[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

Exhibit 10.48

SUPPLY AGREEMENT

(SUNTECH CONTRACT NO. PUR1-0706092)

This Agreement is made as of June 13, 2007 (the “Effective Date”) between WUXI
SUNTECH POWER CO., LTD., a People’s Republic of China company (hereinafter
“SUNTECH”) and HOKU MATERIALS, INC., a Delaware corporation (hereinafter
“HOKU”). SUNTECH and HOKU are each referred to in this Agreement as a “Party”
and collectively as the “Parties.”

RECITALS

Whereas, HOKU desires to supply polysilicon to SUNTECH beginning in July, 2009
for a continuous period of either seven or ten years from the date of the first
shipment;

Whereas, in exchange for HOKU’s agreement to allocate the supply of polysilicon
to SUNTECH, SUNTECH desires to provide HOKU with a firm order for polysilicon
upon the terms and conditions provided herein;

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, any entity that
controls, is controlled by or under common control with such Party, where
“control” of an entity means ownership of more than fifty percent (50%) of the
stock or equity of such entity entitled to vote for the election of directors
(or, if such entity is not a corporation, the corresponding managing authority).

1.2. “Agreement” shall mean this Supply Agreement and all appendices annexed to
this Agreement as the same may be amended by the Parties from time to time in
accordance with the provisions hereof.

1.3. “Business Day” shall mean a day (other than a Saturday or Sunday) on which
banks are open for general business in the United States.

1.4. “Collateral Agent” shall mean the financial institution that serves as the
collateral agent pursuant to the Collateral Agency and Intercreditor Agreement,
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the “Intercreditor Agreement”), to be made among HOKU, Hoku Materials
Holdings, Inc., the Collateral Agent, an administrative agent, and such secured
parties who shall from time to time become parties thereto.

1.5. “Facility” shall mean HOKU’s manufacturing facility in Pocatello, Idaho,
including all buildings and other improvements now or hereafter owned,
developed, constructed, or leased by HOKU

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 1 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

at such facility and used in the development, manufacture, processing, storage,
or distribution of Products, together with all machinery and equipment used or
usable in the operation of such buildings and improvements.

1.6. “First Shipment Month” shall mean the calendar month of July, 2009.

1.7. “Guaranteed Monthly Quantity of Product” shall mean [*] metric tons of
Product during the [*] through [*] Years, and [*] metric tons of Product during
the [*], if applicable.

1.8. “Hoku Competitor” shall mean any commercial producer or vendor of raw
polysilicon, polysilicon ingots or wafers, or solar cells or modules.

1.9. “Initial Financing” shall mean an aggregate of $100 million in gross
aggregate proceeds raised by HOKU from bank debt, equity offerings or any
combination thereof (for avoidance of doubt, proceeds from customers and
potential customers, whether in the form of payments, prepayments, deposits,
escrowed funds or otherwise, shall not be included), to procure the Facility and
equipment necessary to manufacture one thousand five hundred (1,500) metric tons
of Product per annum.

1.10. “Officer’s Closing Certificate” shall mean the certificate in
substantially the form of Appendix 11 attached hereto wherein an executive
officer of HOKU shall certify to the satisfaction of certain conditions
precedent as set forth therein.

1.11. “Officer’s Compliance Certificate” shall mean a certificate in
substantially the form of Appendix 12 attached hereto wherein an executive
officer of HOKU shall certify to the satisfaction of certain conditions
precedent as set forth therein.

1.12. “Primary Monthly Quantity of Product” shall mean [*] metric tons of
Product during the [*] through [*] Years, and [*] metric tons of Product during
the [*], if applicable.

1.13. “Product” shall mean raw polysilicon in chunk form conforming to the
Product Specifications to be sold by HOKU to SUNTECH pursuant to this Agreement.

1.14. “Product Specifications” shall mean the quality and other specifications
set forth on Appendix 2 to this Agreement.

1.15. “Qualified Engineering Firm” means any engineering firm listed on
Appendix 3 that (A) has more than five hundred (500) employees, and (B) is not a
HOKU Competitor.

1.16. “Reactor” shall mean a polysilicon deposition reactor.

1.17. “Secondary Monthly Quantity of Product” shall mean [*] metric tons of
Product during the [*] through [*] Years, and [*] metric tons of Product during
the [*] Years, if applicable.

1.18. “Term” shall mean the period during which this Agreement is in effect, as
more specifically set forth in Section 9 of this Agreement.

1.19. “Total Deposit” shall mean the Initial Deposit and the Main Deposit.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 2 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

1.20. “Years” shall mean consecutive twelve (12) calendar month periods
commencing on the First Shipment Month. For avoidance of doubt, the first Year
is the twelve (12) calendar month period commencing on the First Shipment Month,
the second Year is the twelve (12) calendar month period commencing on the first
anniversary of the First Shipment Month, etc.

2. Ordering; Pricing.

2.1. During each calendar month of each Year, SUNTECH agrees to purchase from
HOKU, and HOKU agrees to sell to SUNTECH, the Guaranteed Monthly Quantity of
Product at the prices set forth on Appendix 1 to this Agreement (the “Pricing
Schedule”). This Agreement constitutes a firm order from SUNTECH, and a firm
supply commitment from HOKU, for either [*] metric tons of Product or [*] metric
tons of Product (if the Agreement expires at the end of the seventh Year) that
cannot be cancelled by either Party during the term of this Agreement, except as
set forth in Section 9 below.

2.2. If, prior to the end of the [*] Year, all of the following conditions have
been satisfied: (A) HOKU has materially increased its production capacity of
Products, (B) HOKU has paid all of its Senior Secured Indebtedness (as defined
in the Intercreditor Agreement, see Section 1.3 above); and (C) HOKU and SUNTECH
have signed a contract providing for the purchase and sale of additional volume
of Products that is in addition to the volume being sold under this Agreement,
then the Pricing Schedule for the remaining term of this Agreement shall be
amended and the prices for the Products being sold pursuant to this Agreement
shall be adjusted to match the pricing for Products in such new contract.
Notwithstanding the foregoing, HOKU shall have no obligation under this
Agreement to increase its production capacity, to pay its Senior Secured
Indebtedness or to enter into a new contract with SUNTECH, and SUNTECH shall
have no obligation under this Agreement to enter into a new contract with HOKU.

3. Supply Obligations.

3.1. HOKU shall deliver, in each calendar month during each Year pursuant to
this Agreement starting on the First Shipment Month, the Guaranteed Monthly
Quantity of Product; provided however, that if HOKU fails to deliver the Primary
Monthly Quantity of Product for any given calendar month in such calendar month,
then HOKU may deliver the deficiency within [*] days after the end of such
calendar month (“Primary Delivery Grace Period”) without breaching this section
or incurring any purchase price reduction pursuant to Section 3.4 below; and
provided further, that if HOKU fails to deliver the Secondary Monthly Quantity
of Product for any given calendar month in such calendar month, then HOKU may
deliver any deficiency within [*] days after the end of such calendar month
(“Secondary Delivery Grace Period”) without breaching this section or incurring
any purchase price reduction pursuant to Section 3.4 below. For the avoidance of
doubt, all shipments for any given month shall be applied first to the Primary
Monthly Quantity of Product and then to the Secondary Monthly Quantity of
Product, and if there is more than one shipment deficiency, each shipment shall
be applied to satisfy the oldest deficiency. At any time during the term of this
Agreement, HOKU may ship to SUNTECH the Guaranteed Monthly Quantity of Product
for any calendar month in advance of such calendar month, but only with
SUNTECH’s prior written consent.

3.2. Notwithstanding Section 3.1 above, HOKU shall deliver to SUNTECH the
Guaranteed Monthly Quantity of Product no later than the last Business Day of
each month from July 2009 through June 2019 (or if the Term is reduced to seven
Years in accordance with Section 9.1, from July 2009

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 3 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

through June 2016). If HOKU is not able to deliver the Guaranteed Monthly
Quantity of Product by the last Business Day of any month because of production
capacity constraints, HOKU shall immediately notify SUNTECH of such in writing,
and HOKU shall allocate its production capacity as follows:

3.2.1. If such month is within the first [*] Years of this Agreement, then after
HOKU completes deliveries to SANYO Electric Co., Ltd. of a total of [*] metric
tons of Product for, SUNTECH shall have next priority with respect to the next
[*] metric tons of Product. After HOKU has fulfilled its obligations pursuant to
the previous sentence, HOKU shall allocate its remaining production capacity on
a pro rata basis (based on the applicable contractual long-term Product supply
commitments made by HOKU to its customers) to each of its customers, including
but not limited to SUNTECH and SANYO Electric Co., Ltd, and HOKU or a HOKU
Affiliate.

3.2.2. If such month is within the [*] Year of this Agreement, then SUNTECH
shall have first priority with respect to the first [*] metric tons of Product.
After HOKU has fulfilled its obligations pursuant to the previous sentence, and
provided that the annual production capacity of the Facility is greater than [*]
metric tons, HOKU may allocate up to the next [*] metric tons per [*] metric
tons per year of its remaining production capacity to a customer or user other
than SUNTECH. Thereafter, HOKU shall allocate its remaining production capacity
on a pro rata basis (based on the applicable contractual long-term Product
supply commitments made by HOKU to its customers) to each of its customers,
including but not limited to SUNTECH, and HOKU or a HOKU Affiliate (e.g. if the
rated capacity is [*] metric tons per year, then [*] metric tons would be
shipped collectively to third parties after the first [*] metric tons are
shipped to SUNTECH, and before any pro rata allocation).

3.2.3. In any event, notwithstanding the foregoing, HOKU may not sell or deliver
any Product on the spot market, or otherwise sell or deliver Product to any
third parties other than pursuant to long term supply contracts entered into by
HOKU with such third parties in compliance with Section 3.2.4 below, in any
given calendar month during the term of this Agreement unless and until HOKU has
fulfilled its Product shipment obligations to SUNTECH for such calendar month
and all preceding calendar months.

3.2.4. During the first [*] Years, HOKU agrees that it will not enter into any
additional supply contract with, or make any supply commitment to, any third
party (not including the long term supply contract that HOKU and SANYO entered
into prior to the Effective Date) if the aggregate of HOKU’s delivery
obligations under all of its supply contracts (including those with SUNTECH and
SANYO) and such additional supply contract/commitment during any month would
exceed the rated monthly production capacity of all Reactors as certified by the
manufacturer thereof. Subject to the foregoing, this Agreement shall not
preclude HOKU from (A) entering into supply contracts for additional capacity
from Facility expansion, including pre-sales of potential Facility expansions,
or from increased productivity of the Reactors, or (B) selling on the spot
market or entering into long-term contracts for the sale of polysilicon that
does not meet the Product Specifications at any time during the term of this
Agreement, provided that HOKU uses commercially reasonable efforts to meet the
Product Specifications with respect to such polysilicon and that HOKU does not
manufacture polysilicon for the purpose of making such spot market sales or
fulfilling such long term contracts.

3.2.5. Notwithstanding anything to the contrary, nothing in this Section 3.2 is
intended by the Parties, or shall be deemed, to waive, limit or otherwise affect
any other rights and remedies that

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 4 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

SUNTECH may have in connection with any HOKU failures to fulfill, or delays in
fulfilling, its Product supply obligations under this Agreement.

3.3. HOKU intends to manufacture the Products at the Facility; however,
notwithstanding anything to the contrary herein, HOKU may deliver to SUNTECH
Products that are manufactured by a third party, provided that the Products meet
the Product Specifications and price set forth in this Agreement. HOKU shall
manufacture the Products only in the Facility, or in other adequate, qualified
manufacturing facilities that have access to all necessary labor and equipment.
In the event that more than [*] of the polysilicon shipped to SUNTECH during any
calendar quarter fails to meet the Product Specifications (which may be
determined through testing of batches/samples), such facilities shall be subject
to inspection and/or re-qualification audits by SUNTECH and/or its
representatives from time to time and upon reasonable prior written notice to
HOKU, and the polysilicon produced at such facilities shall be subject to third
party quality testing at a mutually agreeable location (such agreement not to be
unreasonably withheld or delayed) and at HOKU’s sole expense. HOKU shall bear
such expense until less than [*] of HOKU’s polysilicon shipments in a quarter do
not meet Product Specifications. HOKU shall have the right to pre-approve any
third party inspector selected by SUNTECH that is not a Qualified Engineering
Firm (such approval not to be unreasonably withheld or delayed), which must not
be a HOKU Competitor, and such inspector shall be obligated to sign a
commercially reasonable non-disclosure agreement with HOKU. HOKU shall
continuously make available the necessary capacity at such manufacturing
facilities to meet Guaranteed Monthly Quantity of Products and shall provide all
labor, materials and other items necessary to perform its obligations hereunder.
For the sake of clarity, the foregoing sentence is not a guaranty of shipment;
all Product delivery guaranties are specifically set forth in Sections 2.1, 3.1
and 3.2 above and Sections 3.4 and 4 below.

3.4. If HOKU does not complete shipment of the Primary Monthly Quantity of
Products or the Secondary Monthly Quantity of Products for any month on or
before the end of the applicable Primary Delivery Grace Period or Secondary
Delivery Grace Period, the purchase price for the delayed Products shall be
reduced by [*] of the original purchase price for each week or part thereof that
the Product shipment is delayed beyond the applicable Primary Delivery Grace
Period or Secondary Delivery Grace Period. Notwithstanding anything to the
contrary, the maximum amount of the cumulative purchase price reduction shall
not exceed [*] of the original price of the respective delayed Products.

4. Shipping & Delivery.

4.1. The first shipment of the Guaranteed Monthly Quantity of Product is due on
or before July 31, 2009; provided, however, that HOKU shall provide at least
thirty (30) days’ prior written notice if the first shipment will occur prior to
July 31, 2009.

4.2. Shipments shall be made from the Facility (or from a third party facility
if applicable pursuant to Section 3.3 above) on a monthly basis. On or around
the first day of each calendar month, an estimated Product shipment schedule
will be provided by HOKU to SUNTECH covering such month and the following eleven
(11) months thereafter (the “Shipment Schedule”). All Product shipments shall
include a quality control certificate from HOKU certifying that the Products
have been tested pursuant to HOKU’s quality control testing procedures to ensure
that the Products being shipped meet the Product Specifications.

5. Payments & Advances.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 5 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

5.1. Within five (5) Business Days after the later of (A) execution of this
Agreement and (B) HOKU’s delivery to SUNTECH of the Officer’s Closing
Certificate, SUNTECH shall provide HOKU an initial deposit of Two Million U.S.
Dollars (US$2,000,000.00) (the “Initial Deposit”) as advance payment for
Products to be delivered under this Agreement.

5.2. Subject to HOKU’s completion of the Initial Financing, SUNTECH shall pay in
cash to HOKU the additional sum of Forty-Five Million U.S. Dollars
(US$45,000,000.00) (the “Main Deposit”) as an advance payment for Products to be
delivered under this Agreement in accordance with the milestone schedule set
forth below.

5.2.1. [*] of the Main Deposit (the “[*] Installment”) shall be paid to HOKU
within fifteen (15) Business Days after HOKU’s successful completion of one
“[*]” (as defined in the next sentence) and HOKU’s delivery to SUNTECH of an
Officer’s Compliance Certificate dated as of the date of such completion. For
purposes of this Agreement, a “[*]” means [*]. SUNTECH understands that the [*]
is not meant to produce solar purity polysilicon. SUNTECH shall, at its expense,
attend the [*]. SUNTECH may, at its option and expense, invite a third party
technical advisor to attend the [*] with or in lieu of SUNTECH. HOKU shall
provide written notice to SUNTECH no less than ten (10) Business Days prior to
the [*]. Any third party technical advisor that SUNTECH requests to view the [*]
must not be a Hoku Competitor, and must sign a reasonable confidentiality
agreement prior to participating in the [*]. Upon completion of the [*], HOKU
and SUNTECH shall sign the [*] Certificate attached hereto as Appendix 5 (the
“[*] Certificate”) to indicate whether or not the [*] was successfully
completed.

5.2.2. [*] of the Main Deposit (the “[*] Installment”) shall be paid to HOKU
within fifteen (15) Business Days after HOKU’s successful completion of the
“[*]” (as defined below) and HOKU’s delivery to SUNTECH of an Officer’s
Compliance Certificate dated as of the date of such completion. For purposes of
this Agreement, a “[*]” means [*]. SUNTECH shall, at its expense, attend the
[*]. SUNTECH may, at its option and expense, invite a third party technical
advisor to attend the [*] with or in lieu of SUNTECH. HOKU shall provide written
notice to SUNTECH no less than ten (10) Business Days prior to the [*]. Any
third party technical advisor that SUNTECH requests to view the [*] must not be
a HOKU Competitor, and must sign a reasonable confidentiality agreement prior to
participating in the [*]. Upon completion of the [*], HOKU and SUNTECH shall
sign the [*] Certificate attached hereto as Appendix 6 (the “[*] Certificate”)
to indicate whether or not the [*] was successfully completed.

5.2.3. [*] of the Main Deposit (the “[*] Installment”) shall be paid to HOKU
within fifteen (15) Business Days after the later of the date when [*]. Upon
completion of the [*], HOKU and SUNTECH shall sign the [*] Certificate attached
hereto as Appendix 7 (the “[*] Certificate”) to indicate whether or not the [*]
was successfully completed.

5.2.4. In the event that the Parties cannot resolve a dispute as to whether a
milestone has been achieved under Sections 5.2.1, 5.2.2, or 5.2.3, and the
Parties cannot resolve the dispute in accordance with the first two
(2) sentences of Section 13.2, then the Parties agree to appoint an independent
engineer (the “Independent Engineer”) to make the final determination regarding
the success or failure of the [*], as applicable. The Independent Engineer shall
be selected by and reasonably acceptable to the Collateral Agent, the Senior
Secured Parties (as that term is defined in the Intercreditor Agreement), HOKU
and SUNTECH; provided, however, that if the Collateral Agent, the Senior Secured
Parties, HOKU and SUNTECH cannot agree on the Independent Engineer within ten
(10) days, the

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 6 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

Independent Engineer shall be selected solely by the Collateral Agent and the
Senior Secured Parties among all Qualified Engineering Firms. The conclusion of
the Independent Engineer shall be final for, binding upon and non-appealable by
HOKU and SUNTECH with respect to the success or failure of the applicable
milestone. The fees and expenses of such Independent Engineer shall be shared by
HOKU and SUNTECH if the Independent Engineer was hired to resolve a reasonable
disagreement between HOKU and SUNTECH regarding the success or failure of the
applicable milestone; such fees and expenses shall be paid solely by SUNTECH if
the Independent Engineer was hired because SUNTECH or its third party designee
either did not attend the applicable demonstration (after notice having been
provided pursuant to Section 5.2.1 or 5.2.2, as applicable), or did not confirm
to HOKU in writing either the success or failure of the applicable milestone;
and such fees and expenses shall be paid solely by HOKU if the Independent
Engineer was hired because HOKU did not confirm to SUNTECH in writing either the
success or failure of the applicable milestone, HOKU did not perform the
applicable demonstration in accordance with the terms of Section 5.2.1 or 5.2.2,
as applicable, or HOKU did not provide sufficient advance notice of the
applicable demonstration as specified in Section 5.2.1 or 5.2.2, as applicable.

5.2.5. HOKU shall use commercially reasonable efforts to complete each of the
milestones by its respective Target Date listed in the table below. HOKU may
attempt to achieve each milestone any number of times, provided that the
procedures set forth in Section 5.2.1, 5.2.2, or 5.2.3, as applicable, are
followed; and, provided, further that if any milestone is not completed by the
respective Final Date listed in the table below, SUNTECH shall have the right to
terminate the Agreement in accordance with Section 9.3.2. Notwithstanding
anything to the contrary in this Agreement, HOKU may achieve the [*] in any
order; for example, HOKU may complete the [*], and SUNTECH shall pay to HOKU the
[*] Installment, as applicable, prior to HOKU successfully completing the [*].

 

Milestone

  

Target Date

  

Final Date

[*]

   [*]    [*]

[*]

   [*]    [*]

[*]

   [*]    [*]

5.3. Stand-by Letter of Credit.

5.3.1. Within five (5) Business Days after the Effective Date SUNTECH shall open
a confirmed irrevocable stand-by letter of credit in substantially the form of
Appendix 4 attached hereto, and shall be subject to the prior approval and
possible amendment in language by the issuing banks and the Collateral Agent to
ensure consistency and compliance with the terms of this Agreement and
commercially reasonable market terms for a letter of credit (the “Stand-by
Letter of Credit”) in favor of HOKU in an amount equal to the Main Deposit
against SUNTECH’s failure to pay the Main Deposit (as defined above). The
Stand-by Letter of Credit shall be reduced dollar-for-dollar by the amount of
each installment of the Main Deposit upon SUNTECH’s payment thereof in
accordance with Section 5.2. The Stand-by Letter of Credit shall be valid for
twelve (12) months, and, unless this Agreement is otherwise terminated in
accordance with Section 9, shall be automatically renewable for additional
twelve (12) month periods without the requirement of consent from SUNTECH until
the Main Deposit is paid to HOKU in full.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 7 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

5.3.2. Payment against the Stand-by Letter of Credit in favor of HOKU shall be
available to HOKU upon presentation to the issuing bank (with a copy to the
Collateral Agent) of: (i) a notarized letter from either HOKU’s Chief Executive
Officer or the Collateral Agent certifying that the [*] (whichever is applicable
to such installment) has been successfully completed, (ii) either (A) a
notarized letter from an officer of SUNTECH confirming successful completion of
the [*] (whichever is applicable to such installment), or (B) a copy of the
final decision of the Independent Engineer confirming successful completion of
the [*] (whichever is applicable to such installment), pursuant to Section 5.2.4
above, and (iii) a notarized letter from a duly authorized officer of HOKU
certifying that SUNTECH has breached its payment obligations and failed to pay
an undisputed portion of the applicable installment of the Main Deposit pursuant
to Section 5.2 above more than fifteen (15) Business Days after being notified
by HOKU of such failure.

5.3.3. The Stand-by Letter of Credit must be drawn on a branch of Bank of China
that is located in the United States, or another bank located in the United
States, which may include a branch office of another foreign bank that is
located in the United States, which bank has a minimum long term credit rating
by Standards and Poor’s or Moody’s, whichever is lower, of A+ with stable
outlook (Standard & Poor’s) or A1 (Moody’s). The Stand-by Letter of Credit shall
comply with the Uniform Rules and Customs for Documentary Letters of Credit
(Publication of the International Chamber of Commerce #500, 1993 revision) or as
most recently published by the International Chamber of Commerce.

5.4. HOKU shall invoice SUNTECH at or after the time of each shipment of
Products to SUNTECH. Taxes, customs and duties, if any, will be identified as
separate items on HOKU invoices. All invoices shall be sent to the attention of
SUNTECH’s Financial Controller at SUNTECH’s address set forth in Section 13.4 or
to such other address as SUNTECH may specify to HOKU in writing. Payment terms
for all invoiced amounts shall be [*] days from date of invoice receipt. All
payments shall be made in U.S. Dollars. [*]

5.5. At least fifteen (15) days prior to each quarter in the sixth and seventh
Years of this Agreement, SUNTECH shall provide an advance cash payment to HOKU
(each such payment, a “Supplemental Deposit”) that is equal to (a) [*] of the
net purchase price of all Products scheduled to be shipped during such quarter
at the then-applicable price, less (b) the amount of the Supplemental Deposits
paid by SUNTECH for previous quarters (if any) that were not applied against
invoices for shipments of Products. Each Supplemental Deposit shall be applied
on a pro rata basis as a credit against each shipment made during the applicable
quarter. To clarify, each Supplemental Deposit shall be applied on a
straight-line basis against each invoice for shipments of Products made in the
applicable quarter by a fraction where (x) the numerator is equal to the total
amount (in metric tons) of the applicable shipment plus the total amount (in
metric tons) of any outstanding shipments that were due in such quarter prior to
the shipment date of the applicable shipment; and (y) the denominator is equal
to [*] metric tons, such that the net amount due on the applicable invoice shall
be reduced by the product of the Supplemental Deposit multiplied by such
fraction. [*]

5.6. The prices for the Products do not include any excise, sales, use, import,
export or other similar taxes, which taxes (which, for clarity do not include
income taxes or similar taxes) will be invoiced to and paid by SUNTECH, provided
that SUNTECH is legally or contractually obliged to pay such taxes. HOKU and
SUNTECH will work together to eliminate the possibility of taxes, but if there
are any assessed, HOKU shall promptly remit to SUNTECH in full any such taxes
paid by SUNTECH which are refunded or credited to HOKU, or offset, claimed or
otherwise used by HOKU, in whole or in part.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 8 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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5.7. SUNTECH shall be responsible for all transportation charges, duties or
charges for shipping and handling incurred after HOKU’s delivery of the
Products; thus, the price for the Products shall not include any such charges.
HOKU shall provide reasonable assistance in managing shipping logistics and
timing of pick-up with the freight forwarder to arrange for shipping ex works
from the Facility. Notwithstanding the foregoing, if no freight train rail spur
is available to connect the Facility to a main rail line used for freight
shipments, HOKU shall deliver the Products FOB the nearest available maritime
port (Incoterms 2000). Title and risk of loss shall pass to SUNTECH FOB origin.

5.8. Late payments and outstanding balances shall accrue interest at the lesser
of 18% per annum or the maximum allowed by law.

6. Security Interest.

6.1. Subject to receipt of the Initial Deposit or payment of any portion of the
Main Deposit, pursuant a separate security agreement and related collateral
documents, HOKU hereby grants to SUNTECH a security interest in all of the
tangible and intangible assets, properties and undertaking of HOKU, wherever
located, including without limitation such assets and properties related to
HOKU’s polysilicon business (the “Collateral”) for the purpose of securing the
repayment obligations of HOKU to SUNTECH of the Total Deposit (and any portion
thereof) set forth in this Agreement.

6.2. SUNTECH acknowledges and agrees that the security interests and liens in
the Collateral will be expressly subordinated to the Senior Liens (as defined in
the Intercreditor Agreement). SUNTECH shall enter into subordination agreements
with the Collateral Agent for the Senior Secured Parties (as defined in the
Intercreditor Agreement) on terms and conditions reasonably acceptable to
SUNTECH and such Senior Secured Parties.

6.3. In addition, SUNTECH shall enter into collateral, intercreditor and other
agreements (including, but not limited to, the Intercreditor Agreement,
hereinafter referred to as the “Collateral Agreements”) with the Collateral
Agent (as defined in the Intercreditor Agreement), [*] and HOKU’s other
customers who provide prepayments for Products (collectively, “HOKU’s Other
Customers”), and the other Secured Parties, in each case in form and substance
acceptable to SUNTECH and as may be reasonably necessary to ensure that the
security interest granted hereby is subordinate to the Senior Liens (as defined
in the Intercreditor Agreement) and pari passu with the security interests that
may be granted to HOKU’s Other Customers. Without limiting the foregoing, on or
prior to the date of financial closing on HOKU’s senior credit agreement
providing for the financing of the development and operation of the Facility,
(a) HOKU and SUNTECH shall (and hereby agree to) enter into an Intercreditor
Agreement substantially identical to the form of Intercreditor Agreement
attached as Appendix 8 hereto, and (b) SUNTECH shall (and hereby agrees to)
enter into a consent and agreement for the benefit of the Collateral Agent and
Secured Parties (as defined in the Intercreditor Agreement) substantially
identical to the form of consent and agreement attached as Appendix 9 hereto
(the “Consent”), and (c) SUNTECH shall (and hereby agrees, and instructs its
counsel, to) provide an opinion of legal counsel substantially in the form and
scope of the form of legal opinion attached hereto as Appendix 10 (the “Legal
Opinion”); provided, however, that each of the Intercreditor Agreement, Consent
and Legal Opinion are subject to commercially reasonable changes that are
(i) consistent with market practice for financings of a similar size and
structure and (ii) approved in writing by SUNTECH. Such approval shall not be
unreasonably withheld.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 9 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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6.4. The security interest granted hereby shall continue so long as HOKU
continues to maintain any amount of the Total Deposit, and only to the extent of
such remaining amount of the Total Deposit which has not been credited against
the shipment of Products pursuant to this Agreement.

7. Product Quality Guarantee.

7.1. HOKU warrants to SUNTECH that the polysilicon supplied by HOKU to SUNTECH
shall meet the Product Specifications. For each shipment that is shipped in a
timely manner, this warranty shall survive for [*] days after the applicable
shipment date, and for each shipment that is not shipped in a timely manner
(including, without limitation, each shipment that is shipped during a Primary
Delivery Grace Period or Secondary Delivery Grace Period, as applicable), this
warranty shall survive for [*] days after the applicable shipment date (in each
case, the “Warranty Period”). Upon delivery of the Products to SUNTECH as set
forth in Section 5.7, HOKU warrants that the Products shall be free of all
liens, mortgages, encumbrances, security interests and other claims and rights.
HOKU will, upon prompt notification and compliance with HOKU’s instructions,
promptly refund or replace, at SUNTECH’s sole option and at HOKU’s cost, any
polysilicon which does not meet the Product Specifications, and SUNTECH shall
comply with the inspection and return goods policy described in Section 8 below
with respect to such polysilicon. No employee, agent or representative of HOKU
has the authority to bind HOKU 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 HOKU shall not be enforceable by SUNTECH. HOKU makes no warranty and shall
have no obligation with respect to damage caused by or resulting from accident,
misuse, neglect or unauthorized alterations to the Products not committed by
HOKU, its Affiliates or any of its or their representatives.

7.2. HOKU EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR
STATUTORY, INCLUDING THE WARRANTIES OF MERCHANTABILITY, AND FITNESS FOR A
PARTICULAR PURPOSE. HOKU’s sole responsibility and SUNTECH’s exclusive remedy
for any claim arising out of a breach of the warranty set forth in the first
sentence of Section 7.1 is a refund or replacement, as described in Section 7.1
above. With respect to any such breach, HOKU shall not 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, howsoever
arising, even if HOKU has been advised of the possibility of such damages.

7.3. HOKU shall, at its own expense, indemnify and hold SUNTECH, SUNTECH’s
Affiliates and SUNTECH’s customers harmless from and against any expense or loss
resulting from any actual or alleged infringement of any patent, trademark,
trade secret, copyright, mask work or other intellectual property related to the
Products, and shall defend at its own expense, including attorneys fees, any
suit brought against SUNTECH, SUNTECH’s customers or SUNTECH’s Affiliates
alleging any such infringement. SUNTECH agrees that: (i) SUNTECH shall give HOKU
prompt notice in writing of any such suit; (ii) if HOKU provides evidence
reasonably satisfactory to SUNTECH of HOKU’s financial ability to defend the
matter vigorously and pay any reasonably foreseeable damages, SUNTECH shall
permit HOKU, through counsel of HOKU’s choice, to answer the charge of
infringement and defend such suit (but SUNTECH, SUNTECH’s customer or SUNTECH’s
Affiliate may be represented by counsel and

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 10 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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participate in the defense at its own expense); and (iii) SUNTECH shall give
HOKU all needed information, assistance, and authority, at HOKU’s expense, to
enable HOKU to defend such suit. In case of a final award of damages in any such
suit HOKU shall pay such award, but shall not be responsible for any settlement
made without its prior consent. Except as otherwise expressly set forth herein,
each Party disclaims any obligation to defend or indemnify the other Party, its
officers, agents, or employees, from any losses, damages, liabilities, costs or
expenses which may arise out of the acts of omissions of the disclaiming Party.

8. Inspection and Return Goods Policy.

8.1. If a visual inspection of appearance by SUNTECH of any shipment of Product
upon the delivery of the Product to SUNTECH reveals any obvious and significant
damage to the Product or packaging, then SUNTECH shall inform HOKU promptly, and
in no case later than [*] after discovery of such damage. For the avoidance of
doubt, this Section 8.1 shall not limit SUNTECH’s rights or obligations with
respect to such shipment, including, without limitation, SUNTECH’s right to make
a claim during the Warranty Period in accordance with Section 8.2 below.

8.2. Each claim for breach of Warranty must be submitted during the applicable
Warranty Period, and the Products that are the subject of such claim may be
returned to HOKU promptly after HOKU’s written request for the return of such
Products, which may be submitted after HOKU completes its inspection of such
Products and confirms the defect pursuant to Section 8.3 below. HOKU may specify
the mode of transportation for such returned Products and shall bear all third
party shipping costs and expenses incurred for all defective Products that are
returned in accordance with Section 8 of this Agreement. To assure prompt
handling, HOKU shall provide SUNTECH a return goods authorization number within
48 hours of SUNTECH’s request. Provided that HOKU communicates this number to
SUNTECH within such timeframe, SUNTECH will reference this number on return
shipping documents. Returns made without the authorization number provided by
HOKU in accordance with the foregoing may be subject to HOKU’s reasonable
charges equal to HOKU’s actual additional handling costs. HOKU reserves the
right to reverse any credit issued to SUNTECH if, upon return, such Product is
determined by a predetermined third party mutually selected by both Parties not
to be defective.

8.3. HOKU shall have the right to undertake its own inspection prior to any
return of the Products pursuant to Section 8.2 above.

9. Term and Termination.

9.1. The term of this Agreement shall begin on the Effective Date, and unless
previously terminated as hereinafter set forth, shall remain in force until the
end of the tenth Year; provided, however, that either Party may unilaterally,
and without the consent of the other Party, reduce the term of this Agreement so
that it will expire at the end of the seventh Year by providing written notice
of termination to the other Party at any time prior to the end of the fourth
Year.

9.2. Each Party may, at its discretion, 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:

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 11 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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9.2.1. Upon a material breach of the other Party of any material provision in
this Agreement, and failure of the other Party to cure such material breach
within sixty (60) days after receiving written notice thereof. Notwithstanding
the foregoing, HOKU shall have the right to terminate this Agreement if:

(a) SUNTECH fails to pay the Initial Deposit within ten (10) Business Days after
the Effective Date, without any cure period;

(b) SUNTECH fails to provide the Stand-by Letter of Credit within ten
(10) Business Days after the Effective Date, without any cure period; or

(c) SUNTECH fails to make payment on the [*] payment terms set forth in
Section 5.4 hereof or fails to make any prepayment pursuant to Section 5.5
hereof when due, and SUNTECH fails to make such payment or prepayment within
thirty (30) days after receiving written notice of default containing the threat
of immediate termination if payment or prepayment is not made within such thirty
(30) day period.

9.2.2. 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;

9.2.3. 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

9.2.4. In accordance with the provisions of Section 12 below.

9.3. Without limiting SUNTECH’s right to terminate this Agreement pursuant to
Section 9.1 and 9.2, SUNTECH shall have the right to terminate this Agreement in
the event of the following:

9.3.1. If the shipment for the First Shipment Month is not made by HOKU on or
before December 31, 2009.

9.3.2. If HOKU fails to complete a milestone by the Final Date therefor set
forth in Section 5.2.5.

9.4. Without limiting either Party’s right to terminate this Agreement pursuant
to Section 9.1 and 9.2, HOKU and SUNTECH shall each have the right to terminate
this Agreement in the event that HOKU has, on or before March 31, 2008, failed
to complete the Initial Financing.

9.5. Upon the expiration or termination of this Agreement howsoever arising and
subject always to the provisions of Section 9.6 below, the following Sections
shall survive such expiration or termination: Sections 1 (Definitions);
Section 7 (Product Quality Guarantee), Section 8 (Inspection and Return Goods
Policy); Sections 9.6 and 9.7 (Term and Termination); Section 10 (Liability);
and Section 13 (General Provisions).

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 12 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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9.6. Upon expiration or termination of this Agreement for any reason, all
Product shipments that were due prior to such expiration or termination shall be
completed by HOKU and for this purpose and to that extent, the provisions of
this Agreement shall continue in full force and effect.

9.7. If this Agreement expires at the end of the Term or if SUNTECH terminates
this Agreement pursuant to any provision of this Agreement, then any funds
remaining on the Total Deposit or any Supplemental Deposits on such date of
termination shall be returned promptly to SUNTECH. “Funds remaining” on the
Total Deposit or any Supplemental Deposits are funds not applied (pursuant to
Section 5.4 or 5.5. above, as applicable) against SUNTECH’s purchase of Product
actually delivered to SUNTECH hereunder.

10. Liability.

10.1. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES OR FOR EXEMPLARY OR PUNITIVE DAMAGES, OR ANY DAMAGES
FOR LOST PROFITS OR LOST REVENUES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.

10.2. EXCEPT FOR HOKU’S OBLIGATIONS UNDER SECTION 7.3 AND HOKU’S OBLIGATION TO
REPAY THE TOTAL DEPOSIT AND SUPPLEMENTAL DEPOSITS PURSUANT TO SECTION 9.7 ABOVE,
NEITHER PARTY’S TOTAL LIABILITY TO THE OTHER FOR ANY KIND OF LOSS, DAMAGE OR
LIABILITY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, UNDER ANY THEORY
OF LIABILITY, SHALL EXCEED IN THE AGGREGATE ALL REMAINING AMOUNTS PAYABLE
(INCLUDING SUMS OWED BUT NOT PAID) PURSUANT TO THIS AGREEMENT AT THE TIME THE
CLAIM IS MADE.

11. HOKU Representations & Warranties. HOKU makes the following representations
and warranties to SUNTECH:

11.1. HOKU is duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has the lawful power to own its properties
and to engage in the business it conducts.

11.2. The execution and performance of this Agreement will not immediately, or
with the passage of time or the giving of notice, or both, (a) violate any law
or result in a default under any contract, agreement, or instrument to which
HOKU is a party or by which HOKU or its property is bound, or (b) result in the
creation or imposition of any security interest in, or lien or encumbrance on,
any of the assets of HOKU, except for the security interest granted or to be
granted to SUNTECH pursuant to this Agreement.

11.3. HOKU has the power and authority to incur and perform its obligations
under this Agreement, and HOKU has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and its incurring of such
obligations.

11.4. Except to the extent that the failure to comply would not materially
interfere with the conduct of the business of HOKU, HOKU has complied and will
comply with all applicable laws, and has obtained and will obtain all necessary
permits, licenses and other governmental authorizations, in

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 13 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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respect of: (a) restrictions, specifications, or other requirements pertaining
to products that HOKU sells or to the services it performs; (b) the conduct of
its business; and (c) the construction, use, maintenance, and operation of the
Facility and HOKU’s other properties (except to the extent that such permits,
licenses or other governmental authorizations are not yet necessary to be
obtained by or on behalf of HOKU at such time in light of the stage of
development, construction or operation of the Facility to enable HOKU to
construct, test, operate, maintain, repair, own its interest in, or use the
Facility) as contemplated by this Agreement, sell polysilicon from the Facility,
or consummate and/or perform any obligation contemplated hereby, including all
environmental, regulatory and other permits and approvals.

11.5. HOKU has not entered into any binding supply contracts for polysilicon
other than its contract with SANYO Electric Co., Ltd. HOKU has not committed to
supply to SANYO Electric Co., Ltd. more than [*] metric tons of polysilicon in
any given year during the Term. Notwithstanding anything to the contrary in this
Agreement, HOKU may sell on the spot market or enter into long-term contracts
for the sale of polysilicon that does not meet the Product Specifications at any
time during the term of this Agreement, provided that HOKU uses commercially
reasonable efforts to meet the Product Specifications with respect to such
polysilicon and that HOKU does not manufacture polysilicon for the purpose of
making such spot market sales or fulfilling such long term contracts.

12. Force Majeure. Neither Party shall be liable for damages 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,
terrorism, 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 HOKU is delayed
for Force Majeure for a cumulative period of thirty (30) days or more, HOKU will
use commercially reasonable efforts to transition its production of the Products
for the duration of the Force Majeure to an alternate source (which may be a
HOKU Competitor). If the conditions of Force Majeure continue to materially
impede performance of any material obligation under this Agreement for a period
of more than three (3) consecutive calendar months (and, only if HOKU is the
affected Party, HOKU has not transitioned its production of the Products as
provided in the immediately preceding sentence), then the non-affected Party
shall be entitled to terminate this Agreement by written notice to the other
Party. Upon such termination, any funds remaining on the Total Deposit or any
Supplemental Deposit shall be refunded to SUNTECH.

13. General Provisions.

13.1. This Agreement shall be construed under and governed by the laws of the
State of California, U.S.A.

13.2. Upon notice from one Party to the other of a dispute hereunder, the
Parties agree to hold a meeting within thirty (30) 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 such dispute shall be finally settled by arbitration in
San Francisco County or Santa Clara County, California, in accordance with the
then current Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 14 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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thereof. Notwithstanding any of the foregoing, either Party may seek injunctive
or other equitable relief at any time in any court of competent jurisdiction.
This Section does not limit the right of any Party (or its collateral agent) to:
(i) exercise self-help remedies, such as but not limited to, setoff;
(ii) initiate judicial or non-judicial foreclosure against any real or personal
property collateral; (iii) exercise any judicial or power of sale rights, or
(iv) act in a court of law to obtain an interim remedy, such as but not limited
to, injunctive relief, writ of possession or appointment of a receiver, or
additional or supplementary remedies.

13.3. Neither HOKU nor SUNTECH may assign this Agreement to a third party
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld; provided however that either Party may assign this
Agreement, together with all of its rights and obligations hereunder, to an
Affiliate without the consent of the other Party. Notwithstanding the foregoing,
an assignment of this Agreement (together with all of its rights and obligations
hereunder) by either Party to a third party in connection with a merger with
such third party or sale of all or substantially all of the assets of the
assigning Party to such third party shall not require the consent of the
non-assigning Party. Subject to other provisions of this Section 13.3, this
Agreement shall bind upon permitted successors and assigns of the Parties
hereto. In the event of any assignment of this Agreement by HOKU in compliance
with this Section 13.3, including, without limitation, an assignment through
merger, acquisition or sale of assets, all obligations of HOKU that were
required to be performed by HOKU at or from the Facility, including, without
limitation, HOKU’s obligation to ship Products that were manufactured at the
Facility, shall become the binding obligations of HOKU’s successor or assign;
provided, however, that such successor or assign, as applicable, shall no longer
be obligated to perform such obligation at or from the Facility, but may instead
perform the obligation at or from its own polysilicon production facility,
wherever it may be located, provided that (a) such performance complies with all
other terms of this Agreement, including, without limitation, pricing, volume,
quality, timing, shipping and warranty terms and (b) in the case of HOKU, such
successor or assign, as applicable, provides SUNTECH with reasonable assistance
with shipping logistics. For avoidance of doubt, such assistance shall include
coordination and information regarding shipping, but exclude freight cost,
insurance, or other incremental shipping costs.

13.4. 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 13.4 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; or

 

  (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.

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:

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 15 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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SUNTECH:

WUXI SUNTECH POWER CO., LTD.

17-6 CHANG JIANG SOUTH ROAD

NEW DISTRICT WUXI 214028

CHINA

Attn: Zhengrong Shi Ph. D.

E-mail: [*]

Facsimile: [*]

With a copy to:

WUXI SUNTECH POWER CO., LTD.

17-6 CHANG JIANG SOUTH ROAD

NEW DISTRICT WUXI 214028

CHINA

Attn: Steven Chan

E-mail: [*]

Facsimile: [*]

HOKU:

HOKU MATERIALS, INC.

One Hoku Way

Pocatello, Idaho 83201 USA

Attn: Mr. Dustin Shindo, CEO

E-mail: [*]

Facsimile:

With a copy to:

HOKU SCIENTIFIC, INC.

1075 Opakapaka Street

Kapolei, Hawaii 96707, USA

Attn: Mr. Dustin Shindo, CEO

E-mail: [*]

Facsimile: +1 (808) 682-7800

13.5. 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.

13.6. 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.

13.7. 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.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 16 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

13.8. 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.

13.9. 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) business 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 to the other Party reasonable
advance notice and a reasonable opportunity to review the proposed disclosure
and comment thereon, and shall use commercially reasonable efforts to obtain
confidential treatment from the applicable governing entity for all pricing,
technical and other sensitive information set forth in this Agreement.

13.10. This Agreement constitutes the entire agreement between the Parties and
supersedes all prior and contemporaneous agreements, 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.

13.11. The headings are inserted for convenience of reference and shall not
affect the interpretation and or construction of this Agreement.

13.12. Words expressed in the singular include the plural and vice-versa.

13.13. HOKU shall allow SUNTECH visitation rights to the Facility after the date
of this Agreement and until the first delivery of Products upon reasonable
advanced notice, at mutually agreeable times, and not to areas of the Facility
that are outside the scope of this Agreement; provided, however, that SUNTECH
shall be limited to two visits per calendar quarter, and SUNTECH shall bear all
of its costs and expenses incurred in connection with such visitation.

13.14. If HOKU has not completed the Initial Financing by October 17, 2007, HOKU
shall provide to SUNTECH, beginning on October 31, 2007, a bi-weekly written
update on the 15th day and the last day of each month, on the status of such
Initial Financing, which shall include a summary of any open conditions to
closing such Initial Financing and HOKU’s progress towards satisfying such
conditions. HOKU’s obligation to provide such reports shall end on the earlier
of (a) the closing date of the Initial Financing; and (b) March 31, 2008.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 17 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

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

 

SUNTECH:

  HOKU:

WUXI SUNTECH POWER CO., LTD.

  HOKU MATERIALS, INC. By:   LOGO [g75119img012.jpg]  

By:   LOGO [g75119img013.jpg]

Name:  Zhengrong Shi

  Name:  Dustin Shindo

Title:  Chairman & CEO

 

Title:  Chairman & CEO

Authorized Signatory

 

Authorized Signatory

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

PAGE 18 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 1

PRICING SCHEDULE

 

Actual Delivery Period

   Quantity   Price / kg

July 1, 2009 – June 30, 2010

   [*]   [*]

July 1, 2009 – June 30, 2011

   [*]   [*]

July 1, 2011 – June 30, 2012

   [*]   [*]

July 1, 2012 – June 30, 2013

   [*]   [*]

July 1, 2013 – June 30, 2014

   [*]   [*]

July 1, 2014 – June 30, 2015

   [*]   [*]

July 1, 2015 – June 30, 2016

   [*]   [*]

July 1, 2016 – June 30, 2017

   [*]   [*]

July 1, 2017 – June 30, 2018

   [*]   [*]

July 1, 2018 – June 30, 2019

   [*]   [*]

For avoidance of doubt, the price applicable to any shipment of Products shall
be the price set forth above corresponding to the actual date of shipment,
without regard to the date on which such shipment was due or was scheduled for
shipment.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 1 TO SUPPLY AGREEMENT

PAGE 19 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 2

PRODUCT SPECIFICATIONS

 

Type

  

Bulk elements

   Value   Unit

Acceptors

   [*]    [*]   [*]

Donors

   [*]    [*]   [*]

Carbon Levels (first 6 months)

   [*]    [*]   [*]

Carbon Levels (after 6 months)

   [*]    [*]   [*]

Total Metals

   [*]    [*]   [*]

Product Specifications shall be tested in accordance with the following
procedures: [*].

Product shall be packaged in a virgin polyethylene (no additives) bag. A double
bag system shall be used to be compatible with clean room requirements. Products
shall be palletized.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 2 TO SUPPLY AGREEMENT

PAGE 20 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 3

POTENTIAL QUALIFIED ENGINEERING FIRMS

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 3 TO SUPPLY AGREEMENT

PAGE 21 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 4

STAND-BY LETTER OF CREDIT

STANDBY L/C FOR PAYMENT

[Note original L/C issued directly to Beneficiary—See related notes re.
Assignment on pages 5/6]

TO: [HOKU MATERIALS, INC.][Beneficiary]

One Hoku Way

Pocatello, Idaho 83201 USA

Attn: Mr. Dustin Shindo, CEO

E-mail: dshindo@hokusci.com

DEAR SIRS,

In view of the contract No. (        ) (hereinafter referred to as the “Hoku
Supply Agreement”) signed between you and WUXI SUNTECH POWER CO., LTD.17-6 CHANG
JIANG SOUTH ROAD NEW DISTRICT WUXI 214028 CHINA (hereinafter referred to as
“Suntech”).

Subject to the terms and conditions set forth herein, we, [*] (“We” or “[*]”),
hereby unconditionally and irrevocably issue this standby letter of credit no.
(        ) (the “Stand-by Letter of Credit”) in your favor for account of
Suntech for maximum amount USD45000000.00 (say (Forty-Five Million U.S. Dollars
only) (hereinafter referred to as the guaranteed amount).

Capitalized terms used herein shall have the respective meanings set forth in
Annex A.

We hereby agree as follows:

 

 

(a)

The Beneficiary may request drawings under this Stand-by Letter of Credit by
giving [*] a duly completed 1st Demand, 2nd Demand or 3rd Demand (hereinafter
collectively referred to as the “Demand”). A Demand must be received by [*] by
not later than 12.00 p.m. (U.S. Pacific Time) on the Expiry Date.

 

  (b) Subject to the terms of this Stand-by Letter of Credit, [*]
unconditionally and irrevocably undertakes to the Beneficiary that, within ten
(10) Business Days of receipt by it of a Demand, it must pay to the Beneficiary
the amount demanded in that Demand.

 

  (c) [*] will not be obliged to make payment under this Stand-by Letter of
Credit if, as a result, the aggregate of all payments made by it under this
Stand-by Letter of Credit would exceed the Total L/C Amount.

Documents required:

(a) Each of the 1st Demand, the 2nd Demand and the 3rd Demand (each, a “Demand”)
shall be in writing, subject to the stipulations, unless otherwise stated, must
be made by letter and must be received in legible form by [*] at its address and
by the particular department or officer (if any) as follows:

[Insert [*] address/information]

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 22 OF 82

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

(b) The 1st Demand must be received by [*] no later than [*], and accompanied by
the items described in (I), (II) and (III) below:

 

  I. (i)(A) an Officer’s Compliance Certificate certifying that HOKU has
completed the Initial Financing, and (B) the [*] Certificate bearing the
notarized signatures of HOKU’s Chief Executive Officer or an authorized officer
of the Beneficiary, certifying that the [*] has been successfully completed and
that SUNTECH is more than fifteen (15) Business Days late in paying the [*]
Installment; and

(ii) (A) If the [*] Certificate is signed by HOKU’s Chief Executive Officer, a
Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that HOKU’s Chief Executive Officer has been
duly elected and is currently holding the office of Chief Executive Officer, or
(B) If the [*] Certificate is signed by an authorized officer of the
Beneficiary, a Certificate of Incumbency of the Beneficiary bearing the
notarized signature of the secretary of the Beneficiary which certifies that the
authorized officer of the Beneficiary is duly appointed to act on behalf of the
Beneficiary;

AND

 

  II. (A)(i) the [*] Certificate bearing the notarized signature of an executive
officer of SUNTECH, certifying that the [*] has been successfully completed; and

(ii) a Certificate of Incumbency of SUNTECH bearing the notarized signature of
the secretary of SUNTECH which certifies that the executive officer of SUNTECH
whose signature appears on the [*] Certificate has been duly elected and is
currently holding the position of an executive officer of SUNTECH;

OR

(B) the [*] Certificate bearing the notarized signature of the Independent
Engineer certifying that the [*] has been successfully completed.

AND

 

  III. (i) a letter (the “Breach Letter”) bearing the notarized signature of an
executive officer of HOKU, certifying that SUNTECH has breached its payment
obligations and failed to pay an undisputed portion of the [*] Installment
pursuant to Section 5.2.1 of the HOKU Supply Agreement more than fifteen
(15) days after being notified by HOKU of such failure; and

(ii) a Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that the executive officer of HOKU whose
signature appears on the Breach Letter has been duly elected and is currently
holding the position of an executive officer of HOKU

(c) The 2nd Demand must be received by [*] by no later than [*], and must be
accompanied by the items described in (I), (II) and (III) below.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 23 OF 82

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

  I. (i)(A) an Officer’s Compliance Certificate certifying that HOKU has
completed the Initial Financing, and (B) the [*] Certificate bearing the
notarized signatures of HOKU’s Chief Executive Officer or an authorized officer
of the Beneficiary, certifying the [*] has been successfully completed and that
SUNTECH is more than fifteen (15) Business Days late in paying the [*]
Installment; and

(ii)(A) If the [*] Certificate is signed by HOKU’s Chief Executive Officer, a
Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that HOKU’s Chief Executive Officer has been
duly elected and is currently holding the office of Chief Executive Officer, or
(B) If the [*] Certificate is signed by an authorized officer of the
Beneficiary, a Certificate of Incumbency of the Beneficiary bearing the
notarized signature of the secretary of the Beneficiary which certifies that the
authorized officer of the Beneficiary is duly appointed to act on behalf of the
Beneficiary;

AND

 

  II. (A)(i) the [*] Certificate bearing the notarized signature of an executive
officer of SUNTECH, certifying that the [*] has been successfully completed; and

(ii) a Certificate of Incumbency of SUNTECH bearing the notarized signature of
the secretary of SUNTECH which certifies that the executive officer of SUNTECH
whose signature appears on the [*] Certificate has been duly elected and is
currently holding the position of an executive officer of SUNTECH;

OR

(B) the [*] Certificate bearing the notarized signature of the Independent
Engineer certifying that the [*] has been successfully completed.

AND

 

  III. (i) a Breach Letter bearing the notarized signature of an executive
officer of HOKU, certifying that SUNTECH has breached its payment obligations
and failed to pay an undisputed portion of the [*] Installment pursuant to
Section 5.2.2 of the HOKU Supply Agreement more than fifteen (15) days after
being notified by HOKU of such failure; and

(ii) a Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that the executive officer of HOKU whose
signature appears on the Breach Letter has been duly elected and is currently
holding the position of an executive officer of HOKU

(d) The 3rd Demand must be received by [*] by no later than [*], and must be
accompanied by the items described in (I), (II) and (III) below.

 

  I. (i)(A) an Officer’s Compliance Certificate certifying that HOKU has
completed the Initial Financing, and (B) the [*] Certificate bearing the
notarized signatures of HOKU’s Chief Executive Officer or an authorized officer
of the Beneficiary, certifying that the [*] has been successfully completed and
that

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 24 OF 82

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

 

SUNTECH is more than fifteen (15) Business Days late in paying the [*]
Installment; and

(ii)(A) If the [*] Certificate is signed by HOKU’s Chief Executive Officer, a
Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that HOKU’s Chief Executive Officer has been
duly elected and is currently holding the office of Chief Executive Officer, or
(B) If the [*] Certificate is signed by an authorized officer of the
Beneficiary, a Certificate of Incumbency of the Beneficiary bearing the
notarized signature of the secretary of the Beneficiary which certifies that the
authorized officer of the Beneficiary is duly appointed to act on behalf of the
Beneficiary;

AND

 

  II. (A)(i) the [*] Certificate bearing the notarized signature of an executive
officer of SUNTECH, certifying that the [*] has been successfully completed; and

(ii) a Certificate of Incumbency of SUNTECH bearing the notarized signature of
the secretary of SUNTECH which certifies that the executive officer of SUNTECH
whose signature appears on the [*] Certificate has been duly elected and is
currently holding the position of an executive officer of SUNTECH;

OR

(B) the [*] Certificate bearing the notarized signature of the Independent
Engineer certifying that the [*] has been successfully completed.

AND

 

  III. (i) a Breach Letter bearing the notarized signature of an executive
officer of HOKU, certifying that SUNTECH has breached its payment obligations
and failed to pay an undisputed portion of the [*] Installment pursuant to
Section 5.2.3 of the HOKU Supply Agreement more than fifteen (15) days after
being notified by HOKU of such failure; and

(ii) a Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that the executive officer of HOKU whose
signature appears on the Breach Letter has been duly elected and is currently
holding the position of an executive officer of HOKU

All payments under this Stand-by Letter of Credit shall be made in United States
Dollars, for value within ten Business Days of receipt of the Demand to the
account of the Beneficiary specified therein and contingent of the fulfillment
of the stipulations and conditions and receipt of the documents in each case set
forth above.

The Guaranteed Amount will reduce automatically and on a dollar-for-dollar basis
by the sum already paid by Suntech pursuant to the Hoku Supply Agreement upon
presentation to [*] and the Beneficiary by Suntech of documentary evidence that
it has made the said payment to Hoku pursuant to the terms of the Hoku Supply
Agreement.

All banking charges other than opening charges of this standby are for account
of Suntech.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 25 OF 82

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

Except as expressly stated herein, this undertaking is not subjected to any
contract, agreement, condition or qualification. The obligation and liabilities
of us under this credit shall be independent.

This Standby Letter of Credit sets forth the full terms of our undertaking and
such undertaking shall not in any way be modified, amended or amplified by
reference to any document or instrument referred to herein or to which this
guarantee relates and shall not be deemed to incorporate by reference to any
such document or instrument.

This Stand-by Letter of Credit is governed by the laws of the State of
California. Its courts shall have exclusive jurisdiction to settle any dispute
arising out of or in connection with this Letter of Credit to the extent [*] is
a party to the dispute.

Unless expressly consented by us, this standby L/C is not transferable or
assignable except to Hoku in accordance with a general release by the
Beneficiary of its security interests in Hoku pursuant to the Credit Agreement;
provided, however, that we hereby acknowledge and consent to the beneficiary’s
assignment of this standby L/C. as collateral security for its obligations to
repay borrowed money, and the assignment of all of Hoku’s rights, title and
interest in, to and under this standby L/C (the “Assigned Interests”) to the
financial institution named as Collateral Agent for the Secured Parties (as
defined below) (together with its successors, designees and assigns in such
capacity, the “Agent”) pursuant to a Security Agreement to be made by the
beneficiary in connection with such financing in favor of the Agent for the
benefit of certain secured parties described therein (the “Secured Parties”) and
in that certain Collateral Agency and Intercreditor Agreement (as amended,
restated, supplemented or otherwise modified from time to time, the
“Intercreditor Agreement”) to be made in connection with such financing among
the beneficiary, Hoku Materials Holdings, Inc., the Agent, and the other Secured
Parties party thereto.

We further consent to the transfer of the Beneficiary’s interest under this
Stand-by Letter of Credit to any Subsequent Transferee at a foreclosure sale or
by a conveyance by the beneficiary in lieu of foreclosure and agree that,
notwithstanding any provision hereof to the contrary, upon such foreclosure,
sale or conveyance, such Subsequent Transferee shall be substituted for the
Beneficiary under this Stand-by Letter of Credit and we shall perform our
obligations hereunder in favor of the Subsequent Transferee.

This credit will come into effect upon the issuance hereof, and shall be binding
on us as a continuing guarantee until the earlier of (such date, the “Expiry
Date”) the date (if any) [*] is (i) notified by HOKU or the Beneficiary as the
date upon which [*]’s obligations under this Stand-by Letter of Credit are
released, (ii) notified by SUNTECH and the Beneficiary that SUNTECH is no longer
obligated to pay the Main Deposit to HOKU pursuant to the HOKU Supply Agreement,
or (iii) notified by a valid arbitration award or court order pursuant to
Section 13.2 of the HOKU Supply Agreement that SUNTECH is no longer obligated to
pay the Main Deposit to HOKU pursuant to the HOKU Supply Agreement.

Any claim should reach our counter on or before the Expiry Date. This Stand-by
Letter of Credit shall automatically become null and void upon the Expiry Date,
whether it is returned to us or not.

Except so far as otherwise expressly stated, this credit is subject to the
Uniform Rules and Customs for Documentary Letters of Credit (Publication of the
International Chamber of Commerce #500, 1993 revision) or as most recently
published by the International Chamber of Commerce.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 26 OF 82

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

ANNEX A

DEFINITIONS

“Beneficiary” means the financial institution named as the Collateral Agent
under the Credit Agreement.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are
open for general business in the United States.

“1st Demand” means a demand for payment of one third of the Total L/C Amount
under this Stand-by Letter of Credit in the form of Annex B to this Stand-by
Letter of Credit.

“2nd Demand” means a demand for payment of one third of the Total L/C Amount
under this Stand-by Letter of Credit in the form of Annex C to this Stand-by
Letter of Credit.

“3rd Demand” means a demand for payment of one third of the Total L/C Amount
under this Stand-by Letter of Credit in the form of Annex D to this Stand-by
Letter of Credit.

“Credit Agreement” means that Credit Agreement to be entered into by HOKU with
an affiliate of              as Administrative Agent and Collateral Agent and
such lenders who shall from time to time become parties thereto providing senior
secured financing for the polysilicon production plant contemplated in the HOKU
Supply Agreement.

“HOKU” means Hoku Materials, Inc., a Delaware corporation.

“HOKU Supply Agreement” is the Supply Agreement which has been entered into by
HOKU and SUNTECH on             , 2007 and is the underlying agreement of this
Stand-by Letter of Credit.

“Independent Engineer” means the professional engineer that is selected pursuant
to Section 5.2.4 of the HOKU Supply Agreement.

“Initial Financing” means an aggregate of $100 million in gross aggregate
proceeds raised by HOKU from bank debt, equity offerings or any combination
thereof (for avoidance of doubt, proceeds from customers and potential
customers, whether in the form of payments, prepayments, deposits, escrowed
funds or otherwise, shall not be included), to procure the Facility and
equipment necessary to manufacture one thousand five hundred (1,500) metric tons
of Product per annum.

“Officer’s Compliance Certificate” shall mean a certificate in substantially the
form attached to the HOKU Supply Agreement as Appendix 12 that is executed by an
executive officer of HOKU.

“[*]” has the meaning set forth in the HOKU Supply Agreement.

“[*] Certificate” means the certificate to be executed and notarized by HOKU or
the Beneficiary, and SUNTECH or the Independent Engineer, as applicable, in the
form attached to the HOKU Supply Agreement as Appendix 7.

“[*] Installment” means that portion of the Main Deposit payable by SUNTECH
pursuant to Section 5.2.3 of the HOKU Supply Agreement.

“Subsequent Transferee” means a purchaser , successor, assignee and/or designee
of Hoku’s rights, title and interest in, to and under this Stand-by Letter of
Credit.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 5 TO SUPPLY AGREEMENT

PAGE 27 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

“SUNTECH” means WUXI SUNTECH POWER CO., LTD. located at 17-6 Chang Jiang South
Road, New District, Wuxi 214028 People’s Republic of China.

“[*]” has the meaning set forth in the HOKU Supply Agreement.

“[*] Certificate” means the certificate to be executed and notarized by HOKU or
the Beneficiary, and SUNTECH or the Independent Engineer, as applicable, in the
form attached to the HOKU Supply Agreement as Appendix 6.

“[*] Installment” means that portion of the Main Deposit payable by SUNTECH
pursuant to Section 5.2.2 of the HOKU Supply Agreement.

“[*]” has the meaning set forth in the HOKU Supply Agreement.

“[*] Certificate” means the certificate to be executed and notarized by HOKU or
the Beneficiary, and SUNTECH or the Independent Engineer, as applicable, in the
form attached to the HOKU Supply Agreement as Appendix 5.

“[*] Installment” means that portion of the Main Deposit payable by SUNTECH
pursuant to Section 5.2.1 of the HOKU Supply Agreement.

“Total Deposit” means Forty-seven Million U.S. Dollars ($47,000,000), i.e. the
Total L/C Amount plus Two Million U.S. Dollars paid to HOKU pursuant to the HOKU
Supply Agreement.

“Total L/C Amount” means the Main Deposit, as defined in the HOKU Supply
Agreement, in the amount of Forty-five Million U.S. Dollars ($45,000,000).

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 5 TO SUPPLY AGREEMENT

PAGE 28 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

ANNEX B

1st Demand

To: [ISSUING BANK]

[Date]

Stand-by Letter of Credit in favor of [HOKU][the Beneficiary] (the “Stand-by
Letter of Credit”)

1st Demand

Dear Sirs,

We refer to the Stand-by Letter of Credit. Terms defined in the Stand-by Letter
of Credit have the same meaning when used in this Demand.

 

1. We certify that the sum of Fifteen Million U.S. Dollars ($15,000,000) is due
under the HOKU Supply Agreement and SUNTECH has breached its payment obligations
and failed to pay an undisputed portion of the [*] Installment pursuant to
Section 5.2.1 of the HOKU Supply Agreement more than fifteen (15) days after
being notified by HOKU of such failure. We therefore demand payment of the above
sum.

 

2.

We also certify that the requirements regarding the form of this 1st Demand
under the HOKU Supply Agreement and the Stand-by Letter of Credit have been met.
In this regard, we have attached to this 1st Demand (I) the [*] Certificate
which bears the notarized signatures of (A) HOKU’s Chief Executive Officer or an
authorized officer of Beneficiary; and (B) SUNTECH’s executive officer or the
Independent Engineer, certifying that the [*] has been successfully completed,
and (II) a letter bearing the notarized signature of an executive officer of
HOKU, certifying that SUNTECH has breached its payment obligations and failed to
pay an undisputed portion of the [*] Installment pursuant to Section 5.2.1 of
the HOKU Supply Agreement more than fifteen (15) days after being notified by
HOKU of such failure. We also certify that HOKU has delivered an Officer’s
Compliance Certificate to SUNTECH, and that HOKU has completed the Initial
Financing.

 

3. If the [*] Certificate is signed by HOKU, then we have attached a notarized
Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that HOKU’s Chief Executive Officer has been
duly elected and is currently holding the office of Chief Executive Officer.

 

4. If the [*] Certificate is signed by the Beneficiary, then we have attached a
notarized Certificate of Incumbency of the Beneficiary bearing the notarized
signature of the secretary of the Beneficiary which certifies that the
Beneficiary’s authorized officer is authorized to sign the [*] Certificate on
behalf of the Beneficiary.

 

5. If the [*] Certificate is signed by SUNTECH, then we have attached a
notarized Certificate of Incumbency of SUNTECH bearing the notarized signature
of the secretary of SUNTECH which certifies that the SUNTECH executive officer
has been duly elected and is authorized to sign the [*] Certificate on behalf of
SUNTECH.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 29 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

6. If the [*] Certificate is signed by the Independent Engineer, then we have
attached a letter from the Beneficiary confirming that the Independent Engineer
is acceptable for the relevant subject matter under this Stand-by Letter of
Credit.

 

7.

We also certify that the requirements regarding the form of this 1st Demand
under the HOKU Supply Agreement and the Stand-by Letter of Credit have been met.

 

8. Payment should be made to the following account:

Name:

Account Number:

Bank:

 

9. The date of this Demand is not later than the Expiry Date.

Yours faithfully

 

(Authorized Signatory)

(Authorized Signatory)

For

[BENEFICIARY]

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 30 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

ANNEX C

2nd Demand

To: [ISSUING BANK]

[Date]

Stand-by Letter of Credit in favor of [HOKU][the Beneficiary] (the “Stand-by
Letter of Credit”)

2nd Demand

Dear Sirs,

We refer to the Stand-by Letter of Credit. Terms defined in the Stand-by Letter
of Credit have the same meaning when used in this Demand.

 

1. We certify that the sum of Fifteen Million U.S. Dollars ($15,000,000) is due
under the HOKU Supply Agreement and SUNTECH has breached its payment obligations
and failed to pay an undisputed portion of the [*] Installment pursuant to
Section 5.2.2 of the HOKU Supply Agreement more than fifteen (15) days after
being notified by HOKU of such failure. We therefore demand payment of the above
sum.

 

2. We also certify that the requirements regarding the form of this 2nd Demand
under the HOKU Supply Agreement and the Stand-by Letter of Credit have been met.
In this regard, we have attached to this 2nd Demand (I) the [*] Certificate
which bears the notarized signatures of (A) HOKU’s Chief Executive Officer or an
authorized officer of Beneficiary; and (B) SUNTECH’s executive officer or the
Independent Engineer, certifying that the [*] has been successfully completed;
and (II) a letter bearing the notarized signature of an executive officer of
HOKU, certifying that SUNTECH has breached its payment obligations and failed to
pay an undisputed portion of the [*] Installment pursuant to Section 5.2.2 of
the HOKU Supply Agreement more than fifteen (15) days after being notified by
HOKU of such failure. We also certify that HOKU has delivered an Officer’s
Compliance Certificate to SUNTECH, and that HOKU has completed the Initial
Financing.

 

3. If the [*] Certificate is signed by HOKU, then we have attached a notarized
Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that HOKU’s Chief Executive Officer has been
duly elected and is currently holding the office of Chief Executive Officer.

 

4. If the [*] Certificate is signed by the Beneficiary, then we have attached a
notarized Certificate of Incumbency of the Beneficiary bearing the notarized
signature of the secretary of the Beneficiary which certifies that the
Beneficiary’s authorized officer is authorized to sign the [*] Certificate on
behalf of the Beneficiary.

 

5. If the [*] Certificate is signed by SUNTECH, then we have attached a
notarized Certificate of Incumbency of SUNTECH bearing the notarized signature
of the secretary of SUNTECH which certifies that the SUNTECH executive officer
has been duly elected and is authorized to sign the [*] Certificate on behalf of
SUNTECH.

 

5. If the [*] Certificate is signed by the Independent Engineer, then we have
attached a letter from the Beneficiary confirming that the Independent Engineer
is acceptable for the relevant subject matter under this Stand-by Letter of
Credit.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 31 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

6. We also certify that the requirements regarding the form of this 2nd Demand
under the HOKU Supply Agreement and the Stand-by Letter of Credit have been met.

 

7. Payment should be made to the following account:

Name:

Account Number:

Bank:

 

7. The date of this Demand is not later than the Expiry Date.

Yours faithfully

 

(Authorized Signatory)

(Authorized Signatory)

For

[BENEFICIARY]

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 32 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

ANNEX D

3rd Demand

To: [ISSUING BANK]

[Date]

Stand-by Letter of Credit in favor of [HOKU][Beneficiary] (the “Stand-by Letter
of Credit”)

3rd Demand

Dear Sirs,

We refer to the Stand-by Letter of Credit. Terms defined in the Stand-by Letter
of Credit have the same meaning when used in this Demand.

 

1. We certify that the sum of Fifteen Million U.S. Dollars ($15,000,000) is due
under the HOKU Supply Agreement and SUNTECH has breached its payment obligations
and failed to pay an undisputed portion of the [*] Installment pursuant to
Section 5.2.3 of the HOKU Supply Agreement more than fifteen (15) days after
being notified by HOKU of such failure. We therefore demand payment of the above
sum.

 

2.

We also certify that the requirements regarding the form of this 3rd Demand
under the HOKU Supply Agreement and the Stand-by Letter of Credit have been met.
In this regard, we have attached to this 3rd Demand (I) the [*] Certificate
which bears the notarized signatures of (A) HOKU’s Chief Executive Officer or an
authorized officer of Beneficiary; and (B) SUNTECH’s executive officer or the
Independent Engineer, certifying that the [*] has been successfully completed;
and (II) a letter bearing the notarized signature of an executive officer of
HOKU, certifying that SUNTECH has breached its payment obligations and failed to
pay an undisputed portion of the [*] Installment pursuant to Section 5.2.3 of
the HOKU Supply Agreement more than fifteen (15) days after being notified by
HOKU of such failure. We also certify that HOKU has delivered an Officer’s
Compliance Certificate to SUNTECH, and that HOKU has completed the Initial
Financing.

 

3. If the [*] Certificate is signed by HOKU, then we have attached a notarized
Certificate of Incumbency of HOKU bearing the notarized signature of the
secretary of HOKU which certifies that HOKU’s Chief Executive Officer has been
duly elected and is currently holding the office of Chief Executive Officer.

 

4. If the [*] Certificate is signed by the Beneficiary, then we have attached a
notarized Certificate of Incumbency of the Beneficiary bearing the notarized
signature of the secretary of the Beneficiary which certifies that the
Beneficiary’s authorized officer is authorized to sign the [*] Certificate on
behalf of the Beneficiary.

 

5. If the [*] Certificate is signed by SUNTECH, then we have attached a
notarized Certificate of Incumbency of SUNTECH bearing the notarized signature
of the secretary of SUNTECH which certifies that the SUNTECH executive officer
has been duly elected and is authorized to sign the [*] Certificate on behalf of
SUNTECH.

 

5. If the [*] Certificate is signed by the Independent Engineer, then we have
attached a letter from the Beneficiary confirming that the Independent Engineer
is acceptable for the relevant subject matter under this Stand-by Letter of
Credit.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 33 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

6. We also certify that the requirements regarding the form of this 3rd Demand
under the HOKU Supply Agreement and the Stand-by Letter of Credit have been met.

 

7. Payment should be made to the following account:

Name:

Account Number:

Bank:

 

7. The date of this Demand is not later than the Expiry Date.

Yours faithfully

 

(Authorized Signatory)

(Authorized Signatory)

For

[BENEFICIARY]

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 4 TO SUPPLY AGREEMENT

PAGE 34 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 5

[*] CERTIFICATE

This [*] Certificate is being signed and notarized pursuant to Section 5.2.1 of
the Supply Agreement dated             , 2007 by and between HOKU MATERIALS,
INC. and WUXI SUNTECH POWER CO., LTD. (the “Agreement”). Capitalized terms not
otherwise defined herein have the meaning set forth in the Agreement.

By signing below, each party hereby certifies to the successful completion of
the [*] and confirms the following:

 

[*]:

     

[*]:

     

[*]:

     

[*]:

     

[*]:

     

[*]:

     

[*]:

     

[*] (circle “yes” or “no”)

    YES / NO

[*] (Circle “yes” or “no” below.)

   

YES / NO

  HOKU Initials and Date                                       
                                        
                                            

YES / NO

  SUNTECH Initials and Date                                       
                                                                            

 

SUNTECH:

 

WUXI SUNTECH POWER CO., LTD.

   

HOKU:

 

HOKU MATERIALS, INC.

By:         By:     Name:         Name:     Title:         Title:     Authorized
Signatory     Authorized Signatory

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 5 TO SUPPLY AGREEMENT

PAGE 35 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 6

[*] CERTIFICATE

This [*] Certificate is being signed and notarized pursuant to Section 5.2.2 of
the Supply Agreement dated             , 2007 by and between HOKU MATERIALS,
INC. and WUXI SUNTECH POWER CO., LTD. (the “Agreement”). Capitalized terms not
otherwise defined herein have the meaning set forth in the Agreement.

By signing below, each party hereby certifies to the successful completion of
the [*] and confirms the following:

 

[*]:

     

[*]:

     

[*]:

     

[*]:

     

[*]:

     

    [*]

   

[*] (Circle “yes” or “no” below.)

   

YES / NO

  HOKU Initials and Date                                       
                                        
                                            

YES / NO

  SUNTECH Initials and Date                                       
                                                                            

 

SUNTECH:

 

WUXI SUNTECH POWER CO., LTD.

   

HOKU:

 

HOKU MATERIALS, INC.

By:         By:     Name:         Name:     Title:         Title:     Authorized
Signatory     Authorized Signatory

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 6 TO SUPPLY AGREEMENT

PAGE 36 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 7

[*] CERTIFICATE

This [*] Certificate is being signed and notarized pursuant to Section 5.2.3 of
the Supply Agreement dated             , 2007 by and between HOKU MATERIALS,
INC. and WUXI SUNTECH POWER CO., LTD. (the “Agreement”). Capitalized terms not
otherwise defined herein have the meaning set forth in the Agreement.

By signing below, each party hereby certifies to the successful completion of
the [*] and confirms the following:

 

  1. [*]

 

  2. [*]

 

  3. [*]

 

  4. [*]

 

SUNTECH:

 

WUXI SUNTECH POWER CO., LTD.

   

HOKU:

 

HOKU MATERIALS, INC.

By:         By:     Name:         Name:     Title:         Title:     Authorized
Signatory     Authorized Signatory

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 7 TO SUPPLY AGREEMENT

PAGE 37 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 8

INTERCREDITOR AGREEMENT

[ATTACHED]

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 38 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT

Dated as of                     , 2007

among

HOKU MATERIALS, INC.,

as Borrower,

HOKU HOLDINGS, INC.,

as Pledgor,

THE FINANCIAL INSTITUTION APPOINTED HEREUNDER AND PARTY HERETO AS

COLLATERAL AGENT,

as Collateral Agent,

[                    ],

as Administrative Agent,

[*]

and

THE OTHER PARTIES TO POLYSILICON SALES AGREEMENTS WITH THE BORROWER

PARTY HERETO FROM TIME TO TIME,

as Project Counterparties,

and

EACH OF THE OTHER SECURED PARTIES FROM TIME TO TIME PARTY HERETO

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 39 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 40 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT, dated as of             , 2007
(this “Agreement”), among HOKU MATERIALS, INC., a Delaware corporation (the
“Borrower”), HOKU HOLDINGS, INC., a Delaware corporation (the “Pledgor”), THE
FINANCIAL INSTITUTION APPOINTED PURSUANT TO ARTICLE VI HEREOF, as collateral
agent for the Secured Parties (in such capacity, together with any successor
collateral agent appointed pursuant to Section 6.6 of this Agreement, the
“Collateral Agent”), [            ], as administrative agent for the Lenders (in
such capacity, together with any successor administrative agent appointed
pursuant to the Credit Agreement (as defined below), the “Administrative
Agent”), [*], a [*] corporation (“[*]”), and THE OTHER PARTIES TO SALES
AGREEMENTS WITH THE BORROWER PARTY HERETO (together with [*], the “Project
Counterparties”), and THE OTHER SECURED PARTIES FROM TIME TO TIME PARTY HERETO.

W I T N E S S E T H:

WHEREAS, the Borrower desires to develop, construct, finance and operate an
approximately 2,000 metric ton per year capacity, polysilicon production
facility in Pocatello, Idaho (as more fully defined in the Credit Agreement
referred to below, the “Project”);

WHEREAS, in order to finance the development, construction and operation of the
Project, the Borrower has requested the Lenders to extend certain credit
facilities to the Borrower under and in accordance with the terms of a Credit
Agreement (the “Credit Agreement”) that the Borrower intends to enter into with
the Administrative Agent and the Lenders and other parties thereto;

WHEREAS, in order to hedge against risk associated with interest on certain
credit facilities under the Credit Agreement, the Borrower may from time to time
enter into one or more Interest Rate Hedging Agreements with Interest Hedge
Lenders;

WHEREAS, the Borrower has entered into the Sales Agreements with the Project
Counterparties to provide for the delivery and sale of polysilicon to the
Project Counterparties by the Borrower;

WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement that the Borrower, in order to secure its obligations under the Credit
Agreement and any Interest Rate Hedging Agreements, grant security interests in
all of its personal and real property collateral to the Collateral Agent by
entering into the Senior Secured Obligation Documents;

WHEREAS, in order to secure its obligations in respect of the deposits made with
the Borrower under the Sales Agreements, the Borrower has agreed to grant
security interests in all of its personal and real property collateral to the
Subordinated Collateral Agent by entering into the Subordinated Secured
Obligation Documents;

WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement that the Pledgor, in order to secure the Borrower’s obligations under
the Credit Agreement and any Interest Rate Hedging Agreements, pledge its
membership interests in the Borrower to the Collateral Agent by entering into
the Pledge Agreement; and

WHEREAS, in order to secure certain of the Borrower’s obligations under the
Sales Agreements, the Pledgor has agreed to pledge its membership interests in
the Borrower to the Subordinated Collateral Agent by entering into the
Subordinated Pledge Agreement; and

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 41 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

WHEREAS, the parties are entering into this Agreement to, among other
provisions, appoint the Collateral Agent as such and specify the relative rights
and remedies of the Secured Parties with respect to the Collateral.

NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

A G R E E M E N T:

ARTICLE I.

DEFINITIONS

Section 1.1 Defined Terms. Each capitalized term used and not otherwise defined
herein (including the introductory paragraph and recitals) shall have the
meaning assigned to such term (whether directly or by reference to another
agreement or document) in the Credit Agreement. In addition to the terms defined
in the Credit Agreement, the following terms shall have the meanings specified
below:

“Accession Agreement” shall mean an Accession Agreement substantially in the
form attached hereto as Exhibit A.

“Act of Secured Parties” shall mean, as of any date of determination,

(a) prior to the Discharge of Senior Secured Obligations, a direction in writing
provided to the Collateral Agent by the Administrative Agent representing the
written consent of the holders of more than 50% of the sum of:

(i) the Total Credit Agreement Exposure at such date; and

(ii) with respect to each Interest Rate Hedging Agreement, (1) if such Interest
Rate Hedging Agreement has terminated, the aggregate amount of termination
payments owed by the Borrower to the Secured Interest Hedge Lender under such
Interest Rate Hedging Agreement at such date or (2) if such Interest Rate
Hedging Agreement has not terminated, the aggregate amount of termination
payments that would be owed by the Borrower to the Secured Interest Hedge Lender
under such Interest Rate Hedging Agreement if such Interest Rate Hedging
Agreement were terminated on such date; and

(b) after the Discharge of Senior Secured Obligations, and solely with respect
to the Project Counterparty Collateral, a direction in writing provided to the
Collateral Agent by the Secured Obligation Representative for the Project
Counterparties representing the written consent of the Project Counterparties.

“Administrative Agent” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.

“Agreement” shall have the meaning assigned to such term in the introductory
paragraph of this agreement.

“Bailee Collateral” shall have the meaning given to such term in Section 7.6(a).

“Bankruptcy Event” shall be deemed to occur, with respect to any Person, if:
(a) such Person shall institute a voluntary case seeking liquidation or
reorganization under the Bankruptcy Law, or shall consent to the institution of
an involuntary case thereunder against such Person; (b) such Person shall file a
petition or shall otherwise institute any similar proceeding under any other
applicable Federal or state law, or shall consent thereto; (c) such Person shall
apply for the appointment, or by consent or

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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acquiescence there shall be an appointment, of a receiver, liquidator,
sequestrator, trustee or other officer or custodian with similar powers for
itself or any substantial part of its property or assets; (d) such Person shall
make an assignment for the benefit of its creditors; (e) such Person shall
become insolvent, or admit in writing its inability or unwillingness to pay its
debts generally as they become due; (f) an involuntary case shall be commenced
seeking liquidation or reorganization of such Person under the Bankruptcy Law or
any similar proceedings shall be commenced against such Person under any other
applicable Federal or state law and (i) the petition commencing the involuntary
case is not timely controverted, (ii) the petition commencing the involuntary
case is not dismissed within 60 days of its filing, (iii) an interim trustee is
appointed to take possession of all or a portion of the property, and/or to
operate all or any part of the business, of such Person and such appointment is
not vacated within 60 days, or (iv) an order for relief shall have been issued
or entered therein; (g) a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee or
other officer having similar powers of such Person or all or a part of its
property shall have been entered; or (h) any other similar relief shall be
granted against such Person under any applicable federal or state law.

“Bankruptcy Law” shall mean the U.S. Bankruptcy Code and any other Federal or
state insolvency, reorganization, moratorium or similar law for the relief of
debtors, or any successor statute.

“Borrower” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

“Collateral” shall mean (i) the “Collateral” as defined in the Security
Agreement, (ii) the “Trust Estate” as defined in the Mortgage, (iii) the
“Account Collateral” as defined in the Depositary Agreement and (iv) the
“Pledged Collateral” as defined in the Pledge Agreement, and shall include
(without being limited to) for all purposes the Project Counterparty Collateral;
provided that at no time shall the amounts comprising the “Main Deposit” (as
defined in the [*] Supply Contract) held on deposit in Escrow (as defined in the
[*] Supply Contract) by the Escrow Agent (as defined in the [*] Supply Contract)
in accordance with the terms of the [*] Supply Contract and the [*] Escrow
Agreement be deemed to constitute Collateral under this Agreement or otherwise
in connection with the Secured Obligations. For avoidance of doubt, amounts
comprising the “Main Deposit” (as defined in the [*] Supply Contract) shall
remain the property of [*] until such time as such funds are required under the
terms of the [*] Escrow Agreement to be delivered to the Borrower, at which time
the portion of such deposit required to be so delivered to the Borrower shall
become the property of the Borrower and constitute “Collateral” subject to this
Agreement.

“Collateral Agent” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.

“Collateral Proceeds” shall mean all proceeds received by the Collateral Agent
or any Secured Party in connection with any enforcement of rights or remedies
against or in respect of the Collateral under any agreement or document
evidencing the Senior Liens or the Subordinated Liens (including the sale,
exchange, collection, foreclosure or other disposition thereof or realization
thereon).

“Credit Agreement” shall have the meaning assigned to such term in the recitals
to this Agreement.

“Default” shall mean any event or condition that upon notice, lapse of time or
both would constitute an Event of Default.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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“Depositary Bank” shall mean the financial institution party to the Depositary
Agreement as depositary agent, bank and securities intermediary thereunder, in
such capacities.

“DIP Financing” shall have the meaning assigned to such term in Section 5.1(a).

“Discharge of Secured Obligations” shall mean the Discharge of Senior Secured
Obligations and the Discharge of Subordinated Secured Obligations.

“Discharge of Senior Secured Obligations” shall mean, except to the extent
otherwise expressly provided in Section 5.2(c) and subject to Section 5.1(e):

(a) indefeasible payment in full in cash of all Senior Secured Obligations
(including interest accruing on or after the commencement of any Bankruptcy
Event, whether or not such interest would be allowed in such Bankruptcy Event,
but excluding un-liquidated contingent obligations);

(b) termination or expiration of all commitments to extend credit under the
Senior Secured Obligation Documents; and

(c) cancellation, termination or cash collateralization of all letters of credit
then outstanding under the Senior Secured Obligation Documents in an amount
equal to 103% of the aggregate stated amount of such letters of credit.

“Discharge of Subordinated Secured Obligations” shall mean the indefeasible
payment in full in cash of all Subordinated Secured Obligations (including
interest accruing on or after the commencement of any Bankruptcy Event, whether
or not such interest would be allowed in such Bankruptcy Event, but excluding
un-liquidated contingent obligations).

“Escrow Agreement” shall mean any escrow agreement entered into by a Project
Counterparty pursuant to the terms of a Sales Agreement.

“Event of Default” shall mean (a) an “Event of Default” as defined in the Credit
Agreement and (b) any other event that entitles a Secured Party to accelerate
its Secured Obligations under the applicable Secured Obligation Documents.

“Final Discharge Date” shall mean the date on which the Discharge of Secured
Obligations has occurred.

“Grantor” shall mean the Borrower, the Pledgor and each other Person that may
from time to time hereafter execute and deliver a Security Document as a
“grantor”, “pledgor” or the equivalent thereof.

“Indemnified Liabilities” shall mean, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
claims (including Environmental Claims), actions, judgments, suits, costs
(including the costs of any investigation, study, sampling, testing, abatement,
cleanup, removal, remediation or other response action necessary to remove,
remediate, clean up or abate any Hazardous Materials), expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel to Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and whether
based on any federal, state or foreign laws, statutes, rules or regulations
(including securities and commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted against any such
Indemnitee, in

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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any manner relating to or arising out of (a) this Agreement or the other
Transaction Documents or the transactions contemplated hereby or thereby or any
enforcement of any of the Secured Obligation Documents (including any sale of,
collection from, or other realization upon any of the Collateral) or (b) any
Environmental Claim or any Hazardous Materials relating to or arising from,
directly or indirectly, any past or present activity, operation, land ownership
or practice of the Borrower or any other Grantor.

“Indemnitees” shall have the meaning assigned to that term in Section 6.8(b).

“Loan Obligation Documents” shall mean the Credit Agreement, the Letters of
Credit, any promissory note issued under the Credit Agreement, any Interest Rate
Hedging Agreement and any other agreement evidencing indebtedness or other
obligations owed by the Borrower or any other Grantor to the Loan Parties.

“Loan Obligations” shall mean Secured Obligations under the Loan Obligation
Documents, including any Refinancing of any portion thereof.

“Majority Project Counterparties” shall mean, as of any date of determination,
Project Counterparties entitled to more than 50% of the aggregate amount of
Subordinated Secured Obligations payable at such date.

“Pledgor” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

“Project Contracts” shall mean each contract or agreement necessary for or
related to the development, construction, operation, maintenance, management,
administration, ownership or use of the Project, the provision of services
therefor or the sale of products therefrom, entered into by the Borrower and any
other person, or assigned to the Borrower.

“Project Counterparty Collateral” shall mean (i) the “Subordinated Collateral”
as defined in the Subordinated Security Agreement, (ii) the “Subordinated Trust
Estate” as defined in the Subordinated Mortgage, (iii) the “Subordinated Account
Collateral” as defined in the Depositary Agreement and (iv) the “Subordinated
Pledged Collateral” as defined in the Subordinated Pledge Agreement.

“Project Counterparties” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.

“Property” shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.

“Refinance” shall mean, in respect of any Indebtedness, to refinance, extend,
renew, defease, amend, modify, supplement, restructure, replace, refund or
repay, or to issue other indebtedness in exchange or replacement for, such
Indebtedness in whole or in part. “Refinanced” and “Refinancing” shall have
correlative meanings.

“Sales Agreements” shall mean the [*] Supply Contract and any other agreement
providing for the purchase and sale of polysilicon by the Borrower.

“[*] Escrow Agreement” shall mean the Escrow Agreement dated as of [*], by and
among Hoku Scientific, Inc., [*] and [*], as Escrow Agent thereunder, as
assigned from Hoku Scientific, Inc. to the Borrower, as the same may be amended
and supplemented from time to time in accordance herewith.

“[*] Supply Contract” shall mean that Supply Agreement dated as of [*] by and
between Hoku Scientific, Inc. and [*], as assigned from Hoku Scientific, Inc. to
the Borrower, as the same may be amended and supplemented from time to time in
accordance herewith.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 45 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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“Secured Interest Hedge Lender” shall mean any Interest Hedge Lender that
becomes a party to this Agreement pursuant to Section 7.1.

“Secured Obligation Documents” shall mean the Senior Secured Obligation
Documents and the Subordinated Secured Obligation Documents.

“Secured Obligation Representative” shall mean, as applicable, (a) the
Administrative Agent (on behalf of the Senior Secured Parties) and (b) such
Person as may be designated in writing from time to time by the Majority Project
Counterparties (on behalf of the Subordinated Secured Parties).

“Secured Obligations” shall mean the Senior Secured Obligations and the
Subordinated Secured Obligations.

“Secured Parties” shall mean the Senior Secured Parties and the Subordinated
Secured Parties.

“Senior Collateral Agent” shall mean the Collateral Agent acting on behalf of
the Senior Secured Parties.

“Senior Liens” shall mean the first priority Liens granted pursuant to the
Senior Secured Obligation Documents to the Senior Collateral Agent (for the
benefit of the holders of the Senior Secured Obligations) upon the Collateral to
secure Senior Secured Obligations.

“Senior Recovery” shall have the meaning set forth in Section 5.1(e).

“Senior Secured Obligation Documents” shall mean the Loan Obligation Documents,
the Pledge Agreement, the Security Agreement, the Mortgage, the Depositary
Agreement and each other document or agreement evidencing or securing the Senior
Secured Obligations.

“Senior Secured Obligations” shall mean (a) all Indebtedness, loans, advances,
debts, liabilities (including any indemnification or other obligations that
survive the termination of the Secured Obligation Documents) and all other
obligations (including, but not limited to, obligations relating to the
Uncommitted Post-Completion Working Capital Facility, if any), howsoever
arising, owed by the Borrower to the Senior Secured Parties of every kind and
description (whether or not evidenced by any note or instrument and whether or
not for the payment of money), direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, pursuant to the terms of
the Secured Obligation Documents or any other agreement, document or instrument
evidencing, securing or relating to such indebtedness, liabilities and
obligations, including all interest, fees, charges, expenses, attorneys’ fees
and accountants’ fees chargeable to the Borrower or payable by the Borrower
thereunder, (b) any and all sums advanced by the Collateral Agent in order to
preserve the Collateral or preserve its security interests in the Collateral and
(c) in the event of any proceeding for the collection or enforcement of the
obligations described in clause (a) and (b) above after an Event of Default
shall have occurred and be continuing and un-waived, the expenses of retaking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Collateral Agent of its
rights under the Senior Secured Obligation Documents, together with any
necessary attorneys’ fees and court costs.

“Senior Secured Parties” shall mean the Collateral Agent, the Lender Parties and
any Secured Interest Hedge Lenders.

“Subordinated Collateral Agent” shall mean the Collateral Agent acting on behalf
of the Subordinated Secured Parties with respect to the Project Counterparty
Collateral.

“Subordinated Liens” shall mean the second priority Liens granted pursuant to
the Subordinated Secured Obligation Documents to the Subordinated Collateral
Agent (for the benefit of the holders of the

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 46 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Subordinated Secured Obligations) upon the Project Counterparty Collateral to
secure Subordinated Secured Obligations, subject and subordinated to the Senior
Liens in accordance with the terms of this Agreement.

“Subordinated Recovery” shall have the meaning set forth in Section 5.1(e).

“Subordinated Secured Obligation Documents” shall mean the Sales Agreements, the
Subordinated Pledge Agreement, the Subordinated Security Agreement, the
Subordinated Mortgage, the Depositary Agreement and each other document or
agreement evidencing or providing for the Subordinated Liens.

“Subordinated Secured Obligations” shall mean the obligations of the Borrower in
respect of deposits made under the Sales Agreements.

“Subordinated Secured Parties” shall mean the Subordinated Collateral Agent and
each of the Project Counterparties in its capacity as a beneficiary of the
Subordinated Liens and without affecting any rights or remedies it may have
against the Borrower arising out of the Sales Agreements (other than with
respect to the Subordinated Liens).

“Total Credit Agreement Exposure” shall mean, at any date of determination, the
sum of (without duplication), (a) the aggregate principal amount of Loans
outstanding at such date, and (b) the total available but unused Commitments at
such date.

“Uncommitted Post-Completion Working Capital Facility” shall mean the additional
uncommitted working capital facility contemplated by the Credit Agreement, if
established.

Section 1.2 Rules of Interpretation. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires, the
rules of interpretation set forth in Section 1.02 of the Credit Agreement are
hereby incorporated by reference, mutatis mutandis, as if fully set forth
herein.

Section 1.3 UCC Definitions. All terms defined in the UCC shall have the
respective meanings given to those terms in the UCC, except where the context
otherwise requires. As used in this Agreement, “proceeds” of Collateral shall
mean (a) all “proceeds” as defined in Article 9 of the UCC, (b) payments or
distributions made with respect to any Collateral and (c) whatever is receivable
or received when Collateral or proceeds are sold, leased, licensed, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.

ARTICLE II.

LIENS; SEPARATE COLLATERAL; VOTING

Section 2.1 Lien Priorities.

(a) As among the Senior Secured Parties with respect to the Collateral, all
Senior Secured Obligations shall rank pari passu, no Senior Secured Party shall
be entitled to any preferences or priority over any other Senior Secured Party
and the Senior Secured Parties shall share in the Collateral and all proceeds
thereof in accordance with the terms of this Agreement.

(b) Subject to clause (c) below, as among the Subordinated Secured Parties with
respect to the Project Counterparty Collateral, all Subordinated Secured
Obligations shall rank pari passu, no Subordinated Secured Party shall be
entitled to any preferences or priority over any other Subordinated Secured
Party and the Subordinated Secured Parties shall share in the Project
Counterparty Collateral and all proceeds thereof in accordance with the terms of
this Agreement.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 47 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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(c) Notwithstanding anything to the contrary contained herein or in any other
Secured Obligation Document:

(i) this Agreement and the other applicable Secured Obligation Documents create
two separate and distinct classes of Liens: (A) with respect to the Collateral,
the Senior Liens securing the payment and performance of the Senior Secured
Obligations; and (B) solely with respect to the Project Counterparty Collateral,
the Subordinated Liens securing the payment and performance of the Subordinated
Secured Obligations; and

(ii) the Subordinated Liens are subject and subordinate on the terms contained
in this Agreement to the Senior Liens.

(d) To further effectuate the intent of the parties as provided in clause
(c) above, if a court, under any Bankruptcy Event or otherwise, holds that the
claims of more than one class of Secured Parties in respect of the Collateral
constitute only one secured claim (rather than two separate classes of secured
claims), then each of the parties hereto acknowledges and agrees that, subject
to the lien priorities established or purported to be established hereby, all
distributions under such Bankruptcy Event or otherwise shall be made as if there
were two separate classes of secured claims against the Borrower in respect of
the Collateral, with the effect being that, to the extent the aggregate value of
the Collateral is sufficient (for this purpose ignoring all claims held by the
Subordinated Secured Parties), the Senior Secured Parties shall be entitled to
receive on a pro rata basis all amounts owing to the Senior Secured Parties
under the Senior Secured Obligation Documents before any distribution is made in
respect of the claims arising from the Subordinated Liens, with each
Subordinated Secured Party hereby acknowledging and agreeing to turn over to the
Senior Collateral Agent (for the benefit of the Senior Secured Parties) amounts
otherwise received or receivable by them to the extent necessary to effectuate
the intent of this paragraph, even if such turnover has the effect of reducing
the claim or recovery of the Subordinated Secured Parties.

(e) Notwithstanding (i) the date, time, method, manner or order of grant,
attachment or perfection of the Senior Liens or the Subordinated Liens,
(ii) anything contained in any filing or agreement to which the Senior
Collateral Agent (on behalf of Senior Secured Parties) now or hereafter may be a
party, (iii) the perfection of or avoidability of such Liens or claims secured
thereby, (iv) any provision of the UCC, (v) any other applicable Legal
Requirement or any provision set forth in the Secured Obligation Documents,
(vi) any defect or deficiencies in, or failure to perfect, the Senior Liens or
(vii) any other circumstance whatsoever, each Subordinated Secured Party hereby
agrees that:

(A) the Senior Liens shall be and remain senior in all respects and prior to the
Subordinated Liens for all purposes, whether or not the Senior Liens are
subordinated to any Lien securing any other obligation of the Borrower, any
other Grantor or any other Person; and

(B) the Subordinated Liens shall be junior and subordinate in all respects to
the Senior Liens.

Section 2.2 Prohibition on Contesting Liens. Each Secured Party agrees that it
will not (and hereby waives any right to) contest or support any other Person in
contesting, in any proceeding (including any Bankruptcy Event), the priority,
validity or enforceability of a Lien held by or on behalf of any of the Secured
Parties in the Collateral or the provisions of this Agreement; provided that
nothing in this Agreement shall be construed to prevent or impair the rights of
the Collateral Agent or any Secured Party to (i) enforce this Agreement,
including Section 3.3 and the provisions of this Agreement relating to the
priority of the Liens securing the Obligations as provided in Section 2.1 or
(ii) exercise any rights or remedies of the Project Counterparties against the
Borrower pursuant to the Sales Agreements (other than with respect to the
Subordinated Liens).

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 48 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

Section 2.3 Additional Liens. Except as otherwise expressly provided herein or
in any other Secured Obligation Document, whether or not any Bankruptcy Event
has been commenced by or against the Borrower, the parties hereto agree that
neither the Borrower nor any other Grantor shall:

(a) grant or permit any Liens, in addition to the Liens established under or
arising out of the Senior Secured Obligation Documents, on any Property to
secure any Senior Secured Obligations unless it has granted or concurrently
grants a Lien on such Property to secure all Senior Secured Obligations on a
pari passu basis;

(b) grant or permit any Liens, in addition to the Liens established under or
arising out of the Subordinated Secured Obligation Documents, on any Property to
secure any Subordinated Secured Obligations unless it has granted or
concurrently grants a Lien on such Property to secure all Subordinated Secured
Obligations on a pari passu basis; and

(c) grant or permit any Liens, in addition to the Liens established under or
arising out of the Subordinated Secured Obligation Documents, on any Property to
secure any Subordinated Secured Obligations unless it has granted or
concurrently grants a Senior Lien on such Property to secure the Senior Secured
Obligations.

Section 2.4 Separate Collateral. Notwithstanding anything herein or in any other
Secured Obligation Document to the contrary, each of the parties hereto
acknowledges and agrees that the Subordinated Liens shall not attach to any
Collateral other than the Project Counterparty Collateral.

Section 2.5 Similar Liens and Agreements for Secured Obligations. The parties
hereto agree that it is their intention that the portion of the Collateral
constituting Project Counterparty Collateral subject to the Senior Liens and the
Project Counterparty Collateral subject to the Subordinated Liens be identical.
In furtherance of the foregoing, the parties hereto agree, subject to the other
provisions of this Agreement:

(a) upon request by the Collateral Agent, each Secured Party agrees to cooperate
in good faith (and to direct their Secured Obligation Representative and their
counsel to cooperate in good faith) from time to time in order to determine the
specific items included in the Project Counterparty Collateral and the steps
taken to perfect the Senior Liens and the Subordinated Liens thereon and the
identity of the respective parties obligated under the Secured Obligation
Documents; and

(b) the documents and agreements creating or evidencing the Senior Liens and the
documents and agreements creating or evidencing the Subordinated Liens shall,
subject to Section 4.2(b), be in all material respects the same forms of
documents (or such other forms as shall be reasonably acceptable to the Senior
Collateral Agent and the Subordinated Collateral Agent) other than with respect
to the senior and subordinated nature of the Senior Secured Obligations and
Subordinated Secured Obligations thereunder and the subordination provisions set
forth herein.

Section 2.6 Voting.

(a) In connection with any Act of Secured Parties or any consent or other
direction of the applicable Secured Parties pursuant to Section 4.1, (i) the
votes of each series of Secured Obligations entitled to vote thereon shall be
cast (A) with respect to the Senior Secured Parties, in the manner provided by,
and in accordance with the decision of the holders of such series made pursuant
to, the terms of the applicable Secured Obligation Documents, and (B) with
respect to the Subordinated Secured Parties, in accordance with the written
direction of the Majority Project Counterparties and (ii) the votes of each such
series shall be aggregated and cast as a single block by (A) with respect to the
Senior Secured Parties; the Administrative Agent and each Secured Interest Hedge
Lender, as applicable, in accordance with the

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 8 TO SUPPLY AGREEMENT

PAGE 49 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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decision of the applicable Secured Parties under the applicable Secured
Obligation Documents, and (B) with respect to the Subordinated Secured Parties,
the Secured Obligation Representative for the Project Counterparties in
accordance with the written direction of the Majority Project Counterparties.

(b) In connection with any Act of Secured Parties or any consent or other
direction of the applicable Secured Parties pursuant to Section 4.1, the amount
of votes which each applicable series of Secured Obligations is entitled to vote
hereunder shall be determined on and as of the date the matter to be voted on is
presented to such series for vote.

(c) Notwithstanding anything to the contrary herein or in any other Secured
Obligation Document, in connection with any Act of Secured Parties or any
consent or other direction of the applicable Secured Parties pursuant to
Section 4.1, any Secured Obligations registered in the name of, or beneficially
owned by, a Grantor, or any Affiliate of a Grantor will be deemed not to be
outstanding.

ARTICLE III.

ENFORCEMENT OF REMEDIES; APPLICATION OF PROCEEDS

Section 3.1 Enforcement of Remedies.

(a) Generally. Whether or not any Bankruptcy Event has been commenced by or
against the Borrower or any other Grantor, the Collateral Agent, at the
direction of an Act of Secured Parties, shall have the exclusive right to
enforce rights, exercise remedies (including set-off and the right to credit bid
their debt) and make determinations regarding the release, disposition or
restrictions with respect to the Collateral without any consultation with or the
consent of any other Secured Party (or any Secured Obligation Representative
therefor); provided that the Subordinated Liens shall remain on the proceeds of
any Project Counterparty Collateral so released or disposed of subject to the
relative priorities described in Section 2.1. In exercising rights and remedies
with respect to the Collateral, the Collateral Agent, at the direction of an Act
of Secured Parties, may enforce the provisions of the Security Documents and
exercise remedies thereunder, all in such order and in such manner as it may
thereafter determine in the exercise of its reasonable discretion. Such exercise
and enforcement shall include the rights of the Collateral Agent to sell or
otherwise dispose of Collateral upon foreclosure, to incur expenses in
connection with such sale or disposition, and to exercise all the rights and
remedies of a secured creditor under the UCC and the Security Documents and of a
secured creditor under applicable Bankruptcy Law of any applicable jurisdiction;
provided that unless and until the Collateral Agent shall have received any such
direction, the Collateral Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, in order to preserve or protect its
Liens on and the value of the Collateral, with respect to any Event of Default
as it shall deem advisable in the best interests of the Secured Parties.

(b) Consents. Notwithstanding anything to the contrary herein or any of the
other Security Documents, with respect to the exercise of any rights or remedies
of any of the Secured Parties under any of the Consents, the Collateral Agent
shall act solely at the written direction of (i) if no Event of Default has
occurred and is continuing, the Administrative Agent or (ii) if an Event of
Default has occurred and is continuing, an Act of Secured Parties.
Notwithstanding anything to the contrary herein or any of the other Security
Documents, without the approval of an Act of Secured Parties, no Secured Party
shall instruct or direct the Collateral Agent to take any actions under any
Consent which violate or breach the terms of the Project Contract to which such
Consent relates.

Section 3.2 Subordination of Subordinated Secured Obligations.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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(a) Until the Discharge of Senior Secured Obligations has occurred, whether or
not any Bankruptcy Event has been commenced by or against the Borrower or any
other Grantor, each Subordinated Secured Party agrees that it:

(i) will not exercise or seek to exercise any rights or remedies (including
set-off and the right to credit bid their debt) with respect to the Subordinated
Liens or institute any action or proceeding with respect to such rights or
remedies (including any action of foreclosure);

(ii) will not contest, protest or object to any foreclosure proceeding or action
brought by the Senior Collateral Agent (on behalf of the Senior Secured
Parties), any Senior Secured Party or any Secured Obligation Representative
therefor or any other exercise by the Senior Collateral Agent (on behalf of the
Senior Secured Parties), any Senior Secured Party or any Secured Obligation
Representative therefor of any rights and remedies relating to the Collateral
under the Secured Obligation Documents; and

(iii) will not object to the forbearance by the Senior Collateral Agent (on
behalf of the Senior Secured Parties), any Senior Secured Party or any Secured
Obligation Representative therefor from bringing or pursuing any foreclosure
proceeding or action or any other exercise of any rights or remedies relating to
the Collateral;

(iv) will not oppose or otherwise contest any claim by the Senior Collateral
Agent (on behalf of the Senior Secured Parties), any Senior Secured Party or any
Secured Obligation Representative therefor for allowance in any Bankruptcy Event
of Senior Secured Obligations consisting of post-petition interest, fees or
expenses; and

(v) will not challenge the validity, enforceability, perfection or priority of
the Liens held for the benefit of any Senior Secured Parties.

(b) Each Subordinated Secured Party agrees that it will not take or receive any
Project Counterparty Collateral or any proceeds of Project Counterparty
Collateral in connection with the exercise of any right or remedy (including
set-off) arising out of the Subordinated Liens, or exercise any other rights
relating thereto, unless and until the Discharge of Senior Secured Obligations
has occurred, as confirmed in writing by the Administrative Agent. Without
limiting the generality of the foregoing, unless and until the Discharge of
Senior Secured Obligations has occurred, as confirmed in writing by the
Administrative Agent, the sole right of the Subordinated Secured Parties arising
out of the Subordinated Liens is to hold the Subordinated Liens for the period
and to the extent granted in the Subordinated Secured Obligation Documents and
to receive a share of the proceeds thereof, if any, after the Discharge of
Senior Secured Obligations has occurred.

(c) Each Subordinated Secured Party hereby:

(i) agrees not to take any action that would hinder any exercise of remedies
under any of Senior Secured Obligation Documents or which is otherwise
prohibited hereunder, including any sale, lease, exchange, transfer or other
disposition of the Collateral, whether by foreclosure or otherwise;

(ii) waives any and all rights it may have as a holder of the Subordinated Liens
to object to the manner in which the Senior Collateral Agent (on behalf of the
Senior Secured Parties) or any of the Senior Secured Parties seek to exercise
any rights under the Senior Secured Obligation Documents or to enforce or
collect the Senior Secured Obligations or the Liens securing the Senior Secured
Obligations granted in any of the Collateral undertaken in accordance with this
Agreement, regardless of whether any action or failure to act by or on behalf of
the Senior Collateral Agent (on behalf of the Senior Secured

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Parties) or any Senior Secured Parties is adverse to the interest of any of the
Subordinated Secured Parties; and

(iii) acknowledges and agrees that no covenant, agreement or restriction
contained in any agreement or document evidencing the Subordinated Liens (other
than this Agreement) shall be deemed to restrict in any way the rights and
remedies of the Senior Collateral Agent (on behalf of the Senior Secured
Parties) or any of the Senior Secured Parties with respect to the Collateral.

(d) Except as specifically set forth herein, nothing in this Agreement shall
prohibit the receipt by the Project Counterparties of regularly scheduled
payments of amounts owed under the Sales Agreements so long as such receipt is
not the direct or indirect result of the exercise by any Subordinated Secured
Party of rights or remedies arising out of the Subordinated Liens (including
set-off). Nothing in this Agreement impairs or otherwise adversely affects any
rights or remedies the Senior Collateral Agent (on behalf of the Senior Secured
Parties) or any of the Senior Secured Parties may have with respect to the
Collateral.

 

(e) Notwithstanding anything to the contrary in this Agreement, each
Subordinated Secured Party may:

(i) file a claim or statement of interest with respect to the Subordinated
Secured Obligations; provided that a Bankruptcy Event has been commenced against
the Borrower or any other Grantor;

(ii) take any action not adverse to the priority status of the Liens on the
Collateral securing the Senior Secured Obligations, or the rights of the Senior
Collateral Agent (on behalf of the Senior Secured Parties) or any Senior Secured
Party, in order to create, perfect, preserve or protect their Lien on the
Project Counterparty Collateral;

(iii) file any necessary responsive or defensive pleadings in opposition to any
motion, claim, adversary proceeding or other pleading made by any Person
objecting to or otherwise seeking the disallowance of the claims of any of the
Subordinated Secured Parties, including any claims secured by the Project
Counterparty Collateral, if any, in each case in accordance with the terms of
this Agreement and the other Secured Obligation Documents;

(iv) exercise rights and remedies as, and file any pleadings, objections,
motions or agreements which assert rights or interests available to, unsecured
creditors of the Borrower or any other Grantor arising under either any
Bankruptcy Event or applicable non-bankruptcy law, in each case not inconsistent
with the terms of this Agreement; provided that, in the event that any
Subordinated Secured Party becomes a judgment Lien creditor in respect of
Collateral as a result of its enforcement of its rights as an unsecured creditor
with respect to the Subordinated Secured Obligations, such judgment Lien shall
be subject to the terms of this Agreement for all purposes (including in
relation to the Senior Secured Obligations) as the other Liens securing the
Subordinated Secured Obligations are subject to this Agreement; and

(v) vote on any plan of reorganization, file any proof of claim, make other
filings and make any arguments and motions that are, in each case, in accordance
with the terms of this Agreement and the other Secured Obligation Documents,
with respect to the Subordinated Secured Obligations and the Project
Counterparty Collateral.

Section 3.3 Application of Proceeds.

(a) Notwithstanding anything to the contrary in any Secured Obligation Document
and regardless of whether any Bankruptcy Event has been commenced by or against
the Borrower or any other Grantor, (x) all Collateral Proceeds received by any
Secured Party shall be promptly remitted by such Secured Party to (1) prior to
the Discharge of Senior Secured Obligations, the Senior Collateral Agent or
(2) after the

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Discharge of Senior Secured Obligations, the Subordinated Collateral Agent, in
each case in the like form received (with appropriate endorsements, if
necessary) for application by the Senior Collateral Agent or the Subordinated
Collateral Agent, as applicable, as hereinafter provided in clause (y) of this
sentence, and (y) all Collateral Proceeds received by the Senior Collateral
Agent or the Subordinated Collateral Agent, as applicable, pursuant to the
preceding clause (x) or otherwise shall, promptly upon receipt, be applied in
accordance with the following clauses (i) through (vi):

(i) First, on a pro rata basis, to the payment of all administrative fees,
expenses and other amounts due and payable to the Agents and any of the other
agents under any of the Secured Obligation Documents (other than amounts
specified in clauses (ii) and (iii) below);

(ii) Second, on a pro rata basis, to the payment of (A) all interest (including,
to the extent legally permitted, all interest accrued thereon after the
commencement of any insolvency or liquidation proceeding at the rate, including
any applicable post-default rate, specified in the Credit Agreement, even if
such interest is not enforceable, allowable or allowed as a claim in such
proceeding), commitment fees and letter of credit fees due and payable under the
Credit Agreement and (B) all ordinary course settlement payments due and payable
by the Borrower to any Secured Interest Hedge Lender under an Interest Rate
Hedging Agreement;

(iii) Third, on a pro rata basis, to (1) the payment of all principal, premium
and reimbursement obligations due and payable under the Credit Agreement and the
discharge or cash collateralization of all Letters of Credit (at the lower of
(x) 103% of the aggregate undrawn amount thereof and (y) the percentage of the
aggregate undrawn amount thereof required for release of Liens under the terms
of the Credit Agreement) and (2) the payment of all termination payments due and
payable by the Borrower to any Secured Interest Hedge Lender under an Interest
Rate Hedging Agreement;

(iv) Fourth, on a pro rata basis, to the payment of all other amounts due and
payable to the Senior Secured Parties under the Senior Secured Obligation
Documents;

(v) Fifth, after the Discharge of Senior Secured Obligations, on a pro rata
basis, to the payment of all amounts due and payable to the Subordinated Secured
Parties under the Subordinated Secured Obligation Documents; and

(vi) Sixth, any surplus then remaining to the Borrower or its successors or
assigns, or to the Person who may be lawfully entitled to receive the same or as
a court of competent jurisdiction may direct.

(b) Upon the Discharge of Senior Secured Obligations, the Senior Collateral
Agent, at the expense of the Borrower, shall deliver to the Subordinated
Collateral Agent any Project Counterparty Collateral and Collateral Proceeds
derived therefrom held by it in the same form as received, with any necessary
endorsements, or as a court of competent jurisdiction may otherwise direct, to
be applied by the Subordinated Collateral Agent to the Subordinated Secured
Obligations.

(c) So long as the Discharge of Senior Secured Obligations has not occurred,
whether or not any Bankruptcy Event has been commenced by or against the
Borrower or any other Grantor, any Collateral or proceeds thereof received by
any Person in connection with the exercise of any right or remedy (including
set-off) by any such Person relating to the Collateral in contravention of this
Agreement shall be segregated and held in trust and forthwith paid over to the
Senior Collateral Agent (for the benefit of the Senior Secured Parties) in the
same form as received, with any necessary endorsements or as a court of
competent jurisdiction may otherwise direct. The Senior Collateral Agent is
hereby authorized to make any such endorsements as agent for any and all Senior
Secured Parties. This authorization is coupled with an interest and is
irrevocable until the Discharge of Senior Secured Obligations.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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(d) Upon receipt of any Collateral Proceeds, the Collateral Agent shall promptly
provide notice to each applicable Secured Party (or its Secured Obligation
Representative) of the receipt of such monies. Within 10 Business Days of the
receipt of such notice, each applicable Secured Party (or its Secured Obligation
Representative) shall give the Collateral Agent written certification by an
authorized officer or representative thereof in substantially the form attached
hereto as Exhibit B of the aggregate amount of the Secured Obligations then
outstanding owed by the Borrower to such Secured Party under the applicable
Secured Obligation Documents to be certified to as presently due and owing (and,
promptly upon receipt thereof, the Collateral Agent shall provide a copy of each
such certification to each applicable Secured Party or its Secured Obligation
Representative and the Borrower). Unless otherwise directed by a court of
competent jurisdiction or as otherwise specified by any Secured Party (or its
Secured Obligation Representative), the Collateral Agent shall use the
information provided for in such notices as the basis for applying such
Collateral Proceeds in accordance with this Section 3.3.

(e) Upon receipt by the Collateral Agent and pending disbursement pursuant to
this Section 3.3, all Collateral Proceeds shall be held by the Collateral Agent
for the benefit of the applicable Secured Parties. The Collateral Agent, upon
receipt of an Act of Secured Parties, shall invest such Collateral Proceeds held
by it in the manner specified therein; provided, however, that the Collateral
Proceeds invested in such manner shall not be commingled in a manner which would
disrupt the ability to make distributions of such Collateral Proceeds in
accordance with this Section 3.3.

ARTICLE IV.

AMENDMENTS TO SECURED OBLIGATION DOCUMENTS

Section 4.1 Security Documents.

(a) Subject to Section 4.3, any amendment, supplement or other modification of,
or any waiver or consent under, any Security Document shall not be effective
unless consented to in an Act of Secured Parties; provided that:

(i) any such amendment, supplement, modification, waiver or consent regarding
the release of Collateral or the subordination of the Liens of the Senior
Secured Parties (other than a release or subordination expressly permitted by
the Senior Secured Obligation Documents) shall not be effective unless consented
to in writing by the applicable percentage of Senior Secured Parties under each
Loan Obligation Document;

(ii) any such amendment, supplement, modification, waiver or consent regarding
the release of Collateral constituting Project Counterparty Collateral or the
subordination of the Subordinated Liens (other than (x) the subordination of the
Subordinated Liens pursuant to the terms of this Agreement or (y) a release or
subordination expressly permitted by the Secured Obligation Documents) shall not
be effective unless consented to in writing by the Majority Project
Counterparties and the applicable percentage of Senior Secured Parties under
each Loan Obligation Document;

(iii) any such amendment, supplement, modification, waiver or consent that has a
material adverse effect on the Senior Secured Parties or that modifies any of
the following provisions (including defined terms as used therein) shall not be
effective unless consented to in writing by Senior Secured Parties holding 100%
of the Senior Secured Obligations: (1) the priority of application of Proceeds
under Section 3.3(a); (2) the priority of payments under the Depositary
Agreement; (3) Section 2.1(b), 2.2, 2.4, 2.5, 2.6, 3.2 or 4.1(a) or Article V of
this Agreement; or (4) the definitions of “Collateral”, “Collateral Proceeds”,
“Secured Obligation Documents”, “Secured Obligations”, “Secured Parties”,
“Senior Liens”, “Senior Secured Obligation Documents”, “Senior Secured
Obligations”, “Senior Secured Parties”,

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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“Subordinated Liens”, “Subordinated Secured Obligation Documents”, “Subordinated
Secured Obligations” or “Subordinated Secured Parties” contained in this
Agreement; and

(iv) any such amendment, supplement, modification, waiver or consent which
modifies any of the provisions (including defined terms as used therein)
respectively specified in the immediately following clauses (A) and (B), shall
not be effective unless consented to in writing by (A) with respect to any such
amendment, supplement, modification, waiver or consent which modifies (1) the
priority of application of Proceeds under Section 3.3(a); (2) Section 2.2, 2.5,
2.6, 3.2, 7.9, 8.18 Section 4.1(a)(ii) or this Section 4.1(a)(iv); (3) the
definitions of “Project Counterparty Collateral”, “Subordinated Liens”,
“Subordinated Secured Obligation Documents”, “Subordinated Secured Obligations”,
“Subordinated Secured Parties”, “Majority Project Counterparties”, contained in
this Agreement; or (4) the proviso to the first sentence and/or the second and
final sentence of the definition “Collateral” set forth in Section 1.1 above,
the Subordinated Secured Parties holding 100% of the Subordinated Secured
Obligations or (B) with respect to any such amendment, supplement, modification,
waiver or consent which modifies the definitions of “Discharge of Secured
Obligations”, “Discharge of Senior Secured Obligations”, “Escrow Agreement”,
“Project Counterparties”, “Sales Agreement”, “[*] Escrow Agreement”, “Secured
Obligations”, “Secured Parties”, “Senior Liens”, “Senior Secured Obligation
Documents”, “Senior Secured Obligations”, “Senior Secured Parties”, or “[*]
Supply Contract”, each Subordinated Secured Party whose rights hereunder or
under the Sales Agreement and Escrow Agreement to which it is a party are
directly impaired or otherwise materially and adversely affected thereby.

(b) Notwithstanding anything to the contrary herein, this Agreement can be
amended, supplemented or otherwise modified without the consent or approval of
the Borrower, the Pledgor or any other Grantor unless such amendment, supplement
or other modification would materially and adversely affect the rights of the
Borrower, the Pledgor or any other Grantor, as applicable, hereunder.

Section 4.2 Other Secured Obligation Documents.

(a) Generally. Any amendment, supplement or other modification of, or any waiver
or consent under, any Secured Obligation Document other than a Security Document
may be effected in accordance with the provisions of such Secured Obligation
Document without the consent of any Secured Party or class of Secured Parties
not party to or governed by such Secured Obligation Document; provided that
without the prior written consent of the Senior Collateral Agent (acting at the
direction of an Act of Secured Parties), no Subordinated Secured Obligation
Document may be amended, supplemented or otherwise modified or entered into to
the extent such amendment, supplement or modification, or the terms of any new
Subordinated Secured Obligation Document, would contravene the provisions of
this Agreement.

(b) No Impairment of Subordination. The Senior Secured Obligation Documents may
be amended, supplemented or otherwise modified in accordance with their terms
and the Senior Secured Obligations may be Refinanced at any time, without notice
to, or the consent of, the Subordinated Collateral Agent or the Subordinated
Secured Parties, all without affecting the lien priority and subordination or
other provisions of this Agreement; provided, however, that notwithstanding
anything to the contrary herein, no such amendment, supplement, other
modification or Refinancing shall result in (i) an increase in the Senior
Secured Obligations by an amount greater than $25,000,000 or (ii) an extension
of the scheduled maturity date of the Senior Secured Obligations to a date after
December 31, 2015.

Section 4.3 Administrative Amendments. Notwithstanding the provisions of
Section 4.1, the Borrower and the Collateral Agent (acting at the direction of
the Administrative Agent) may effect amendments, supplements or modifications of
the Security Documents for the following purposes:

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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(a) subject to Section 2.3, to add to the covenants of the Borrower or any other
Grantor for the benefit of the Secured Parties or to surrender any right or
power therein conferred upon the Borrower or any other Grantor or to confer
additional benefits upon the Secured Parties;

(b) to evidence and provide for the acceptance of appointment by a successor
Collateral Agent;

(c) to mortgage, pledge, hypothecate or grant a security interest in favor of
the Collateral Agent for the benefit of the Secured Parties as additional
security for the payment and performance of Borrower’s obligations under the
Secured Obligation Documents, so long as such additional security is consistent
with the rights of the Secured Parties as set forth herein, including
Section 2.3;

(d) to make administrative or mechanical amendments to this Agreement to provide
for the addition of Secured Obligations and Secured Parties as permitted under
the Credit Agreement so long as such amendments do not modify the rights and
obligations of the parties hereto; or

(e) to correct any typographical errors or other similar mistakes that do not
modify the rights and obligations of the parties hereto.

ARTICLE V.

BANKRUPTCY EVENTS; OTHER SUBORDINATION PROVISIONS

Section 5.1 Bankruptcy Events.

(a) Finance and Sale Issues. Until the Discharge of Senior Secured Obligations
has occurred, if the Borrower or any other Grantor shall be subject to any
Bankruptcy Event and an Act of Secured Parties shall determine to permit the use
of “Cash Collateral” (as such term is defined in Section 363(a) of the U.S.
Bankruptcy Code) on which the Senior Collateral Agent (on behalf of the Senior
Secured Parties) or any other creditor has a Lien or to permit the Borrower to
obtain financing, whether from any Senior Secured Party or any other Person
under Section 364 of the Bankruptcy Code or any similar Bankruptcy Law (“DIP
Financing”), then each Subordinated Secured Party agrees that it will raise no
objection to such Cash Collateral use or DIP Financing, and to the extent the
Liens securing the Senior Secured Obligations are subordinated to or pari passu
with such DIP Financing, the Subordinated Collateral Agent (on behalf of the
Subordinated Secured Parties) will subordinate the Subordinated Liens to the
Liens securing such DIP Financing (and all Senior Secured Obligations relating
thereto) and will not request adequate protection or any other relief in
connection therewith (except as expressly set forth in an Act of Secured
Parties). Each Subordinated Secured Party agrees that it will raise no objection
or oppose a motion to sell or otherwise dispose of any Collateral free and clear
of its Liens or other claims under Section 363 of the Bankruptcy Code if the
Senior Collateral Agent (as directed by an Act of Secured Parties) has consented
to such sale or disposition of such assets, and such motion does not materially
impair the rights of the Subordinated Collateral Agent (on behalf of the
Subordinated Secured Parties) or the Subordinated Secured Parties under
Section 363(k) of the Bankruptcy Code.

(b) Relief from the Automatic Stay. So long as the Discharge of the Senior
Secured Obligations has not occurred, each Subordinated Secured Party agrees
that it shall not seek (or support any other Person seeking) relief from the
automatic stay or any other stay in any Bankruptcy Event in respect of the
Collateral or the exercise of rights under the Subordinated Secured Obligation
Documents, except pursuant to any action taken by the Senior Collateral Agent
(on behalf of the Senior Secured Parties) in accordance with terms hereof.

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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(c) Adequate Protection. So long as the Discharge of the Senior Secured
Obligations has not occurred, each Subordinated Secured Party agrees that it
shall not contest (or support any other Person contesting):

(i) any request by the Senior Collateral Agent (on behalf of the Senior Secured
Parties) or any Senior Secured Party for adequate protection; or

(ii) any objection by the Senior Collateral Agent (on behalf of the Senior
Secured Parties) or any Senior Secured Party to any motion, relief, action or
proceeding based on the Senior Collateral Agent (on behalf of the Senior Secured
Parties) or any Senior Secured Party claiming a lack of adequate protection.

(d) No Waiver of Objection Rights. Nothing contained herein shall prohibit or in
any way limit the Senior Collateral Agent (on behalf of the Senior Secured
Parties) or any other Senior Secured Party from objecting in any Bankruptcy
Event or otherwise to any action taken by the Subordinated Collateral Agent (on
behalf of the Subordinated Secured Parties) or any other Subordinated Secured
Party with respect to the Collateral, including the seeking by the Subordinated
Collateral Agent (on behalf of the Subordinated Secured Parties) or any other
Subordinated Secured Party of adequate protection or the asserting by the
Subordinated Collateral Agent (on behalf of the Subordinated Secured Parties) or
any other Subordinated Secured Party of any of its rights and remedies with
respect to the Project Counterparty Collateral under the Subordinated Secured
Obligation Documents or otherwise.

(e) Avoidance Issues.

(i) If the Senior Collateral Agent (on behalf of the Senior Secured Parties) is
required in any Bankruptcy Event or otherwise to turn over or otherwise pay to
the estate of the Borrower or any other Grantor any amount paid in respect of
the Senior Secured Obligations (a “Senior Recovery”), then the Senior Collateral
Agent (on behalf of the Senior Secured Parties) shall be entitled to a
reinstatement of Senior Secured Obligations with respect to all such recovered
amounts. In such event, the Discharge of Senior Secured Obligations shall be
deemed not to have occurred. If this Agreement shall have been terminated prior
to such Senior Recovery, this Agreement shall be reinstated in full force and
effect, and such prior termination shall not diminish, release, discharge,
impair or otherwise affect the obligations of the parties hereto from such date
of reinstatement.

(ii) If the Subordinated Collateral Agent (on behalf of the Subordinated Secured
Parties) is required in any Bankruptcy Event or otherwise to turn over or
otherwise pay to the estate of the Borrower or any other Grantor any amount paid
in respect of the Subordinated Secured Obligations (a “Subordinated Recovery”),
then the Subordinated Collateral Agent (on behalf of the Subordinated Secured
Parties) shall be entitled to a reinstatement of Subordinated Secured
Obligations with respect to all such recovered amounts. In such event, the
Discharge of Subordinated Secured Obligations shall be deemed not to have
occurred. If this Agreement shall have been terminated prior to such
Subordinated Recovery, this Agreement shall be reinstated in full force and
effect, and such prior termination shall not diminish, release, discharge,
impair or otherwise affect the obligations of the parties hereto from such date
of reinstatement.

(f) Reorganization Securities. If, in connection with any Bankruptcy Event, debt
obligations of the reorganized debtor secured by Liens upon any property of the
reorganized debtor are distributed pursuant to a plan of reorganization or
similar dispositive restructuring plan on account of Secured Obligations then,
to the extent the debt obligations distributed on account of the Secured
Obligations are secured by Liens upon the same property, the provisions of this
Agreement will survive the distribution of such debt

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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obligations pursuant to such plan and will apply with like effect to the Liens
securing such debt obligations.

(g) Post-Petition Interest. None of the Subordinated Secured Parties shall
oppose or seek to challenge any claim by the Senior Collateral Agent (on behalf
of the Senior Secured Parties) or any Senior Secured Party for allowance in any
Bankruptcy Event in respect of Senior Secured Obligations consisting of
post-petition interest, fees or expenses to the extent of the value of the
Senior Collateral Agent’s (on behalf of the Senior Secured Parties) or any
Senior Secured Party’s Lien, without regard to the existence of the Lien of the
Subordinated Collateral Agent (on behalf of the Subordinated Secured Parties).

(h) Waiver of Claims. Each Subordinated Secured Party waives any claim it may
hereafter have against the Senior Collateral Agent (on behalf of the Senior
Secured Parties) or any Senior Secured Party arising out of the election of the
Senior Collateral Agent (on behalf of the Senior Secured Parties) or any Senior
Secured Party of the application of Section 1111(b)(2) of the Bankruptcy Code,
and/or out of any cash collateral or financing arrangement or out of any grant
of a security interest in connection with the Collateral in any Bankruptcy
Event.

Section 5.2 Other Subordination Provisions.

(a) When Discharge of Senior Secured Obligations Deemed to Not Have Occurred.
If, at any time after the Discharge of Senior Secured Obligations has occurred
the Borrower thereafter enters into any Refinancing of the Loan Obligations,
then such Discharge of Senior Secured Obligations shall automatically be deemed
not to have occurred with respect to any Senior Secured Obligations outstanding
after giving effect to such Refinancing for all purposes of this Agreement
(other than with respect to any actions taken as a result of the occurrence of
such Discharge of Senior Secured Obligations), and, from and after the date on
which the New Loan Obligation Notice (as defined below) is delivered to the
Subordinated Collateral Agent in accordance with the next sentence, the
obligations under such Refinancing of the Loan Obligations shall automatically
be treated as Senior Secured Obligations for all purposes of this Agreement,
including for purposes of the Lien priorities and rights in respect of
Collateral set forth herein, and the administrative agent under the applicable
Senior Secured Obligation Documents shall be the Administrative Agent for all
purposes of this Agreement. Upon receipt of a notice (the “New Loan Obligations
Notice”) stating that the Borrower has entered into new Senior Secured
Obligation Documents in respect of a Refinancing of the Loan Obligations, which
notice shall include the identity of the new Administrative Agent (such agent,
the “New Administrative Agent”), the Subordinated Collateral Agent (on behalf of
the Subordinated Secured Parties) and each Subordinated Secured Party (or its
Secured Obligation Representative) shall promptly enter into such documents and
agreements (including amendments or supplements to this Agreement) as the
Borrower or such New Administrative Agent shall reasonably request in order to
provide to the New Administrative Agent the rights contemplated hereby, in each
case consistent in all material respects with the terms of this Agreement. The
New Administrative Agent shall enter into an Accession Agreement.

(b) Waiver of Claims, Duty, Marshalling, etc.

(i) Except as otherwise provided herein and so long as the Senior Collateral
Agent and the Senior Secured Parties are not acting in violation of this
Agreement, each Subordinated Secured Party agrees that neither the Senior
Collateral Agent (on behalf of the Senior Secured Parties) nor any Senior
Secured Party (or its Secured Obligation Representative on its behalf) shall
have any liability to any Subordinated Secured Party with respect to the
Subordinated Liens or otherwise with respect to the Project Counterparty
Collateral, and each Subordinated Secured Party hereby waives any claim against
the Senior

 

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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Collateral Agent (on behalf of the Senior Secured Parties) or any Senior Secured
Party (or its Secured Obligation Representative on its behalf) arising out of
any and all actions which the Senior Collateral Agent (on behalf of the Senior
Secured Parties) or any Senior Secured Party may take or permit or omit to take
with respect to:

(A) the Senior Secured Obligation Documents;

(B) the collection of the Senior Secured Obligations; or

(C) the foreclosure upon, or sale, liquidation, use or other disposition of, any
Collateral.

(ii) Each Subordinated Secured Party agrees that, except as otherwise expressly
provided herein, the Senior Collateral Agent (on behalf of the Senior Secured
Parties) and the Senior Secured Parties have no duty to it in respect of the
maintenance or preservation of the Project Counterparty Collateral or the
Subordinated Lien.

(iii) Until the Discharge of Senior Secured Obligations, each Subordinated
Secured Party agrees, except as otherwise expressly provided herein, not to
assert and hereby waives, to the fullest extent permitted by law, any right to
demand, request, plead or otherwise assert or otherwise claim the benefit of,
any marshalling, appraisal, valuation or other similar right that may otherwise
be available under applicable law with respect to the Project Counterparty
Collateral or any other similar rights a junior secured creditor may have under
applicable law.

(iv) Each Subordinated Secured Party assents, except as otherwise expressly
provided herein, to any extension or postponement of the time of payment of the
Senior Secured Obligations or any part thereof and to any other waiver, consent,
restructuring, forgiveness or similar indulgence with respect thereto, to any
substitution, exchange or release of any security which may at any time secure
any part of the Senior Secured Obligations and to the addition or release of any
other Person primarily or secondarily liable therefore.

(c) Application of Payments. All payments received by the Senior Collateral
Agent (on behalf of the Senior Secured Parties) or any Senior Secured Party may
be applied, reversed and reapplied, in whole or in part, to such part of the
Senior Secured Obligations as provided for in the Senior Secured Obligation
Documents.

ARTICLE VI.

COLLATERAL AGENT

Section 6.1 Grant of Authority; Acceptance of Appointment.

(a) The Administrative Agent shall appoint a financial institution satisfactory
to it as Collateral Agent hereunder and such Collateral Agent shall accede to
this Agreement by executing a counterpart signature page to this Agreement. Each
Secured Party hereby agrees to such appointment of the Collateral Agent by the
Administrative Agent and authorizes the Collateral Agent to take such action as
agent on its behalf and to exercise such powers hereunder and under the other
Security Documents as are specifically delegated to the Collateral Agent by the
terms of this Agreement and the other Security Documents or in an Act of Secured
Parties or a consent or other direction of the applicable Secured Parties
pursuant to Section 4.1, together with such other powers as are reasonably
incidental thereto. The Collateral Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
other Security Documents or in an Act of Secured Parties or a consent or other
direction of the applicable Secured Parties pursuant to Section 4.1. By its
execution of a counterpart

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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signature page to this Agreement, the Collateral Agent shall accept its
appointment as Collateral Agent hereunder, including its obligations hereunder
and under the other Security Documents, for the benefit of the Secured Parties,
upon the terms herein and therein expressly set forth.

(b) Each Senior Secured Party hereby appoints the financial institution
appointed pursuant to Section 6.1(a) as Collateral Agent as Senior Collateral
Agent hereunder and authorizes the Senior Collateral Agent to take such action
as agent on its behalf and to exercise such powers hereunder and under the other
Security Documents as are specifically delegated to the Senior Collateral Agent
by the terms of this Agreement and the other Security Documents or in an Act of
Secured Parties or a consent or other direction of the applicable Senior Secured
Parties pursuant to Section 4.1, together with such other powers as are
reasonably incidental thereto. The Senior Collateral Agent shall not have any
duties or responsibilities except those expressly set forth in this Agreement
and the other Security Documents or in an Act of Secured Parties or a consent or
other direction of the applicable Senior Secured Parties pursuant to
Section 4.1. By its execution of a counterpart signature page to this Agreement,
the Senior Collateral Agent shall accept its appointment as Senior Collateral
Agent hereunder, including its obligations hereunder and under the other
Security Documents, for the benefit of the Senior Secured Parties, upon the
terms herein and therein expressly set forth.

(c) Each Subordinated Secured Party hereby appoints the financial institution
appointed pursuant to Section 6.1(a) as Collateral Agent as Subordinated
Collateral Agent hereunder and authorizes the Subordinated Collateral Agent to
take such action as agent on its behalf and to exercise such powers hereunder
and under the other Security Documents as are specifically delegated to the
Subordinated Collateral Agent by the terms of this Agreement and the other
Security Documents or in an Act of Secured Parties or a consent or other
direction of the applicable Subordinated Secured Parties pursuant to
Section 4.1, together with such other powers as are reasonably incidental
thereto. The Subordinated Collateral Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
other Security Documents or in an Act of Secured Parties or a consent or other
direction of the applicable Subordinated Secured Parties pursuant to
Section 4.1. By its execution of a counterpart signature page to this Agreement,
the Subordinated Collateral Agent shall accept its appointment as Subordinated
Collateral Agent hereunder, including its obligations hereunder and under the
other Security Documents, for the benefit of the Subordinated Secured Parties,
upon the terms herein and therein expressly set forth.

Section 6.2 Authorization.

(a) The Collateral Agent is authorized to take such action on behalf of each of
the Secured Parties and to exercise all such powers as are delegated to the
Collateral Agent hereunder and under any of the other Security Documents and any
related documents or in an Act of Secured Parties or a consent or other
direction of the applicable Secured Parties pursuant to Section 4.1, together
with such powers as are reasonably incidental thereto, including the authority,
without the necessity of any notice to or further consent of the Secured
Parties, from time to time to take any action with respect to any Collateral or
the Security Documents which may be necessary to perfect, maintain, protect or
insure the priority of the security interest in and liens on the Collateral
granted pursuant to the Security Documents; provided that no duties or
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Collateral Agent.

(b) The relationship between the Collateral Agent and each of the Secured
Parties is that of an independent contractor. As an independent contractor
empowered by the Secured Parties to exercise certain rights and perform certain
duties and responsibilities hereunder and under the other Security

 

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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Documents, the Collateral Agent is nevertheless a “representative” of the
Secured Parties, as that term is defined in Article 1 of the UCC, for purposes
of actions for the benefit of the Secured Parties with respect to all collateral
security and guaranties contemplated by the Security Documents. Such actions
include the designation of the Collateral Agent as “secured party”, “mortgagee”
or the like on all financing statements and other documents and instruments,
whether recorded or otherwise, relating to the attachment, perfection, priority
or enforcement of any security interests, mortgages or deeds of trust in
collateral security intended to secure the payment or performance of any of the
Secured Obligations, all for the benefit of the Secured Parties.

Section 6.3 Employees and Agents. The Collateral Agent may exercise its powers
and execute its duties by or through employees or agents and shall be entitled
to take, and to rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Agreement and the other Security Documents.

Section 6.4 Action on Instructions. The Collateral Agent shall take such actions
and exercise such rights, powers or remedies under this Agreement and under the
other Security Documents as directed in an Act of Secured Parties or in a
consent or other direction of the applicable Secured Parties pursuant to
Section 4.1. Neither the Collateral Agent nor any of its directors, officers,
agents, employees or attorneys shall be liable for any action taken or omitted
to be taken under or in connection with this Agreement or any other Credit
Document in accordance with the written instructions of the appropriate Secured
Parties in accordance with this Agreement, except for such liability resulting
from its or their bad faith, gross negligence or willful misconduct. Any such
directions and any action taken and any failure to act, in each case pursuant to
such directions, shall be binding on all the Secured Parties and their
respective successors and assigns.

Section 6.5 Responsibility of the Collateral Agent.

(a) The Collateral Agent shall hold each document or instrument included in the
Collateral and delivered to it as provided in this Agreement for the benefit of
the Secured Parties. Collateral Agent shall take such further action with
respect to any particular filing or recording pertaining to the Collateral as
may be requested in an Act of Secured Parties or in a consent or other direction
of the applicable Secured Parties pursuant to Section 4.1.

(b) The Collateral Agent may rely and shall be protected in acting or refraining
from acting, in good faith, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, note or
other document believed by it to be genuine and to have been signed or presented
by the proper party or parties.

Section 6.6 Resignation, Removal and Replacement of the Collateral Agent. The
Collateral Agent or any successor Collateral Agent may resign at any time by
giving at least 30 days’ prior written notice of resignation to each Secured
Party, such resignation to be effective upon the appointment of a successor the
Collateral Agent as provided in this Section 6.6. The Secured Parties may at any
time remove the Collateral Agent for or without cause by an Act of Secured
Parties delivered to the Collateral Agent. In case the office of the Collateral
Agent shall become vacant for any reason, the Secured Parties may appoint a
successor Collateral Agent to fill such vacancy by an Act of Secured Parties
delivered to such successor Collateral Agent and the departing Collateral Agent
with, so long as no Default or Event of Default has occurred and is continuing,
the consent of the Borrower, such consent not to be unreasonably withheld or
delayed. Until a new Collateral Agent shall be so appointed by such persons, the
Collateral Agent shall appoint an interim Collateral Agent to fill such vacancy
by an instrument or instruments in writing and delivered to such interim
Collateral Agent and each Secured Party. Upon the appointment of

 

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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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any successor or interim Collateral Agent pursuant to this Section 6.6, such
successor or interim Collateral Agent shall immediately and without further act
succeed to all the rights and obligations of the departing Collateral Agent
hereunder and under the Security Documents as if originally named herein and
therein and the departing Collateral Agent shall duly assign, transfer and
deliver to such successor or interim Collateral Agent all the rights, property,
assets and moneys at the time held by the departing Collateral Agent hereunder
and under the Security Documents and shall execute and deliver such proper
instruments as may be reasonably necessary or requested to evidence such
assignment, transfer and delivery. After any such resignation or removal, the
provisions of this Section 6.6 shall continue in effect for the benefit of the
departing Collateral Agent with respect to any actions taken or omitted by it
while acting as Collateral Agent.

Section 6.7 Agency for Perfection. Each Secured Party hereby appoints each other
Secured Party as agent for the purpose of perfecting the security interest in
any Collateral which, in accordance with Article 9 of the UCC, can be perfected
only by possession. Should any Secured Party obtain possession of any such
Collateral, such Secured Party shall notify the Collateral Agent thereof, and,
promptly upon the Collateral Agent’s request therefor shall deliver such
Collateral to the Collateral Agent or in accordance with the Collateral Agent’s
instructions.

Section 6.8 Collateral Agent Compensation; Indemnification; No Consequential
Damages.

(a) The Borrower shall pay such compensation to the Collateral Agent as the
Borrower and the Collateral Agent may agree in writing from time to time.

(b) In addition to the payment of compensation pursuant to clause (a), whether
or not the transactions contemplated hereby shall be consummated, the Borrower
agrees to defend (subject to Indemnitees’ reasonable approval of counsel),
indemnify, pay and hold harmless, the Collateral Agent and the officers,
partners, members, directors, trustees, advisors, employees, agents, sub-agents
and Affiliates of the Collateral Agent (each, an “Indemnitee”) from and against
any and all Indemnified Liabilities; provided that the Borrower shall not have
any obligation to any Indemnitee hereunder with respect to any Indemnified
Liabilities to the extent such Indemnified Liabilities arise from the bad faith,
gross negligence or willful misconduct of that Indemnitee. To the extent that
the undertakings to defend, indemnify, pay and hold harmless set forth in this
clause (b) may be unenforceable in whole or in part because they are violative
of any law or public policy, the Borrower shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.

(c) Any amounts payable by the Borrower as provided clause (a) or (b) of this
Section 6.8 shall, except as otherwise expressly provided, be paid within 10
days after written demand therefor and shall constitute additional Secured
Obligations secured by the Security Documents.

(d) To the extent permitted by applicable law, the Borrower and each other
Grantor shall not assert, and the Borrower and each other Grantor hereby waives,
any claim against the Collateral Agent and its Affiliates, directors, employees,
attorneys, agents or sub-agents, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) (whether or not the claim therefor is based on contract, tort or duty
imposed by any applicable legal requirement) arising out of, in connection with,
as a result of, or in any way related to, this Agreement or any other Secured
Obligation Document or any agreement or instrument contemplated hereby or
thereby or referred to herein or therein, the transactions contemplated hereby
or thereby or any act or omission or event occurring in connection therewith,
and Borrower and each other Grantor hereby waives, releases and

 

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AMENDED.

 

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agrees not to sue upon any such claim or any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.

(e) The agreements in this Section 6.8 shall survive repayment of the Secured
Obligations and all other amounts payable under the Secured Obligation
Documents.

ARTICLE VII.

OTHER AGREEMENTS

Section 7.1 Additional Secured Parties. A Person shall be added as a “Secured
Party” party hereto upon delivery to the Collateral Agent of (a) an Officer’s
Certificate of the Borrower substantially in the form of Exhibit C and (b) an
Accession Agreement executed by such Person.

Section 7.2 Secured Party Meetings. A meeting of the Secured Parties (a “Secured
Party Meeting”) may be called by any Secured Party at any time during the
continuation of an Event of Default. Secured Party Meetings shall be held at a
mutually convenient time and place, and any applicable Secured Party may
participate therein via telephone. No Secured Party Meeting shall be held unless
each applicable Secured Party has been given notice thereof. If any applicable
Secured Party is not represented at any Secured Party Meeting, the other Secured
Parties shall promptly deliver to such applicable Secured Party upon its request
minutes of such Secured Party Meeting.

Section 7.3 No Independent Actions. Each of the Secured Parties agrees not to
take any enforcement or other action with respect to the Collateral, any
Collateral Proceeds or the Security Documents other than pursuant to this
Agreement; provided, however, that nothing in this Agreement shall restrict the
ability of any Secured Party to accelerate the Secured Obligations owed to it in
accordance with the applicable Secured Obligation Documents or to exercise any
other remedy available to it under the applicable Secured Obligation Documents,
other than remedies with respect to the Collateral.

Section 7.4 Independent Actions. Each Secured Obligation Representative (for
itself and on behalf of each of its Secured Parties) acknowledges and agrees
that each of the other Secured Parties has made no express or implied
representation or warranty, including with respect to the execution, validity,
legality, completeness, collectibility or enforceability of any of the Secured
Obligation Documents, as the case may be, the ownership of any Collateral or the
perfection or priority of any Liens thereon. Except as otherwise provided
herein, the Secured Parties will be entitled to manage and supervise their
respective loans and extensions of credit under the Secured Obligation Documents
in accordance with law and as they may otherwise, in their sole discretion, deem
appropriate. No Secured Party shall have any duty to any other Secured Party to
act or refrain from acting in a manner which allows, or results in, the
occurrence or continuance of an Event of Default or default under any agreements
with the Borrower (including the Secured Obligation Documents), regardless of
any knowledge thereof which they may have or be charged with.

Section 7.5 Collateral Releases.

(a) If in connection with the exercise of any of the Secured Parties’ remedies
under the Security Documents (subject to Section 3.1), the Collateral Agent
disposes of any part of the Collateral, or in connection with any conveyance,
sale, lease, transfer or other disposition permitted under the Security
Documents (subject to Section 4.1), any part of the Collateral is conveyed,
sold, leased, transferred or otherwise disposed of, then the Liens, if any, of
the Collateral Agent for the benefit of any of the Secured Parties on such
Collateral shall be automatically, unconditionally and simultaneously released.
The Collateral Agent (on behalf of the applicable Secured Parties) shall
promptly execute and deliver such

 

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AMENDED.

 

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termination statements, releases and other documents as reasonably required or
requested to effectively confirm such release.

(b) To the extent that the Collateral Agent or any of the Secured Parties have
released any Lien on Collateral and any such Liens are later reinstated or
replaced by new Liens, then each such reinstated or replacement Lien shall be
subject to the lien priority and subordination provisions of this Agreement.

(c) Until the Discharge of Senior Secured Obligations, the Subordinated
Collateral Agent (for itself and on behalf of the Subordinated Secured Parties
acting on their own behalf or through their respective Secured Obligation
Representatives) hereby irrevocably constitutes and appoints the Senior
Collateral Agent and any officer or agent of the Senior Collateral Agent, with
full power of substitution, as its true and lawful attorney in fact with full
irrevocable power and authority in the place and stead of the Subordinated
Collateral Agent or such holder or in the Senior Collateral Agent’s own name,
from time to time in the Senior Collateral Agent’s discretion, for the purpose
of carrying out the terms of this Section 7.5, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary to accomplish the purposes of this Section 7.5, including any
endorsements or other instruments of transfer or release.

(d) If any of the Collateral shall be sold or disposed of to any Person in a
transaction (i) expressly permitted under the Secured Obligation Documents or
(ii) consented to pursuant to the Secured Obligation Documents, in each case
subject to this Agreement (including Section 4.1) and the other Secured
Obligation Documents, such Collateral shall be automatically released from the
Liens created under the Secured Obligation Documents.

(e) Upon the release of the Collateral agent’s Liens on any portion of the
Collateral pursuant to Section 7.5(d) above, the Collateral Agent shall (at the
written request and sole cost and expense of the Borrower) promptly execute and
deliver to the Borrower upon such release such UCC termination statements or
amendments to existing UCC financing statements, and such other documentation
and take such other action as shall be reasonably requested by the Borrower to
effect the termination and release of the Liens on the Collateral so released.

Section 7.6 Bailee for Protection.

(a) The Collateral Agent agrees to hold that part of the Collateral that is in
its possession or control (or in the possession or control of its agents or
bailees) to the extent that possession or control thereof is taken to perfect a
Lien thereon by possession or delivery under the UCC (such Collateral being the
“Bailee Collateral”) as collateral agent for the applicable Secured Parties
(such bailment being intended, among other things, to satisfy the requirements
of Sections 8-301(a)(2), 9-313(a) and 9-313(c) of the UCC) and any assignee
solely for the purpose of perfecting by possession or delivery the security
interest granted under the Security Documents, subject to the terms and
conditions of this Section 7.6.

(b) The Collateral Agent shall have no obligation whatsoever to the Secured
Parties to ensure that the Bailee Collateral is genuine or owned by any of the
Grantors or to preserve rights or benefits of any Person except as expressly set
forth in this Section 7.6. The duties or responsibilities of the Collateral
Agent under this Section 7.6 shall be limited solely to holding the Bailee
Collateral as bailee in accordance with this Section 7.6.

(c) The Collateral Agent acting pursuant to this Section 7.6 shall not have, by
reason of this Agreement, the other Security Documents or any other document, a
fiduciary relationship in respect of the Secured Parties.

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Section 7.7 Notices and Information.

(a) Each Secured Obligation Representative hereby agrees to give the Collateral
Agent and each other Secured Obligation Representative prompt written notice of
the occurrence of (i) any Event of Default under such Person’s Secured
Obligation Documents of which such Person has written notice, and (ii) any
acceleration of the maturity of such Person’s Secured Obligations under such
Person’s Secured Obligation Documents wherein such Person’s Secured Obligations
have been declared to be or have automatically become due and payable earlier
than the scheduled maturity thereof or termination date thereunder and setting
forth the aggregate amount of Secured Obligations that have been so accelerated
under such Secured Obligation Documents, in each case, as soon as practicable
after the occurrence thereof (and, in any event, within five Business Days after
the occurrence thereof); provided, however, that the failure to provide such
notice shall not limit or impair the rights of the Secured Parties, or the
obligations of the Borrower or any other Grantor, hereunder or under the other
Secured Obligation Documents. No Secured Obligation Representative shall be
deemed to have knowledge or notice of the occurrence of a Event of Default under
the Secured Obligation Documents, other than the Secured Obligation Documents to
which it is a party, until such Secured Obligation Representative has received a
written notice of such Event of Default from the Collateral Agent, a Secured
Obligation Representative, the Borrower, the other Grantors or any other Secured
Party for whom such Secured Obligation Representative is acting as agent or
trustee.

(b) The Collateral Agent hereby agrees to give each other Secured Obligation
Representative written notice of the occurrence of an Event of Default following
receipt thereof of written notice to it and provide a copy of all other
information provided to it by the Borrower, any other Grantor or the Depositary
Bank under the Secured Obligation Documents upon request.

(c) Upon the written request of the Collateral Agent, each Secured Party (or its
Secured Obligation Representative) shall promptly (and, in any event, within
five Business Days) give the Collateral Agent written notice of the aggregate
amount of the Secured Obligations then outstanding owed by the Borrower to such
Secured Party under the applicable Secured Obligation Documents and any other
information that the Collateral Agent may reasonably request.

(d) Each of the Secured Parties shall be responsible for keeping themselves
informed of (i) the financial condition of the Borrower and its Affiliates and
all endorsers and/or guarantors of the Secured Obligations and (ii) all other
circumstances bearing upon the risk of nonpayment of the Secured Obligations.
The Secured Parties shall have no duty to advise any other Secured Parties of
information known to it or them regarding such condition or any such
circumstances or otherwise. In the event that any of the Secured Parties, in its
or their sole discretion, undertakes at any time or from time to time to provide
any such information to any other Secured Party, it or they shall be under no
obligation:

(i) to make, and such Secured Party shall not make, any express or implied
representation or warranty, including with respect to the accuracy,
completeness, truthfulness or validity of any such information so provided;

(ii) to provide any additional information or to provide any such information on
any subsequent occasion;

(iii) to undertake any investigation; or

(iv) to disclose any information, which pursuant to accepted or reasonable
commercial finance practices, such party wishes to maintain confidential or is
otherwise required to maintain confidential.

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Section 7.8 Attorney-in-Fact. The Collateral Agent is hereby irrevocably
authorized and empowered to act as the attorney-in-fact for the Borrower and
each other Grantor with respect to the giving of any instructions or notices
delivered in accordance with, and to the extent the Collateral Agent is
permitted to do so under, the Depositary Agreement. The Collateral Agent hereby
agrees that (without limiting anything set forth in the Depositary Agreement),
upon an Act of Secured Parties during the occurrence and continuation of an
Event of Default or as otherwise contemplated by the Depositary Agreement, it
shall give such notices and instructions under the Depositary Agreement to the
Depositary Bank.

Section 7.9 Purchase Right. Without prejudice to the enforcement of the Senior
Secured Parties’ remedies, the Senior Secured Parties agree that following an
acceleration of the Senior Secured Obligations in accordance with the terms of
the Senior Secured Obligation Documents, the Senior Secured Parties will offer
the Subordinated Secured Parties the option to purchase the entire aggregate
amount of (but not less than the entire amount of) outstanding Senior Secured
Obligations at par plus any accrued and unpaid interest (but without regard to
any prepayment penalty or premiums), due and payable to the Senior Secured
Parties under the Senior Secured Obligation Documents, without warranty or
representation or recourse, on a pro rata basis across the Senior Secured
Parties. The Subordinated Secured Parties shall irrevocably accept or reject
such offer within 10 Business Days of the receipt thereof and the parties shall
use their reasonable commercial efforts to close promptly thereafter (and, in
any event, shall close within 30 Business Days of the receipt thereof unless
otherwise agreed to by the Secured Obligation Representative for the Senior
Secured Parties). If the Subordinated Secured Parties accept such offer, it
shall be exercised pursuant to documentation mutually acceptable to the Secured
Obligation Representative for the Senior Secured Parties and the Secured
Obligation Representative for the Subordinated Secured Parties. If the
Subordinated Secured Parties reject such offer (or do not so irrevocably accept
such offer within the required timeframe), the Senior Secured Parties shall have
no further obligations pursuant to this Section 7.9 and may take any further
actions in their sole discretion in accordance with the Senior Secured
Obligation Documents and this Agreement.

ARTICLE VIII.

MISCELLANEOUS

Section 8.1 Conflicts. In the event of any conflict between the provisions of
this Agreement and the provisions of the Security Documents, the provisions of
this Agreement shall govern and control.

Section 8.2 Effectiveness; Continuing Nature of this Agreement. This Agreement
shall become effective when executed and delivered by the parties hereto. This
is a continuing agreement and any Secured Party (or its Secured Obligation
Representative on its behalf) may continue, at any time and without notice to
any other Person, to extend credit and other financial accommodations and lend
monies to or for the benefit of the Borrower constituting Secured Obligations in
reliance hereof. Each Secured Party (or its Secured Obligation Representative on
its behalf) hereby waives any rights it may have under applicable law to revoke
this Agreement or any of the provisions of this Agreement. The terms of this
Agreement shall survive, and shall continue in full force and effect, in any
Bankruptcy Event. All references to the Borrower shall include the Borrower as
debtor and debtor-in-possession and any receiver or trustee for the Borrower (as
the case may be) in any Bankruptcy Event.

Section 8.3 Termination. Notwithstanding any provision hereof to the contrary,
this Agreement shall terminate on the Final Discharge Date. If following such
termination any payment or performance of any Secured Obligation shall be
rescinded or reduced, or must otherwise be restored or returned by any oblige
thereof, whether as a “voidable payment”, “fraudulent conveyance” or otherwise,
this Agreement shall be

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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reinstated with respect to such Secured Obligation as if such payment or
performance, or any part thereof, had not been made.

Section 8.4 Successors and Assigns.

(a) This Agreement shall inure to the benefit of the Collateral Agent and the
Secured Parties and their respective successors and permitted assigns who shall
have, to the extent of their interests, the rights of the Collateral Agent and
the Secured Parties hereunder.

(b) This Agreement is binding upon the Borrower, each other Grantor and their
respective successors and permitted assigns. Neither the Borrower nor any other
Grantor may assign any of their respective rights and obligations hereunder
without the prior written consent of the Collateral Agent (acting at the
direction of an Act of Secured Parties), and any purported assignment in
violation of this Section shall be void.

Section 8.5 Notices.

(a) Notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, to the applicable address set forth in
Schedule 8.5.

(b) Each party hereto may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided further that approval of such procedures may
be limited to particular notices or communications.

(c) All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service, sent by
telecopy or (to the extent permitted by paragraph (b) above) electronic means or
on the date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section or in accordance with the latest unrevoked
direction from such party given in accordance with this Section.

(d) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto.

Section 8.6 APPLICABLE LAW. THIS AGREEMENT, AND ANY CLAIM OR CONTROVERSY
RELATING TO THE SUBJECT MATTER HEREOF, WHETHER FOUNDED IN CONTRACT LAW OR TORT
LAW, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

Section 8.7 Waivers; Amendment.

(a) No failure or delay of the Collateral Agent or any Secured Party in
exercising any right or power hereunder or under this Agreement or any Security
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Collateral Agent and the Secured Parties hereunder and under the Security
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower or any other Grantor therefrom shall in
any event be effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
the Borrower or any other Grantor

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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in any case shall entitle such Person to any other or further notice or demand
in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to Article IV.

Section 8.8 Further Assurances. Each party hereto shall take such further action
and shall execute and deliver such additional agreements, instruments and other
documents as reasonably required to effectuate and evidence the terms of this
Agreement.

Section 8.9 Entire Agreement. This Agreement and the other Secured Obligation
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any previous agreement among or representations from the
parties or their Affiliates with respect to the subject matter hereof is
superseded by this Agreement and the other Secured Obligation Documents.

Section 8.10 No Third Party Beneficiaries. This Agreement and the rights and
benefits hereof shall inure to the benefit of each of the parties hereto and its
respective successors and assigns and shall inure to the benefit of the
Collateral Agent, the Secured Obligation Representatives (on behalf of their
respective Secured Parties) and the other Secured Parties. Nothing in this
Agreement shall impair, as between the Borrower and the Collateral Agent, the
Secured Obligation Representatives (on behalf of their respective Secured
Parties) and the other Secured Parties, the obligations of the Borrower to pay
principal, interest, fees and other amounts as provided in the Secured
Obligation Documents.

Section 8.11 Provisions Solely to Define Relative Rights. The provisions of this
Agreement are and are intended for the purpose of defining the relative rights
of the Collateral Agent, the Secured Obligation Representatives (on behalf of
their respective Secured Parties) and the other Secured Parties. None of the
Borrower, any other Grantor or any other creditor thereof shall have any rights
hereunder and the Borrower and the other Grantors may not rely on the terms
hereof, other than in each case the provisions of Sections 4.2, 5.2(a), 6.6,
6.8, 7.5, 8.7, 8.11 and 8.16. Nothing in this Agreement is intended to or shall
impair the obligations of the Borrower, which are absolute and unconditional, to
pay the Secured Obligations as and when the same shall become due and payable in
accordance with their terms.

Section 8.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER EQUITY SECURED
OBLIGATION DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER EQUITY SECURED
OBLIGATION DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 8.12.

Section 8.13 Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

Section 8.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute but one contract, and shall become effective
when executed and delivered by each Person intended to be a party hereto.
Delivery of an executed counterpart to this Agreement by facsimile transmission
shall be as effective as delivery of a manually signed original.

Section 8.15 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

Section 8.16 Jurisdiction; Consent to Service of Process.

(a) Each party hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by applicable
law, in such federal court. The Borrower and each other Grantor further
irrevocably consent to the service of process in any action or proceeding in
such courts by the mailing thereof by any parties thereto by registered or
certified mail, postage prepaid, to the Borrower or such other Grantor, as
applicable, at the address specified for the Borrower on Schedule 8.5. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable law. Nothing in this
Agreement shall affect any right that the Collateral Agent or any Secured Party
may otherwise have to bring any action or proceeding relating to this Agreement
or the other Secured Obligation Documents against the Borrower, any other
Grantor or its properties in the courts of any jurisdiction.

(b) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any New York State or federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

Section 8.17 Specific Performance. The Collateral Agent and each Secured Party
(or its Secured Obligation Representative on its behalf) may demand specific
performance of this Agreement. The Collateral Agent, each Secured Obligation
Representative (for itself and on behalf of each of its Secured Parties) and
each Grantor hereby irrevocably waive any defense based on the adequacy of a
remedy at law and any other defense which might be asserted to bar the remedy of
specific performance in any action which may be brought by the Collateral Agent,
any Secured Obligation Representative (for itself and on behalf of each of its
Secured Parties) or any other Secured Parties, as the case may be.

Section 8.18 Additional Provision Relating to Project Counterparties.
Notwithstanding anything herein to the contrary, nothing herein shall restrict,
prevent or impair the exercise of the respective rights or remedies of the
Project Counterparties against the Borrower arising out of their respective
Sales Agreements and Escrow Agreements other than with respect to the
Subordinated Lien.

 

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        /s/DS 6/13/2007    

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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[Signature pages follow.]

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
written above.

HOKU MATERIALS, INC.

By:

Name:

Title:

HOKU HOLDINGS, INC.

By:

Name:

Title:

[*]

By:

Name:

Title:

[                                         ],

as Project Counterparty

By:

Name:

Title:

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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[                                         ],

as Administrative Agent

By:

Name:

Title:

The undersigned hereby confirms that it was appointed Collateral Agent for the
Secured Parties under the Intercreditor Agreement on [                ], 2007,
pursuant to Article VI thereof, and acknowledges and agrees that by signing this
counterpart signature page to this Intercreditor Agreement, it hereby becomes a
party to this Intercreditor Agreement as of such date with the same force and
effect as if such counterpart were delivered on the date thereof.

[                                         ],

as Collateral Agent

By:

Name:

Title:

SCHEDULE 8.5

NOTICE ADDRESSES

EXHIBIT A

ACCESSION AGREEMENT

EXHIBIT B

FORM OF SECURED OBLIGATION BALANCE CERTIFICATE

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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EXHIBIT C

FORM OF OFFICER’S CERTIFICATE

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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APPENDIX 9

CONSENT

[ATTACHED]

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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CONSENT AND AGREEMENT

This CONSENT AND AGREEMENT, dated as of [            ], 2007 (as amended,
restated, supplemented or otherwise modified from time to time, this “Consent”),
is entered into by and among WUXI SUNTECH POWER CO., LTD., a People’s Republic
of China company (together with its successors and assigns, the “Contracting
Party”), HOKU MATERIALS, INC., a Delaware corporation (together with its
successors and assigns, the “Borrower”), and [            ], in its capacity as
Collateral Agent for the Secured Parties (as defined below) (together with its
successors, designees and assigns in such capacity, the “Agent”) under the
Intercreditor Agreement (as defined below).

RECITALS

A. The Borrower intends to enter into a Credit Agreement (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among the Borrower, the financial institutions from time to time parties
thereto as lenders, and the financial institution party thereto in the capacity
of administrative agent (the “Administrative Agent”).

B. The Contracting Party and the Borrower are parties to a Supply Agreement,
dated as of [            ], 2007 (as amended, restated, supplemented or
otherwise modified from time to time, the “Contract”).

C. The Borrower intends to finance certain costs in connection with the
development, construction, operation, maintenance and ownership of a polysilicon
producing processing plant with a nominal capacity of 2,000 metric tons per
year, located in Pocatello, Idaho (the “Project”), with funds borrowed by the
Borrower pursuant to the terms of the Credit Agreement.

D. As collateral security for all obligations of the Borrower to the Secured
Parties (as defined below), the Borrower intends to, inter alia, assign all of
its rights, title and interest (the “Assigned Interests”) in, to and under the
Contract to the Agent pursuant to a Security Agreement (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Security
Agreement”), to be made by the Borrower in favor of the Agent for the benefit of
certain secured parties to be described therein (the “Secured Parties”) and in a
Collateral Agency and Intercreditor Agreement, (as amended, restated,
supplemented or otherwise modified from time to time, the “Intercreditor
Agreement”), to be made among the Borrower, Hoku Materials Holdings, Inc. (“Hoku
Holdings”), the Agent, the Administrative Agent, the Contracting Party and the
other Secured Parties party thereto.

E. Pursuant to the terms of the Intercreditor Agreement, the Secured Parties
will appoint the Agent as collateral agent on their behalf and authorize the
Collateral Agent to take certain actions and exercise such powers under the
Secured Obligation Documents (as defined in the Intercreditor Agreement) as will
be provided for therein.

F. The Borrower has requested that the Contracting Party and the other parties
hereto execute and deliver this Consent in fulfillment of certain obligations of
the Borrower under the Credit Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

1. Consent and Agreements.

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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(a) The Contracting Party hereby acknowledges and consents to the assignment as
collateral security to the Agent, for the benefit of the Secured Parties, of the
Assigned Interests.

(b) The Agent shall be entitled (but not obligated) to cure any defaults of the
Borrower under the Contract in accordance with the provisions hereof. Upon
receipt by the Contracting Party of written notice from the Agent, the
Contracting Party agrees to (i) accept such cure by the Agent and, subject to
the terms and conditions of the Contract and cure of such defaults, to render to
the Secured Parties all performance due by it under the Contract and this
Consent, and (ii) act solely on the instructions of the Agent, not the Borrower,
with respect to the exercise of the Borrower’s rights under the relevant
Contract. The Contracting Party agrees to make all payments to be made by it
under the Contract directly to the Agent for the benefit of the Secured Parties
upon receipt of the Agent’s written instructions to do so and the Borrower
agrees that any such payments made to the Agent by the Contracting Party shall
be deemed to have been made by the Contracting Party in fulfillment of the
Contracting Party’s obligations to the Borrower under the Contract.

(c) In all cases except as provided in the Contract or required by law, and in
accordance with Section 1(d) hereof, the Contracting Party will not, without the
prior written consent of the Agent (such consent not to be unreasonably
withheld), (i) cancel or terminate the Contract or suspend performance of its
services thereunder, or consent to or accept any cancellation, termination or
suspension thereof by the Borrower, or (ii) (A) sell or assign any part of its
rights, title or interest in the Contract, or (B) otherwise dispose (by
operation of law or otherwise) of all or substantially all of its rights, title
or interest in the Contract unless its successor thereunder shall assume all of
the obligations of the Contracting Party under the Contract and this Consent by
means of a written agreement in form and substance reasonably satisfactory to
the Agent. The Contracting Party agrees to deliver copies of all notices of
default delivered by the Contracting Party to the Borrower under or pursuant to
the Contract to the Agent promptly upon delivery thereof. Not later than three
(3) business days following its receipt of a written request therefor from the
Agent, the Contracting Party shall deliver to the Agent and the Independent
Engineer copies of any and all fully executed [*] Certificates and [*]
Certificates (as defined in the contract) it has received.

(d) The Contracting Party will not terminate or suspend performance of the
Contract on account of any default or breach of the Borrower thereunder without
written notice to the Agent and first providing to the Agent (i) 30 days from
the date notice of default or breach is delivered to the Agent to cure such
default if such default is the failure to pay amounts to the Contracting Party
which are due and payable under the Contract, or (ii) 60 days, to cure such
breach or default if the breach or default cannot be cured by the payment of
money to the Contracting Party so long as the Agent, the Borrower or their
respective designee shall have commenced to cure the breach or default promptly
following such notice and in any case within such 60-day period and thereafter
diligently pursues such cure to completion (but in any event within not more
than 120 days) and during such cure period performs all monetary obligations
under the Contract and all other obligations under the Contract are performed by
the Borrower or the Agent or their respective designees. The Contracting Party
shall not hinder the Agent’s or its designees’ efforts, and shall provide
reasonable cooperation to the Agent and its designees, in effecting any cure of
any default or breach of the Borrower under the Contract. Except in the event of
a payment default under the Contract, if possession of the Project is necessary
to cure such breach or default, and the Agent or its designees or assignees
declares the Borrower in default under the Credit Agreement and within the
60-day period described above commences foreclosure proceedings, the Agent or
its designees or assignees shall be allowed a reasonable period to complete such
proceedings so long as (A) the Agent proceeds diligently and in good faith to do
so and during such period performs all monetary obligations

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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under the Contract, and (B) all other obligations under the relevant Contract
are performed by the Borrower or the Agent or their respective designees. If the
Agent or its designees or assignees are prohibited by any court order or
bankruptcy or insolvency proceedings from curing the default or from commencing
or prosecuting foreclosure proceedings, the foregoing time periods shall be
extended by the period of such prohibition so long as (1) the Agent proceeds
diligently and in good faith to address such impediments and during such period
performs all monetary obligations under the Contract, and (2) all other
obligations under the Contract are performed by the Borrower or the Agent or
their respective designees; provided that any such extension shall not exceed
[270] days. The Contracting Party consents to the transfer of the Borrower’s
interest under each Contract to the Agent or any purchaser, successor, assignee
and/or designee (a “Subsequent Transferee”) of the Assigned Interests at a
foreclosure sale by judicial or nonjudicial foreclosure and sale or by a
conveyance by the Borrower in lieu of foreclosure and agrees that,
notwithstanding any provision of the Contract to the contrary, upon such
foreclosure, sale or conveyance, the Agent or such Subsequent Transferee shall
be substituted for the Borrower under the Contract and the Contracting Party
(a) shall recognize the Agent or the Subsequent Transferee, as the case may be,
as its counter-party under the Contract, and (b) perform its obligations under
the Contract in favor of the Agent or the Subsequent Transferee, as the case may
be; provided that the Agent or such Subsequent Transferee (i) has elected to
assume the rights and obligations of the Borrower (including the obligation to
cure any then existing payment and performance defaults, but excluding any
obligation to cure any then existing performance defaults which by their nature
are incapable of being cured and which default that is incapable of being cured
does not materially and adversely affect the rights of the Contracting Party
under the Contract) under the Contract, and (ii) would reasonably be expected to
have the capability to perform the Borrower’s obligations under the Contract.

(e) Subject to payment of all amounts due and unpaid to the Contracting Party
and cure of all then existing payment and performance defaults, but excluding
any obligation to cure any then existing performance defaults which by their
nature are incapable of being cured and which default that is incapable of being
cured does not materially and adversely affect the rights of the Contracting
Party under the Contract, in the event the Contract is rejected or terminated by
a trustee or debtor in possession in any bankruptcy or insolvency proceeding, or
if the Contract is terminated for any reason other than a default which could
have been but was not cured by the Agent as provided in Section 1(d) hereof, and
if, within 45 days after such rejection or termination, the Agent shall so
request, and in the Contracting Party’s reasonable judgment the Agent (or any
Proposed Transferee) has the capability to perform the Borrower’s obligations
under the original Contract, the Contracting Party shall execute and deliver to
the Agent a new Contract having substantially identical terms to the Contract
(subject to any conforming changes necessitated by the substitution of parties
and such changes as may be necessary to compensate the Contracting Party for
schedule and cost adjustments resulting from the passage of time), provided that
the term under such new agreement shall be no longer than the remaining balance
of the term specified in the Contract.

(f) In the event the Agent or its designees or assignees elect to perform the
Borrower’s obligations under a Contract or a new Contract is entered into as
provided above in Sections 1(d) or (e), respectively, the liability of the
Agent, or its designees or assignees, as the case may be, to the Contracting
Party for the performance of obligations under such Contract, and the sole
recourse of the Contracting Party in seeking the enforcement of such
obligations, shall be limited to such parties’ rights, title and interest in the
Project.

(g) Except as provided in Sections 1(d), (e) and (f) above, neither the Agent,
its designees or assignees shall have any obligation or liability under the
Contract, nor shall the Agent, its designees or

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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assignees be obligated to perform any of the obligations or duties of the
Borrower under the Contract or to take any action or collect or enforce any
claim for payment or performance of the Assigned Interests. Within 30 or 60
days, as the case may be pursuant to Section 1(d), of being notified by the
Contracting Party that a Borrower default or breach has occurred under the
Contract, the Agent shall notify the Contracting Party of its intent whether or
not to cure any such Borrower default or breach. In the event the Agent fails to
notify the Contracting Party within the time period described in the foregoing
sentence that the Agent will cure such default or breach, the Contracting Party
shall be entitled to assume that the Agent has elected not to cure such default
or breach and the Contracting Party may then exercise all rights that the
Contracting Party would have under the Contract, without regard to the
provisions of this Consent. In the absence of such notice, no performance by the
Agent, its designees or assignees under or pursuant to this Consent or otherwise
(whether to cure a Borrower default or exercise rights under any provision
hereof or otherwise) shall be construed as an assumption by the Agent, its
designees or assignees of the obligations and duties of the Borrower under the
Contract, unless otherwise expressly agreed in writing by the Agent, its
assignees or designees, as the case may be. The Agent shall have the right to
assign all interests in a Contract or a new Contract entered into pursuant to
Section 1(e) to a person or entity to whom the Project is transferred, provided
such transferee (i) assumes the obligations of the Borrower (or the Secured
Parties) under such Contract and cure of any material defaults under such
Contract has been effected as provided herein, and (ii) would reasonably be
expected to have the capability to perform the Borrower’s obligations under such
Contract. Upon such assignment, the Agent and the Secured Parties (including
their agents and employees) shall be released from any further liability
thereunder to the extent of the interest assigned.

(h) Each of the Borrower and the Contracting Party hereby agrees and confirms
that, notwithstanding any provision of the Contract to the contrary, (i) the
Letter of Credit (as defined in the Contract) shall be for the benefit of,
drawable by (and otherwise in form and substance reasonably satisfactory to) the
Agent, (ii) the Subordinated Liens (as defined in the Intercreditor Agreement)
and the Subordinated Secured Obligation Documents (as defined in the
Intercreditor Agreement) evidencing or providing for such Subordinated Liens
will, when such documents are executed by each of the parties thereto, satisfy
the Borrower’s obligation to provide a subordinated lien on its assets to the
Contracting Party under Article 6 of the Contract, (iii) the Contracting Party’s
rights to impose penalty payments on the Borrower pursuant to Section 3.4 of the
Contract (A) shall only apply to that portion of the Product (as defined in the
Contract) as to which the Borrower has not fulfilled its delivery obligations
referred to in Section 3.4 of the Contract, and (B) shall not arise in
connection with any such failure attributable to an event or circumstance
described in Section 12 of the Contract, (iv) the use of the Total Deposit (as
defined in the Contract) or the proceeds of any drawing upon the Letter of
Credit to repay obligations of the Borrower under the Credit Agreement shall be
a permissible use of the Total Deposit or any such proceeds under the Contract,
[and (v), etc.] [OTHER CLAUSES, IF ANY, ADDRESSING OTHER PROVISIONS REQUIRED BY
THE SENIOR LENDERS AND/OR THE INDEPENDENT ENGINEER TO BE PROVIDED FOLLOWING
COMPLETION OF THEIR REVIEW OF THE SUPPLY AGREEMENT].

2. Borrower’s Acknowledgment. The Borrower acknowledges and agrees that the
Contracting Party is authorized to act in accordance with the Agent’s exercise
of the Borrower’s rights in accordance with this Consent, and the Contracting
Party may rely on any notice or instruction by the Agent in the purported
exercise of the Agent’s rights and remedies hereunder.

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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3. Legal Opinion. The Contracting Party hereby agrees to deliver to the Agent a
legal opinion (which may be from a senior in-house counsel), dated as of the
dated hereof, substantially in form attached hereto as Exhibit A.

4. Payment of Monies. The Contracting Party hereby agrees to make all payments
to be made by it to the Borrower under the Contract directly to Borrower’s
Account No. [            ] (the “Revenue Account”) by wire transfer to:

[            ]

ABA [            ]

[            ]

Account Number: [            ]

FFC: Account No. [            ]

REF: [Hoku Materials] Revenue Account

and any notices to [Depositary Bank Name] may be given to the following address:

[            ]

[            ]

[            ]

[            ]

Attn: [            ]

Telephone: [            ]

Facsimile: [            ]

Notwithstanding the foregoing, (i) if the Agent shall notify the Contracting
Party in writing that an Event of Default under the Credit Agreement has
occurred and is continuing, the Contracting Party shall make all payments to be
made by it to the Borrower under the Contract directly to the Agent, for the
benefit of the Secured Parties, to an account designated by the Agent in such
written notice, and (ii) if any person has elected to become a Subsequent
Transferee, then the Contracting Party shall make all payments to be made by it
to the Borrower under the Contract directly to such Subsequent Transferee. The
Borrower agrees that any payments made by the Contracting Party as provided
under this Section 4 shall be deemed to have been made by the Contracting Party
in fulfillment of the Contracting Party’s obligations under the Contract.

5. Representations and Warranties. The Contracting Party hereby represents and
warrants, for the benefit of the Agent and the Secured Parties, as of the date
hereof, that:

(a) it (i) is duly organized, validly existing and in good standing under the
laws of China, and (ii) has all requisite organizational power and authority
necessary to execute, deliver and perform its obligations under this Consent and
the Contract;

(b) the execution, delivery and performance by the Contracting Party of the
Contract and this Consent have been duly authorized by all necessary corporate
action, and do not and will not require any further consents or approvals which
have not been obtained, or violate any provision of any law, regulation, order,
judgment, injunction or similar matters or breach any agreement presently in
effect with

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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respect to or binding on the Contracting Party, except for such breaches,
defaults, or violations as will not, either individually or in the aggregate,
result in a material adverse effect on the ability of the Contracting Party to
perform its obligations under this Consent or the Contract;

(c) each of this Consent and the Contract constitutes legal, valid and binding
obligations of the Contracting Party, enforceable against the Contracting Party
in accordance with their respective terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors’
rights or by the effect of general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law);

(d) no authorizations, approvals or consents of any governmental or regulatory
authority or agency or any other person, and no filings or registrations with
any governmental authority or agency, are necessary for the execution, delivery
or performance by the Contracting Party of this Consent, or for the validity or
enforceability thereof, except for any authorizations, approvals, consents or
filings which (i) have been made or obtained prior to the date hereof and are in
full force and effect, (ii) are obtainable in the ordinary course of business
and are set forth on Exhibit B to this Consent; or (iii) will not, either
individually or in the aggregate, result in a material adverse effect on the
ability of the Contracting Party to perform its obligations under this Consent
or the Contract;

(e) except pursuant to this Consent and as expressly set forth in the Contract,
the Contracting Party has not consented to any pledge, assignment or other
transfer of any interest in the Contract;

(f) the Contract is in full force and effect and has not been amended,
supplemented or modified (except with respect to the Assignment and Assumption
and as otherwise disclosed in writing to the Agent);

(g) the Borrower has fulfilled all of its material obligations which are
currently due under the Contract, and there are no breaches or unsatisfied
conditions presently existing (or which would exist after the passage of time
and/or giving of notice) that would allow the Contracting Party to terminate the
Contract;

(h) the Product sold to the Contracting Party pursuant to the Contract (as
defined therein) (i) will be used by the Contracting Party in [NOTE: Contracting
Party to specify end use], (ii) will not be used in connection with any nuclear,
chemical or biological warfare, or missile activity, and (iii) will not be
resold by the Contracting Party to any United States’ embargoed destination or
to any person who appears on a United States’ denied persons, debarred persons,
or Specially Designated National or Blocked Persons list; and

(i) the Contracting Party hereby (i) confirms that it has made the Initial
Deposit pursuant to (and in accordance with the terms of) the Contract and
(ii) confirms that the Letter of Credit has been issued for its account pursuant
to (and in accordance with the terms of) the Contract. [NOTE – SUBJECT TO
FURTHER REVIEW IN LIGHT OF REVISED SUPPLY CONTRACT RECEIVED 6/5/07]

6. Limitation of Liability. The Contracting Party shall have no liability under
this Consent to the Borrower. With respect to any undertaking by the Contracting
Party which is susceptible to enforcement by specific performance as described
in Section 7, where the Agent would receive the full benefit of this Consent
through such specific performance, the Agent shall limit its remedy to specific
performance. With respect to any other undertaking, acknowledgment,
representation and warranty or other provision of this Consent, the Agent’s
remedies shall not be so limited, provided that the Agent and the Borrower agree
that the Contracting Party’s aggregate liability for monetary damages under this
Consent and the

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Contract shall be limited as provided in the Contract. Under no circumstances
shall the Contracting Party have any liability for any punitive, exemplary,
consequential, indirect, incidental, or special damages (including by way of
example, but not by way of limitation, loss of profits, nonpayment of principal
or interest on loans, and cost of capital under the Credit Agreement).

7. Specific Performance. The Parties to this Consent and Agreement acknowledge
and agree that the Contracting Party, the Borrower, the Agent, the Secured
Parties and any Subsequent Transferee may be damaged irreparably in the event
any of the provisions set forth in Sections 1 and 4 of this Consent (the
“Applicable Provisions”) are not performed in accordance with their specific
terms or are otherwise breached. Accordingly, the parties to this Consent and
Agreement agree that the Contracting Party, the Borrower, the Agent and/or any
Subsequent Transferee may seek to enforce specifically this Consent and the
Applicable Provisions in any action instituted in any court of the United States
or any state thereof having jurisdiction over the parties hereto and the matter
hereof (subject to the provisions set forth in Section 9), in addition to any
other remedy to which it may be entitled, at law or in equity.

8. Governing Law. This Consent shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York, United States
of America, excluding its conflicts of law provisions (other than Sections
5-1401 and 5-1402 of the General Obligations Law of the State of New York).

9. Submission to Jurisdiction. The parties hereto submit to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Consent or the
transactions contemplated hereby. Each of the parties hereto irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.

10. Counterparts. This Consent and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

11. Severability. In case any one or more of the provisions contained in this
Consent should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

12. Amendment, Waiver. Neither this Consent nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified except by an instrument in
writing signed by the Contracting Party, the Borrower and the Agent.

13. Notices. All notices required or permitted hereunder shall be in writing and
shall be effective (a) upon receipt if hand delivered, (b) upon receipt if sent
by facsimile and (c) if otherwise delivered, upon the receipt thereof. Any such
notices to the Contracting Party or the Borrower shall be delivered to their
respective addresses as specified in the Contract. Any such notices to the Agent
shall be addressed as follows:

[            ]

 

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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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[            ]

[            ]

Attn: [            ]

Telephone No.: [            ]

Telecopy No.: [            ]

If any notice is tendered to an addressee and the delivery thereof is refused by
such addressee, such notice shall be effective upon such tender. Any party shall
have the right to change its address for notice hereunder to any other location
within the continental United States by providing 30 days’ notice to the other
parties in the manner set forth hereinabove.

14. Third Party Beneficiaries. This Consent and the representations, covenants
and agreements contained herein are and shall be held to be for the sole benefit
of the parties hereto and the Secured Parties, and their respective successors
and assigns.

15. Interpretation. All references in this Consent to any document, instrument
or agreement (a) shall include all exhibits, schedules and other attachments
thereto, and (b) shall include all documents, instruments or agreements issued
or executed in replacement thereof in accordance with the terms thereof.

[SIGNATURE PAGE FOLLOWS]

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized,
intending to be legally bound, have caused this Consent and Agreement to be duly
executed and delivered as of the date first above written.

HOKU MATERIALS, INC.

By:

Name:

Title:

[                                ]

By:

Name:

Title:

The undersigned hereby confirms that it was appointed Collateral Agent for the
Secured Parties under the Intercreditor Agreement on [            ], 2007,
pursuant to Article VI thereof, and acknowledges and agrees that by signing this
counterpart signature page to this Consent, it hereby becomes a party to this
Consent as of such date with the same force and effect as if such counterpart
were delivered on the date thereof.

[                                ],
as Agent for the Secured Parties

By:

Name:

Title:

EXHIBIT A: FORM OF OPINION OF CONTRACTING PARTY’S COUNSEL

 

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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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EXHIBIT B: AUTHORIZATIONS AND APPROVALS

[IF ANY. Contracting Party to provide.]

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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APPENDIX 10

LEGAL OPINION

[ATTACHED]

 

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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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[Letterhead of             ]

[Date]

[Agent]

[            ]

[            ]

[            ]

Ladies and Gentlemen:

We have acted as counsel for Wuxi Suntech Power Co., Ltd., a company
incorporated under the laws of People’s Republic of China (the “Company”), in
connection with that certain [Contract and Consent] (collectively, the
“Contracts”). Capitalized terms used and not otherwise defined herein shall have
the respective meanings specified in the Consent.

This letter is being delivered to you in satisfaction of the condition set forth
in Section 3 of the Consent.

In this connection, we have examined such certificates of public officials,
certificates of officers of the Company and copies certified to our satisfaction
of corporate documents and records of the Company and of other papers, and have
made such other investigations, as we have deemed relevant and necessary as a
basis for our opinions hereinafter set forth. We have relied upon such
certificates of public officials and of officers of the Company with respect to
the accuracy of material factual matters contained therein which were not
independently established.

Based on the foregoing, it is our opinion that:

1. The Company is a limited liability company duly organized and validly
existing in good standing under the laws of the People’s Republic of China.

2. The Contracts have been duly authorized by all requisite corporate action and
duly executed and delivered by authorized officers of the Company, and are valid
obligations of the Company, legally binding upon and enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by (a) bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors’ rights generally, and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

3. To the best of our knowledge after due inquiry, the execution and delivery of
the Contracts, and fulfillment of and compliance with the respective provisions
of the Contracts, do not conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any lien upon any of the properties
or assets of the Company pursuant to, or require any authorization, consent,
approval, exemption, or other action by or notice to or filing with any court,
administrative or governmental body or other person or entity pursuant to, the
charter or by-laws of the Company, any applicable law, statute, rule or
regulation of People’s Republic of

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 9 TO SUPPLY AGREEMENT

PAGE 86 OF 89

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

China or (insofar as is known to us after having made due inquiry with respect
thereto) any agreement, instrument, order, judgment or decree governed by the
laws of People’s Republic of China to which the Company is a party or otherwise
subject.

Very truly yours,

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 9 TO SUPPLY AGREEMENT

PAGE 87 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 10

FORM OF OFFICER’S CLOSING CERTIFICATE

Pursuant to the Supply Agreement (the “Supply Agreement”) dated             ,
2007 between HOKU MATERIALS, INC., (“HOKU”) and SUNTECH POWER CO., LTD., the
person signing below hereby certifies that the following statements are true and
correct as of [date].

 

  i. I am the [executive officer title] of HOKU.

 

  ii. HOKU has performed all obligations that were required to have been
performed by it pursuant to the Agreement as of the date of this Certificate.

 

  iii. The representations and warranties set forth in Section 11 of the
Agreement are true and correct in all material respects as of the date of this
Certificate.

All capitalized terms not otherwise defined herein have the meaning set forth in
the Supply Agreement.

In witness whereof, I hereby certify to the truth of the above statements.

By:                           

Name:                       

Title:                       

Date:                       

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 10 TO SUPPLY AGREEMENT

PAGE 88 OF 89

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

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

LOGO [g75119img001.jpg]

CONFIDENTIAL

 

APPENDIX 11

FORM OF OFFICER’S COMPLIANCE CERTIFICATE

Pursuant to the Supply Agreement (the “Supply Agreement”) dated             ,
2007 between HOKU MATERIALS, INC., (“HOKU”) and SUNTECH POWER CO., LTD., the
person signing below hereby certifies that the following statements are true and
correct as of [date].

 

  i. I am the [executive officer title] of HOKU.

 

  ii. HOKU has performed all obligations that were required to have been
performed by it pursuant to the Agreement as of the date of this Certificate.

 

  iii. The representations and warranties set forth in Section 11 of the
Agreement are true and correct in all material respects as of the date of this
Certificate.

 

  iv. HOKU has granted to SUNTECH a valid, enforceable and perfected
subordinated security interest in all Collateral for the purpose of security the
repayment obligations of HOKU to SUNTECH of the Total Deposit (and any portion
thereof) set forth in the Agreement.

 

  v. HOKU has completed the Initial Financing.

 

  vi. HOKU is not in material default of any material third party loan or credit
agreement that cannot be cured within the applicable cure period.

All capitalized terms not otherwise defined herein have the meaning set forth in
the Supply Agreement.

In witness whereof, I hereby certify to the truth of the above statements.

By:                             

Name:                           

Title:                           

Date:                           

 

SUNTECH Initials & Date         /s/ZS               HOKU Initials & Date
        /s/DS 6/13/2007    

 

APPENDIX 11 TO SUPPLY AGREEMENT

PAGE 89 OF 89