Exhibit 10.12

CONFIDENTIAL TREATMENT REQUESTED

—

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

 

 

WAFERING SUPPLY AND SALES AGREEMENT

 

THIS AGREEMENT, made and entered into in           , Philippines, this
          th day of            2007 by and between:

 

First Philec Solar Corp., a corporation duly organized and existing under the
laws of the Philippines, with offices at First Philippine Industrial Park,
hereinafter referred to as Supplier;

 

- and -

 

SUNPOWER PHILS. MFG., LTD, a foreign corporation duly licensed to do business in
the Philippines, with office address at 100 East Trade Avenue, Laguna Technopark
Inc., Biñan, Laguna, hereinafter referred to as Purchaser.

 

WITNESSETH:

 

WHEREAS, First Philippine Electric Corporation and Purchaser have entered into a
Joint Venture Agreement dated                                          (the “JV
Agreement”) to form the Supplier;

 

WHEREAS, pursuant to the JV Agreement, the purpose of Supplier, inter alia, is
to provide wafering services to Purchaser;

 

WHEREAS, the Parties desire to enter into an Agreement pursuant to which
Supplier shall provide wafering services to Purchaser;

 

NOW THEREFORE, in furtherance of the foregoing premises and in consideration of
the mutual covenants and obligations hereinafter set forth and in the JV
Agreement, and based on the consideration set forth in the JV Agreement, the
receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound hereby, do agree, as follows:

 

1.                                      DEFINITION OF TERMS

 

IN THIS AGREEMENT THE FOLLOWING EXPRESSIONS SHALL HAVE THE FOLLOWING MEANINGS:

 

1.1                             “Semi-Annual Firm Forecast” shall have the
meaning set forth in Section 3.7.

 

 

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1.2                             “Affiliate” shall mean with respect to
Purchaser, any other corporation or entity directly or indirectly (through one
or more intermediaries) controlling, controlled by, or under common control with
such Purchaser (including any subsidiary).

 

1.3                             “Contract Year” shall mean the period of twelve
(12) consecutive months beginning from January 1 and ending December 31.  For
the first year of operation, it shall mean to refer to the Start-up Date and
ending December 31 of the first year of operation.  Notwithstanding the
foregoing, if this Agreement expires or is terminated before the end of any
Contract Year, such last Contract Year shall end of the date of such expiration
or termination.

 

1.4                             “Delivery” shall have the meaning set forth in
Sections 2.1, 3.7.1, 4.1 and 5.2.

 

1.5                             “Delivery Point” shall have the meaning set
forth in Section 2.1.

 

1.6                             “Initial Schedule” shall have the meaning set
forth in Section 3.1.

 

1.7                             “Initial Term” shall have the meaning set forth
in Section 8.1.

 

1.8                             “Mark-up” shall mean an agreed percentage  to be
applied to the sum of the variable cost and fixed cost for wafering services by
the Supplier.

 

1.9                             “Minimum Yield” shall mean a percentage amount
equal to the minimum number of good wafers expected to be produced per
millimeter of good ingot used divided by the theoretical number of wafers that
can be produced per millimeter of good ingot.  The theoretical number of wafers
that can be produced is equal to the length of the ingot divided by the
wireguide roller pitch.

 

1.10                       “Non-SP Ingot” shall mean the Silicon Ingot purchased
or taken by Supplier from a source other than Purchaser.

 

1.11                       “Non-SP Silicon Wafers” shall mean Silicon wafers,
sliced, manufactured and/or produced substantially from Non-SP Ingot.

 

1.12                       “Product” shall mean silicon ingot that are already
sliced or cut into wafers that meet the specifications of Purchaser.

 

1.13                       “Renewal Term” shall have the meaning set forth in
Section 9.1.

 

 

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1.14                       “Representatives” shall have the meaning set forth in
Section 8.2.

 

1.15                       “Requirements” shall have the meaning set forth in
Section 5.1.

 

 

1.16                       “Specifications” shall mean the physical, technical
and functional requirements, as each of such requirements are set forth on Annex
“A” hereto for both the SP Ingot and SP Silicon Wafers.

 

1.17                       “SP Ingot” shall mean the Silicon Ingot consigned,
purchased or taken by Supplier pursuant to this Agreement.

 

1.18                       “SP Silicon Wafers” shall mean Silicon wafers,
sliced, manufactured and/or produced substantially from SP Ingot.

 

1.19                       “Start-up Date” shall mean the date on which
Supplier’s installed capacity is sufficient to meet the Purchaser’s first
quarter demand (as shown in the table in Section 3.1) as certified in writing by
Supplier and Purchaser in accordance with Purchaser’s specifications.

 

1.20                       “Target Price” shall have the meaning set forth in
Sections 3.1 and 3.2.

 

1.21                       “Target Utilization” shall have the meaning set forth
in Sections 2.5 and 3.13.

 

1.22                       “Yield” shall mean a percentage amount equal to the
number of actual good wafers produced per millimeter of good ingot used divided
by the theoretical number of wafers that can be produced per millimeter of good
ingot used.  The theoretical number of wafers that can be produced is equal to
the length of the ingot divided by the wireguide roller pitch.

 

 

2.0                                 Ingot Supply Arrangement

 

2.1                             Subject to the terms and conditions described
herein, commencing on the Start-up Date, Purchaser shall guarantee to supply and
deliver by consignment to Supplier SP Ingots (based on the Semi-Annual Confirmed
Silicon Ingot Delivery Schedules (“Semi-Annual Delivery Schedule”) corresponding
to the relevant Semi-Annual Firm Forecast, a copy corresponding to the
Semi-Annual Delivery Schedule for the first Semi-Annual Firm Forecast is hereto
attached as Annex “B”) and the JVC shall take delivery of the SP Ingots from
Purchaser. Delivery Point shall be at JVC warehouse.

 

 

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2.2                             The quality of the Ingots shall be in accordance
with the Ingot specifications of Purchaser, a copy of which is attached hereto
as “Annex A”, which may be amended from time to time by the parties.  Defective
ingots shall not be counted as delivered SP ingots.

 

2.3                             The Parties shall, from time to time, update and
adjust the Semi-Annual Delivery Schedule corresponding to the relevant
Semi-Annual Firm Forecast to insure the attainment of the agreed utilization of
the JV wafering capacity as shown in Table 1 of Section 3.1.

 

2.4                             SP and Non-SP ingots must be properly segregated
by the Supplier to ensure proper handling and accounting.

 

2.5                             In case Supplier is unable to meet its target
utilization by a shortfall in the delivery of actual sliced wafers against the
forecast for each quarter and such shortfall is due to the following:

 

a)                                      failure of Purchaser to supply the
requisite number of SP ingots in accordance with the applicable Delivery
Schedule; or

b)                                     due to lower actual wafering demand not
attributable to Seller or Section 3.7.1 (a) and (b).

 

Supplier shall allow Purchaser to make up for the shortfall during the next
succeeding two (2) quarters.  If Purchaser fails to do so, Purchaser shall
compensate Supplier in accordance with the following:

 

% shortfall vs forecast

 

 

for the 3 quarters

 

Compensation

 

 

 

***%

 

***

 

 

 

>***% up to ***%

 

***

 

 

 

>***%

 

***

 

For this purpose, fixed cost per unit is understood to refer to the actual fixed
cost divided by the forecast volume. The elements of fixed cost are limited to
actual depreciation of equipment, facilities expense, fixed utilities  cost and
labor allocated to Purchaser.

 

The capacity is deemed used if sold or utilized to third party customers.
Supplier shall notify Purchaser if capacity is to be sold or utilized by third

 

 

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party customers and Supplier may proceed to do so if no written contrary advice
is received from Purchaser within three (3) days from notice. Purchaser may deny
such use or utilization only if Purchaser will be making use of Supplier’s
capacity and for no other reason.

 

3.0                                 SP Silicon Wafer Supply and Purchase
Arrangement

 

3.1                             Subject to the terms and conditions described
herein, Supplier hereby agrees to supply and deliver to Purchaser, and Purchaser
hereby agrees to purchase and take, the SP Silicon Wafers sliced or manufactured
by Supplier that meet the order and Specifications of Purchaser in accordance
with the following rates and 5 year schedule (the “Initial Schedule”) see Table
I

 

Table I — Five- year Silicon Wafer Supply Schedule

 

Year

 

Quarter

 

Forecast
Wafers
(K units)

 

Minimum
Yield

 

Mark-up

 

Target
Price

 

2008

 

Q308

 

***

 

***

 

***

 

***

 

 

 

Q408

 

***

 

***

 

***

 

***

 

2009

 

Q109

 

***

 

***

 

***

 

***

 

 

 

Q209

 

***

 

***

 

***

 

***

 

 

 

Q309

 

***

 

***

 

***

 

***

 

 

 

Q409

 

***

 

***

 

***

 

***

 

2010

 

Q110

 

***

 

***

 

***

 

***

 

 

 

Q210

 

***

 

***

 

***

 

***

 

 

 

Q310

 

***

 

***

 

***

 

***

 

 

 

Q410

 

***

 

***

 

***

 

***

 

2011

 

Q111

 

***

 

***

 

***

 

***

 

 

 

Q211

 

***

 

***

 

***

 

***

 

 

 

Q311

 

***

 

***

 

***

 

***

 

 

 

Q411

 

***

 

***

 

***

 

***

 

2012

 

Q112

 

***

 

***

 

***

 

***

 

 

 

Q212

 

***

 

***

 

***

 

***

 

 

 

Q312

 

***

 

***

 

***

 

***

 

 

 

Q412

 

***

 

***

 

***

 

***

 

2013

 

Q113

 

***

 

***

 

***

 

***

 

 

 

Q213

 

***

 

***

 

***

 

***

 

 

3.2                             At the beginning of each quarter, an initial
price (“Initial Price”) shall be determined based on the cost forecast of
Supplier for the applicable quarter using the following formula:

 

 

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Price :                                        (***% x cost per unit x
applicable Mark-up)

 

Plus

 

(***% x Target Price)

 

Where:                                                       a) cost per unit is
total sum of the wafering manufacturing cost allocated to Purchaser, excluding
cost of silicon loss, compensation under Section 3.15  and that portion of the
JV’s fixed cost attributable to the event under Section 3.15, divided by the
total number of Products.  The cost of silicon loss represents the cost of
additional SP Ingot lost corresponding to the difference between the minimum
yield and actual yield in the event that the actual yield is less than the
applicable target yield provided in the table above. (For this purpose silicon
loss associated with defective incoming ingot shall not be borne by the JVC and
shall not form part of this formula).  The fixed cost attributable to the event
under Section 3.16 is equivalent to the actual fixed cost divided by the
confirmed demand multiplied by the difference between the confirmed demand and
quantity of wafers delivered for the quarter.

 

With respect to computing the Initial Price, it is understood that this is based
on an estimate of the cost per unit.

 

A sample computation is hereto attached as Annex “C.”

 

b) The Target Price shall be based on the target standard cost of $*** plus ***%
mark-up.

 

c) Prices shall be “ex-works” and shall be expressed up to three (3) decimal
places.

 

3.3                             Supplier shall be entitled to be paid the
Initial Price for every good Product delivered to the Purchaser.

 

 

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3.4                             At the end of each quarter, the Actual Price
shall be calculated using the formula in par. 3.2 based on the Supplier’s actual
cost per unit for the preceding quarter.  If the Actual Price is different from
the Initial Price, a reconciliation of the Total Billings for the quarter must
be made.  The reconciliation must show the following:

 

Total Billings using Initial Price

Less:

Total Quantities of Product Delivered for the Qtr x Actual Price

 

Any resulting difference must be covered by an adjustment billing or credit note
issued to the Purchaser. Total Billings shall mean the sum of Supplier’s total
invoices to Purchaser for the quarter.

 

 

3.5                             In the event the actual yield is less than the
applicable Minimum Yield in the above table, the Supplier shall credit or deduct
from its invoices *** (***%) percent of the actual cost of SP Ingot
corresponding to the difference between the actual yield and the Minimum yield. 
The actual cost of the SP Ingot is understood to be net of the resale value of
the Silicon materials.

 

3.6                             The above Forecast Wafers as shown in Table 1 in
Section 3.1 are the indicative Product demand by Purchaser of which the first
six months is firm and guaranteed by the Purchaser upon Supplier’s confirmation
of the available capacity for the first six months.  Supplier must confirm and
guarantee the availability of capacity to meet the first six months demand not
later than March 15, 2008.

 

3.7                             The following governs Purchaser’s forecasts and
Supplier’s shortfalls in capacity:

 

3.7.1      Subsequent to the first six months of the Schedule and every 180 days
thereafter, Purchaser may provide a revised 5 year demand forecast (“5-year
Forecast”) of which the first six months, subject to Supplier’s confirmation,
shall be firm and guaranteed (the “Semi-Annual Firm Forecast”). Supplier must
confirm and guarantee the availability of capacity to meet the first half year
demand not later than 90 days before the start of the relevant six months. 
“Firm and guaranteed” means that Purchaser will purchase and take delivery of
the total number of wafers stated in the Semi-Annual Firm Forecast.   The
Semi-Annual Firm Forecast shall, likewise be taken by the Supplier for purposes
of capacity build up plan and

 

 

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equipment purchase plan. Each Semi-Annual Firm Forecast shall not be lower than
the installed capacity of Supplier for the duration of this Agreement except in
the following cases:

 

a)                                      Market condition is such that the
worldwide silicon solar cell

demand of Purchaser and its Affiliates is substantially reduced; and

b)                                     the JVC wafering price is consistently
higher compared to the actual wafering price of at least 3 other wafering
suppliers of Purchaser for a period of 3 consecutive quarters, provided that
this become operative only after two (2) years from execution of this Agreement
on Q1, Year 2011.

 

3.8                             In case of a shortfall in Supplier’s guaranteed
capacity resulting in its inability to satisfy the volume order(s) of Purchaser,
Purchaser shall allow Supplier to make up for the shortfall during the next
succeeding two (2) quarters. If Supplier fails to do so, Supplier agrees to
compensate the Purchaser in accordance with the following:

 

% shortfall vs guaranteed capacity

 

Compensation

 

 

 

***%

 

***

 

 

 

>***% up to ***%

 

***

 

 

 

>***%

 

***

 

 

For this purpose, incremental cost is understood to refer to the Purchaser’s
actual landed cost for going to third party supplier less Supplier’s price
ex-works. A shortfall is deemed to occur when Supplier’s actual wafers delivered
is less than Purchaser’s confirmed demand and is due to causes other than a
shortage of SP ingots.  It shall be determined through a quarterly review by
Supplier and Purchaser.

 

For purposes of computing the incremental cost, Purchaser’s comparable landed
cost shall be capped at *** percent (***%) of Supplier’s price.

 

3.9                             Not later than the 15th day of each month,
Purchaser should provide a rolling forecast covering the succeeding six (6)
months to enable Supplier to plan its production schedule.

 

 

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3.10                       All confirmations required under this Section shall
be in writing.  If no such confirmation is received within the prescribed
period, the capacity or demand is deemed confirmed.

 

3.11                       Supplier shall hold for safekeeping and account all
SP Ingot tails, wings, broken wafers, reject or non-conforming wafers and all
other residual silicon materials.  Purchaser shall periodically collect them for
sale to third parties.

 

3.12                       Finished wafers shall be delivered by Supplier to
Purchaser on a daily basis.

 

3.13                       Supplier shall be the preferred supplier of wafers
for Purchaser. In  the event that Purchaser has an increased demand for wafers, 
Purchaser will give first priority to Supplier to meet such demand.  In the case
of a decreased demand for wafers, Purchaser shall give first priority to
Supplier with respect to any of its orders.  The foregoing is without prejudice
to, and does not affect, Purchaser’s other obligations in this Agreement
particularly on its firm and guaranteed orders and guaranteed target
utilization.

 

3.14                       The parties agree to make corresponding adjustments
in the pricing formula in the event of an extraordinary increase or decrease
amounting to at least ***% in the price of silicon carbide, polyethylene glycol,
or wire.

 

 

4.                                       Invoices and Payment

 

4.1                             As soon as reasonably practicable after each
Delivery under this Agreement, Supplier shall issue an invoice to Purchaser for
the Products that were the subject of the Delivery.  Each such invoice shall
contain the following information specific to the Delivery:

(i)                                     an invoice number for tracking purposes;

(ii)                                  the applicable Purchaser Order number (if
provided by Purchaser);

(iii)                               the quantity of Products shipped;

(iv)                              the date of shipping;

(v)                                 the shipping destination and

(vi)                              the applicable purchase price.

 

Invoices may be sent by any normally reliable means, including electronically,
facsimile, hand-delivery or other methods.

 

 

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4.2                             In the event that Purchaser does not dispute the
purchase price set forth in an invoice within ten (10) working days from receipt
thereof, Purchaser shall pay such purchase price within thirty (30) days after
Purchaser’s receipt of such invoice. Late payments shall earn interest
equivalent to the rate of interest currently being paid by Supplier for its
loans..

 

4.3                             In case Purchaser disputes the amount billed in
any invoice, Purchaser shall pay the undisputed portion of the invoice, and the
Parties shall engage in good faith discussions to resolve such dispute within
five (5) days from the written request of any party.  If such dispute is not
resolved within ninety (90) days after Purchaser’s receipt of the invoice,
either Party may resolve the dispute by arbitration in accordance with Section
10.7.

 

4.4                             All payments by Purchaser hereunder shall be
made in United States dollars by wire transfer of the applicable payment into
the bank account notified by Supplier to Purchaser in the invoice, or to such
other bank account notified by Supplier to Purchaser in writing.

 

 

4.5                             Each Party shall be responsible for all sales,
use, excise, value-added or other taxes, tariffs, duties or assessments levied
or imposed at any time against it by any Governmental Authority.

 

 

5.0                                 Quality; Defects; Inspection

 

5.1                             An inspection of each shipment of the Products
shall be made by Purchaser in accordance with sound business practice upon
Delivery.  The final inspection of the Products shall be performed by Purchaser
at its manufacturing facility within *** days of receipt of the same.  In the
event that any Product fails to meet the Specifications, Purchaser shall notify
Supplier in writing within *** days of such finding, and Supplier shall remedy
such damage or defect as set forth in Section 6.2.  Purchaser shall be deemed to
have accepted the Products if no such notice is received by Supplier after ***
days.

 

Purchaser and Supplier shall work towards accrediting Supplier as a
dock-to-stock vendor of Purchaser

 

5.2                             Supplier shall permit Purchaser (or an
independent quality control auditor reasonably acceptable to Supplier) to
inspect the Supplier’s facilities from time to time on at least *** Days’ notice
to Supplier for the purpose of

 

 

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determining whether the Product meets the Specifications and that Supplier is
otherwise complying with its obligations under this Agreement.

 

 

6                         Warranties; Limitation of Liability

 

SP Products

 

6.1                                 Supplier represents and warrants that all
Products supplied by Supplier under this Agreement shall be (i) free from liens
and defects in title that prevent their distribution to or by Purchaser and
(iii) free from any defects in materials and workmanship.  Supplier further
represents and warrants that the Products sold by Supplier to Purchaser as the
Products conforming to the Specifications shall meet the Specifications.

 

6.2                                 Without prejudice to any other rights
Purchaser may have under this Agreement, if Supplier’s warranty in Section 6.1
is breached, Purchaser, at Purchaser’s sole option, may by written notice (i)
demand and receive a refund/credit of the applicable purchase price (or the
portion of the purchase price applicable to the returned Products) upon the
return (at Supplier’s sole cost) of all or a portion of the Products which fail
to conform to Supplier’s warranty in Section 6.1 and/or (ii) demand and receive
replacement for the Products which fail to conform to Supplier’s warranty in
Section 6.1

 

6.3                                 In case Purchaser exercises its right to
return all or a portion of the Products pursuant to Section 6.2, Supplier shall
immediately repay the applicable purchase price (or the portion of the purchase
price applicable to the returned Products) by wire transferring such purchase
price into a bank account designated by Purchaser or credit the amount against
future deliveries, and Supplier shall bear and pay all banking charges related
to such payment.  In case Purchaser exercises its right to demand replacement
pursuant to Section 6.2, Supplier shall, as soon as practicable, deliver (or
cause to be delivered) the replacement to the location designated by Purchaser,
and Supplier shall bear and pay all fees and expenses associated with such
delivery.

 

SP Ingots

 

6.4                                 Purchaser warrants that all SP Ingots
supplied by Purchaser under this Agreement shall be (i) free from liens and
defects in title that prevent their distribution to or by Supplier and
(iii) free from any defects in materials and workmanship.  Purchaser further
represents and warrants that the Ingots

 

 

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consigned by Purchaser to Supplier as conforming to the Specifications shall
meet the Specifications.  Supplier shall establish a materials review board with
respect to exceptional ingot lots which do not meet the Specifications that will
decide on how the non-conforming ingots will be treated.

 

Breach and Damages

 

6.5                                 Notwithstanding any provision to the
contrary, neither party shall be responsible or liable for any breach of this
Agreement attributable to the other party and neither party shall be entitled to
seek or receive any remedies against the other in case the breach by a party is
attributable to the defaulting party or its subsidiaries.

 

6.6                                 Except as specifically provided in this
Agreement, in no event shall either party be liable to the other party for any
special, exemplary, punitive, indirect, incidental or consequential damages
whether arising out or contract, tort, strict liability or otherwise resulting
from or related to this Agreement (Whether or not a party knew or should have
known the possibility of any such damages).

 

 

7                         Confidentiality

 

7.1                Confidential Information.  The terms and conditions of this
Agreement and any information provided by one Party to the other Party which has
been indicated as confidential shall be deemed confidential information (the
“Confidential Information”).

 

7.2                Restrictions On Use and Disclosure.  Once any Confidential
Information is provided by a Party to the other Party, the receiving Party
shall, and shall cause its respective directors, officers, principals, members,
employees, consultants, contractors, agents and representatives (collectively,
“Representatives”) (i) not to deliver, divulge, disclose or communicate, or
permit to be delivered, divulged, disclosed or communicated, to any third party,
other than its permitted contractors under this Agreement, in any manner,
directly or indirectly, any Confidential Information of the disclosing Party,
(ii) to disclose or give access to, or permit to be disclosed or given access
to, any such Confidential Information, only to those of its Representatives that
have a need to know such Confidential Information, (iii) to ensure that such
Representatives are bound in writing to confidentiality obligations applicable
to the Confidential Information on terms no less strict than those set forth in
this Section 7, and (iv) to take all other necessary or

 

 

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                               advisable actions to preserve the confidentiality
and security of the Confidential Information of the disclosing Party.  For
avoidance of any doubt, the Parties may disclose any Confidential Information,
including this Agreement, to the credit rating agencies to the extent deemed
necessary and requested by such agencies, subject to the restrictions and
covenants stated in (iii) and (iv) of this Section 7.2.

 

7.3                Exclusions.  The restrictions contained in Section 7.2 shall
not apply to information of the disclosing Party that (i) is or becomes
generally known to the public through no fault of the receiving Party including
without limitation any acts or omissions of the receiving Party in violation of
this Agreement, (ii) is disclosed to the receiving Party without obligation of
confidentiality by a third person who has a right to make such disclosure and
the receiving Party is able to document the independent source, (iii) was in the
possession of the receiving Party at or prior to the time of receipt from the
disclosing Party, as evidenced by contemporaneous, corroborated written records,
without being subject to another confidentiality agreement or (iv) is
independently developed without reliance on Confidential Information.

 

7.4                Compelled Disclosure.  If a receiving Party or its
Representatives is requested or required to disclose any Confidential
Information of the disclosing Party otherwise than in accordance with this
Agreement by a Governmental Authority or pursuant to any applicable laws,
regulations, or judicial orders, including without limitation any disclosures in
connection with filings with the U.S. and Philippine Securities and Exchange
Commission, NASDAQ, the Philippine Stock Exchange or otherwise, such receiving
Party shall provide the disclosing Party with prompt prior written notice of
such request or requirement prior to disclosing the Confidential Information.

 

7.5                Press Releases.  Except as permitted under this Section 7,
neither Party shall issue any press release or make any public announcement
which includes or otherwise uses the name of the other Party, or relates to this
Agreement or to the performance hereunder in any public statement or document,
without the prior review and written approval of the other Party, which approval
shall not be unreasonably withheld or delayed.  Any such review shall be
completed as soon as practicable, but in any event within five (5) Business Days
of receipt of the proposed statement or document.

 

 

8                         Term, No Exclusivity and Termination

 

8.1                Term and No Exclusivity.  Subject to Section 8.3 below, this
Agreement shall commence upon the Execution Date and shall remain in full force
for five (5)

 

 

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                               years from the Start-up Date, unless earlier
terminated pursuant to Section 8.2 (the “Initial Term”).  The Initial Term, upon
expiration, shall be renewed upon mutual agreement (the “Renewal Term”), subject
to the Parties’ agreement on price and other material terms and conditions of
the Agreement.  The Parties shall commence good faith negotiations of the new
terms and conditions for the Renewal Term and shall attempt to agree on the
terms and conditions of the Renewal Term at least six (6) months prior to the
expiration of the Initial Term.

 

The parties acknowledge that subject to the provisions herein, this Agreement is
not exclusive, and Supplier is free to supply wafering services to other
customers and Purchaser is free to purchase wafering services from other
providers.

 

8.2                Termination.

 

8.2.1                        Mutual Agreement.  This Agreement may be terminated
at any time upon mutual agreement of the Parties.

 

8.2.2                        Unilateral For Certain Events.  Either Party shall
have the right to terminate this Agreement upon termination of the Joint Venture
Agreement.  In addition, Supplier shall have the right to terminate this
Agreement if Purchaser fails to pay the applicable purchase price as required
under this Agreement, and fails to cure such breach within sixty (60) days after
the delivery by Supplier to Purchaser of notice to cure such breach.

 

8.2.3                        Bankruptcy/Insolvency.  If a Party (or its
creditors or any other eligible party) files for its liquidation, bankruptcy,
reorganization, composition, dissolution or other similar proceedings or
arrangement, or if such Party is unable to pay any material debts   as they
become due, has explicitly or implicitly suspended payment of any debts as they
became due (except debts contested in good faith), or if the creditors of the
such Party have taken over its management, or if the relevant financial
institutions have suspended clearing house privileges with regard to such Party,
then the other Party shall be entitled to immediately terminate this Agreement.

 

8.2.4                        Effect of Termination.  The orders that have been
accepted, the SP Ingot which Supplier has already received (or will receive in
accordance with accepted orders) and the SP Ingots that have already been sliced
into Products by Supplier as well as the Parties’

 

 

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                                                respective obligations with
respect thereto shall survive termination of this Agreement.  The expiration or
termination of this Agreement shall not relieve the Parties of any obligations
accruing prior to such termination, and any such termination shall be without
prejudice to the rights of either Party against the other conferred on it by
this Agreement.   In addition, the provisions of Sections 4, 7, 8 and 9 shall
survive expiration or termination of this Agreement for any reason as long as
necessary to permit their full discharge.

 

8.2.5                        Effectiveness of Agreement.  The Parties hereby
acknowledge and agree that this Agreement takes effect upon execution and this
Agreement shall terminate concurrently with the termination of the JV Agreement.

 

 

9.             Miscellaneous

 

9.1              Force Majeure.  Neither Party shall be responsible for
suspension of its performance (other than any obligation to make payments) under
this Agreement if such suspension is caused by fortuitous events as defined by
Article 1174 of the New Civil Code, or by fire, flood, strikes, riots,
terrorism, acts of war, , or compliance with applicable laws, rules or
regulations of any governmental authority or by compliance with any order or
decisions of any court, board or other governmental authority or by any cause
beyond the reasonable control of such Party.

 

9.2              Entire Agreement.  Subject to the Joint Venture Agreement, this
Agreement (including the Schedules hereto) and the agreements, documents and
instruments to be executed and delivered pursuant to the JV Agreement are
intended to embody the final, complete and exclusive agreement between the
Parties with respect to the matters addressed herein; are intended to supersede
all prior agreements, understandings and representations written or oral, with
respect thereto; and may not be contradicted by evidence of any such prior or
contemporaneous agreement, understanding or representation, whether written or
oral.

 

9.3             Modifications.  This Agreement shall not be modified, amended,
canceled or altered in any way, and may not be modified by custom, usage of
trade or course of dealing, except by an instrument in writing signed by both
Parties.  All amendments or modifications of this Agreement shall be binding
upon the Parties despite any lack of consideration so long as the same shall be
in writing and executed by the Parties.

 

 

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9.4             Waiver.  The performance of any obligation required of a Party
hereunder may be waived only by a written waiver signed by the other Party, and
such waiver shall be effective only with respect to the specific obligation
described.  The waiver by either Party of a breach of any provision of this
Ingot Supply Agreement by the other Party shall not operate or be construed as a
waiver of any subsequent breach of the same provision or another provision of
this Agreement.

 

9.5              Export Controls.  Neither Party shall commit any act or cause
any person to commit any act which would violate any applicable export control
laws, rules or regulations, and each Party will take any and all actions within
its ability to assure compliance with such laws, rules or regulations.  The
Parties shall not, directly or indirectly, export, re-export or transship the
Product and/or technical data for such Product in violation of any applicable
export control laws promulgated and administrated by the government of any
country having jurisdiction over the Parties or the transactions contemplated
herein.

 

9.6              Severability.  In the event that any term, condition or
provision of this Agreement is held to be or become invalid or be a violation of
any applicable law, statute or regulation, the same shall be deemed to be
deleted from this Agreement and shall be of no force and effect and the
Agreement shall remain in full force and effect as if such term, condition or
provision had not originally been contained in this Agreement.  The validity and
enforceability of the other provisions shall not be affected thereby.  In such
case or in the event that this Agreement should have a gap, the Parties hereto
shall agree on a valid and enforceable provision completing this Agreement,
coming as close as possible to the economic intentions of the Parties.  In the
event of a partial invalidity the Parties agree that this Agreement shall remain
in force without the invalid part.  This shall also apply if parts of this
Agreement are partially invalid.

 

9.7             Governing Law and Dispute Resolution.  This Agreement, and the
rights and obligations of the Parties hereunder, shall be interpreted and
governed in accordance with the laws of the Philippines, without regard to
conflict of laws principles.    Any disputes incapable of being resolved by
mutual agreement of the Parties shall be handled in accordance with the JV
Agreement.

 

9.8            Notices.  All notices, demands, requests, consents or other
communications hereunder shall be in writing and shall be given by personal
delivery, by express courier, by registered or certified mail with return
receipt requested, or by facsimile, to the Parties at the addresses shown below,
or to such other address as may be designated by written notice given by either
Party to the other Party.  Unless conclusively proved otherwise, all notices,
demands, requests, consents or other communications hereunder shall be deemed
effective upon delivery if

 

 

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                        personally delivered, five (5) days after dispatch if
sent by express courier, fourteen (14) days after dispatch if sent by registered
or certified mail with return receipt requested, or confirmation of the receipt
of the facsimile by the recipient if sent by facsimile.

 

To Supplier:

 

 

 

 

First Philec Solar Corporation

 

 

 

 

 

 

 

 

 

 

Attention:

 

 

 

 

 

Fax:

 

 

 

 

 

 

 

 

 

Email:

 

 

 

 

 

 

 

 

With a copy to:

 

 

 

To First Philec:

 

 

 

 

First Philippine Electric Corporation

 

2nd Floor, Benpres Building

 

Exchange Road corner Meralco Avenue

 

Pasig City, Philippines

 

 

 

Attention: Managing Director — Electronics Division

 

Fax: 632-490-0116

 

 

To Purchaser:

 

 

 

 

SunPower Philippines Mfg Ltd

 

100 East Main Ave.

 

LTI, Binan, Laguna

 

Philippines

 

 

 

Attention: VP Manufacturing Operations or Finance Director

 

Fax: 632- 841-9720

 

9.9               Assignment.  This Agreement may not be assigned or otherwise
transferred by either Party, in whole or in part, whether voluntary, or by 
operation of law, except, with respect to Purchaser, in connection with a
permitted assignment and transfer under the JV Agreement.  Subject to the
foregoing, this Agreement shall

 

 

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                        be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns.

 

9.10   Third Party Benefits.  This Agreement shall be binding upon, and inure to
the benefit of, each of the Parties and their respective successors and
permitted assigns.  Nothing contained in this Agreement, express or implied,
shall be deemed to confer any right or remedy upon, or obligate any Party to,
any person or entity other than the Parties and their respective successors and
permitted assigns.

 

9.11   Remedies.  The remedies described in this Agreement are not exclusive
remedies, and upon breach of this Agreement, either Party shall be entitled
alternatively or cumulatively to any available remedy against the other Party
under the applicable law (including remedies available under this Agreement). 
Each Party shall have the right to enforce this Agreement and any of its
provisions by injunction, specific performance or other equitable relief without
prejudice to any other rights and remedies that such Party may have for a breach
of this Agreement.

 

9.12   No Partnership or Agency.  Nothing in this Agreement (as opposed to the
JV Agreement separately) shall be construed as creating a joint venture,
partnership, agency, employment relationship, franchise relationship or taxable
entity between the Parties, and neither Party shall have the right, power or
authority to create any obligation or duty, express or implied, on behalf of the
other Party, it being understood that the Parties are independent contractors
vis-à-vis one another.

 

9.13   Captions.  The section headings and captions contained herein are for
purposes of reference and convenience only and shall not in any way affect the
meaning or interpretation of this Agreement.

 

9.14   Number and Gender.  Whenever used in this Agreement, the singular terms
shall include the plural and the plural the singular, and the use of any gender
shall be applicable to all genders.

 

9.15   English Language.  The official language of this Agreement is English. 
All contract interpretations, notices and dispute resolutions shall be in
English.  Any attachments or amendments to this Agreement shall be in English. 
Translations of any of these documents shall not be construed as official or
original versions of such documents.

 

9.16   Counterparts.  This Agreement may be executed in counterparts or
duplicate originals, both of which shall be regarded as one and the same

 

 

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                        instrument, and which shall be the official and
governing version in the interpretation of this Agreement.

 

 

IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to
be executed by the duly authorized officers and/or representatives of the
parties hereto at the place and on the date first above written.

 

FIRST PHILEC SOLAR CORP.

SUNPOWER PHILS. MFG., LTD

By:

By:

 

 

 

 

 

 

/s/ DANILO C. LACHICA

 

 

/s/ GREGORY D. REICHOW

 

 

DANILO C. LACHICA

GREGORY D. REICHOW

President

Vice-President for Manufacturing Operations

 

 

 

IN THE PRESENCE OF:

 

 

 

/s/ illegible

 

 

/s/ illegible

 

 

 

 

 

 

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ANNEX A

 

 

 

***

 

 

 

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Annex B

First Semi Annual Delivery Schedule (Ingots)

 

Quarter

 

Estimated Delivery (Mtons)

 

 

 

 

 

Q308

 

***

 

Q408

 

***

 

 

 

 

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ANNEX C — SAMPLE COMPUTATION

 

 

 

 

Pricing Formula:

(***% x cost per unit x applicable Mark-up)

 

 

                Plus

 

 

(***% x Target Price)

 

 

 

 

Sample Computation:

 

 

 

Where:

Target Price = $***

 

 

 

Cost per unit = $***

 

 

 

Applicable Mark-up = ***%

 

 

 

 

 

 

Price       =

(***% x cost per unit x applicable Mark-up)

 

 

Plus

 

 

 

(***% x Target price)

 

 

 

 

 

 

                = (***% x *** x ***) + (***% x ***)

 

 

 

 

 

 

                = (***) + (***)

 

 

 

 

 

 

 

                = ***

 

 

 

 

 

 

 

Price      = $***

 

 

 

 

 

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