Exhibit 10.88
 
NOTE: Portions of this Exhibit are the subject of a Confidential Treatment
Request by the Registrant to the Securities and Exchange Commission (the
“Commission”).  Such portions have been redacted and are marked with a “[***]”
in the place of the redacted language.  The redacted information has been filed
separately with the Commission.
 
AMENDMENT NO. 2 TO

SUPPLY AGREEMENT

This Amendment No. 2 to Supply Agreement (this “Amendment”) is entered into as
of this ___ day of December, 2010 between SHANGHAI ALEX NEW ENERGY CO., LTD.
(hereinafter “ALEX”) and HOKU MATERIALS, INC., a Delaware corporation
(hereinafter “HOKU”).  HOKU and ALEX are sometimes referred to in the singular
as a “Party” or in the plural as the “Parties.”

Recitals

Whereas, HOKU, ALEX, and SHANGHAI HUAYI ENTERPRISES GROUP, as guarantor, are
parties to that certain Supply Agreement, dated as of February 27, 2009, and as
amended on December 30, 2009 (the “Supply Agreement”), pursuant to which ALEX
has agreed to purchase from HOKU, and HOKU has agreed to sell to ALEX, specified
volumes of polysilicon each year over a ten year period; and

Whereas, HOKU and ALEX desire to further amend certain provisions of the Supply
Agreement as set forth herein to, among other things, reduce the pricing of
polysilicon per kilogram for the first year and postpone the First Shipment
Date;

NOW, THEREFORE, in furtherance of the foregoing Recitals and in consideration of
the mutual covenants and obligations set forth in this Amendment, the Parties
hereby agree as follows:

 
1.
Definitions.
Unless otherwise defined herein, capitalized terms used in this Amendment shall
have the meanings set forth in the Supply Agreement.

 
2.
Amendments.
The following provisions of the Supply Agreement are amended or amended and
restated as follows.

 
2.1.
The Pricing Schedule on Appendix 1 to the Supply Agreement is hereby amended and
restated such that the price in Year [***] shall be $[***]/kg and the price in
Years [***] and [***] shall be $[***]/kg, as follows:

 
Year
1
2
3
4
5
6
7
8
9
10
Total
Volume
200
200
200
200
200
200
200
200
200
200
2,000
Price
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

 
*Pricing in Years [***] shall be determined as follows:

 
·
The Price in Year [***] shall be determined annually by the Parties three (3)
months prior to the expiration of each Year, beginning in Year [***] of the
Agreement.

 
 
·
If there is a difference greater than or equal to [***]% (+/-) between the
then-effective price pursuant to the Agreement and the average contract price
for the last twelve (12) months reported by [***] or another mutually acceptable
third party index (the “Average Index Price”), then the price for such
subsequent Year shall be renegotiated in good faith by the Parties.

 
 
·
If, following 45 days’ of good faith negotiations, the Parties are unable to
agree on the price, such subsequent Year’s price will be the same as the Average
Index Price.

 
 
1
*** CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION
 
 
 

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·
If the Average Index Price within [***]% (+/-) of the then-effective price under
the Agreement, then the price shall not be renegotiated, and the prior Year’s
price shall continue to be the effective price for such subsequent Year.

 
2.2.
Section 4.3 of the Supply Agreement is hereby amended and restated in its
entirety to read as follows:

4.3           Except in the case of a force majeure pursuant to Section 13
below, if at any time after October 1, 2011, HOKU does not supply any Products
pursuant to Section 4.1 or 4.2 within [***] days of the scheduled delivery date,
HOKU will provide ALEX with a purchase price adjustment. Such purchase price
adjustment shall be [***] percent ([***]%) of the value of the respective
delayed Products for each week or part thereof that the Product shipment (or
part thereof) is delayed beyond the [***] day grace period. In addition, the
Price Adjustment shall apply to any late shipments between July 31, 2011 and
September 30, 2011, without any grace period. Any purchase price adjustment as a
result of this Section 4.3 will be paid by HOKU at the end of the term of the
applicable calendar quarter.  In lieu of making a cash payment to ALEX pursuant
to this Section 4.3, HOKU may, at its option, pay for such purchase price
adjustment in the form of a credit issued for future shipments of Products.
Notwithstanding anything to the contrary, the maximum amount of such purchase
price reduction is limited to [***] percent ([***]%) of the value of the
respective delayed Products.  Monthly shipments which are delayed beyond [***]
days shall be deemed to constitute a material breach of this Agreement pursuant
to Section 10.2.1 below.  Notwithstanding the foregoing, if ALEX fails to make a
payment to HOKU within the 30-day period set forth in Section 6.4 below, HOKU
shall not be required to supply any Product to ALEX until HOKU has received the
past due amount including any interest payable thereon pursuant to this
Agreement.  For the avoidance of doubt, ALEX’s right to reduce the purchase
price pursuant to this Section 4.3 shall not apply if HOKU is not fulfilling its
supply obligations for this reason. Monthly shipments which are delayed more
than [***] days in a calendar year AND are less than [***] of the Minimum Annual
Quantity of Product shall be deemed to constitute a material breach of this
Agreement pursuant to Section 10.2.1.
 
 
2.3.
Section 5.2 of the Supply Agreement is hereby amended such that the reference to
September 30, 2010, is changed to March 31, 2011, and the reference to June 30,
2010, is changed to January 31, 2011.

 
 
2.4.
Section 10.2.6 of the Supply Agreement is hereby amended such that the reference
to December 31, 2010, is changed to September 30, 2011.

 
 
3.
Hoku shall use commercially reasonable efforts to make available to Alex
additional Product beyond the specified volumes of Product in the Supply
Agreement; provided, however, that Alex is not in material breach of the Supply
Agreement; and provided further that the terms and conditions for the sale of
any additional amount of Product shall be negotiated and agreed in writing
pursuant to a new agreement between the Parties.

 
4.
This Amendment, together with the Supply Agreement, constitute the entire
agreement between the Parties concerning the subject matter hereof.  Except as
specifically amended herein, the terms of the Supply Agreement shall continue in
full force and effect without modification or amendment.

 
 

2
*** CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION
 
 

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IN WITNESS WHEREOF, the Parties have executed this Amendment No. 2 to Supply
Agreement as of the date first set forth above.   Date:   January 11, 2011      
  HOKU                 ALEX   HOKU MATERIALS, INC.               SHANGHAI ALEX
NEW ENERGY CO., LTD.   By:  /s/ Scott B. Paul               By:    /s/ Zhang
LianWen   Name:  Scott B. Paul               Name: 
Zhang LianWen
    Title:    CEO           Authorized Signatory   Title: President          
Authorized Signatory   Date: January 12, 2011  

 

 
 
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