Exhibit 10.88
 
[*] = 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.
 
SUPPLY AGREEMENT
 
This Supply Agreement (this “Agreement”) is made as of November 19, 2008 (the
“Effective Date”) between BHS Acquisition, LLC, a limited liability company
organized under the laws of the State of Utah (hereinafter “SUPPLIER”) and HOKU
MATERIALS, INC., a Delaware corporation (hereinafter “HOKU”).  SUPPLIER and HOKU
are sometimes referred to in this Agreement as the “Parties” or individually as
a “Party”.
 
Recitals
 
Whereas, SUPPLIER desires to supply Product (as defined below) to HOKU for use
in HOKU’s polysilicon production process beginning in the second quarter of
calendar year 2009, and HOKU desires to purchase such Product from SUPPLIER;
 
NOW, THEREFORE, in furtherance of the foregoing Recitals and in consideration of
the mutual covenants and obligations set forth in this Agreement, the Parties
hereby agree as follows:
 
Agreement
 
1.           Definitions.
 
The following terms used in this Agreement shall have the meanings set forth
below:
 
1.1.           “Affiliate” shall mean, with respect to either Party to this
Agreement, any entity that is controlled by or under common control with such
Party.
 
1.2.           “Agreement” shall mean this Supply Agreement and all appendices
annexed to this Agreement as the same may be amended from time to time in
accordance with the provisions hereof.
 
1.3.           “Business Day” shall mean Monday through Friday, excluding United
States federal holidays.
 
1.4.           “First Shipment Date” shall mean June 30, 2009, which shall be
the date on which the first delivery of Guaranteed Weekly Quantity of Products
is delivered to the Hoku Facility in accordance with the terms of this
Agreement.
 
1.5.           “Guaranteed Weekly Quantity of Product” shall mean [*] metric
tons of Product, except that for the first four weeks of the Agreement, the
Guaranteed Weekly Quantity of Product shall be [*] metric tons.

HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Page 1 of 14
 
 

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1.6.           “HOKU Facility” shall mean HOKU’s polysilicon production facility
located at One Hoku Way, Pocatello, Idaho USA.
 
1.7.           “Product” shall mean 22° Bé Hydrochloric Acid (HCl), commonly
known as muriatic acid, that meets the Product Specifications.
 
1.8.           “Product Specifications” shall mean the quality and other
specifications for the Products as set forth on Appendix 2 to this Agreement.
 
1.9.           “Term” shall mean the period during which this Agreement is in
effect, as more specifically set forth in Section 7.1 of this Agreement.
 
1.10.           “Year” shall mean each of the twelve-month periods commencing on
the First Shipment Date.
 
2.           Ordering; Supply; Shipment & Delivery Obligations.
 
2.1.           HOKU hereby agrees to purchase from SUPPLIER, and SUPPLIER agrees
to sell to HOKU each week beginning on the First Shipment Date, through the
expiration or earlier termination of this Agreement pursuant to Section 8 below,
the Guaranteed Weekly Quantity of Product.  The Product will be shipped in the
weekly volumes and invoiced at the prices set forth in Appendix 1 to this
Agreement (the “Shipping and Pricing Schedule”).   After the first Year, the
pricing for each subsequent year will be freely negotiated in good faith for
each such Year.  If the Parties are unable to agree on the price at least 60
days prior to the beginning of the applicable Year, then either Party shall have
the right to terminate this Agreement without penalty, and following such
termination in writing, both Parties shall be released from any further
obligations under this Agreement, except for any obligations related to past or
pending shipments in the then-current Year.
 
2.2.           The entire Guaranteed Weekly Quantity of Product shall be
delivered to the Hoku Facility by the last Business Day of each week (the
“Weekly Shipment Date”) following the First Shipment Date, in shipments of not
less than [*] pounds of Product; provided, however, that the Parties may agree
to modify the daily delivery schedule within any given week without the need for
formal written amendment of the Agreement as long as any change to the delivery
schedule is made between an authorized party from each company.
 
2.3.           If SUPPLIER does not supply to HOKU the Guaranteed Weekly
Quantity of Product pursuant to Section 2.1 within [*] of any Weekly Shipment
Date, SUPPLIER will incur a purchase price adjustment applicable to the delayed
week’s shipments only.  This purchase price adjustment does not apply to any
future shipments.  This purchase price adjustment shall be [*] of the value of
the respective delayed Product for each day or part thereof that the Product
shipment is delayed beyond the [*] grace period, up to a maximum purchase price
adjustment of [*].  Any purchase price adjustments incurred as a result of this
Section 2.3 may be off-set by HOKU against payment of any invoice.  For the
avoidance of doubt, the purchase price adjustment shall not be considered to be
either a penalty or liquidated damages.

HOKU Initials & Date ____DS      11/19/08        
 
SUPPLIER Initials & Date ___MTM   11/19/08___________________
 

Page 2 of 14
 
 

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2.4.           In addition to, and cumulative with, the purchase price
adjustment and remedies mentioned in Section 2.3  of this Agreement, if SUPPLIER
fails to deliver to HOKU the Guaranteed Weekly Quantity of Product pursuant to
Section 2.1 above within [*] of the applicable Weekly Shipment Date, HOKU may,
in its sole discretion, and after providing written notice to SUPPLIER, choose
to forego delivery of the delayed Product.  If HOKU elects to forego delivery of
the delayed Product pursuant to this Section 2.4, then HOKU may purchase the
undelivered quantity of Product from any other vendor of its choosing for any
time frame for which Supplier is unable to supply, and SUPPLIER shall be
required to reimburse or credit HOKU for the difference between what HOKU would
have paid to SUPPLIER for that Product (before applying any purchase price
adjustment to which HOKU would have been entitled to for that delivery), and the
net costs HOKU actually incurs in obtaining the replacement Product; provided,
however, that HOKU shall use commercially reasonable efforts to pay not more
than the then-current market price for such replacement Products.
 
2.5.           All shipments shall be [*] (INCOTERMS 2000) HOKU’s facility at
One Hoku Way Pocatello, Idaho.
 
2.6.             HOKU shall have the option, during the term of this Agreement,
to construct the infrastructure needed for delivery of the Product to the HOKU
Facility by rail at Hoku’s sole discretion and cost.  If HOKU constructs this
infrastructure, and if rail shipment would provide transportation cost savings
to SUPPLIER, then HOKU may require, with no less than 180 days’ written notice,
that SUPPLIER  ship the PRODUCT by rail and credit HOKU with a per-ton purchase
price adjustment in the amount of [*] of SUPPLIER’s cost savings per ton.  If
HOKU and SUPPLIER cannot agree on the amount of SUPPLIER’s cost savings, then
HOKU may, at its sole expense, hire an independent auditor to determine
SUPPLIER’s cost savings, and the decision of that independent auditor shall be
binding on the Parties.
 
2.7.           HOKU may at any time reduce the Guaranteed Weekly Quantity of
Product by providing 30 days’ prior written notice to SUPPLIER.  In the event
that such decrease reduces the number of SUPPLIER’s leased rail cars that
SUPPLIER can utilize for the applicable shipments, HOKU shall be liable for the
actual monthly lease expense for the unused rail cars, which SUPPLIER estimates
to be [*] per car per month (the “Railcar Lease”) through the term of this
Agreement; provided, however, that SUPPLIER shall use commercially reasonable
efforts to sublease or assign such leases, or otherwise cover its lease costs,
in which case HOKU shall only be liable for the difference between the Railcar
Lease and such amounts recovered, if any.
 
3.           Payments & Advances.
 
3.1.           SUPPLIER shall invoice HOKU, once per month, for all of the
Guaranteed Weekly Quantities of Product delivered to HOKU during that
month.  Taxes, customs and duties, if any, will be identified as separate items
on SUPPLIER invoices. All invoices shall be sent to HOKU’s notice address
provided in this Agreement.  Payment terms for all invoiced amounts shall be [*]
from the date of invoice.  All payments shall be made in U.S. Dollars via wire
transfer.  If payments are not received within [*], SUPPLIER will notify
Hoku.  Should payment not be received within [*] after notification, SUPPLIER
will have the right to suspend shipments.
 
3.2.           The prices for the Products do not include any excise, sales,
use, import, export or other similar taxes, which taxes will be separately
identified on invoices and paid by HOKU, provided that HOKU is legally or
contractually obliged to pay such taxes.  SUPPLIER and HOKU will work together
to Legally minimize the possibility of taxes, but if there are any assessed,
SUPPLIER shall promptly remit to HOKU in full any such taxes paid by HOKU which
are refunded to SUPPLIER in whole or in part.  Supplier shall be responsible for
all transportation charges, duties or charges for shipping and handling; thus,
the price for the Products set forth in Appendix 1 includes any and all such
charges.

HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Page 3 of 14
 
 

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3.3.           Notwithstanding SUPPLIER’s obligation to pay all transportation
charges associated with shipment and delivery of the Products pursuant to
Sections 2.5 and 3.2 above, SUPPLIER shall invoice HOKU for any additional costs
it incurs in shipping Products to HOKU which are directly attributable to
increases in the cost of fuel per the BHS Marketing-Nampa Fuel Surcharge
Program.  If the fuel-related costs incurred by SUPPLIER in shipping Products
decrease, then SUPPLIER shall credit HOKU in the amount of the difference
between its costs as of the Effective Date and its then-current costs.  In
addition, if the Product is shipped to HOKU by rail, SUPPLIER may also invoice
HOKU for any additional rail rate or rail fuel surcharges it incurs in shipping
Product to HOKU.
 
4.           Product Quality Guarantee.
 
4.1.           SUPPLIER warrants to HOKU that the Products shall meet the
Product Specifications. For each shipment during the first Year, this warranty
shall survive for [*] days after the applicable delivery date, and for each
shipment after the first Year, this warranty shall survive for [*] days after
the applicable delivery date (the “Warranty Period”), given that the product
integrity is protected by Hoku during the product storage and use process.  If
Hoku stores or processes the product in a manner inconsistent with recommended
industry practices (e.g. using materials of construction not recommended for the
storage and handling of Hydrochloric Acid 22 degree), SUPPLIER warranty shall be
void.  SUPPLIER warrants that the Products shall be free of all liens,
mortgages, encumbrances, security interests or other claims or rights.  SUPPLIER
will, upon prompt notification and compliance with SUPPLIER’s instructions,
refund or replace any Product which does not meet the Product Specifications,
and HOKU shall comply with the inspection and return goods policy described in
Section 5 below with respect to such Products.  No employee, agent or
representative of SUPPLIER has the authority to bind SUPPLIER to any oral
representation or warranty concerning the Products.  Any oral representation or
warranty made prior to the purchase of any Product and not set forth in writing
and signed by a duly authorized officer of SUPPLIER shall not be enforceable by
HOKU.  Any disagreement between the Parties regarding the Product Specifications
shall be resolved by a third party testing lab that is chosen from among the
labs set forth on Appendix 3 (the “Independent Labs”).  If the Parties are
unable to agree on which of the Independent Labs should conduct the testing,
then each Party shall choose one of the Independent Labs, and those two
Independent Labs shall choose a third lab to conduct the testing.  The results
of the independent lab shall be final and binding on the Parties.  All costs
associated with the independent lab testing, including, without limitation,
transportation costs, and lab fees, shall be borne by the non-prevailing Party.
 
4.2.           SUPPLIER EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER
EXPRESS, IMPLIED OR STATUTORY, INCLUDING THE WARRANTIES OF MERCHANTABILITY, AND
FITNESS FOR A PARTICULAR PURPOSE.  SUPPLIER’s sole responsibility and HOKU’s
exclusive remedy for any warranty claim arising out of the purchase of any
Product is a refund or replacement, as described above.  In no event shall
SUPPLIER’s liability for breach of warranty exceed the purchase price paid
therefor; nor shall SUPPLIER be liable for any claims, losses or damages of any
individual or entity or for lost profits or any special, indirect, incidental,
consequential, or exemplary damages, arising as a result of a breach of
warranty, even if SUPPLIER has been advised of the possibility of such
damages.  None of the limitations in this paragraph, however, will prevent
either party from exercising any remedies to which they may be entitled under
Section 2.4, 3, 5, 8.2, or 8.2.5.
 
5.           Inspection and Return Goods Policy.

HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Page 4 of 14
 
 

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5.1.           An inspection of each shipment of Product shall be made by HOKU
in accordance with sound business practice upon the delivery of the Product, and
in no case later than 30 days after delivery at the HOKU Facility. HOKU shall
inform SUPPLIER promptly, and in no case later than 30 days after delivery of
Product, in case of any obvious damages or other obvious defects to the Product
which HOKU discovers under the inspection of appearance.
 
5.2.           HOKU shall perform final inspection of the Product upon
introducing the Product into HOKU’s production process. Such inspection shall
take place during the Warranty Period, if at all.  If the Product does not meet
the Product Specifications, HOKU shall notify SUPPLIER in writing without undue
delay after the inspection and, together with the notification, submit
documentary evidence of the result of the final inspection whereupon HOKU shall
have the right to immediately return the Products to SUPPLIER at SUPPLIER’s sole
expense for replacement or a refund.  SUPPLIER reserves the right to reverse any
credit issued to HOKU if, upon return, such Product is determined by a
predetermined third party to meet the Product Specifications.
 
6.           Indemnification.
 
6.1.           SUPPLIER agrees to indemnify and hold harmless HOKU and its
officers, directors, employees and agents from and against any and all
liabilities (including tort, negligence and strict liability), obligations,
losses, damages, costs, claims, judgments, suits and all legal proceedings, and
any and all costs and expenses in connection therewith, including reasonable
attorneys’ fees, of whatever kind or nature (“Claims”) imposed on Hoku,
SUPPLIER’s production of the Product, and HOKU’s use of the Product in its
polysilicon production process, except to the extent caused by HOKU’s
negligence, use of the product in a means other than those that are accepted
industry practices, or intentional acts or omissions including, without
limitation, claims for injury or death of persons or damage to property.
 
6.2.           HOKU agrees to indemnify and hold harmless SUPPLIER and its
officers, directors, employees and agents from and against any and all Claims
arising out of HOKU’s breach of this Agreement, HOKU’s use of the Product in its
polysilicon production process, HOKU’s use of the Product in a means other than
those that are accepted by industry practices, or HOKU’s intentional acts or
omissions, including, without limitation, claims for injury or death of persons
or damage to property, except in all cases, to the extent caused by SUPPLIER’s
negligence, intentional acts or omissions.
 
7.           Term.
 
7.1.           The term of this Agreement shall begin on the Effective Date and,
unless previously terminated as hereinafter set forth, shall remain in force for
a period of eight (8) Years.  This Agreement will be automatically extended for
periods of one (1) year unless either party notifies the other within 180 days
prior to the end of the original agreement or any extension period thereof.
 
8.           Termination and Remedies.
 
8.1.           HOKU may terminate this agreement after written notice to
SUPPLIER, if, at any time within a given twelve month period, SUPPLIER has, on
three separate occasions, or on two consecutive occasions, delivered a
Guaranteed Weekly Quantity of Product to HOKU that is either more than ten (10)
days late, or that materially fails to conform to the Product
Specifications.  HOKU may also terminate this agreement if SUPPLIER fails to
deliver any Guaranteed Weekly Quantity of Product within thirty (30) days of the
Weekly Shipment Date for that delivery.

HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Page 5 of 14
 
 

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8.2.           Either  Party may, 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:
 
8.2.1.                      Upon a material breach of the other Party to this
Agreement, and failure of the other Party to cure such material breach within
thirty (30) days after written notice thereof; provided, however, that such cure
period shall not modify or extend the 10-day cure period for SUPPLIER’s delivery
obligations pursuant to Section 2.3 above, nor shall it apply to or alter HOKU’s
termination rights under Section 8.2, above; and provided, further that such
thirty (30) day cure period shall not apply to HOKU’s failure to make any
payment to SUPPLIER pursuant to this Agreement.  In the event of HOKU’s failure
to make payment on the 15-day payment terms set forth in Section 3.1 hereof,
termination by SUPPLIER shall require Hoku to cure such material breach with 5
days after written notice.  A “material breach” of this Agreement shall include
(i) the breach of any material term of this Agreement, including any of the
representations or warranties set forth in Section 10 of this Agreement; and
(ii) the repeated or continuous breach of any term of this Agreement, which
breach materially adversely affects the non-breaching Party.
 
8.2.2.                      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;  Should Buyer be involved with a
voluntary or involuntary bankruptcy or insolvency proceeding, all shipments
after such filing such be delivered with payment terms of COD.
 
8.2.3.                      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
 
8.2.4.                      In accordance with the provisions of Section 9
below.
 
8.2.5.                      In accordance with the provisions of Section 2.1
above if the Parties are unable to agree on pricing for a subsequent year.
 
8.3.           Apart from the purchase price adjustment and reimbursement
provisions discussed in Section 2.4, above, neither Party shall be liable to the
other Party for any special, consequential, or liquidated damages for breach of
this agreement, except, however, that if HOKU terminates this Agreement pursuant
to Section 8.1, then SUPPLIER shall be liable to HOKU, for the remainder of the
Term specified in Section 7 of this Agreement, or under any subsequent written
extension of this agreement, for any additional costs that HOKU incurs in
obtaining the Guaranteed Weekly Quantity of Product from any other vendor or
vendors, above what HOKU would have paid to SUPPLIER for the same amount of
Product under the Pricing and Shipping Schedule.
 
8.4.           Upon the expiration or termination of this Agreement howsoever
arising and subject always to the provisions of Section 8.5 below, the following
Sections shall survive such expiration or termination: Sections 1 (Definitions);
Section 4 (Product Quality Guarantee), Section 5 (Inspection and Return Goods
Policy); Section 7 (Term); Section 8 (Termination and Remedies); and Section 10
(General Provisions).

HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Page 6 of 14
 
 

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8.5.           Upon expiration or termination of this Agreement for any reason,
all outstanding Orders placed prior to such expiration or termination shall be
completed by SUPPLIER and for this purpose and to that extent, the provisions of
this Agreement shall continue in full force and effect. The foregoing shall not
apply for the Order(s) that is (are) terminated at the same time as the
Agreement.
 
9.            Force Majeure.
 
9.1.           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 SUPPLIER is delayed for Force Majeure for a
cumulative period of thirty (30) days or more, SUPPLIER will use commercially
reasonable efforts to transition its delivery of the Products for the duration
of the Force Majeure to an alternate source (which may be a competitor).  If the
conditions of force majeure apply for a period of more than sixty (60) days,
and, in the event that SUPPLIER is the affected Party, if SUPPLIER has not
transitioned its delivery pursuant to the previous sentence, then the
non-affected Party shall be entitled to terminate this Agreement by written
notice to the other Party.
 
10.           Representations and Warranties.
 
10.1.           SUPPLIER and HOKU each represent and warrant to the other Party
the following:
 
10.1.1.                      This Agreement constitutes the legal, valid and
binding obligation of such Party, enforceable against such Party in accordance
with its terms, except as to the effect, if any, of (i) applicable bankruptcy,
insolvency, reorganization, moratorium and similar Laws affecting creditors’
rights and remedies generally, (ii) rules of Law governing specific performance,
injunctive relief and other equitable remedies, and (iii) general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing .
 
10.1.2.                      Such Party has the absolute and unrestricted right,
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement, and such action has been duly authorized by
all necessary action by such party’s shareholders and board of directors, to the
extent such authorization is required by such party’s governing documents, or by
applicable law, code, rule or regulation.
 
10.1.3.                      Neither the execution and delivery of this
Agreement by such Party nor the consummation of the transactions contemplated
hereby, will conflict in any respect with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination or cancellation or acceleration under, any provision
of (i) the certificate of formation and  operating agreement of such Party;
(ii) any company resolution of such Party; (iii) any contract to which such
Party is a party or by which any of the properties or assets of such Party are
bound; (iv) any order applicable to such Party or by which any of the properties
or assets of such Party are bound; or (v) any law or regulation applicable to
such Party.

HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Page 7 of 14
 
 

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10.1.4.                      Such Party is not and will not be required to
obtain any consent from any third party in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
transactions contemplated hereby.
 
10.2.           SUPPLIER further represents and warrants to HOKU that SUPPLIER
has, and will continue to have during the term of this Agreement, the capacity
to manufacture or otherwise procure the Guaranteed Weekly Quantity of Product
from a secure source, and the capacity to deliver such Product to HOKU according
to the Shipping and Pricing Schedule set forth in Appendix 1.
 
11.           General Provisions.
 
11.1.           This Agreement shall be construed under and governed by the laws
of the State of Idaho, U.S.A.  In any legal proceeding between the Parties that
is brought to enforce this agreement, or arising out of this Agreement, the
prevailing party shall be entitled to its legal fees, costs, and other expenses.
 
11.2.           Upon notice from one Party to the other of a material breach of
this Agreement under Section 8.1 or Section 8.2.1 of this Agreement, the Parties
agree to hold a meeting within fifteen (15) days of receipt of such notice with
at least one (1) representative from each Party who has decision-making
authority for such company. At this meeting, the Parties will attempt to resolve
the dispute in good faith. If, after the meeting, the dispute has not been
resolved, only then may a Party resort to litigation. Any proceeding to enforce
or to resolve disputes relating to this Agreement shall be brought in Idaho,
USA. In any such proceeding, neither Party shall assert that such a court lacks
jurisdiction over it or the subject matter of the proceeding.
 
11.3.           Each Party may assign this Agreement to any of its Affiliates
that have the ability to perform the obligations of this Agreement, and HOKU may
assign its rights under this Agreement to any collateral agent as collateral
security for HOKU’s secured obligations in connection with the financing a HOKU
Facility, without the consent of SUPPLIER.  Except as stated in the previous
sentence, neither HOKU nor SUPPLIER may assign this Agreement to a third party
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld.  Notwithstanding the foregoing, an assignment of this
Agreement by either Party in connection with a merger, acquisition, or sale of
all or substantially all of the assets or capital stock of such Party shall not
require the consent of the other Party.  If this Agreement is assigned
effectively to a third party, this Agreement shall bind upon successors and
assigns of the Parties hereto.
 
11.4.           Except as provided elsewhere in this Agreement, a notice is
effective only if the Party giving or making the notice has complied with this
Section 11.4 and if the addressee has received the notice. A notice is deemed to
have been received as follows:
 
 
(a)
If a notice is delivered in person, or sent by registered or certified mail, or
nationally or internationally recognized overnight courier, upon receipt as
indicated by the date on the signed receipt;

 
 
(b)
If a notice is sent by facsimile, upon receipt by the Party giving the notice of
an acknowledgment or transmission report generated by the machine from which the
facsimile was sent indicating that the facsimile was sent in its entirety to the
addressee’s facsimile number; or

 
HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Page 8 of 14
 
 

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(c)
If a notice is sent by e-mail, upon receipt by the Party giving the notice of an
acknowledgement or transmission report indicating that the e-mail was sent in
its entirety to the addressee’s e-mail address.

 
Each Party giving a notice shall address the notice to the appropriate person at
the receiving Party at the address listed below or to a changed address as the
Party shall have specified by prior written notice:
 
HOKU:
 
HOKU MATERIALS, INC.
One Hoku Way
Pocatello, Idaho 83201 USA
Attn:  Mr. Karl Taft, CTO
E-mail:  ktaft@hokusci.com
Facsimile:  +1 (808) 440-0357

With a copy to:

HOKU SCIENTIFIC, INC.
1288 Ala Moana Blvd., Suite 220
Honolulu, Hawaii 96814
Attn:  Mr. Dustin Shindo, CEO
E-mail:  dshindo@hokusci.com
Facsimile:  +1 (808) 440-0357

 
SUPPLIER:

BHS Acquisitions, LLC
1717 E Fargo Ave
Nampa, ID  83687
Attn:  Michael T. Merlo
E-mail:  MTMerlo@aol.com
Facsimile: 208-466-8989

Copy to:

BHS Marketing LLC
2320 W Indiana Ave
Salt Lake City, UT  84104
Attn:  Bruce Schechinger
E-mail:  BHSCHECH@aol.com
Facsimile: 801-973-8838
 
11.5.           The waiver by either Party of the remedy for the other Party’s
breach of or its right under this Agreement will not constitute a waiver of the
remedy for any other similar or subsequent breach or right.
 
 
11.6.           If any provision of this Agreement is or becomes, at any time or
for any reason, unenforceable or invalid, no other provision of this Agreement
shall be affected thereby, and the remaining provisions of this Agreement shall
continue with the same force and effect as if such unenforceable or invalid
provisions had not been inserted in this Agreement.
 

HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Page 9 of 14
 
 

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11.7.           No changes, modifications or alterations to this Agreement shall
be valid unless reduced to writing and duly signed by respective authorized
representatives of the Parties.
 
11.8.           No employment, agency, trust, partnership or joint venture is
created by, or shall be founded upon, this Agreement. Each Party further
acknowledges that neither it nor any Party acting on its behalf shall have any
right, power or authority, implied or express, to obligate the other Party in
any way.
 
11.9.           Neither Party shall make any announcement or press release
regarding this Agreement or any terms thereof without the other Party’s prior
written consent; provided, however, that the Parties will work together to issue
a joint press release within two (2) days after execution of this
Agreement.  Notwithstanding the foregoing, either Party may publicly disclose
the material terms of this Agreement pursuant to the United States Securities
Act of 1933, as amended, the United States Securities Exchange Act of 1934, as
amended, or other applicable law; provided, however, that the Party being
required to disclose the material terms of this Agreement shall provide
reasonable advance notice to the other Party, and shall use commercially
reasonable efforts to obtain confidential treatment from the applicable
governing entity for all pricing and technical information set forth in this
Agreement.
 
11.10.                      This Agreement constitutes the entire agreement
between the Parties and supersedes all prior proposal(s) and discussions,
relative to the subject matter of this Agreement and neither of the Parties
shall be bound by any conditions, definitions, warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein. No oral explanation or oral information by either Party hereto
shall alter the meaning or interpretation of this Agreement.
 
11.11.                      The headings are inserted for convenience of
reference and shall not affect the interpretation and or construction of this
Agreement.
 
11.12.                      Words expressed in the singular include the plural
and vice-versa.
 
11.13.                      This Agreement may be executed in one or more
counterparts, including counterparts transmitted by telecopier, telefax or email
PDF, which taken together shall constitute one and the same legally binding
instrument.

HOKU Initials & Date ____DS      11/19/08        
 
SUPPLIER Initials & Date ___MTM   11/19/08___________________
 

Page 10 of 14
 
 

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IN WITNESS WHEREOF, the Parties have executed this Supply Agreement as of the
date first set forth above.

 

HOKU:   SUPPLIER:           HOKU MATERIALS, INC.   BHS ACQUISITIONS, LLC        
 
By:
/s/ Dustin Shindo
 
By:
/s/ Michael T. Merlo
         
Name:
Dustin Shindo
 
Name:
Michael T. Merlo
         
Title:
Chief Executive Officer
 
Title:
Vice President
Authorized Signatory   Authorized Signatory

 
Signature Page to Supply Agreement
Page  11 of 14

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Appendix 1
Shipping and Pricing Schedule

Year
 
Total Annual Quantity
of Product
 
Guaranteed Weekly
Quantity of Product
 
Weekly Delivery Date
 
DEQ Price
($/ton)
1
 
[*]
 
[*]
 
Last Business Day of each week
 
$257.20
2
 
[*]
 
[*]
 
Last Business Day of each week
 
**
3
 
[*]
 
[*]
 
Last Business Day of each week
 
**
4
 
[*]
 
[*]
 
Last Business Day of each week
 
**
5
 
[*]
 
[*]
 
Last Business Day of each week
 
**
6
 
[*]
 
[*]
 
Last Business Day of each week
 
**
7
 
[*]
 
[*]
 
Last Business Day of each week
 
**
8
 
[*]
 
[*]
 
Last Business Day of each week
 
**

 
*Except for the first four deliveries of product, for which the Guaranteed
Weekly Quantity of Product shall be [*]
 
**Pricing to be negotiated pursuant to Section 2.1 of the Agreement.

HOKU Initials & Date ____DS      11/19/08         
SUPPLIER Initials & Date ___MTM   11/19/08___________________
 

Appendix 2 to Supply Agreement
Page  12 of 14
 
 

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Appendix 2
Product Specifications

22º Bé Muriatic Acid
(HCL)

BURNER GRADE

COMPONENT
 
SPECIFICATIONS
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]
[*]
 
[*]

 
HOKU Initials & Date ____DS      11/19/08        
 
SUPPLIER Initials & Date ___MTM   11/19/08___________________
 

Appendix 2 to Supply Agreement
Page 13 of 14
 
 

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Appendix 3
 
Independent Labs
 
Analytical Laboratories, Inc.
1804 N 33RD
Boise, ID 83703
1-800-574-5773
1-208-342-5515

Anatek Laboratories
1282 Alturas Drive
Moscow, ID  83843
208-883-2839

DataChem Laboratories, Inc.
960 W. LeVoy Drive
Salt Lake City, UT 84123
801-266-7700

Edge Analytical Laboratories
1620 S Walnut Street
Burlington, WA 98233
Burlington Office
(360) 757-1400

HOKU Initials & Date ____DS      11/19/08        

SUPPLIER Initials & Date ___MTM   11/19/08___________________

Appendix 2 to Supply Agreement
Page 14 of 14
 
 

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