Exhibit
10.12




	
  CONFIDENTIAL
  TREATMENT REQUESTED

  
	
  —

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

  






 


 


WAFERING
SUPPLY AND SALES AGREEMENT


 


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


 


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


 


- and -


 


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


 


WITNESSETH:


 


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


 


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


 


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


 


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


 


1.                                      Definition
of Terms


 


In this Agreement the following
expressions shall have the following meanings:


 


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


 


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


 


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


 


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


 


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


 


2.0                                 Ingot Supply
Arrangement


 


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


 


 


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


 


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


 


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


 


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


 


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


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


 


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


 


	
  % shortfall vs forecast

  	
   

  	
   

  
	
  for the 3 quarters

  	
   

  	
  Compensation

  
	
   

  	
   

  	
   

  
	
  ***%

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  >***% up to ***%

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  >***%

  	
   

  	
  ***

  



 


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


 


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


 


 


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


 


3.0                                 SP Silicon
Wafer Supply and Purchase Arrangement


 


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


 


Table I — Five- year Silicon Wafer Supply Schedule 


 




	
  Year

  	
   

  	
  Quarter

  	
   

  	
  Forecast

  Wafers

  (K units)

  	
   

  	
  Minimum

  Yield

  	
   

  	
  Mark-up

  	
   

  	
  Target

  Price

  	
   

  
	
  2008

  	
   

  	
  Q308

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q408

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2009

  	
   

  	
  Q109

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q209

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q309

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q409

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2010

  	
   

  	
  Q110

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q210

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q310

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q410

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2011

  	
   

  	
  Q111

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q211

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q311

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q411

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2012

  	
   

  	
  Q112

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q212

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q312

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q412

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2013

  	
   

  	
  Q113

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q213

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  






 


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


 


 


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


 


Plus


 


(***% x Target Price)


 


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


 


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


 


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


 


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


 


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


 


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


 


 


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


 


Total Billings using Initial
Price


Less:


Total Quantities of Product
Delivered for the Qtr x Actual Price


 


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


 


 


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


 


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


 


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


 


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


 


 


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


 


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


demand of Purchaser and its
Affiliates is substantially reduced; and


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


 


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


 


	
  % shortfall vs guaranteed
  capacity

  	
   

  	
  Compensation

  
	
   

  	
   

  	
   

  
	
  ***%

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  >***% up to ***%

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  >***%

  	
   

  	
  ***

  



 


 


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


 


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


 


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


 


 


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


 


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


 


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


 


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


 


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


 


 


4.                                       Invoices and
Payment


 


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


(i)                                     an invoice
number for tracking purposes;


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


(iii)                               the quantity of
Products shipped;


(iv)                              the date of
shipping;


(v)                                 the shipping
destination and


(vi)                              the applicable
purchase price.


 


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


 


 


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


 


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


 


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


 


 


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


 


 


5.0                                 Quality; Defects; Inspection


 


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


 


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


 


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


 


 


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


 


 


6                         Warranties;
Limitation of Liability


 


SP Products


 


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


 


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


 


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


 


SP Ingots


 


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


 


 


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


 


Breach and Damages


 


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


 


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


 


 


7                         Confidentiality


 


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


 


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


 


 


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


 


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


 


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


 


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


 


 


8                         Term, No
Exclusivity and Termination


 


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


 


 


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


 


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


 


8.2                Termination.


 


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


 


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


 


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


 


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


 


 


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


 


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


 


 


9.             Miscellaneous


 


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


 


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


 


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


 


 


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


 


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


 


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


 


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


 


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


 


 


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


 


	
  To Supplier:

  	
   

  
	
   

  	
   

  
	
   

  	
  First Philec Solar Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Email:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  With a copy to:

  	
   

  
	
   

  	
   

  
	
  To First
  Philec:

  	
   

  
	
   

  	
   

  
	
   

  	
  First Philippine Electric Corporation

  
	
   

  	
  2nd Floor, Benpres Building

  
	
   

  	
  Exchange Road corner Meralco Avenue

  
	
   

  	
  Pasig City, Philippines

  
	
   

  	
   

  
	
   

  	
  Attention: Managing Director — Electronics
  Division

  
	
   

  	
  Fax: 632-490-0116

  
	
   

  	
   

  
	
  To Purchaser:

  	
   

  
	
   

  	
   

  
	
   

  	
  SunPower Philippines Mfg
  Ltd

  
	
   

  	
  100 East Main Ave.

  
	
   

  	
  LTI, Binan, Laguna

  
	
   

  	
  Philippines

  
	
   

  	
   

  
	
   

  	
  Attention: VP Manufacturing Operations or Finance
  Director

  
	
   

  	
  Fax: 632- 841-9720

  
															



 


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


 


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


 


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


 


 


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


 


	
  FIRST PHILEC SOLAR CORP.

  	
  SUNPOWER PHILS. MFG., LTD

  
	
  By:

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ DANILO C. LACHICA

  	
   

  	
   

  	
  /s/ GREGORY D. REICHOW

  	
   

  	
   

  
	
  DANILO C. LACHICA

  	
  GREGORY D. REICHOW

  
	
  President

  	
  Vice-President for
  Manufacturing Operations

  
						



 


 


 


IN THE PRESENCE OF:


 




	
   

  	
   

  
	
  /s/ illegible

  	
   

  	
   

  	
  /s/ illegible

  	
   

  	
   

  
						






 


 


 


 


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ANNEX A


 


 


 


***


 


 


 


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Annex B


First Semi Annual Delivery Schedule (Ingots)


 


	
  Quarter

  	
   

  	
  Estimated Delivery (Mtons)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Q308

  	
   

  	
  ***

  	
   

  
	
  Q408

  	
   

  	
  ***

  	
   

  



 


 


 


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ANNEX C
— SAMPLE COMPUTATION


 


 


 


 




	
  Pricing Formula:

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

  	
   

  
	
   

  	
                  Plus

  	
   

  
	
   

  	
  (***% x Target Price)

  	
   

  
	
   

  	
   

  	
   

  
	
  Sample  Computation:

  	
   

  	
   

  
	
   

  	
  Where:

  	
  Target Price = $***

  	
   

  
	
   

  	
   

  	
  Cost per unit = $***

  	
   

  
	
   

  	
   

  	
  Applicable Mark-up = ***%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Price       =

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

  
	
   

  	
   

  	
  Plus

  	
   

  
	
   

  	
   

  	
  (***% x Target price)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
                  = (***) + (***)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
                  = ***

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Price      = $***

  	
   

  	
   

  	
   

  
						






 


 


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