Exhibit 10.2
 
HOKU CORPORATION

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT
 
RECITALS
 

A.           The Board has adopted the Plan for the purpose of retaining the
services of selected Employees and consultants and other independent advisors
who provide services to the Corporation.

B.           Participant is to render valuable services to the Corporation (or a
Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation’s
issuance of shares of Common Stock to the Participant under the Plan.

C.           All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix A.

NOW, THEREFORE, it is hereby agreed as follows:

1.           Grant of Restricted Stock Units.  The Corporation hereby awards to
the Participant, as of the Award Date, Restricted Stock Units under the Plan.
Each Restricted Stock Unit which vests during the Participant’s period of
Continuous Service shall entitle the Participant to receive one share of Common
Stock on the specified issuance date. The number of shares of Common Stock
subject to the awarded Restricted Stock Units, the applicable vesting schedule
for those shares, the date on which those vested shares shall become issuable to
Participant and the remaining terms and conditions governing the award (the
“Award”) shall be as set forth in this Agreement.
 
AWARD SUMMARY
 
Participant:
 
Award Date:
     
Number of Shares Subject to Award:
   ______________ shares of Common Stock (the “Shares”)
   
Vesting Schedule:
The Shares shall vest in a series of installments over the Participant’s period
of Continuous Service as follows: [                      ] (the “Vesting
Schedule”).  However, the Shares may vest on an accelerated basis in accordance
with the provisions of Paragraph 5 of this Agreement.
   
Issuance Schedule
The Shares in which the Participant vests in accordance with the Vesting
Schedule set forth above shall be issued, subject to the Corporation’s
collection of all applicable Withholding Taxes, on the specified vesting date
determined in accordance with such Vesting Schedule or as soon thereafter as
administratively practicable, but in no event later than the last day of the
calendar year in which such vesting date occurs or (if later) the fifteenth day
of the third calendar month following such vesting date (the “Issuance Date”).
The Shares which vest pursuant to Paragraph 5 of this Agreement shall be issued
in accordance with the provisions of such Paragraph. The applicable Withholding
Taxes are to be collected pursuant to the procedures set forth in Paragraph 7 of
this Agreement.
   

 
 
 

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2.           Limited Transferability.  Prior to actual receipt of the Shares
which vest and become issuable hereunder, the Participant may not transfer any
interest in the Award or the underlying Shares. Any Shares which vest hereunder
but which otherwise remain unissued at the time of the Participant’s death may
be transferred pursuant to the provisions of the Participant’s will or the laws
of inheritance or to the Participant’s designated beneficiary or beneficiaries
of this Award. The Participant may make such a beneficiary designation at any
time by filing the appropriate form with the Plan Administrator or its designee.
 
3.           Cessation of Continuous Service.  Should the Participant cease
Continuous Service for any reason prior to vesting in the Shares subject to this
Award, then the Award will be immediately cancelled with respect to those
unvested Shares, and the Restricted Stock Units subject to this Award will also
be cancelled.  The Participant shall thereupon cease to have any right or
entitlement to receive any Shares under those cancelled units.
 
4.           Stockholder Rights and Dividend Equivalents.  The holder of this
Award shall not have any stockholder rights, including voting or dividend
rights, with respect to the Shares subject to the Award until the Participant
becomes the record holder of those Shares upon their actual issuance following
the Corporation’s collection of the applicable Withholding Taxes.
 
5.           Change of Control.
 
[Alternative 1]
 
(a)           Any Restricted Stock Units subject to this Award at the time of a
Change in Control shall vest on the closing of that Change in Control.  The
Shares subject to those vested units shall be issued on the effective date of
the Change in Control (the “Effective Date”) or as soon as administratively
practicable thereafter, but in no event more than fifteen (15) business days
after such Effective Date.  Alternatively, the Shares subject to those vested
units shall be converted into the right to receive the same consideration per
share of Common Stock payable to the other stockholders of the Corporation in
consummation of the Change in Control, and such consideration per Share shall be
distributed on the Effective Date or as soon as administratively practicable
thereafter, but in no event more than fifteen (15) business days after such
Effective Date. Such issuance or distribution shall be subject to the
Corporation’s collection of the applicable Withholding Taxes in accordance with
the procedure set forth in Paragraph 7 of this Agreement.
 
 
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(b)           This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
 
[Alternative 2]
 
(c)           Any Restricted Stock Units subject to this Award at the time of a
Change in Control may be assumed by the successor entity or otherwise continued
in full force and effect or may be replaced with a cash incentive program of the
successor entity which preserves the Fair Market Value of the unvested shares of
Common Stock subject to the Award at the time of the Change in Control and
provides for the subsequent vesting and payout of that value in accordance with
the same vesting and issuance schedule that would otherwise be in effect for
those shares in the absence of such Change in Control.  In the event of such
assumption or continuation of the Award or such replacement of the Award with a
cash incentive program, no accelerated vesting of the Restricted Stock Units
shall occur at the time of the Change in Control.
 
(d)           In the event the Award is assumed or otherwise continued in
effect, the Restricted Stock Units subject to the Award shall be adjusted
immediately after the consummation of the Change in Control so as to apply to
the number and class of securities into which the Shares subject to those units
immediately prior to the Change in Control would have been converted in
consummation of that Change in Control had those Shares actually been issued and
outstanding at that time.  To the extent the actual holders of the outstanding
Common Stock receive cash consideration for their Common Stock in consummation
of the Change in Control, the successor corporation (or parent entity) may, in
connection with the assumption or continuation of the Restricted Stock Units
subject to the Award at that time, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in the Change in Control transaction, provided the
substituted common stock is readily tradable on an established U.S. securities
exchange or market.
 
(e)           If the Restricted Stock Units subject to this Award at the time of
the Change in Control are not assumed or otherwise continued in effect or
replaced with a cash incentive program in accordance with Paragraph 5(a), then
those units shall vest immediately prior to the closing of the Change in
Control. The Shares subject to those vested units shall be converted into the
right to receive the same consideration per share of Common Stock payable to the
other stockholders of the Corporation in consummation of that Change in Control,
and such consideration shall be distributed to Participant within fifteen (15)
business days following the effective date of that Change in Control. Such
distribution shall be subject to the Corporation’s collection of the applicable
Withholding Taxes pursuant to the provisions of Paragraph 7.
 
(f)           This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
 
 
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6.           Adjustment in Shares.  Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares, spin-off transaction, extraordinary
dividend or distribution or other change affecting the outstanding Common Stock
as a class without the Corporation’s receipt of consideration, or should the
value of outstanding shares of Common Stock be substantially reduced as a result
of a spin-off transaction or an extraordinary dividend or distribution, or
should there occur any merger, consolidation or other reorganization, then
equitable adjustments shall be made by the Plan Administrator to the total
number and/or class of securities issuable pursuant to this Award in order to
reflect such change. The determination of the Plan Administrator shall be final,
binding and conclusive.  In the event of a Change in Control, the adjustments
(if any) shall be made in accordance with the provisions of Paragraph 5.
 
7.           Collection of Withholding Taxes.
 
(a)           Until such time as the Corporation provides the Participant with
notice to the contrary, the Corporation shall collect the Withholding Taxes
required to be withheld with respect to the issuance of the Shares that vest
hereunder through an automatic Share withholding procedure pursuant to which the
Corporation will withhold, at the time of such issuance, a portion of
the  Shares with a Fair Market Value (measured as of the issuance date) equal to
the amount of such Withholding Taxes (the “Share Withholding Method”); provided,
however, that the amount of any Shares so withheld shall not exceed the amount
necessary to satisfy the Corporation‘s required tax withholding obligations
using the minimum statutory withholding rates for federal and state tax
purposes, including payroll taxes, that are applicable to supplemental taxable
income. The Participant shall be notified in writing in the event such Share
Withholding Method is no longer available.
 
(b)           Should any Shares vest under the Award when the Share Withholding
Method is not available, then the Withholding Taxes shall be collected from the
Participant through either of the following alternatives:
 
the Participant’s delivery of his or her separate check payable to the
Corporation in the amount of such Withholding Taxes, or
 
the use of the proceeds from a next-day sale of the Shares issued to the
Participant, provided and only if (i) such a sale is permissible under the
Corporation’s trading policies governing the sale of Common Stock, (ii) the
Participant makes an irrevocable commitment, on or before the vesting date for
those Shares, to effect such sale of the Shares and (iii) the transaction is not
otherwise deemed to constitute a prohibited loan under Section 402 of the
Sarbanes-Oxley Act of 2002.
 
(c)           Except as otherwise provided in Paragraph 5 and Paragraph 7(a),
the settlement of all Restricted Stock Units which vest under the Award shall be
made solely in shares of Common Stock.  In no event, however, shall any
fractional shares be issued.  Accordingly, the total number of shares of Common
Stock to be issued pursuant to the Award shall, to the extent necessary, be
rounded down to the next whole share in order to avoid the issuance of a
fractional share.
 
 
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8.           Benefit Limit. In the event the vesting and issuance of the shares
of Common Stock subject to this Award would constitute a parachute payment under
Code Section 280G, the vesting and issuance of those shares of Common Stock
shall be subject to reduction to the extent necessary to assure that the number
of shares of Common Stock which vest and are issued under this Award will be
limited to the greater of (i)  the number of shares of Common Stock which can
vest and be issued without triggering a parachute payment under Code Section
280G or (ii)  the maximum number of shares of Common Stock which can vest and be
issued under this Award so as to provide the Participant with the greatest
after-tax amount of such vested and issued shares of Common Stock after taking
into account any excise tax the Participant may incur under Code Section 4999
with respect to those shares and any other benefits or payments to which the
Participant may be entitled in connection with any change in control or
ownership of the Corporation or the subsequent termination of the Participant’s
Continuous Service.
 
9.           Compliance with Laws and Regulations. The issuance of shares of
Common Stock pursuant to the Award shall be subject to compliance by the
Corporation and Participant with all applicable requirements of law relating
thereto and with all applicable regulations of the Stock Exchange on which the
Common Stock is listed for trading at the time of such issuance.
 
10.          Notices.  Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices.  Any notice required to
be given or delivered to Participant shall be in writing and addressed to
Participant at the address indicated below Participant’s signature line on this
Agreement.  All notices shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party to
be notified.
 
11.          Successors and Assigns.  Except to the extent otherwise provided in
this Agreement, the provisions of this Agreement shall inure to the benefit of,
and be binding upon, the Corporation and its successors and assigns and
Participant, Participant’s assigns, the legal representatives, heirs and
legatees of Participant’s estate and any beneficiaries of the Award designated
by Participant.
 
12.          Construction.
 
(a)           This Agreement and the Award evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the terms
of the Plan.  All decisions of the Plan Administrator with respect to any
question or issue arising under the Plan or this Agreement shall be conclusive
and binding on all persons having an interest in the Award.
 
(b)           It is the intention of the parties that the provisions of this
Agreement comply with the requirements of the short-term deferral exception of
Section 409A of the Code and Treasury Regulations Section
1.409A-1(b)(4).  Accordingly, to the extent there is any ambiguity as to whether
one or more provisions of this Agreement would otherwise contravene the
requirements or limitations of Code Section 409A applicable to such short-term
deferral exception, then those provisions shall be interpreted and applied in a
manner that does not result in a violation of the requirements or limitations of
Code Section 409A and the Treasury Regulations thereunder that apply to such
exception.
 
 
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13.          Governing Law.  The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Delaware without
resort to that State’s conflict-of-laws rules.
 
14.          Employment at Will.  Nothing in this Agreement or in the Plan shall
confer upon Participant any right to continue in Continuous Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any parent or Subsidiary employing or
retaining Participant) or of Participant, which rights are hereby expressly
reserved by each, to terminate Participant’s Continuous Service at any time for
any reason, with or without cause.
 
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first indicated above.
 

 
HOKU CORPORATION.
       
By:
   
Title:
       
PARTICIPANT
       
Signature:
   
Address:
       

 
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APPENDIX A
 
DEFINITIONS
 
The following definitions shall be in effect under the Agreement:

A.           Agreement shall mean this Restricted Stock Unit Issuance Agreement.
 
B.           Award shall mean the award of Restricted Stock Units made to the
Participant pursuant to the terms of this Agreement.
 
C.           Award Date shall mean the date the Restricted Stock Units are
awarded to Participant pursuant to the Agreement and shall be the date indicated
in Paragraph 1 of the Agreement.
 
D.           Board shall mean the Corporation’s Board of Directors.
 
E.           Change in Control shall mean a change in ownership or control of
the Corporation effected through any of the following transactions:
 
(i)           a merger or consolidation in which the Corporation is not the
surviving entity and in which one person or a group of related persons (other
than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation) acquires
ownership of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation’s outstanding securities;

(ii)           the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or dissolution of
the Corporation;

(iii)           any reverse merger in which the Corporation is the surviving
entity but in which one person or a group of related persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) acquires ownership of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation’s outstanding securities;

(iv)           the acquisition, directly or indirectly by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation’s outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation’s stockholders; or
 
 
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(v)           a change in the composition of the Board over a period of twelve
(12) consecutive months or less such that a majority of the Board members cease,
by reason of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time the Board
approved such election or nomination.

F.           Code shall mean the Internal Revenue Code of 1986, as amended.
 
G.           Common Stock shall mean shares of the Corporation’s common stock.
 
H.           Continuous Service shall have the meaning assigned to such term in
the Plan.
 
I.           Corporation shall mean Hoku Corporation, a Delaware corporation,
and any successor corporation to all or substantially all of the assets or
voting stock of Hoku Corporation which shall by appropriate action adopt the
Plan.
 
J.           Employee shall mean an individual who is in the employ of the
Corporation (or any Subsidiary), subject to the control and direction of the
employer entity as to both the work to be performed and the manner and method of
performance.
 
K.          Fair Market Value shall have the meaning assigned to such term in
the Plan.
 
L.           1934 Act shall mean the Securities Exchange Act of 1934, as amended
from time to time.
 
M.         Participant shall mean the person to whom the Award is made pursuant
to the Agreement.
 
N.          Plan shall mean the Corporation’s 2005 Equity Incentive Plan.
 
O.          Plan Administrator shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.
 
P.           Restricted Stock Unit shall mean each unit subject to this Award
which shall entitle the Participant to receive one share of Common Stock under
the Plan at a designated time following the vesting of that unit.
 
Q.           Stock Exchange shall mean the American Stock Exchange, the Nasdaq
Global or Global Select Market or the New York Stock Exchange.
 
 
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R.           Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
 
S.           Withholding Taxes shall mean the federal, state and local income
taxes and the employee portion of the federal, state and local employment taxes
required to be withheld by the Corporation in connection with the vesting and
issuance of the shares of Common Stock which vest under of the Award and any
other amounts distributable in replacement or substitution of such shares.
 
 
 
 
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