EXHIBIT
10.99




[*]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED FROM PUBLIC FILING PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT SUBMITTED TO THE U.S. SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION, WHICH HAS BEEN IDENTIFIED WITH THE SYMBOL “[*],” HAS
BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.




SUPPLY
AGREEMENT




This
Supply Agreement is entered into as of the last date set forth on the signature
page hereto (the “Signing
Date”) between SHANGHAI ALEX NEW ENERGY CO., LTD., a China company
(hereinafter “ALEX”) and
HOKU MATERIALS,
INC.,a Delaware corporation (hereinafter “HOKU”).  HOKU
and ALEX are sometimes referred to in the singular as a “Party” or
in the plural as the “Parties”.




Recitals




Whereas,
HOKU desires to supply polysilicon to ALEX for its general use beginning in
calendar year 2010 for a continuous period of ten years from the date of the
First Shipment Date (as defined below).




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




Whereas,
HOKU is a wholly owned subsidiary of Hoku Scientific, Inc. (“Hoku Scientific”),
which is listed on the Nasdaq Global Market, and HOKU is the operating company
that owns all of the assets for Hoku Scientific’s polysilicon
business.




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.           Effectiveness.  This
Agreement shall become effective upon ALEX’s payment to HOKU of the Initial
Deposit pursuant to Section 6.1 below (such payment date, the “Effective
Date”).  If such payment is not made within ten (10) calendar
days after the Signing Date, then this Agreement shall be voidable at the sole
and absolute option of HOKU.




2.           Definitions.




The
following terms used in this Agreement shall have the meanings set forth
below:




2.1.           “Affiliate”
shall mean, with respect to either Party to this Agreement, any entity that is
controlled by or under common control with such Party.




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








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                HOKU
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2.3.           “First Shipment
Date” shall mean the first day after January 9, 2010, when HOKU commences
delivers to ALEX of Products pursuant to this Agreement.




2.4.           “Facility”
shall mean any facility used by HOKU for the production of the
Product.




2.5.           
“Independent
Expert” means any Qualified Laboratory that is reasonably acceptable to
each of HOKU and ALEX; provided, however that if such parties cannot agree on
the Independent Expert within ten (10) days, each Party shall select one
independent expert form the list of Qualified Laboratories, and those two
independent experts shall select the Independent Expert.




2.6.           “Minimum Annual
Quantity of Product” means [*] metric tons ([*] kilograms).




2.7.           “Minimum Monthly
Quantity of Product” means not less than [*] of the Minimum Annual
Quantity of Product.




2.8.           
“Product”
shall mean the raw polysilicon in chunk form manufactured by HOKU and sold to
ALEX pursuant to this Agreement.




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




2.10.           “Qualified
Laboratory” means each qualified laboratory set forth on Appendix
2 to this Agreement.




2.11.           “Signing
Date” has the meaning set forth in the first paragraph of this
Agreement.




2.12.           “Term”
shall mean the period during which this Agreement is in effect, as more
specifically set forth in Section 10 of this Agreement.




2.13.           “Total
Deposit” shall mean all deposits or prepayments required to be paid by
ALEX to HOKU hereunder including without limitation the Prior Deposit, the
Initial Deposit, the Second Deposit, the Third Deposit, and the Fourth
Deposit.




2.14.           “Year”
shall mean each of the ten (10) twelve-month periods commencing on the First
Shipment Date.




3.           Ordering.




3.1.           Starting
on the First Shipment Date and each Year during the term of this Agreement
thereafter, ALEX agrees to purchase from HOKU, and HOKU agrees to sell to ALEX,
the Minimum Annual Quantity of Product at the prices set forth on Appendix 1 to
this Agreement (the “Pricing
Schedule”).  This Agreement constitutes a firm order from ALEX
for [*] metric tons of Product that cannot be cancelled during the term of this
Agreement, except as set forth in Section 10 below.






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                HOKU
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4.           Supply
Obligations.




4.1.           HOKU
shall deliver each Year pursuant to this Agreement starting on the First
Shipment Date at least the Minimum Annual Quantity of Product in approximately
equal monthly shipments pursuant to Section 5.1 below; provided however, that if
HOKU fails to deliver a monthly shipment, then HOKU may deliver any deficiency
(i.e., the difference between the scheduled Minimum Monthly Quantity (as defined
below) and the amount of Product actually delivered, the “Deficiency”)
within [*] days without breaching this section.  At any time during
the term of this Agreement, HOKU may ship to ALEX up to the full cumulative
balance of Minimum Annual Quantity of Product to be shipped through the end of
this Contract (an “Excess
Shipment”) with ALEX’s prior written consent. This shipment will be
credited against each subsequent Minimum Annual Quantity of
Product.  For example, if the Minimum Annual Quantity of Product for a
given Year is [*] metric tons, and if HOKU delivers [*] metric tons in January,
then the next shipment of [*] metric tons is not required until the following
Year. HOKU shall deliver any deficiency in the Minimum Annual Quantity of
Product within the first quarter in the next Year. Any deficient shipments of
the Minimum Annual Quantity of Product which are delayed beyond the first
quarter of the next Year shall be deemed to constitute a material breach of this
Agreement pursuant to Section 10.2.1. For the avoidance of doubt, each monthly
shipment shall be applied first to satisfy the Minimum Monthly Quantity for that
calendar month. Any Product in excess of this amount shall then be applied to
reduce the oldest outstanding Deficiency.




4.2.           HOKU
intends to manufacture the Products at its Facility; however, notwithstanding
anything to the contrary herein, HOKU may deliver to ALEX Products that are
manufactured by a third party other than HOKU, (the “Alternative
Products”), provided that the Products meet the Product Specifications
and price set forth in this Agreement. The Alternative Products shall conform to
the warranties and representations of HOKU to ALEX hereunder, and the quality,
price, delivery and any other terms and conditions of the Alternative Products
shall be no less favorable than the terms and conditions set forth in this
Agreement.  Delivery of the Alternative Products shall not release or
mitigate HOKU’s liabilities and obligations hereunder except that delivery of
the Alternative Products is deemed to be delivery of Products, and ALEX shall
have the same rights and HOKU shall have the same obligations as set forth
hereunder with respect to any Alternative Products.  HOKU shall notify
ALEX in writing prior to the delivery of Alternative Products.




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








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      2009.2.27
                HOKU
      Initials & Date  /s/ DS
      2/26/09
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5.           Shipping &
Delivery.




5.1.           Except
as provided in Section 4.2 above, shipments shall be made from the Facility on a
monthly basis in accordance with a shipment schedule that will be provided by
HOKU each Year under this Agreement and reviewed and approved by ALEX (the
“Shipment
Schedule”) no later than [*] days prior to the applicable
Year.  The Shipment Schedule shall provide for approximately equal
monthly shipments that add up to the Minimum Annual Quantity of Products, and
that are not less than the Minimum Monthly Quantity of Products.  HOKU
will use commercially reasonable efforts to make monthly shipments available on
or about the fifteenth (15th) day of
each month and will advise ALEX approximately seven (7) days prior to the
expected ship date; provided, however, that ALEX may request an alternate
shipping date that is within fourteen (14) days after the advised schedule.
Product shall be ready to ship EXW the HOKU Facility. (INCOTERMS
2000).




5.2.           HOKU
will use commercially reasonable efforts to make available to ALEX its first
shipment of Products on or before January 10, 2010; provided, however, that HOKU
shall have no obligation to ship any Products to ALEX until the Total Deposit
has been paid in full; and provided further that HOKU may extend the first
shipment date by one month for each week that ALEX is late in paying any
installment of the Total Deposit per Section 6 below. Notice of any expected
delay beyond this date shall be made in writing to ALEX not later than October
1, 2009.




5.3.           HOKU
hereby covenants and agrees that, provided ALEX is not in breach of any material
term of this Agreement, including, without limitation, its payment obligations
hereunder, HOKU shall not ship any Products to any third party that is not one
of HOKU’s Other Customers (e.g., spot market sales), or to any of HOKU's
Customers with polysilicon Supply Agreements signed after the Effective Date of
this Agreement until HOKU has satisfied its delivery obligations to ALEX
pursuant to this Agreement.




6.           Payments &
Advances. The Total Deposit shall be used only by HOKU for polysilicon
facilities construction, operation, administration, and other expenses and
investments related to HOKU’s polysilicon business.




6.1.           HOKU
acknowledges receipt of Five Million U.S. Dollars ($5,000,000) from ALEX as a
prepayment for Products (the “Prior
Deposit”)




6.2.           Within
ten (10) days after the Signing Date, ALEX shall provide HOKU with a payment of
Two Million U.S. Dollars (US$2,000,000) as an advance payment for Products to be
delivered under this Agreement, via wire transfer of immediately available funds
(the “Initial
Deposit”).








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                HOKU
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6.3.           ALEX
shall pay in cash to HOKU the additional sum of Eight Million U.S. Dollars
(US$8,000,000) (the “Second
Deposit”) as an advance payment for Products to be delivered under this
Agreement.  Payment of the Second Deposit shall be made on or before
March 25, 2009.




6.4.           ALEX
shall pay in cash to HOKU the additional sum of Two Million U.S. Dollars
(US$2,000,000) (the “Third
Deposit”) as an advance payment for Products to be delivered under this
Agreement.  Payment of the Third Deposit shall be made on or before
June 24, 2009.




6.5.           ALEX
shall pay in cash to HOKU the additional sum of Three Million U.S. Dollars
(US$3,000,000) (the “Fourth
Deposit” and together with the Prior Deposit, the Initial Deposit, the
Second Deposit, and the Third Deposit, the “Total
Deposit”) as an advance payment for Products to be delivered under this
Agreement.  Payment of the Fourth Deposit shall be made on or before
July 28, 2009.




6.6.           HOKU
shall invoice ALEX at or after the time of each shipment of Products to ALEX.
Taxes, customs and duties, if any, will be identified as separate items on HOKU
invoices. All invoices shall be sent to ALEX’s address as provided herein.
Payment terms for all invoiced amounts shall be [*] days from date of shipment
as reflected in the bill of lading or airway bill. All payments shall be made in
U.S. Dollars.  Unless HOKU is entitled to retain the Total Deposit as
liquidated damages pursuant to Section 12 below, shipments to ALEX shall be
credited against the Total Deposit on a straight-line basis during the second
through tenth Year.




6.7.           The
prices are EXW prices (INCOTERMS 2000). Prices for the Products do not include
any excise, sales, use, import, export or other similar taxes, such taxes will
not include income taxes or similar taxes, which taxes will be invoiced to and
paid by ALEX, provided that ALEX is legally or contractually obliged to pay such
taxes. ALEX shall be responsible for all transportation charges, duties or
charges, liabilities and risks for shipping and handling (and hereby indemnifies
HOKU for such costs, liabilities and risks); thus, the price for the Products
shall not include any such charges.




6.8.           Late
payments and outstanding balances, including, without limitation, late payments
of any portion of the Total Deposit, shall accrue interest at the lesser of [*]
per annum or the maximum allowed by law.




7.           Security
Interest.




7.1.           Subject
to receipt of the Initial Deposit HOKU hereby grants to ALEX a security interest
to secure the repayment by HOKU to ALEX of the Total Deposit following any of
the events set forth in Section 10.5 below, which shall be subordinated in
accordance with Section 7.2 below, in all of the tangible and intangible assets
related to HOKU’s polysilicon business (the “Collateral”).




7.2.           ALEX
acknowledges and agrees that the security interests and liens in the Collateral
will not be first priority security interests, will be expressly subordinated to
HOKU’s third-party lenders (the “Senior
Lenders”) that provide debt financing for the construction of any HOKU
Facility, and may be subordinated as a matter of law to other security
interests, and to security interests that are created and perfected prior to the
security interest granted to ALEX hereby. ALEX shall enter into subordination
agreements with the Senior Lenders on terms and conditions reasonably acceptable
to the Senior Lenders.








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      2009.2.27
                HOKU
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7.3.           In
addition, ALEX shall enter into collateral, intercreditor and other agreements
(the “Collateral
Agreements”) with HOKU’s Senior Lenders, and with Suntech Power Holding
Co., Ltd., Solarfun Power Hong Kong Limited, Jiangxi Jinko Solar Co., Ltd.,
Tianwei New Energy (Chengdu) Wafer Co., Ltd, Wealthy Rise International, Ltd.
(Solargiga) and HOKU’s other customers who provide prepayments for Products
(collectively, “HOKU’s Other
Customers”), as may be reasonably necessary to ensure that the security
interest granted hereby is pari passu with the security interests that may be
granted to HOKU’s Other Customers.  ALEX may not unreasonably refuse
to sign any such Collateral Agreement, provided that such Collateral Agreement
grants ALEX a pari passu priority with respect to HOKU’s Other Customers, and is
expressly subordinated to the Senior Lenders.




7.4.           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 being held by HOKU, which has not been
credited against the shipment of Products pursuant to this Agreement, or
otherwise repaid to ALEX.  Notwithstanding anything to the contrary
contained in this Agreement, the Collateral consisting of real property shall
secure only the obligations of HOKU to refund any portion of the Total Deposit
to ALEX in accordance with the terms of this Agreement.  When the
Total Deposit is no longer held by HOKU, ALEX will sign such documents as are
necessary to release its security interests.




7.5.           HOKU
and ALEX each agree to act in good faith to execute and deliver any additional
document or documents that may be required in furtherance of the foregoing
provisions of this Section 7, including the Collateral Agreements. In any event,
HOKU and ALEX shall enter into the Collateral Agreements prior to HOKU granting
any senior security interest to the Senior Lenders. Neither HOKU nor ALEX may
unreasonably refuse to sign any such document.




8.           Product Quality
Guarantee.




8.1.           HOKU
warrants to ALEX that the Products shall meet the Product Specifications. For
each shipment, this warranty shall survive for the lesser of (a) [*] days after
ALEX receives the products; or (b) [*] days after the release of the products by
HOKU at EXW origin (INCOTERMS 2000) (the “Warranty
Period”).  Upon release of the Products to a common carrier or
freight forwarder, EXW origin (INCOTERMS 2000), HOKU warrants that the Products
shall be free of all liens, mortgages, encumbrances, security interests or other
claims or rights.  HOKU will, upon prompt notification and compliance
with ALEX’s instructions, refund or replace, at ALEX’s sole option, any Product
which does not meet the Product Specifications, and ALEX shall comply with the
inspection and return goods policy described in Section 9 below with respect to
such Products. HOKU shall be responsible for all replacement costs, including
but not limited to transportation, taxes and customs charges, and, in the case
of a replacement, shall use commercially reasonable efforts to replace such
non-confirming products within [*] days after expiration of the [*] day period
described in section 9.3 below. 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
ALEX.  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.








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8.2.           HOKU
EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY,
INCLUDING THE WARRANTIES OF MERCHANTABILITY, AND FITNESS FOR A PARTICULAR
PURPOSE.  Except as otherwise provided in Section 10.2.5 below, HOKU’s
sole responsibility and ALEX’s exclusive remedy for any claim arising out of the
purchase of any Product is a refund or replacement, as described
above.  In no event shall any Party’s liability exceed the purchase
price paid therefore; nor shall any Party 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 the Party has been advised of the possibility of such
damages.




8.3.           HOKU
shall, at its own expense, indemnify and hold ALEX and its Affiliates 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 ALEX or ALEX’s
Affiliates alleging any such infringement.  ALEX agrees
that:  (i) ALEX shall give HOKU prompt notice in writing of any such
suit; (ii) if HOKU provides evidence reasonably satisfactory to ALEX of HOKU’s
financial ability to defend the matter vigorously and pay any reasonably
foreseeable damages, ALEX shall permit HOKU, through counsel of HOKU’s choice,
to answer the charge of infringement and defend such suit (but ALEX, or ALEX’s
Affiliate may be represented by counsel and participate in the defense at its
own expense); and (iii) ALEX 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, HOKU
disclaims any obligation to defend or indemnify ALEX, its officers, agents, or
employees, from any losses, damages, liabilities, costs or expenses which may
arise out of the acts of omissions of HOKU.




9.           Inspection and Return Goods
Policy.




9.1.           An
inspection of appearance of each shipment of Product shall be made by ALEX in
accordance with sound business practice upon the delivery of the Product, and in
no case later than [*] weeks after delivery at ALEX’s factory. ALEX shall inform
HOKU promptly, and in no case later than [*] weeks after delivery of Product at
ALEX’s factory, in case of any obvious damages or other obvious defects to the
Product which ALEX discovers under the inspection of appearance.




9.2.           ALEX
shall perform final inspection of the Product upon introducing the Product into
ALEX’s production process. Such inspection shall take place during the Warranty
Period.  If the Product does not meet the Product Specifications, ALEX
shall notify HOKU in writing without undue delay after the inspection and,
together with the notification, submit documentary evidence of the result of the
final inspection whereupon HOKU shall have the right to undertake its own
inspection prior to any return of the Products pursuant to Section 9.3
below.




9.3.           Non-complying
Products may be returned to HOKU within the later of (a) [*] after discovery of
a defect consistent with Sections 9.1 and 9.2 above; and (b) [*] after HOKU
completes its inspection and confirms the defect pursuant to Section 9.2 above,
for replacement or a refund including all return shipment
expenses.  To assure prompt handling, HOKU shall provide ALEX a return
goods authorization number within 48 hours of ALEX’s
request.  Provided that HOKU communicates this number to ALEX within
such timeframe, ALEX 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 due to HOKU’s additional handling costs, provided, however, if HOKU
fails to provide ALEX such authorization number within such time frame without
reasonable cause, HOKU shall bear all handling costs incurred in returning the
non-complying products. HOKU reserves the right to reverse any credit issued to
ALEX if, upon return, such Product is determined by an Independent Expert not to
be defective. The conclusion of the Independent Expert shall be final, binding
and non-appealable in respect of the conformity of the Products to the
warranties set forth in Section 8.1 above.  The fees and expenses of
the Independent Expert shall be paid solely by the party that does not succeed
in the dispute.








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                HOKU
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9.4.           The
following shall be deemed to constitute a material breach of this agreement by
HOKU pursuant to section 10.2.1: (A) if HOKU delivers [*] consecutive monthly
shipments where more than [*] percent [*] of the Products in each shipment do
not meet the Product Specifications, or (B) HOKU delivers [*] or more monthly
shipments during any Year where [*] of the Products in each such shipment do not
meet the Product Specifications.




10.           Term and
Termination.




10.1.           The
term of this Agreement shall begin on the Effective Date and shall remain in
force for a period of ten (10) Years beginning with the First Shipment
Date.




10.2.           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:




10.2.1.                      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
[*] days after written
notice thereof; provided, however, that such cure period shall not modify or
extend the [*]-day cure
period for HOKU’s delivery obligations pursuant to Section 4.3 above; and
provided, further that each [*] day cure period shall not
apply to ALEX’s failure to make payment to HOKU pursuant to this
Agreement.  In the event of ALEX’s failure to make payment on the
[*]-day payment terms set
forth in Section 6.4 hereof, termination by HOKU shall require the issuance of a
written notice of default containing the threat of immediate termination if
payment is not made within an additional grace period of not less than [*] business
days.  For purposes of this Section 10.2.1, a “material breach” means
a monthly shipment which is delayed beyond [*] days, a payment default or
any other material breach of this Agreement which materially and adversely
affects a Party or which occurs on multiple occasions;




10.2.2.                      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;








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10.2.3.                      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);




10.2.4.                      In
accordance with the provisions of Section 13 (Force Majeure) below; provided,
however, that ALEX may not terminate this Agreement pursuant to Section 13 if
HOKU is supplying Products to ALEX pursuant to Section 4.2 of this
Agreement;




10.2.5.                      HOKU’s
repetitive failure to deliver Products conforming to the warranties set forth in
Section 8 above, subject to applicable cure periods; or




10.2.6.                      Without
limiting the foregoing, ALEX shall have the right to terminate this Agreement if
the First Shipment of the Minimum Monthly Quantity of Products does not occur on
or before March 31, 2010; provided, however, that such right to terminate shall
be extended to a later date as set forth in Section 5.2 for any late payment of
any portion of the Total Deposit by ALEX.




10.3.           HOKU
shall have the right to terminate this Agreement if (A) on or before the tenth
(10th) calendar day after the Signing Date, ALEX has failed to pay the Initial
Deposit; (B) on or before March 25, 2009, ALEX has failed to pay the Second
Deposit pursuant to Section 6.3 above, in which case, HOKU shall be entitled to
retain the Initial Deposit and the Prior Deposit as liquidated damages; (C) on
or before June 24, 2009, ALEX has failed to pay the Third Deposit pursuant to
Section 6.4 above, in which case, HOKU shall be entitled to retain the Prior
Deposit, the Initial Deposit and the Second Deposit as liquidated damages; or
(D) on or before July 28, 2009, ALEX has failed to pay the Fourth Deposit
pursuant to Section 6.5 above, in which case, HOKU shall be entitled to retain
the Prior Deposit, the Initial Deposit, the Second Deposit, and the Third
Deposit as liquidated damages.




10.4.           Upon
the expiration or termination of this Agreement howsoever arising, the following
Sections shall survive such expiration or termination: Sections 1 (Definitions);
Section 8 (Product Quality Guarantee), Section 9 (Inspection and Return Goods
Policy); Section 10 (Term and Termination); Section 11 (Liability); Section 12
(Liquidated Damages); and Section 14 (General Provisions).




10.5.           If
ALEX terminates this Agreement pursuant to Section 10.2 et seq., or 13, then, in
addition to ALEX’s other remedies pursuant to this Agreement, and all available
remedies at law and in equity, 100% of the Funds Remaining on the Total Deposit
on such date of termination shall be returned to ALEX within thirty (30)
calendar days, plus interest equal to the amount set forth in Section 6.8 for
each year since such funds were paid to HOKU by ALEX; provided however that if
ALEX is in material breach of this Agreement at the time it terminates this
Agreement, then HOKU shall not be required to repay any
of the Funds Remaining  on the Total Deposit up to the amounts of
HOKU’s direct loss from such material breach (unless ALEX cures such breach
within the applicable cure period) or ALEX’s other outstanding and unpaid
obligations hereunder (including, without limitation, obligations under Section
12). If HOKU terminates this Agreement pursuant to Section 10.2 et seq.,or 13then, in addition to
HOKU’s other remedies pursuant to this Agreement, and all available remedies at
law and in equity, HOKU shall be entitled to retain any Funds Remaining on the
Total Deposit on such date of termination in accordance with Section 12. “Funds
Remaining” on the Total Deposit are funds not applied against ALEX’s
purchase of Product, pursuant to Section 6.4 above, for Product actually shipped
to ALEX hereunder. If ALEX terminates this Agreement pursuant to section 10.2.1
or 10.2.6 due to HOKU’s failure to deliver products pursuant to this Agreement,
then one hundred fifty percent (150%) of the funds remaining on the total
deposit on such date of termination shall be immediately returned to
ALEX.








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                HOKU
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11.           Liability.




11.1.           IN
NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR FOR EXEMPLARY OR PUNITIVE DAMAGES, EVEN IF ALEX OR HOKU
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.




11.2.           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   THE TOTAL DEPOSIT,
EXCEPT WITH RESPECT TO ALEX’S CONTINUING OBLIGATION TO PURCHASE THE PRODUCTS AS
SET FORTH HEREIN.




12.           Liquidated
Damages




12.1.           
THE PARTIES ACKNOWLEDGE AND AGREE THAT ANY BREACH OF SECTION 6 OF THIS AGREEMENT
BY ALEX MAY CAUSE IRREPARABLE AND IMMEASURABLE DAMAGE TO
HOKU.  BECAUSE IT IS DIFFICULT TO MEASURE THESE DAMAGES, IN THE EVENT
THAT THIS AGREEMENT IS TERMINATED BY HOKU PURSUANT TO SECTION 10.3, THEN HOKU
SHALL BE ENTITLED TO RETAIN AS LIQUIDATED DAMAGES, ANY FUNDS REMAINING ON THE
TOTAL DEPOSIT THEREOF NOT CREDITED AGAINST PRODUCT SHIPMENTS.  ANY
AMOUNTS DUE FOR UNDELIVERED PRODUCT UNDER THIS AGREEMENT ARE STILL DUE, UNLESS
OTHERWISE AGREED UPON BY BOTH PARTIES IN WRITING.




13.           Force
Majeure.  Neither Party shall be liable 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,
embargoes, riots, strike, lock-outs and other events beyond its reasonable
control, provided, however, that the non-performing Party shall not be so
excused to the extent such default or delay is attributable to such
non-performing Party failing to use reasonable efforts to prevent or such
non-performing Party causing such default or delay, and such default or delay
could not reasonably be circumvented by the non-performing Party through the use
of alternate sources, workaround plans or other
means.  Notwithstanding the foregoing, a strike, lock-out or other
labor dispute involving a Party (or, in the case of Supplier, a subcontractor or
supplier) and its own personnel will not excuse such Party from
performing its obligations hereunder. In such event, the non-performing Party
will be excused from further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and such Party continues to
use commercially reasonable efforts to recommence performance or observance
whenever and to whatever extent without delay. If such failure or delay occurs,
the affected Party (i.e. the Party that is unable to perform) 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 conditions of
Force Majeure apply for a period of more than three (3) consecutive calendar
months, the non-affected Party shall be entitled to terminate this Agreement
upon 30 days’ prior written notice to the other Party.








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                HOKU
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14.           OEM Module
Manufacturing.  ALEX agrees to provide HOKU or its designated
Affiliate, at HOKU’s sole option, original equipment manufacturing (OEM) module
production services at preferred pricing for up to [*] megawatts (MW) of modules
per Year for the term of the Supply Agreement. The Parties agree that per-module
pricing for this service shall be determined through negotiation on an annual
basis. These negotiations shall be concluded no later than two months prior to
the commencement of the applicable Year, at which time HOKU shall provide ALEX
with an estimate of required capacity, if any, of OEM modules to be manufactured
during the Year to follow. ALEX shall affirm that the pricing and other
commercial terms offered to HOKU at such time shall be ALEX’s most preferential
rate and terms, and no greater than [*].




15.           Corporate Guaranty.
As an inducement for HOKU to enter into this Agreement with ALEX, the parent
company of ALEX, SHANGHAI HUAYI ENTERPRISES GROUP, with its principal place of
business located at No. 3102 Huhang Highway, Fengxian, Shanghai, People’s
Republic of China (the “Guarantor”)
hereby guaranties to HOKU the prompt, punctual and full payment of the Total
Deposit  due HOKU from ALEX pursuant to this Agreement, and agrees to
the following:




15.1.           The
obligations of the Guarantor shall be at the election of HOKU, shall be primary
and not necessarily secondary, and HOKU shall not be required to exhaust its
remedies as against ALEX prior to enforcing its rights under this guaranty
against the Guarantor.




15.2.           The
guaranty hereunder shall be unconditional and absolute and the Guarantor waives
all rights of subrogation and set-off until all sums under this guaranty are
fully paid. The Guarantor further waives all suretyship defenses or defenses in
the nature thereof, generally.




15.3.           The
Guarantor warrants and represents it has full authority to enter into this
guaranty.




15.4.           This
guaranty shall be binding upon and inure to the benefit of the Parties, their
successors, assigns and personal representatives.




15.5.           This
guaranty shall be construed and enforced under the laws of the State of
California, USA.




16.           General
Provisions.




16.1.           ALEX
and HOKU each represent and warrant to each other that this Agreement has been
duly authorized by their respective Boards of Directors and shareholders, as
applicable, and that the execution of this Agreement and the performance of such
Party’s respective obligations hereunder will not conflict with any other
agreement to which HOKU or ALEX, as applicable, is a party.




16.2.           ALEX
acknowledges that it is the policy of HOKU to scrupulously comply with the
Foreign Corrupt Practices Act of 1977 (as amended, the “FCPA”) and
to adopt appropriate and reasonable practices and procedures that are undertaken
in such a manner as to substantially eliminate the potential for violation of
the FCPA.  ALEX further acknowledges that it shall be bound by any
law, regulation or other legal enactment, that prohibits corrupt practices of
the type or nature described in the FCPA and that is applicable to ALEX, and
ALEX hereby represents and warrants that neither HOKU, nor to ALEX’s knowledge,
any other authorized person or entity associated with or acting for or on behalf
of HOKU, has knowingly directly or indirectly made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to ALEX,
whether in money, property, or services (i) to obtain favorable treatment in
securing business from ALEX, (ii) to pay for favorable treatment for business
secured from ALEX, or (iii) to obtain special concessions or for special
concessions already obtained from ALEX, for or in respect of HOKU, in violation
of any legal requirement or applicable law.








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




16.4.           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, only
then may a Party resort to litigation. Any proceeding to enforce or to resolve
disputes relating to this Agreement shall be brought in California, USA. In any
such proceeding, neither Party shall assert that such a court lacks jurisdiction
over it or the subject matter of the proceeding.




16.5.           HOKU
may assign its rights under this Agreement to any collateral agent as collateral
security for HOKU’s secured obligations in connection with the financing a HOKU
Facility, without the consent of ALEX. Except as stated in the previous
sentence, neither HOKU nor ALEX may assign this Agreement to a third party
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld.  Notwithstanding the foregoing, an assignment
of this Agreement by either Party in connection with a merger, acquisition, or
sale of all or substantially all of the assets or capital stock of such Party
shall not require the consent of the other Party.  If this Agreement
is assigned effectively to a third party, this Agreement shall bind upon
successors and assigns of the Parties hereto.




16.6.           All
notices delivered pursuant to this Agreement shall be in writing and in the
English language.  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 16.6 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:




ALEX:


SHANGHAI
ALEX NEW ENERGY CO., LTD.


No.
111-3111 West Huancheng Road


Minhang
Export Processing Zone, Feng Xian District


Shanghai,
201401, China


Attn:  Mr.
Lian Wen Zhang, President


Facsimile:
+86 (021) 5744 2247








ALEX
      Initials & Date  /s/ JGL
      2009.2.27
                HOKU
      Initials & Date  /s/ DS
      2/26/09
 Page
12 of 17








HOKU:


HOKU
MATERIALS, INC.


One Hoku
Way


Pocatello,
Idaho, 83204


Attn:  Mr.
Dustin Shindo, CEO


Facsimile:  +1
(808) 440-0357




16.7.           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.




16.8.           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.




16.9.           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.




16.10.                      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.




16.11.                      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) 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
reasonable advance notice to the other Party.




16.12.                      This
Agreement constitutes the entire agreement between the Parties and supersedes
all prior 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.




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








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




16.15.                      This
Agreement may be executed in one or more counterparts, including counterparts
transmitted by telecopier, telefax, or PDF, all of which taken together shall
constitute one and the same contract.




16.16.                      Beginning
on the Effective Date, and until the First Shipment Date or the earlier
termination of this Agreement pursuant to Section 10 above, ALEX shall have the
right to visit the HOKU Facility in Pocatello Idaho, USA for the limited purpose
of evaluating HOKU’s progress towards completing the construction of its
polysilicon production facilities. ALEX shall provide HOKU with at least five
(5) business days’ prior notice of any such visit, and may not visit more than
two times each calendar quarter. HOKU reserves the right to refuse access to any
individual who is not subject to HOKU’s non-disclosure agreement. ALEX shall
agree to abide by all of HOKU’s safety and security requirements and
instructions for the HOKU facility.




16.17.                      Beginning
on the Effective Date, and until the First Shipment Date or the earlier
termination of this Agreement pursuant to Section 10 above, HOKU shall provide
ALEX with monthly updates on the progress of the construction of the HOKU
polysilicon production facility, including, without limitation, an explanation
of any potential delays in meeting its shipment obligations to
ALEX.








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      2009.2.27
                HOKU
      Initials & Date  /s/ DS
      2/26/09
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IN
WITNESS WHEREOF, the Parties have executed this Supply Agreement as of the date
last set forth below.






ALEX:
              
              SHANGHAI
      ALEX NEW ENERGY CO., LTD.
              
              By: 
      /s/ Jian Gang Li
              

              Name: 
      Jian Gang Li
              Title:
              Authorized
      Signatory
              
              Date: 
      2009.2.27
            HOKU:
              
              HOKU
      MATERIALS, INC.
              
              By: 
      /s/ Dustin Shindo
              

              Name: 
      Dustin Shindo
              Title: 
      Chief Executive Officer
              Authorized
      Signatory
              
              Date: 
      February 26, 2009GUARANTOR:
              
              SHANGHAI
      HUAYI ENTERPRISES GROUP
              
              By: 
      /s/ Lian Wen Zhang
              

              Name: 
      Lian Wen Zhang
              Title:
              Authorized
      Signatory
              
              Date: 
      2009.2.27







Signature
Page to Supply Agreement
 Page
15 of 17





Appendix
1




Pricing
Schedule









[*]




If there
is uncertainty in price between the delivery period and the total quantity for
that period based on the table above, the price assigned to the quantity shall
prevail.  For example, the first [*] shall be invoiced at [*] per
kilogram.






ALEX
      Initials & Date  /s/JGL
      2009.2.27
                HOKU
      Initials & Date  /s/ DS
      2/26/09
 Appendix
1 to Supply Agreement
 Page
16 of 17







Appendix
2 -- Product Specifications




[*]





1.  Description





[*]





2.  Bulk
& Surface Impurity Specifications





[*]





3.  Size
Specifications





[*]





4.
Certification & Elemental Analysis





[*]





5.
Packaging





[*]








6.           Qualified
Laboratories:





[*]





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      Initials & Date  /s/JGL
      2009.2.27
                HOKU
      Initials & Date  /s/ DS
      2/26/09
 Appendix
2 to Supply Agreement
 Page
17 of 17