Exhibit 10.4

CONFIDENTIAL TREATMENT REQUESTED

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CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

LONG-TERM SUPPLY AGREEMENT II

 

HEMLOCK SEMICONDUCTOR CORPORATION, a Michigan corporation with its principal
place of business at 12334 Geddes Road, Hemlock, Michigan 48626 (“HSC”), and
SunPower Corporation, a United States corporation with its principal place of
business at 3939 North First Street, San Jose, California 95134 (“Buyer”) hereby
enter into this Long-Term Supply Agreement (the “Agreement”) effective as of the
date of Buyer’s execution of this Agreement (the “Effective Date”).

WHEREAS, Buyer desires to purchase and HSC agrees to sell Products (herein
defined) pursuant to the terms and conditions of this Agreement.

NOW, THEREFORE, the parties agree as follows:

1.                                       PRODUCTS. AS USED IN THIS AGREEMENT,
“PRODUCT” OR “PRODUCTS” SHALL MEAN THE POLYCRYSTALLINE SILICON MANUFACTURED BY
HSC. THE SPECIFICATIONS FOR THE PRODUCT ARE SET FORTH IN EXHIBIT A, AS SUCH
SPECIFICATIONS MAY BE AMENDED FROM TIME TO TIME BY MUTUAL WRITTEN AGREEMENT OF
THE PARTIES (THE “HSC PRODUCT SPECIFICATIONS”). SUBJECT ONLY TO THE FOLLOWING
TWO EXCEPTIONS, BUYER SHALL UTILIZE THE PRODUCTS FOR ITS MANUFACTURING PURPOSES
AND SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF HSC, RE-SELL THE PRODUCTS,
OR BECOME A RE-SELLER OR DISTRIBUTOR OF THE PRODUCTS; SAID CONSENT AS TO ANY
OPTIONS OF BUYER SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED UNLESS SAID
OPTIONS ARE LIKELY TO HAVE A NEGATIVE IMPACT ON HSC’S FINANCIAL PERFORMANCE.
EXCEPTIONS: (1) BUYER MAY RE-SELL OR DISTRIBUTE THE PRODUCTS WITHOUT PRIOR
WRITTEN CONSENT OF HSC TO WHOLLY-OWNED OR MAJORITY OWNED SUBSIDIARIES
(HEREINAFTER TOGETHER WITH BUYER REFERRED TO AS THE “SUNPOWER GROUP”; (2) BUYER
MAY RE-SELL OR DISTRIBUTE THE PRODUCTS WITHOUT PRIOR WRITTEN CONSENT OF HSC TO
SUCH ENTERPRISES THAT HAVE ENTERED INTO SUPPLY AGREEMENTS WITH THE SUNPOWER
GROUP FOR THE SOLE PURPOSE OF PRODUCING INGOTS AND/OR WAFERS FOR THE EXCLUSIVE
USE OF THE SUNPOWER GROUP. BUYER WILL NOTIFY HSC OF THE CONCLUSION OF SUCH
SUPPLY AGREEMENTS AND UPON BUYER’S REQUEST HSC MAY, AT ITS DISCRETION, AGREE TO
DROP-SHIP PRODUCTS TO SUCH ENTERPRISES FOR THE PURPOSE CITED ABOVE.

2.                                       Non-Refundable Advance Payment. Buyer
agrees to make a non-refundable, unconditional, irrevocable advance payment in
the amount of $113,220,000.00 (the “Advance Payment”). One-third
($37,740,000.00) of the Advance Payment shall be paid on or before October 4,
2007, One-third ($37,740,000.00) of the Advance Payment will be paid on or
before October 4, 2008, and One-third ($37,740,000.00) of the Advance Payment
will be paid on or before October 4, 2009. Except as set forth in Section 15,
Buyer expressly acknowledges its understanding and agrees that, once this
Agreement is executed, there are no circumstances or occurrences that will
require HSC to refund to Buyer all or any portion of the Advance Payment other
than HSC’s failure to deliver the Products to which the Advance Payment relates,
as set forth in Section 9. The Advance Payment shall be applied as a credit
against the price of the Products that Buyer is required to

 

 

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PURCHASE, AND HSC IS REQUIRED TO SUPPLY, UNDER THIS AGREEMENT AT THE TIMES AND
IN THE AMOUNTS SHOWN ON EXHIBIT B.

3.                                       PRICE AND QUANTITY; PURCHASE ORDERS.

(A)                                  PRICE AND
QUANTITY.                                      FOR THE TIME PERIOD JANUARY 1,
2010 THROUGH DECEMBER 31, 2019, HSC AGREES TO SELL AND BUYER AGREES TO PURCHASE
PRODUCTS PURSUANT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT. THE PRICE AND
QUANTITY OF PRODUCTS TO BE PURCHASED BY BUYER IS AS SET FORTH IN EXHIBIT B. AS
SET FORTH IN EXHIBIT B, BUYER RETAINS THE DISCRETION TO SELECT AMONG THE
PRODUCTS LISTED TO FULFILL ITS ANNUAL QUANTITY COMMITMENTS. UNIT PRICES FOR
SHIPMENT OF PRODUCT ARE FCA HEMLOCK, MICHIGAN (INCOTERMS 2000). SUBJECT ONLY TO
THE PRICE ADJUSTMENTS SET FORTH IN SECTION 4, THESE PRICES ARE FIXED FOR THE
TERM OF THIS AGREEMENT. BUYER MAY REQUIRE AN AUDIT OF THE HSC’S SUPPORTING
DOCUMENTATION VALIDATING THE PRICE ADJUSTMENTS PERMITTED UNDER EXHIBIT B. ANY
SUCH AUDIT SHALL BE CONDUCTED BY A QUALIFIED INDEPENDENT THIRD PARTY WHO SHALL
BE GRANTED ACCESS, UNDER A CONFIDENTIALITY AGREEMENT, TO ALL RELEVANT
DOCUMENTATION IT REASONABLY REQUESTS FOR SUCH VERIFICATION. ANY SUCH AUDIT SHALL
BE PAID FOR BY BUYER.

(B)                                 PURCHASE ORDERS. THE PARTIES ACKNOWLEDGE
THEIR STANDARD PRACTICE IN WHICH BUYER, IN CONNECTION WITH FULFILLING ITS
PURCHASE COMMITMENT FOR ANY GIVEN YEAR, PERIODICALLY ISSUES PURCHASE ORDERS, AND
OCCASIONALLY CHANGE ORDERS THERETO, FOR PRODUCTS REQUESTING SPECIFIED
QUANTITIES, DELIVERY DATES AND DELIVERY LOCATIONS. THE PARTIES AGREE THAT THE
PROVISIONS OF THIS SECTION 3(B) CREATE NO LEGAL COMMITMENT OR OBLIGATIONS WITH
RESPECT TO PURCHASE ORDERS OR OTHERWISE.

4.                                       PRICE ADJUSTMENTS. HSC MAY ADJUST
PRICES ON AN ANNUAL BASIS TO ACCOUNT FOR CHANGES IN HSC’S COST STRUCTURE
RELATIVE TO THE MANUFACTURE OF THE PRODUCTS, INCLUDING CHANGES RELATING TO
ELECTRICITY, RAW MATERIALS AND THE EMPLOYMENT COST INDEX. ON JANUARY 1 OF EACH
YEAR BEGINNING WITH JANUARY 1, 2010, PRICES MAY BE INCREASED PURSUANT TO THE
MECHANISM SET FORTH IN EXHIBIT C.

5.                                       TAKE OR PAY AGREEMENT. THIS AGREEMENT
IS A “TAKE OR PAY AGREEMENT” SUCH THAT BUYER IS ABSOLUTELY AND IRREVOCABLY
REQUIRED TO ACCEPT AND PAY FOR THE CONTRACTED VOLUME OF PRODUCTS PER YEAR OVER A
10-YEAR PERIOD AT THE PRICES SET FORTH IN EXHIBIT B, SUBJECT TO THE ADJUSTMENTS
DESCRIBED IN SECTION 4 ABOVE. IN THE EVENT THAT BUYER FAILS TO ORDER AND TAKE
DELIVERY OF ITS CONTRACTED VOLUME IN A GIVEN YEAR, HSC SHALL INVOICE BUYER FOR
THE DIFFERENTIAL AT FULL CONTRACT PRICE AND BUYER WILL PAY THE SAME WITHIN 30
DAYS OF INVOICE DATE. BUYER SPECIFICALLY ACKNOWLEDGES AND ACCEPTS THAT IT WILL
BE LIABLE FOR THE FULL PURCHASE PRICE OF VOLUME DIFFERENTIAL BETWEEN THE
QUANTITY ORDERED AND THE CONTRACTED VOLUME.

6.                                       PAYMENT. PAYMENT TERMS ARE NET 30 DAYS
FROM THE DATE OF THE INVOICE. FINANCE CHARGES OF ***% PER MONTH (***% PER ANNUM)
MAY BE ASSESSED ON PAYMENT PAST DUE FROM THE PAYMENT DUE DATE TO THE DATE
PAYMENT IS RECEIVED. FAILURE TO PAY

 

 

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INVOICES WHEN DUE OR FINANCE CHARGES WHEN ASSESSED MAY RESULT IN DELAYED OR
CANCELLED SHIPMENTS. NO UNAUTHORIZED DEDUCTIONS FROM INVOICES ARE PERMITTED.

7.                                       TITLE AND RISK OF LOSS. BUYER SHALL
PURCHASE THE PRODUCTS FROM HSC FCA HEMLOCK (INCOTERMS 2000) WITH TITLE AND RISK
OF LOSS WITH RESPECT TO ALL PRODUCTS PASSING TO BUYER WHEN THE GOODS HAVE BEEN
DELIVERED TO THE CARRIER AT HEMLOCK, MICHIGAN.

8.                                       TERM. THE TERM OF THIS AGREEMENT SHALL
BE FROM THE EFFECTIVE DATE THROUGH DECEMBER 31, 2019 (THE “INITIAL TERM”). THE
AGREEMENT MAY NOT BE TERMINATED DURING THE INITIAL TERM, EXCEPT AS EXPRESSLY SET
FORTH IN SECTION 10.

9.                                       MANUFACTURING FACILITY.              
BUYER ACKNOWLEDGES THAT HSC WILL BE EXPANDING ITS MANUFACTURING FACILITIES (THE
“EXPANDED MANUFACTURING FACILITY”) IN ORDER TO PRODUCE THE PRODUCTS TO BE
SUPPLIED UNDER THIS AGREEMENT. THE ESTIMATED COMPLETION DATE FOR 50% OF THE
MANUFACTURING FACILITY CAPACITY IS JANUARY 1, 2010, WITH ESTIMATED CAPACITY OF
75% COMPLETED ON JANUARY 1, 2011, AND 100% OF ESTIMATED CAPACITY COMPLETED ON
JANUARY 1, 2012. BUYER ACKNOWLEDGES THE POSSIBILITY OF DELAYS IN COMPLETING THE
MANUFACTURING FACILITY AND EXPRESSLY AGREES THAT, SO LONG AS 50% OF THE
MANUFACTURING CAPACITY COMMENCES PRODUCTION BY JUNE 30, 2010, HSC SHALL HAVE NO
LIABILITY TO BUYER FOR ANY SUCH DELAY.  THE PARTIES FURTHER AGREE TO THE
FOLLOWING LIQUIDATED DAMAGES FORMULA AS BUYER’S SOLE AND EXCLUSIVE REMEDY AND
DAMAGES FOR DELAYS BEYOND JUNE 30, 2010:

LIQUIDATED DAMAGES CALCULATION: $*** MULTIPLIED BY THE NUMBER OF MONTHS DELAYED
BEYOND JUNE 30, 2010 (PRO-RATED FOR PARTIAL MONTHS). THE TOTAL LIQUIDATED
DAMAGES SHALL NOT EXCEED THE AMOUNT OF BUYER’S ADVANCE PAYMENT.

HSC AGREES THAT THE EXPANDED MANUFACTURING FACILITY SHALL BE SUBJECT TO
BI-ANNUAL INSPECTIONS BY BUYER. SAID INSPECTIONS SHALL BE SUBJECT TO HSC’S
CONFIDENTIALITY AND SECURITY POLICIES FOR SITE VISITS. ANY FEES AND COSTS
ASSOCIATED WITH SUCH INSPECTION SHALL BE BORNE BY BUYER.

10.                                 TERMINATION. BUYER UNDERSTANDS AND
ACKNOWLEDGES THAT HSC IS MAKING SUBSTANTIAL CAPITAL INVESTMENTS TO EXPAND ITS
MANUFACTURING CAPABILITIES IN ORDER TO SATISFY BUYER’S DEMAND FOR THE PRODUCTS.
THE PARTIES ACKNOWLEDGE IT IS THEIR EXPRESS INTENT THAT BUYER IS OBLIGATED TO
PURCHASE THE CONTRACTED VOLUMES OVER THE INITIAL TERM OF THIS AGREEMENT.
ACCORDINGLY, THE BASIS AND CIRCUMSTANCES UNDER WHICH THE PARTIES CAN TERMINATE
THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE INITIAL TERM OF THIS AGREEMENT IS
EXPRESSLY LIMITED TO THE TERMS OF THIS SECTION 10.

(A)                                  TERMINATION BY BUYER. BUYER MAY, AT ITS
OPTION, TERMINATE THIS AGREEMENT ONLY UPON THE OCCURRENCE OF ALL OF THE
FOLLOWING EVENTS: (I)(1) ONCE PRODUCTION OF PRODUCTS HAS COMMENCED AT THE
EXPANDED MANUFACTURING FACILITY, A FAILURE BY HSC TO DELIVER THE CONTRACTED
AMOUNT OF PRODUCTS PROPERLY ORDERED BY

 

 

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BUYER OR (2) OTHER MATERIAL BREACH OF THIS AGREEMENT BY HSC OTHER THAN (A) HSC’S
FAILURE TO COMPLETE THE EXPANDED MANUFACTURING FACILITY (WHICH SHALL BE
ADDRESSED SOLELY BY THE PROVISIONS OF SECTION 9) AND (B) A MATERIAL BREACH
TRIGGERED BY A FORCE MAJEURE EVENT (WHICH SHALL BE SOLELY ADDRESSED IN SECTION
19), (II) SERVICE OF WRITTEN NOTICE OF SUCH FAILURE TO HSC, AND (III) A FAILURE
BY HSC TO CURE SUCH DELIVERY DEFICIENCY OR MATERIAL BREACH WITHIN NINETY (90)
DAYS OF RECEIPT OF THE WRITTEN NOTICE OF SUCH EVENT. IF HSC RECTIFIES ANY SUCH
FAILURE OF DELIVERY OR MATERIAL BREACH WITHIN SUCH PERIOD, THEN HSC’S DEFICIENCY
OF PERFORMANCE SHALL BE DEEMED CURED AND BUYER SHALL NOT BE ENTITLED TO
TERMINATE THIS AGREEMENT.

(B)                                 TERMINATION BY HSC. HSC MAY, AT ITS OPTION,
TERMINATE THIS AGREEMENT ONLY UPON THE OCCURRENCE OF ALL OF THE FOLLOWING
EVENTS: (I) IN THE EVENT OF A FAILURE TO PAY (OTHER THAN A FAILURE TO PAY
TRIGGERED BY A FORCE MAJEURE EVENT WHICH SHALL BE SOLELY ADDRESSED IN SECTION
19) OR OTHER MATERIAL BREACH OF THIS AGREEMENT BY BUYER, (II) SERVICE OF WRITTEN
NOTICE OF SUCH FAILURE TO BUYER, AND (III) A FAILURE BY BUYER TO CURE SUCH
BREACH WITHIN NINETY (90) DAYS AFTER RECEIPT OF WRITTEN NOTICE OF SUCH BREACH.
IF BUYER RECTIFIES ANY SUCH PAYMENT FAILURE OR MATERIAL BREACH WITHIN SUCH
PERIOD, THEN BUYER’S DEFICIENCY OF PERFORMANCE SHALL BE DEEMED CURED AND BUYER
SHALL NOT BE ENTITLED TO TERMINATE THIS AGREEMENT. IN THE EVENT OF A TERMINATION
DUE TO BUYER’S BREACH, IN ADDITION TO ANY OTHER DAMAGES THAT CAN BE ESTABLISHED
BY HSC, BUYER SHALL BE LIABLE TO HSC FOR THE PURCHASE PRICE OF PRODUCTS AS SET
FORTH IN EXHIBIT B.

11.                                 CONFIDENTIALITY. THE PARTIES ACKNOWLEDGE AND
AGREE THAT THE TERMS OF THIS AGREEMENT AND CERTAIN INFORMATION EXCHANGED BETWEEN
THEM PERTAINING TO THIS AGREEMENT, INCLUDING INFORMATION REGARDING RESEARCH,
TECHNOLOGY, PRODUCT DEVELOPMENTS, MARKETING PLANS OR CONDITIONS, PRODUCTS,
BUSINESS STRATEGIES, AND THE LIKE, CONSTITUTES “CONFIDENTIAL INFORMATION” OF THE
PARTY DISCLOSING THE INFORMATION. THE PURPOSE OF THE EXCHANGE OF THE
CONFIDENTIAL INFORMATION” IS TO ALLOW THE PARTIES TO MEET THEIR OBLIGATIONS AND
RESPONSIBILITIES UNDER THIS AGREEMENT. DURING THE TERM OF THIS AGREEMENT, AND
FOR A PERIOD OF 15 YEARS FOLLOWING ITS TERMINATION OR EXPIRATION, EXCEPT AS
REQUIRED BY APPLICABLE LAW, REGULATION OR RULES OF ANY SECURITIES EXCHANGE, THE
PARTY RECEIVING ANY CONFIDENTIAL INFORMATION, AND ITS EMPLOYEES, ATTORNEYS,
FINANCIAL ADVISORS, OFFICERS, DIRECTORS AND SHAREHOLDERS WHO SHALL RECEIVE SUCH
CONFIDENTIAL INFORMATION SHALL NOT, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF THE
DISCLOSING PARTY, USE, DIVULGE, DISCLOSE OR COMMUNICATE, TO ANY PERSON, FIRM,
CORPORATION OR ENTITY, IN ANY MANNER WHATSOEVER, THE TERMS OF THIS AGREEMENT OR
ANY CONFIDENTIAL INFORMATION OF THE DISCLOSING PARTY; PROVIDED, HOWEVER, THAT
EACH PARTY MAY USE, DIVULGE, DISCLOSE OR COMMUNICATE THE TERMS OF THIS AGREEMENT
OR CONFIDENTIAL INFORMATION OF THE DISCLOSING PARTY TO WHOLLY-OWNED OR MAJORITY
OWNED SUBSIDIARIES IF SUCH SUBSIDIARIES UNDERTAKE TO KEEP SUCH INFORMATION
STRICTLY CONFIDENTIAL IN ACCORDANCE WITH THIS SECTION 11 AND EACH SUBSIDIARY HAS
A “NEED TO KNOW”. THE PARTIES WILL BE LIABLE FOR ANY BREACH OF THIS SECTION 11
BY ANY OF THEIR RESPECTIVE WHOLLY-OWNED OR MAJORITY OWNED SUBSIDIARIES. EACH
PARTY FURTHER AGREES TO USE THE SAME DEGREE OF CARE TO AVOID PUBLICATION OR
DISSEMINATION OF THE CONFIDENTIAL INFORMATION DISCLOSED TO SUCH PARTY UNDER THIS

 

 

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AGREEMENT AS IT EMPLOYS WITH RESPECT TO ITS OWN CONFIDENTIAL INFORMATION, BUT AT
ALL TIMES SHALL USE AT LEAST REASONABLE CARE TO PROTECT AGAINST DISCLOSURE.
CONFIDENTIAL INFORMATION DOES NOT AND SHALL NOT INCLUDE INFORMATION THAT:

(A)                                  WAS ALREADY KNOWN TO THE RECEIVING PARTY AT
THE TIME SUCH INFORMATION IS DISCLOSED BY THE OTHER PARTY;

(B)                                 WAS OR BECAME PUBLICLY KNOWN THROUGH NO
WRONGFUL ACT OF THE RECEIVING PARTY;

(C)                                  WAS RIGHTFULLY RECEIVED FROM A THIRD PARTY
WITHOUT RESTRICTION;

(D)                                 WAS INDEPENDENTLY DEVELOPED BY THE RECEIVING
PARTY;

(E)                                  WAS APPROVED FOR RELEASE BY WRITTEN
AUTHORIZATION OF THE PARTY DISCLOSING SUCH INFORMATION UNDER THIS AGREEMENT; OR

(F)                                    WAS REQUIRED BY LEGAL OR FINANCIAL
REPORTING PURPOSES TO BE DISCLOSED; PROVIDED, HOWEVER, THAT THE PARTY BEING
REQUIRED TO DISCLOSE SHALL, IF CIRCUMSTANCES PERMIT, PROVIDE ADVANCED NOTICE TO
THE OTHER PARTY AND SHALL ALLOW THE OTHER PARTY A REASONABLE OPPORTUNITY TO
OPPOSE SUCH DISCLOSURE, IF APPROPRIATE.

12.                                 LIMITED WARRANTY. HSC WARRANTS ONLY THAT,
UPON DELIVERY, THE PRODUCTS WILL MEET THE HSC PRODUCT SPECIFICATIONS, AS SET
FORTH IN EXHIBIT A (II) THE PRODUCTS WILL BE DELIVERED FREE FROM ANY SECURITY
INTEREST, LIEN OR ENCUMBRANCE; AND (III) HSC WILL CONVEY GOOD TITLE TO THE
PRODUCTS.

13.                                 WARRANTY DISCLAIMER. THIS LIMITED WARRANTY
IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, SAID WARRANTIES BEING EXPRESSLY DISCLAIMED.

14.                                 LIMITED REMEDY. HSC SHALL BE GIVEN
REASONABLE AND PROMPT OPPORTUNITY TO EXAMINE ANY CLAIM OF DEFECT BY BUYER. BUYER
AGREES THAT ITS SOLE AND EXCLUSIVE REMEDY AGAINST HSC SHALL BE LIMITED TO
EITHER, AT HSC’S SOLE DISCRETION, (I) THE REVISION, REPAIR OR REPLACEMENT OF
NON-CONFORMING OR DEFECTIVE PRODUCTS OR (II) PAYMENT NOT TO EXCEED THE PURCHASE
PRICE OF THE SPECIFIC PRODUCTS FOR WHICH DAMAGES ARE CLAIMED. THIS EXCLUSIVE
REMEDY SHALL NOT BE DEEMED TO HAVE FAILED OF ITS ESSENTIAL PURPOSE SO LONG AS
HSC IS WILLING TO REVISE, REPAIR OR REPLACE THE DEFECTIVE PRODUCTS, OR MAKE THE
PAYMENT DESCRIBED IN THIS SECTION 14.

15.                                 DAMAGES LIMITATION. EXCEPT FOR SITUATIONS
INVOLVING (I) A DELAY IN COMPLETION OF THE MANUFACTURING FACILITY AS DESCRIBED
IN SECTION 9 OF THIS AGREEMENT, OR (II) FOR FAILURE TO DELIVER PRODUCTS TO WHICH
THE ADVANCE PAYMENTS RELATE, AS DESCRIBED IN SECTION 9 OF THIS AGREEMENT, HSC
SHALL NOT BE LIABLE FOR ANY LOSS, DAMAGE, OR INJURY RESULTING FROM DELAY IN
DELIVERY OF THE PRODUCTS, OR FOR ANY FAILURE TO PERFORM

 

 

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WHICH IS DUE TO A FORCE MAJEURE EVENT (AS DEFINED IN SECTION 19).  EXCEPT FOR
HSC’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 16 AND FOR EITHER PARTY’S BREACH
OF SECTION 11, THE MAXIMUM AGGREGATE LIABILITY OVER THE TERM OF THIS AGREEMENT,
IF ANY, FOR ALL DAMAGES, INCLUDING WITHOUT LIMITATION CONTRACT DAMAGES AND
DAMAGES FOR INJURIES TO PERSONS OR PROPERTY, WHETHER ARISING FROM A PARTY’S
BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, OR OTHER
TORT, IS LIMITED TO, IN THE CASE OF HSC, THE REMAINING NET BALANCE OF THE
ADVANCED PAYMENT AS SET FORTH IN EXHIBIT B AND, IN THE CASE OF BUYER, THE
AGGREGATE PRICE FOR THE PRODUCTS COMMITTED TO BE PURCHASED BY BUYER DURING THE
INITIAL TERM AS SET FORTH IN EXHIBIT B.  IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES,
INCLUDING WITHOUT LIMITATION LOST REVENUES AND PROFITS, EVEN IF IT HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF THE LIMITED REMEDY SET FORTH
ABOVE.

16.                                 PATENTS. IF ANY SUIT IS BROUGHT AGAINST
BUYER FOR INFRINGEMENT OF ANY UNITED STATES LETTERS PATENT ALLEGING THAT THE
PRODUCTS OR HSC’S METHODS OF MANUFACTURING THEM INFRINGE ANY UNITED STATES
LETTERS PATENT, HSC SHALL, AT ITS OWN EXPENSE, DEFEND AND CONTROL THE SUIT
AGAINST THESE ALLEGATIONS ONLY, AND SHALL PAY ANY AWARD OF DAMAGES ASSESSED
AGAINST BUYER IN THE SUIT TO THE EXTENT ONLY THAT THE DAMAGES ARE AWARDED IN
CONNECTION SPECIFICALLY WITH THE ALLEGED INFRINGEMENT, PROVIDED THAT BUYER GIVES
HSC PROMPT NOTICE IN WRITING OF THE INSTITUTION OF THE SUIT AND, TO THE FULL
EXTENT OF BUYER’S POWER TO DO SO, BUYER PERMITS HSC TO DEFEND AND CONTROL THE
SUIT AGAINST THESE ALLEGATIONS. THE ABOVE FULLY EXPRESSES BUYER’S EXCLUSIVE
REMEDY AND HSC’S SOLE RESPONSIBILITY WITH RESPECT TO INFRINGEMENT OF ANY PATENT
BY THE PRODUCTS, AND HSC EXPRESSLY DISCLAIMS ANY OTHER WRITTEN OR UNWRITTEN,
EXPRESS OR IMPLIED WARRANTY AGAINST INFRINGEMENT WITH RESPECT TO THE PRODUCTS.
IN NO CASE SHALL HSC BE LIABLE TO DEFEND OR PAY ANY AWARD OF DAMAGES ASSESSED
AGAINST BUYER TO THE EXTENT ANY SUIT OR CAUSE OF ACTION ALLEGES THAT THE NATURE
OF BUYER’S USE OF THE PRODUCTS (OR THE USE OF THE PRODUCTS BY BUYER’S CUSTOMERS)
INFRINGES ANY PATENT.

17.                                 TAXES. ANY TAX OR OTHER GOVERNMENT CHARGE
NOW OR IN THE FUTURE LEVIED UPON THE PRODUCTION, SALE, USE OR SHIPMENT OF THE
PRODUCTS (EXCEPT HSC’S INCOME TAX OBLIGATIONS) MAY, AT HSC’S OPTION, BE ADDED TO
THE PURCHASE PRICE.

18.                                 FAIR LABOR STANDARDS ACT. HSC HEREBY
CERTIFIES THAT THE PRODUCTS SHALL BE PRODUCED IN COMPLIANCE WITH THE FAIR LABOR
STANDARDS ACT, AS AMENDED, AND OF REGULATIONS AND ORDERS OF THE UNITED STATES
DEPARTMENT OF LABOR ISSUED UNDER THAT ACT.

19.                                 FORCE MAJEURE. HSC SHALL NOT BE LIABLE FOR
DELAYS OR FAILURES IN PERFORMANCE OF AN ORDER OR DEFAULT IN DELIVERY ARISING OUT
OF OR RESULTING FROM CAUSES

 

 

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BEYOND ITS CONTROL. SUCH CAUSES INCLUDE, BUT ARE NOT LIMITED TO, ACTS OF GOD,
ACTS OF BUYER, ACTS OF THE GOVERNMENT OR THE PUBLIC ENEMY, FIRE, FLOOD,
EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, SEVERE WEATHER,
EQUIPMENT BREAKAGE OR DEFAULT OF SUPPLIERS DUE TO ANY OF SUCH CAUSES (EACH A
“FORCE MAJEURE EVENT”). IN THE EVENT OF ANY SUCH DELAY OF HSC’S PERFORMANCE,
BUYER SHALL HONOR ITS OBLIGATIONS HEREUNDER AS SOON AS HSC IS ABLE TO PERFORM.
IN ADDITION, IF DUE TO A FORCE MAJEURE EVENT, HSC IS UNABLE TO PRODUCE
SUFFICIENT GOODS TO MEET ALL DEMANDS FROM CUSTOMERS AND INTERNAL USES, HSC SHALL
HAVE THE RIGHT TO ALLOCATE PRODUCTION AMONG ITS CUSTOMERS AND PLANTS IN ANY
MANNER IN WHICH HSC MAY DETERMINE TO BE EQUITABLE.

BUYER SHALL NOT BE LIABLE FOR DELAYS OR FAILURES IN MEETING ITS PAYMENT
OBLIGATIONS AS SET FORTH IN SECTION 6, IF SUCH FAILURE ARISES OUT OF OR RESULTS
FROM CAUSES BEYOND ITS CONTROL. SUCH CAUSES INCLUDE, BUT ARE NOT LIMITED TO,
ACTS OF GOD, ACTS OF HSC, ACTS OF THE GOVERNMENT OR THE PUBLIC ENEMY, FIRE,
FLOOD, EPIDEMIC, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, OR SEVERE
WEATHER (EACH A “FORCE MAJEURE EVENT”). IN THE EVENT OF ANY SUCH DELAY OF
BUYER’S PERFORMANCE, HSC SHALL HONOR ITS OBLIGATIONS HEREUNDER AS SOON AS BUYER
IS ABLE TO PERFORM.

20.                                 CHOICE OF LAW. THE AGREEMENT IS MADE IN, AND
SHALL BE GOVERNED AND CONTROLLED IN ALL RESPECTS BY THE LAWS OF THE STATE OF
MICHIGAN, USA (SPECIFICALLY DISCLAIMING THE U.N. CONVENTION CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS) AND ALL DISPUTES, INCLUDING INTERPRETATION,
ENFORCEABILITY, VALIDITY, AND CONSTRUCTION, SHALL BE DETERMINED UNDER THE LAW OF
THE STATE OF MICHIGAN, WITHOUT REGARD TO ANY CONFLICT OF LAW PROVISIONS.

21.                                 CHOICE OF FORUM. THE PARTIES SUBMIT TO THE
EXCLUSIVE JURISDICTION AND VENUE OF THE U.S. DISTRICT COURT FOR THE EASTERN
DISTRICT OF MICHIGAN FOR ALL DISPUTES ARISING, DIRECTLY OR INDIRECTLY, UNDER
THIS AGREEMENT.

22.                                 WAIVER. EITHER PARTY’S FAILURE TO EXERCISE A
RIGHT OR REMEDY OR SUCH PARTY’S ACCEPTANCE OF A PARTIAL OR DELINQUENT PAYMENT
SHALL NOT OPERATE AS A WAIVER OF ANY OF SUCH PARTY’S RIGHTS OR THE OTHER PARTY’S
OBLIGATIONS UNDER THE AGREEMENT AND SHALL NOT CONSTITUTE A WAIVER OF SUCH
PARTY’S RIGHT TO DECLARE AN IMMEDIATE OR A SUBSEQUENT DEFAULT.

23.                                 SEVERABILITY. IF ONE OR MORE OF THE
PROVISIONS OF THIS AGREEMENT SHALL BE FOUND, BY A COURT WITH JURISDICTION, TO BE
ILLEGAL, INVALID OR UNENFORCEABLE, IT SHALL NOT AFFECT THE LEGALITY, VALIDITY OR
ENFORCEABILITY OF ANY OF THE REMAINING PROVISIONS OF THIS AGREEMENT. THE PARTIES
AGREE TO ATTEMPT TO SUBSTITUTE FOR ANY ILLEGAL, INVALID OR UNENFORCEABLE
PROVISION A LEGAL, VALID OR ENFORCEABLE PROVISION THAT ACHIEVES TO THE GREATEST
EXTENT POSSIBLE THE ECONOMIC OBJECTIVES OF THE ILLEGAL, INVALID OR UNENFORCEABLE
PROVISION.

24.                                 INTEGRATION. THE AGREEMENT CONSTITUTES THE
ENTIRE UNDERSTANDING BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER OF
THE AGREEMENT AND SUPERSEDES ANY PRIOR DISCUSSIONS, NEGOTIATIONS, AGREEMENTS,
MEMORANDA OF UNDERSTANDING AND THE

 

 

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LIKE. MODIFICATIONS TO THE AGREEMENT MAY BE MADE ONLY IN WRITING AND SIGNED BY
EACH PARTY.

25.                                 ASSIGNMENTS. NO ASSIGNMENT OF THE AGREEMENT
OR OF ANY RIGHT OR OBLIGATION UNDER THE AGREEMENT SHALL BE MADE BY EITHER PARTY
WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY, SAID CONSENT SHALL NOT BE
UNREASONABLY WITHHELD; PROVIDED, HOWEVER, THAT EACH PARTY MAY ASSIGN THIS
AGREEMENT WITHOUT ANY SUCH CONSENT TO ITS AFFILIATES OR IN CONNECTION WITH A
MERGER, ACQUISITION, CHANGE OF CONTROL OR SALE OF SUBSTANTIALLY ALL OF THE
ASSETS OF THE ASSIGNING PARTY. AS USED HEREIN, AN “AFFILIATE” OF A PARTY MEANS
ANY OTHER PARTY CONTROLLING, CONTROLLED BY, OR UNDER COMMON CONTROL WITH, SUCH
PARTY. IN THE EVENT OF A PROPER ASSIGNMENT, THE AGREEMENT SHALL BE BINDING UPON
AND INURE TO THE BENEFIT OF THE ASSIGNING PARTY’S SUCCESSORS AND ASSIGNS.

26.                                 ATTORNEY FEES AND COSTS. IN THE EVENT OF
HSC’S ENFORCEMENT OF ANY TERM OR CONDITION IN THE AGREEMENT, BUYER SHALL BE
LIABLE TO HSC FOR ALL COSTS, INCLUDING ATTORNEY FEES, INCURRED BY HSC IN
ENFORCING THE AGREEMENT AND IN COLLECTING ANY SUMS OWED BY BUYER TO HSC.

27.                                 DOLLARS. ALL REFERENCES TO MONETARY AMOUNTS
SHALL BE IN U.S. DOLLARS.

28.                                 AGREEMENT PREPARATION. THIS AGREEMENT SHALL
BE CONSIDERED FOR ALL PURPOSES AS PREPARED THROUGH THE JOINT EFFORTS OF THE
PARTIES AND SHALL NOT BE CONSTRUED AGAINST ONE PARTY OR THE OTHER AS A RESULT OF
THE MANNER IN WHICH THIS AGREEMENT WAS NEGOTIATED, PREPARED, DRAFTED OR
EXECUTED.

29.                                 DEADLINE. THIS AGREEMENT MUST BE EXECUTED
AND RETURNED TO HSC BY JULY 20, 2007. IF THE AGREEMENT IS NOT EXECUTED AND
RETURNED TO HSC BY THAT DATE, THE AGREEMENT SHALL BE NULL AND VOID.

BUYER:

HSC:

 

 

SUNPOWER CORPORATION

 

HEMLOCK SEMICONDUCTOR

 

 

CORPORATION

 

 

By:

/s/ THOMAS WERNER

 

By:

/s/ GARY R. HOMAN

 

 

 

 

 

 

 

Print Name:

Thomas Werner

 

Print Name:

Gary R. Homan

 

 

 

 

 

 

 

Title:

Chief Executive Officer

 

Title:

Vice President

 

 

 

 

 

 

 

Date:

July 16, 2007

 

Date:

July 2, 2007

 

 

 

HSC and Buyer Confidential

***                           CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

 

8

--------------------------------------------------------------------------------

EXHIBIT A

HSC PRODUCT SPECIFICATIONS

***

 

 

 

 

 

 

 

 

HSC and Buyer Confidential

***                           CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

 

9

--------------------------------------------------------------------------------

 

Calendar Year

 

Shipped Quantity
(FCA HSC in
kilograms)

 

Gross Price Per
Kilogram for
HSC DMS (in US
Dollars)

 

Advanced Payment Per
Kilogram (in US
Dollars)

 

Net Price Per
Kilogram for
HSC DMS (in US
Dollars)

 

Net Remaining
Advanced
Payment at Year-
End (to be
Prorated based
on actual volume
shipped)

 

Total Advance Payment

 

 

 

 

 

 

 

 

 

$

***

 

2010

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2011

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2012

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2013

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2014

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2015

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2016

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2017

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2018

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

2019

 

***

 

$

***

 

$

***

 

$

***

 

$

***

 

 

 

Total Shipped Quantity (in kilograms): ***

 

Average Gross Price Per Kilogram: $***

 

 

 

Average Net Price Per Kilogram: $***

 

 

 

 

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

10

--------------------------------------------------------------------------------

 

EXHIBIT B

SOLAR-GRADE POLYSILICON ANTICIPATED DELIVERY SCHEDULE

 

PRODUCT

 

TYPE

 

PACKAGE

 

PRICE VARIANCE
($US/KG)

HSC DMS

 

CHUNK

 

BULK

 

***

HSC DMS-L

 

BIG PIECE

 

10 KG BAGS

 

***

HSC SGB

 

CHUNK

 

10 KG BAGS

 

***

HSC 840

 

CHIPS

 

10 KG BAGS

 

***

HSC 850

 

CHIPS

 

10 KG BAGS

 

***

HSC 900

 

CHUNK

 

BULK

 

***

HSC XXX

 

GRANULAR

 

TBD

 

TBD

 

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

11

--------------------------------------------------------------------------------

 

Exhibit B (Continued)

Product Pricing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

12

--------------------------------------------------------------------------------

 

Pricing for HSC DMS

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2011

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2012

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2013

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2014

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2015

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2016

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2017

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2018

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

2019

 

HSC DMS

 

Chunk

 

Bulk

 

$

***

 

$

***

 

Pricing for HSC DMS-L

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2011

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2012

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2013

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2014

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2015

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2016

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2017

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2018

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

2019

 

HSC DMS-L

 

Big Piece

 

10 kg Bags

 

$

***

 

$

***

 

Pricing for HSC SGB

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2011

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2012

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2013

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2014

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2015

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2016

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2017

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2018

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

2019

 

HSC SGB

 

Chunk

 

10 kg Bags

 

$

***

 

$

***

 

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

13

--------------------------------------------------------------------------------

 

Exhibit B (Continued)

Product Pricing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

14

--------------------------------------------------------------------------------

 

Pricing for HSC 900

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2011

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2012

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2013

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2014

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2015

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2016

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2017

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2018

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

2019

 

HSC 900

 

Chunk

 

Bulk

 

$

***

 

$

***

 

Pricing for HSC 840*

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2011

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2012

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2013

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2014

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2015

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2016

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2017

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2018

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2019

 

HSC 840

 

Chips

 

10 kg Bags

 

$

***

 

$

***

 

Pricing for HSC 850*

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2011

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2012

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

 ***

2013

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2014

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2015

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2016

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2017

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2018

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

2019

 

HSC 850

 

Chips

 

10 kg Bags

 

$

***

 

$

***

 

 

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

15

--------------------------------------------------------------------------------

 

Exhibit B (Continued)

Product Pricing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

16

--------------------------------------------------------------------------------

 

Pricing for HSC 890*

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2011

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2012

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2013

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2014

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2015

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2016

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2017

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2018

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

2019

 

HSC 890

 

Chips/Fines

 

Bulk

 

$

***

 

$

***

 

Pricing for HSC SCE*

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2011

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2012

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2013

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2014

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2015

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2016

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2017

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2018

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

2019

 

HSC SCE

 

Carbon Ends

 

Bulk

 

$

***

 

$

***

 

Pricing for HSC PTB*

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2011

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2012

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2013

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2014

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2015

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2016

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2017

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2018

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

2019

 

HSC PTB

 

Etched TBS

 

Bulk

 

$

***

 

$

***

 

 

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

17

--------------------------------------------------------------------------------

 

Exhibit B (Continued)

Product Pricing

 

Pricing for HSC PCE*

Calendar
Year

 

Product

 

Type

 

Package

 

Gross Price
Per kg

 

Net Price Per kg

2010

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2011

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2012

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2013

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2014

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2015

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2016

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2017

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2018

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

2019

 

HSC PCE

 

Etched CE

 

10 kg Bags

 

$

***

 

$

***

 

 

PRODUCTS UNDER DEVELOPMENT(1)

PRODUCT

 

TYPE

 

PACKAGE

 

PRICE

HSC P18*

 

SURFACE CLEANED FALLOUT

 

TBD(2)

 

TBD

HSC P19*

 

SURFACE CLEANED FALLOUT

 

TBD

 

TBD

HSC PSR*

 

SURFACE CLEANED FALLOUT

 

TBD

 

TBD

HSC GXX*

 

GRANULAR

 

TBD

 

TBD

--------------------------------------------------------------------------------

*THE AVAILABLE QUANTITY OF THESE PRODUCTS WILL BE LIMITED DUE TO CAPACITY AND
THE ACTUAL FALL-OUT QUANTITIES.  BUYER MAY, IN ITS SOLE AND EXCLUSIVE
DISCRETION, FULFILL ITS QUANTITY COMMITMENTS BASED ON ANY COMBINATION OF
AVAILABLE PRODUCT AS DETERMINED SOLELY BY HSC.  WITH RESPECT TO THE PRODUCTS
LISTED IN THIS EXHIBIT B WITHOUT THE ASTERISK (*) DESIGNATION, BUYER MAY, IN ITS
SOLE AND EXCLUSIVE DISCRETION, FULFILL ITS QUANTITY COMMITMENTS BASED ON ANY
COMBINATION OF SUCH PRODUCTS, AS DETERMINED SOLELY BY BUYER.

 

 

1 The Products identified are under development by HSC. HSC makes no
representation that the Products will ultimately be available for use by Buyer.
If development is successful (determined in HSC’s sole and exclusive
discretion), these Products or other future Product generations will be made
available for purchase at Buyer’s discretion in fulfillment of its purchase
obligations hereunder. Specifications will be developed and communicated to
Buyer.

2 “TBD” means to be determined.

 

HSC and Buyer Confidential

***         CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION

 

18

--------------------------------------------------------------------------------

 

EXHIBIT C

 

Electrical Costs:  The base cost (base year = 2007) will be $*** per MWh
(megawatt hour) with inflation estimated at ***% per year.  If the cumulative
percentage increase in HSC’s actual electrical rate exceeds ***% compounded
annually, HSC may increase the contract price of polysilicon by $*** per kg for
each whole percentage point that the cumulative actual percentage increase
exceeds the cumulative compounded ***% base rate.  The following table provides
an example of this price adjustment mechanism:

 

 

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013

 

2014

 

2015

 

2016

 

2017

 

2018

 

2019

 

2020

 

Base Rate *

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Compounded

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Actual Rate *

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Compounded

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Price Change / KG

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

***

 

$

***

 

$

***

 

$

***

 

$

***

 

$

***

 

 

In the preceding example, HSC may choose to increase the annual contract price
of polysilicon (Exhibit B) by $*** per kg in 2015 through 2017 and by $*** per
kg in 2018 through 2020.

 

 

Labor Cost Inflation:  The base inflation rate is estimated at ***% per year
(base year = 2007).  If the cumulative rate of inflation (as measured by ECI)
exceeds ***% compounded annually, HSC may increase the contract price of
polysilicon by $*** per kg for each whole percentage point that the cumulative
percentage increase in ECI exceeds the cumulative compounded ***% base rate. 
The following table provides an example of this price adjustment mechanism:

 

 

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013

 

2014

 

2015

 

2016

 

2017

 

2018

 

2019

 

2020

 

Base Rate *

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Compounded

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Actual Rate *

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Compounded

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Price Change / KG

 

 

 

 

 

 

 

 

 

 

 

$

***

 

$

***

 

$

***

 

$

***

 

$

***

 

$

***

 

$

***

 

$

***

 

 

In the preceding example, HSC may choose to increase the annual contract price
of polysilicon (Exhibit B) by $*** per kg in 2013 through 2016 and by $*** per
kg in 2017 through 2020.

 

 

HSC and Buyer Confidential

***                           CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

 

19

--------------------------------------------------------------------------------

 

EXHIBIT C (Continued)

 

Raw Material Cost Inflation:  The base cost (base year = 2007) of Metallurgical
Grade Silicon Metal will be $*** per KG with inflation estimated at ***% per
year.  If the cumulative rate of inflation (as measured by USA CRU Spot) exceeds
***% compounded annually, HSC may increase the contract price of polysilicon by
$*** per kg for each whole percentage point that the cumulative percentage
increase in USA CRU Spot exceeds the cumulative compounded ***% base rate.  The
following table provides an example of this price adjustment mechanism:

 

 

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013

 

2014

 

2015

 

2016

 

2017

 

2018

 

2019

 

2020

 

Base Rate *

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Compounded

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Actual Rate *

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Compounded

 

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

***

%

Price Change / KG

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

***

 

$

***

 

$

***

 

$

***

 

$

***

 

$

***

 

 

In the preceding example, HSC may choose to increase the annual contract price
of polysilicon (Exhibit B) by $*** per kg in 2015 through 2017 and by $*** per
kg in 2018 through 2020.

 

 

Inflation rate for Electrical costs shall be measured by actual $ per MWh. 
Inflation rate for Labor Cost Inflation shall be measured by ECI.  “ECI” is the
Employment Cost Index Civilian (unadjusted) as published by the U.S. Department
of Labor (www.bls.gov).  Inflation for metallurgical grade silicon metal shall
be measured by CRU Spot price as published by CRU International LTD (by
subscription only).

 

 

HSC and Buyer Confidential

***                           CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

 

20

--------------------------------------------------------------------------------