Document:

Exhibit
      10.59

    

    [*]
      =
      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. 

    

    
      AGREEMENT
        FOR CONSTRUCTION OF HOKU ELECTRIC SUBSTATION

    

    AND
      ASSOCIATED FACILITIES

     

    THIS
      AGREEMENT for the construction of Hoku electric substation and associated
      facilities (the “Agreement”) is entered into as of the 28th day
      of
December,
      2007 by and between HOKU MATERIALS, INC., One Hoku Way, Pocatello,
      Idaho 83204 (“Hoku”) and IDAHO POWER COMPANY, P.O. Box 70, Boise, Idaho
      83707 (“Idaho Power” or “IPCO”). Hoku and IPCO may also be referred to
hereinafter
      individually as “Party” or collectively as the “Parties”.

     

    RECITALS

     

    A. Hoku
      is
      developing a manufacturing plant to produce polysilicon, a key material
      used in the production of solar cells and integrated circuits. The construction
      of an
      electric substation and associated transmission facilities is required to allow
      IPCO to supply
      electric capacity and energy to Hoku’s manufacturing complex located at South
Philbin
      Road in Pocatello, Idaho (“Hoku Facility”). Hoku has requested that the
substation
      and associated facilities be sized to allow IPCO to provide electric service
      to
the
      Hoku
      Facility in an amount up to [*] Megawatts (“MW”) of demand.

     

    B. Because
      the Hoku Facility will be located in an area where Idaho Power does
      not
      have existing facilities of adequate capacity, delivery of power to the Hoku
      Facility
      site will require the construction of (1) approximately [*] of [*] volt
overhead
      transmission line to interconnect with Idaho Power’s existing transmission
system,
      (2) a new [*] volt electric substation at the Hoku Facility, and (3) additional
      equipment and facilities at IPCO’s existing substations. These facilities are
      sometimes hereinafter collectively referred to as the “Requested Facilities” and
      are described in greater detail in Exhibit 1 to this Agreement. This Agreement
      is not subject to or governed by Rule H, Idaho Power’s tariff governing line
      installations, including any revisions to that rule, or any successor rules
      or
      schedules.

     

    
      
        
        

      

      
        Page
          1

        
          

        

      

      
        
        

      

    

    
       

    

    C. Idaho
      Power will construct the Requested Facilities in accordance with the terms
      and
      provisions of this Agreement.

     

    NOW,
      THEREFORE, in consideration of the mutual obligations and undertakings set
      forth
      herein, and other good and valuable consideration, the sufficiency is hereby
      acknowledged, Hoku and Idaho Power agree as follows:

     

    AGREEMENTS

     

    1. Construction
      of Requested Facilities 

     

    1.1
      Idaho
      Power will construct the Requested Facilities to provide for the
      delivery of power (capacity) at a point generally described as the load side
      terminals of
      the
      substation transformer [*]
      disconnect
      switches at the Hoku Facility
      (the “Delivery Point”).

     

    1.2
      Idaho
      Power will use commercially reasonable efforts to complete construction
      of the Requested Facilities by February 15, 2009. However, Hoku recognizes
      that Idaho Power’s ability to complete the Requested Facilities on or before
that
      date
      is subject to the receipt of the site plans and payments from Hoku as
described
      herein, Idaho Power’s ability to obtain required labor, materials and
equipment,
      timely receipt of satisfactory easements and rights of way, and timely receipt
      of governmental regulatory authorizations.

     

    1.3
      If
      Idaho Power fails to meet the completion deadline described above,
      and such failure is not excused as provided in Section 1.2, the Parties agree
      that Hoku may submit the matter to the Idaho Public Utilities Commission
      (“Commission”) for
      appropriate relief, and pending final resolution, Hoku’s obligation to make
      further payments pursuant to the terms of this Agreement shall be
      suspended.

    

    
      
        
        

      

      
        Page
          2

        
          

        

      

      
        
        

      

    

     

    2. Project
      Cost 

     

    2.1
      Excluding amounts previously paid for design and engineering expenses,
      the total estimated cost for the construction of the Requested Facilities is
      $14,804,000. Hoku’s payments to IPCO constitute a Contribution In Aid of
      Construction (“CIAC”)
      and include a tax gross-up of thirty-one percent (31%) to cover IPCO’s
resulting
      income tax liability. Hoku shall pay IPCO in the amounts and at the times specified
      below:

     

    
      	
              January
                9, 2008

            	
              $3,701,000

            
	
              March
                1, 2008

            	
              $3,701,000

            
	
              June
                1, 2008

            	
              $3,701,000

            
	
              September
                1, 2008

            	
              $3,201,000

            
	
              Facilities
                Available for Service

            	
              $500,000

            

    

     

    For
      purposes of the payment schedule described above, “Facilities Available for
Service”
      shall mean the date when the capacity is first made available to provide the
      requested
      service. In the event of significant scheduling changes, the payment
milestones
      will be delayed or accelerated accordingly. The total estimated cost of the
      Requested Facilities does not include costs associated with use of any temporary
      substations,
      transmission or distribution facilities that may be necessary to provide
Hoku
      with
      temporary start-up power prior to the expected February 15, 2009 completion
      date. The cost of such temporary facilities will be invoiced to and paid by
      Hoku
      separately from this Agreement.

     

    
      
        
        

      

      
        Page
          3

        
          

        

      

      
        
        

      

    

    
       
2.2
      If
      Hoku fails to pay an amount due on or before the payment milestone
      date specified in Section 2.1, any obligation of Idaho Power to further perform
      under
      this agreement will be suspended pending receipt of such payment. If, after
      Idaho
      Power’s delivery to Hoku of notice that such payment has not been received, Hoku
      fails to make such payment within ten (10) days of Idaho Power sending such
      notice,
      Idaho Power may, in its sole discretion, terminate this Agreement. If this
      Agreement
      is so terminated, Idaho Power shall refund to Hoku any portion of Hoku’s
previous
      payments that Idaho Power has not encumbered for work orders for design,
labor,
      materials and supplies, permitting costs and other expenditures for the
Requested
      Facilities.

     

    2.3
      Hoku’s payments under this Agreement shall not provide or give Hoku
      any
      ownership rights or interest in the Requested Facilities. Ownership of the
      Requested Facilities and new Hoku Substation shall remain with
      IPCO.

     

    3. Capacity
      Entitlement 

     

    3.1
      Once
      construction of the Requested Facilities is complete, Idaho Power
      will have installed facilities and equipment sufficient to provide Hoku with
      [*]
      MW of
      electrical capacity measured at the Delivery Point to serve loads at the Hoku
      Facility.
      For five (5) years following the completion of construction, Idaho Power agrees
      not to
      serve
      additional customers from the two (2) substation transformers installed or
      utilize the
      two
      (2) vacant transformer spaces pursuant to this Agreement without the prior
      written consent
      of Hoku . However, if at the conclusion of the five (5)-year period following
      the completion of construction, total loads at the Hoku Facility are less than
      [*]
      MW,
      Hoku’s entitlement to capacity at the Delivery Point will be limited to the
      amount of contract demand
      established in the Electric Service Agreement referenced in Section 6 that
      is
      currently being negotiated between the Parties. Relinquishment of any portion
      of
      Hoku’s capacity
      entitlement, as discussed above, does not entitle Hoku to any refund of the
      CIAC
      payments specified in Section 2.1. Idaho Power will send a letter to Hoku
specifying
      the date when construction of the Requested Facilities has been completed and
      notifying Hoku that the five (5)-year time period described above has
      commenced.

     

    
      
        
        

      

      
        Page
          4

        
          

        

      

      
        
        

      

    

     

    4. Ownership
      Operation and Maintenance 

     

    4.1
      Idaho
      Power will own, operate and maintain the Requested Facilities
      constructed pursuant to this Agreement. Hoku recognizes that the Requested
      Facilities
      will become part of Idaho Power’s integrated electrical transmission and
distribution
      system and will be used by Idaho Power to provide electric service to other
      existing, and future, customers.

     

    5. Rights
      of Way and/or Easements 

     

    5.1
      Hoku
      and IPCO agree to work in good faith to acquire the rights to access
      and use the real property determined by IPCO to be reasonably required for
      locating,
      constructing, operating and maintaining the Requested Facilities. Idaho Power
      recognizes
      that Hoku does not own the land on which the Hoku Facility will be located
      (the
“Land”),
      but holds a long-term ground lease under which the City of Pocatello is the
      landlord.
      It is IPCO’s preference to own said real property in fee simple free and
clear
      of
      liens and other encumbrances. In the event IPCO purchases or otherwise
acquires
      the real property rights it deems necessary to access and use the Requested
      Facilities, Hoku shall fully reimburse IPCO for amounts spent by IPCO to
      purchase or otherwise acquire such necessary real property interest. All such
      easements and rights of way will be in a form reasonably acceptable to Idaho
      Power, and
      will
      be provided to Idaho Power at no cost. Idaho Power will be responsible for
      obtaining
      any and all other permits, rights-of-way, and/or regulatory approvals
required
      by public agencies for performance of this Agreement and for payment of any
      and
      all permit fees and/or taxes required for or associated with such permits,
      rights-of-way,
      and
      regulatory approvals.

    

    
      
        
        

      

      
        Page
          5

        
          

        

      

      
        
        

      

    

    
       

    

    5.2
      IPCO
      will make a good faith effort to coordinate construction, operation
      and maintenance schedules with Hoku so that such activities will not
unreasonably
      interfere with Hoku’s access, ingress and egress to the Hoku manufacturing
      complex.

     

    6. Refunds.
      

     

    6.1
      The
      Parties are concurrently negotiating an ELECTRIC SERVICE AGREEMENT
      (“ESA”) to govern the rates and terms of IPCO’s provision of electric
service
      to Hoku. The ESA shall be subject to the approval of the Commission and the
      respective
      rights and obligations of the Parties hereunder shall be subject to the
continuing
      jurisdiction and regulatory authority of said Commission. In the event an
ESA
      cannot be reached that is satisfactory to the Parties and receives regulatory
      approval
      from the Commission, or if Hoku notifies IPCO that it no longer wishes to
proceed
      with the construction of the Requested Facilities for any other reason, IPCO
      will
      refund only the amounts received that exceed the cost of constructing the
Requested
      Facilities then completed or committed to date, and IPCO shall use reasonable
      efforts to avoid or mitigate such costs.

    

    
      
        
        

      

      
        Page
          6

        
          

        

      

      
        
        

      

    

    
       
7. Additional
      Provisions 

     

    7.1
      Liability.
      Each
      Party will indemnify and hold harmless the other Party
      from and against loss, damage or liability, exclusive of costs and attorney’s
      fees, resulting from claims asserted by third persons against either or both
      Parties to this Agreement
      on account of injury or death to persons or damage or destruction of
property
      occurring on such (indemnifying) Party’s side of the aforesaid Delivery Point,
      unless such injury or damage shall have resulted from the sole negligence of
      the
      other Party; provided, however, that each Party shall be solely responsible
      for
      claims of and payment to its employees for injuries occurring in connection
      with
      their employment or arising out of any worker’s compensation laws.

     

    7.2
      Limitation
      on Liability. NEITHER
      PARTY SHALL, IN ANY EVENT, BE
      LIABLE
      TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE
      OR CONSEQUENTIAL DAMAGES SUCH AS, BUT NOT LIMITED TO, LOST
      PROFITS, REVENUE OR GOOD WILL, OR INTEREST, WHETHER SUCH LOSS
      IS
      BASED ON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR
      OTHERWISE.

     

    7.3
      Waivers.
      Any
      waiver at any time by either Party of any right with respect
      to any matter arising under this Agreement, or any failure to give notice
provided
      hereunder, shall not be deemed to be a waiver with respect to any subsequent
      matter,
      nor as the establishment of or consent to any practice under this Agreement
      or
an
      interpretation of any term or provision hereof.

     

    7.4
      Regulatory
      Authority. This
      Agreement is subject to valid laws and to
      the
      regulatory authority and orders, rules and regulations of the Commission and
      such other
      administrative bodies having jurisdiction, as well as Idaho Power Company’s
      Rules and Regulations as now or may be hereafter modified and approved by the
      Commission.

     

    
      
        
        

      

      
        Page
          7

        
          

        

      

      
        
        

      

    

     

     

    7.5
      Choice
      of Law and Venue. This
      Agreement shall be governed by and
      construed in accordance with the laws of the State of Idaho, and venue for
      any
court
      proceeding arising out of this Agreement shall be in Boise, Idaho.

     

    7.6
      Dispute
      Resolution. Prior
      to
      commencement of any suit, claim or other
      cause of action in any court proceeding, Hoku and IPCO agree to undertake good
      faith efforts to resolve such differences through negotiations between senior
      business representatives
      of each company. In the event of a dispute arising under this Agreement
      that cannot be resolved through negotiation, the prevailing party shall be
      entitled
      to reimbursement from the non-prevailing party for all reasonable costs and
      expenses, including reasonable attorney’s fees incurred by the prevailing party
      in the formal resolution of the dispute.

     

    7.7
      Modifications
      and Counterparts. This
      Agreement sets forth the entire
      understanding and agreement of Hoku and IPCO with regard to the construction
      of
      the
      Requested Facilities. This Agreement may only be amended or modified by a
writing
      signed by the duly authorized representatives of both parties. This Agreement
      may
      be
      executed in counterparts, each of which, taken together, shall constitute one
      and
      the
      same Agreement.

     

    7.8
      Notices.
      All
      notices, requests, demands and other communications which
      are
      required or may be given under this Agreement shall be in writing and shall
      be
      given
      to the intended recipient at the address specified below:

     

    
      
        
        

      

      
        Page
          8

        
          

        

      

      
        
        

      

    

     

     

    
      	If to IPCO, to:	 	
              
                Dan
                  Minor

              

              Senior
                Vice President, Delivery 

              Idaho
                Power Company

              P.O.
                Box 70

              Boise,
                Idaho 83707

            
	 	 	 
	With a copy to:	 	Thomas Saldin
              General
                Counsel

              Idaho
                Power Company 

              P.O.
                Box 70

              Boise,
                Idaho 83707

            
	 	 	 
	and	 	 
	 	 	 
	If to Hoku, to:	 	Karl Taft
              CTO

              Hoku
                Materials, Inc. One
                Hoku Way

              Pocatello,
                Idaho 83204

            
	 	 	 
	With a copy to:	 	Dustin Shindo
              CEO

              Hoku
                Scientific, Inc.

              1075
                Opakapaka Street Kapolei, Hawaii
                96707-1887

            

    

     

    8. Commission
      Approval. This
      Agreement and the respective rights and obligations of the Parties hereunder
      shall be subject to the continuing jurisdiction and regulatory authority of
      the
      Commission.

     

    
      
        
        

      

      
        Page
          9

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Parties have entered into this Agreement effective as
      of
      the day
      and
      year first above written.

     

     

    
      	 	 	 
	 	HOKU
              MATERIALS,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Dustin
              M.
              Shindo
	 	
              
Title:
              CEO
	 	 

    

    
       

      
        	 	 	 
	 	IDAHO
                POWER
                COMPANY
	 
 	 
 	 
 
	 	By:  	/s/ Dan
                Minor
                
	 	
                
                  

                

                Title: Senior Vice President,
                  Delivery

              
	 	 

      

       

      
        
          
          

        

        
          Page
            10

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      1

     

    HOKU
      REQUESTED FACILITIES

     

    New
      [*]
      Substation
      to be located at Hoku Facility 

    
      	
            	·	
              [*]
                Line
                Terminals with relay protection

            

    

    
      	
            	·	
              [*]
                LTC substation power transformers

            

    

    
      	
            	·	
              [*]
                circuit
                breakers, diagonal ring bus
                configuration

            

    

    
      	
            	·	
              [*]
                amp
                metered bus points of delivery

            

    

    
      	
            	·	
              Control
                enclosure for equipment protective relays and station
                battery

            

    

    
      	
            	·	
              Approx
                1+ acre yard size (site and access provided by
                Hoku)

            

    

     

    Don
      Substation 

    
      	 	
              ·

            	
              Install
                [*]
                new [*]
                Transmission Line Terminal with circuit breaker and
                protective relays for service to new substation located at the Hoku
                Facility.

            

    

     

    Alameda
      Substation 

    
      	 	
              ·

            	
              Install
                [*]
                new [*]
                Transmission Line Terminal with protective relays for service to
                new substation located at the Hoku
                Facility.

            

    

    
      	 	
              ·

            	
              Add
                [*] circuit breaker and line relay protection to existing Alameda
                Tap
                Transmission Line.

            

    

     

    Transmission
      Lines 

    
      	 	
              ·

            	
              Construct
                approx [*] single pole transmission line from Don Substation to new
                substation located at the Hoku
                Facility.

            

    

    
      	 	
              ·

            	
              Construct
                approx [*] single pole transmission line from Alameda Substation
                to new
                substation located at the Hoku
                Facility.

            

    

     

    Kinport
      Substation 

    
      	
            	·	
              Install
                protective relay for redundant Kinport-Alameda-Hoku [*] transmission
                source.

            

    

     

    Terry
      Substation 

    
      	
            	·	
              Install
                protective relay for redundant Terry-Alameda-Hoku [*] transmission
                source.

            

    

     

    Pocatello
      Service Building 

    
      	
            	·	
              Install
                protective relay communications equipment for redundant
                KinportAlameda-Terry [*] transmission
                source.

            

    

     

    
      
        
        

      

      
        EXHIBIT1Unassociated Document

     

    CONFIDENTIAL

     

    Exhibit
      10.60

     

    [*]
      =
      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.

     

    FIRST
      AMENDED & RESTATED SUPPLY AGREEMENT

     

    This
      First Amended & Restated Supply Agreement (“Agreement”)
      is
      made as of the last date set forth on the signature page hereto (the
“Effective
      Date”)
      between SOLARFUN
      POWER HONG KONG LIMITED,
      a
      company registered in Hong Kong (hereinafter “SOLARFUN”)
      and
HOKU
      SCIENTIFIC, INC., a
      Delaware corporation (hereinafter “HOKU”).
      HOKU
      and SOLARFUN are sometimes referred to in the singular as a “Party”
or
      in
      the plural as the “Parties”.

     

    Recitals
      

     

    Whereas,
      HOKU and SOLARFUN are parties that certain Supply Agreement dated as of November
      19, 2007 (the “Supply
      Agreement”),
      pursuant to which HOKU agreed to sell to SOLARFUN, and SOLARFUN agreed to
      purchase from HOKU, polysilicon for SOLARFUN’S general use beginning in calendar
      year 2009 for a continuous period of eight years from the date of the first
      shipment.

     

    Whereas,
      HOKU and SOLARFUN desire to amend and restate the Supply Agreement as
      hereinafter set forth to allow SOLARFUN additional time to negotiate with its
      banks for issuance of a letter of credit in an amount equal to the Main Deposit;
      and such other terms as set forth herein.

     

    Whereas,
      HOKU desires to supply polysilicon to SOLARFUN for its general use beginning
      in
      calendar year 2009 for a continuous period of eight years from the date of
      the
      first shipment; 

     

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

     

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

     

    1. Definitions. 

     

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

     

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

     

    1.2. “Agreement”
      shall mean this First Amended & Restated 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. 

     

    1.3. “Escrow
      Account”
      is the bank deposit account created with the Escrow Agent pursuant to the Escrow
      Agreement.

     

    1.4. “Escrow
      Agent”
      shall mean (A) a bank that is domiciled in and organized under the laws of
      one
      of the fifty states of the United States of America, and which is reasonably
      acceptable to HOKU, or (B) a bank located in China whose obligations and
      responsibilities are guaranteed by a bank that is domiciled in and organized
      under the laws of one of the fifty states of the United States of America,
      and
      which is reasonably acceptable to HOKU, or (C) any other bank that is acceptable
      to HOKU in its sole discretion, or (D) any successor escrow agent appointed
      pursuant to the Escrow Agreement.

     

    
      
        
        

      

      
        Page
          1 of
          29

        
          

        

      

      
        CONFIDENTIAL

      

    

     

    1.5. “Escrow
      Agreement”
      has the meaning set forth in Section 5.3.1
      below.

     

    1.6. “First
      Shipment Date”
      shall mean the first day of the calendar month in which HOKU commences
      deliveries to SOLARFUN of Products pursuant to this Agreement.

     

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

     

    1.8. “Minimum
      Annual Quantity of Product”
      means [*] metric tons ([*] kilograms) of Product during the first Year and
      [*]
      metric tons ([*] kilograms) during each of the second through eighth Year,
      inclusive. 

     

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

     

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

     

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

     

    1.12. “Total
      Deposit”
      shall mean all deposits or prepayments made by SOLARFUN to HOKU hereunder
      including without limitation the Initial Deposit and the Main Deposit.

     

    1.13. “Year”
      shall mean each of the eight (8) twelve-month periods commencing on the First
      Shipment Date.

     

    2. Ordering.
      Starting
      on the First Shipment Date and each Year during the term of this Agreement
      thereafter, SOLARFUN agrees to purchase from HOKU, and HOKU agrees to sell
      to
      SOLARFUN, 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 SOLARFUN for [*] metric tons of Product
      that cannot be cancelled during the term of this Agreement, except as set forth
      in Section 9
      below.

     

    3. Supply
      Obligations.
      

     

    3.1. 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 4.1 below; provided however, that
      if
      HOKU fails to deliver a monthly shipment, then HOKU may deliver any deficiency
      within [*] days without breaching this section or incurring any purchase price
      adjustment (pursuant to Section 3.3
      below).
      At any time during the term of this Agreement, HOKU may ship to SOLARFUN 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
      SOLARFUN’s 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.

     

    
      
        
        

      

      
        Page
          2 of
          29

        
          

        

      

      
        CONFIDENTIAL

      

    

     

    3.2. HOKU
      intends to manufacture the Products at its Facility; however, notwithstanding
      anything to the contrary herein, HOKU may deliver to SOLARFUN Products that
      are
      manufactured by a third party other than HOKU, where HOKU is acting only as
      a
      reseller or distributor of such Products; and provided that the Products meet
      the Product Specifications and price set forth in this Agreement. 

     

    3.3. Except
      in
      the case of a force majeure pursuant to Section 12
      below,
      if at any time after [*], HOKU does not supply any Products pursuant to Section
      3.1
      or
3.2
      within
      [*] days of the scheduled delivery date, HOKU will provide SOLARFUN with a
      purchase price adjustment. Such purchase price adjustment shall be [*] percent
      ([*]%) of the value of the respective delayed Products for each week or part
      thereof that the Product shipment (or part thereof) is delayed beyond the [*]
      day grace period. Any
      purchase price adjustment as a result of this Section 3.3
      will be
      paid by HOKU at the end of the term of the applicable calendar quarter.
      In lieu of making a cash payment to SOLARFUN pursuant to this Section
3.3,
      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 adjustment shall not exceed [*] percent ([*]%) of the value of the
      respective delayed Products. Monthly shipments which are delayed beyond one
      hundred fifty (150) days shall be deemed to constitute a material breach of
      this
      Agreement pursuant to Section 9.2.1
      below. 

     

    3.4. If
      HOKU
      delivers any Products to SOLARFUN prior to [*], then SOLARFUN shall pay HOKU
      a
      premium equal to [*]% of the applicable purchase price for the Products shipped.
      

     

    4. Shipping
      & Delivery. 

     

    4.1. Except
      as
      provided in Section 3.2
      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
      (the “Shipment
      Schedule”)
      no later than sixty (60) 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. 

     

    4.2. HOKU
      agrees that it will not enter into any additional supply contract with, or
      make
      any supply commitment to, any third party (not including the long term supply
      contracts that have been signed prior to the Effective Date (the
“Pre-existing
      Commitments”))
      if the aggregate of HOKU’s delivery obligations under all of its supply
      contracts (including those with SOLARFUN and its Pre-existing Commitments)
      and
      such additional supply contract/commitment during any month would exceed the
      rated monthly production capacity of all polysilicon reactors at all HOKU
      Facilities, as certified by the manufacturer thereof. Subject to the foregoing,
      this Section 4.2
      shall
      not preclude HOKU from (A) entering into supply contracts for additional
      capacity from Facility expansion, including pre-sales of potential Facility
      expansions, or from increased productivity of the Reactors, or (B) selling
      on
      the spot market or entering into long-term contracts for the sale of polysilicon
      that does not meet the Product Specifications at any time during the term of
      this Agreement, provided that HOKU uses commercially reasonable efforts to
      meet
      the Product Specifications with respect to such polysilicon and that HOKU does
      not manufacture polysilicon for the purpose of making such spot market sales
      or
      fulfilling such long term contracts

     

    4.3. HOKU
      will
      use commercially reasonable efforts to make its first shipment of Products
      to
      SOLARFUN on or before July 1, 2009. 

     

    5. Payments
      & Advances.

     

    5.1. HOKU
      acknowledges that as of the date of this Agreement, SOLARFUN has provided HOKU
      with a deposit of Eleven Million U.S. Dollars (US$11,000,000) via wire transfer
      of immediately available funds (the “First
      Deposit”)
      as advance payment for Products to be delivered under this
      Agreement.

     

    
      
        
        

      

      
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    5.2. SOLARFUN
      shall pay in cash to HOKU the additional sum of Forty-Four Million U.S. Dollars
      (USD $44,000,000.00) (the “Main
      Deposit”) as
      an
      advance payment for Products to be delivered under this Agreement in accordance
      with the payment schedule set forth below. 

     

    5.2.1. Nineteen
      Million U.S. Dollars ($19,000,000) of the Main Deposit (the “Second
      Deposit”)
      shall
      be paid to HOKU on September 30, 2008 (the “Second
      Deposit Date”).

     

    5.2.2. Twenty
      Million U.S. Dollars (USD $20,000,000) of the Main Deposit (the “Third
      Deposit”)
      shall
      be paid to HOKU on March 31, 2009 (the “Third
      Deposit Date”).
      

     

    5.2.3. Five
      Million U.S. Dollars (USD $5,000,000.00) of the Main Deposit (the “Fourth
      Deposit”)
      shall
      be paid to HOKU on March 31, 2010 (the “Fourth
      Deposit Date”).

     

    5.3. Escrow
      Agreement; Letter of Credit. 

     

    5.3.1. On
      or
      before February 15, 2008, either (A) SOLARFUN shall provide to HOKU an
      irrevocable stand-by letter of credit in substantially the form of Appendix
      3
      attached
      hereto (the “Letter
      of Credit”)
      in the
      amount of the Main Deposit, or (B) SOLARFUN, HOKU and the Escrow Agent shall
      sign an escrow agreement in substantially the form of Appendix
      4
      (the
“Escrow
      Agreement”),
      and
      SOLARFUN shall deposit into the Escrow Account the amount of the Main
      Deposit. 

     

    5.3.1(a) If
      the
      Letter of Credit is provided pursuant to Section 5.3.1(A)
      above, then such Letter of Credit shall be issued to HOKU by a bank domiciled
      in
      and organized under the laws of one of the fifty states of the United States
      of
      America, and which is reasonably acceptable to HOKU (the “Issuing
      Bank”).
      The
      Letter of Credit shall be issued in US Dollars for the full amount of the Main
      Deposit, and shall be freely assignable by HOKU in connection with any
      assignment of this Agreement by HOKU pursuant to Section 13.3
      below.
      Payment to HOKU of the Second Deposit, Third Deposit and Fourth Deposit shall
      be
      made by the Issuing Bank upon its receipt of written notice that SOLARFUN has
      failed to make such payment on the Second Deposit Date, the Third Deposit Date
      or the Fourth Deposit Date, as applicable. The Letter of Credit shall expire
      on
      the later of the date when (A) the Main Deposit has been paid in full to HOKU
      by
      SOLARFUN, or (B) the Main Deposit has been paid in full to HOKU by the Issuing
      Bank.

     

    5.3.1(b) If
      the
      Escrow Agreement is entered into pursuant to Section 5.3.1(B)
      above, then the Main Deposit may be deposited into the Escrow Account in US
      Dollars or Chinese RMB; provided, however, that all payments to HOKU pursuant
      to
      this Agreement shall be in US Dollars. Payment of the Second Deposit, Third
      Deposit and Fourth Deposit shall automatically be made to HOKU from the Escrow
      Account pursuant to the Escrow Agreement on the Second Deposit Date, Third
      Deposit Date and Fourth Deposit Date, as applicable. Notwithstanding anything
      to
      the contrary, all payments from the Escrow Account to HOKU shall be made in
      US
      Dollars, unless HOKU and SOLARFUN otherwise agree in writing. In the event
      that
      the amount of any payment from the Escrow Account to HOKU in US Dollars is
      less
      than the Second Deposit, Third Deposit, or Fourth Deposit, as applicable, due
      to
      currency exchange rates from Chinese RMB to US Dollars, then SOLARFUN shall
      be
      obligated to immediately pay HOKU in US Dollars the difference between the
      actual payment from the Escrow Account and the Second Deposit, Third Deposit
      or
      Fourth Deposit, as applicable. The final form of the Escrow Agreement may be
      different from the form attached as Appendix 4, acceptance of which by the
      Parties shall be evidenced by HOKU and SOLARFUN’s execution thereof.

     

    
      
        
        

      

      
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    5.4. HOKU
      shall invoice SOLARFUN at or after the time of each shipment of Products to
      SOLARFUN. Taxes, customs and duties, if any, will be identified as separate
      items on HOKU invoices. All invoices shall be sent to SOLARFUN’s address as
      provided herein. Payment terms for all invoiced amounts shall be [*] days from
      date of shipment. All payments shall be made in U.S. Dollars. Unless HOKU is
      entitled to retain the Total Deposit as liquidated damages pursuant to Section
      11
      below,
shipments
      to SOLARFUN shall be credited against the Total Deposit beginning
      in the second Year, as set forth in Appendix
      1
      (Pricing
      Schedule).

     

    5.5. The
      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 SOLARFUN, provided that SOLARFUN
      is
      legally or contractually obliged to pay such taxes. SOLARFUN shall be
      responsible for all transportation charges, duties or charges for shipping
      and
      handling; thus, the price for the Products shall not include any such
      charges.

     

    5.6. Late
      payments and outstanding balances shall accrue interest at the lesser of [*]%
      per annum or the maximum allowed by law. 

     

    6. Security
      Interest.

     

    6.1. Subject
      to receipt of the Initial Deposit and or payment of any portion of the Main
      Deposit HOKU hereby grants to SOLARFUN a security interest to secure the
      repayment by HOKU to SOLARFUN of the Total Deposit following any of the events
      set forth in Section 9.6
      below,
      which shall be subordinated in accordance with Section 6.2
      below,
      in all of the tangible and intangible assets related to HOKU’s polysilicon
      business (the “Collateral”).
      

     

    6.2. SOLARFUN
      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 SOLARFUN hereby. SOLARFUN shall enter into subordination agreements with
      the
      Senior Lenders on terms and conditions reasonably acceptable to the Senior
      Lenders. 

     

    6.3. In
      addition, SOLARFUN shall enter into collateral, intercreditor and other
      agreements (the “Collateral
      Agreements”)
      with
      HOKU’s Senior Lenders, and with SANYO Electric Co., Ltd., Suntech Power Holding
      Co., Ltd., Global Expertise Wafer Division, Ltd., 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. SOLARFUN may not unreasonably refuse to sign any such
      Collateral Agreement, provided that such Collateral Agreement grants SOLARFUN
      a
      pari passu priority with respect to HOKU’s Other Customers, and is expressly
      subordinated to the Senior Lenders. 

     

    6.4. The
      security interest granted hereby shall continue so long as HOKU continues to
      maintain any amount of the Total Deposit, and only to the extent of such
      remaining amount of the Total Deposit being held by HOKU, which has not been
      credited against the shipment of Products pursuant to this Agreement, or
      otherwise repaid to SOLARFUN. 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 SOLARFUN
      in accordance with the terms of this Agreement.

     

    
      
        
        

      

      
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    6.5. HOKU
      and
      SOLARFUN 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 6,
      including the Collateral Agreements. Neither HOKU nor SOLARFUN may unreasonably
      refuse to sign any such document.

     

    7. Product
      Quality Guarantee. 

     

    7.1. HOKU
      warrants to SOLARFUN that the Products shall meet the Product Specifications.
      For each shipment, this warranty shall survive for [*] days after the applicable
      shipment date (the “Warranty
      Period”).
      Upon release of the Products to a common carrier or freight forwarder, FOB
      origin, 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 HOKU’s instructions, refund or replace,
      at SOLARFUN’s sole option, any Product which does not meet the Product
      Specifications, and SOLARFUN shall comply with the inspection and return goods
      policy described in Section 8
      below
      with respect to such Products. 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 SOLARFUN. 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.

     

    7.2. HOKU
      EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY,
      INCLUDING THE WARRANTIES OF MERCHANTABILITY, AND FITNESS FOR A PARTICULAR
      PURPOSE. HOKU’s sole responsibility and SOLARFUN’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 HOKU’s liability exceed the purchase price
      paid therefore; nor shall HOKU be liable for any claims, losses or damages
      of
      any individual or entity or for lost profits or any special, indirect,
      incidental, consequential, or exemplary damages, howsoever arising, even if
      HOKU
      has been advised of the possibility of such damages.

     

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

     

    8. Inspection
      and Return Goods Policy.

     

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

     

    
      
        
        

      

      
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    8.2. SOLARFUN
      shall perform final inspection of the Product upon introducing the Product
      into
      SOLARFUN’s production process. Such inspection shall take place during the
      Warranty Period. If the Product does not meet the Product Specifications,
      SOLARFUN 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 8.3
      below.

     

    8.3. Products
      may be returned to HOKU within the later of (a) [*] after discovery of a defect
      consistent with Sections 8.1
      and
8.2
      above;
      and (b) [*] after HOKU completes its inspection and confirms the defect pursuant
      to Section 8.2
      above,
      for replacement or a refund including all return shipment expenses. To assure
      prompt handling, HOKU shall provide SOLARFUN a return goods authorization number
      within 48 hours of SOLARFUN’s request. Provided that HOKU communicates this
      number to SOLARFUN within such timeframe, SOLARFUN 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. HOKU reserves the
      right to reverse any credit issued to SOLARFUN if, upon return, such Product
      is
      determined by a predetermined third party not to be defective. 

     

    9. Term
      and Termination. 

     

    9.1. The
      term
      of this Agreement shall begin on the Effective Date and provided that the first
      delivery of the Product under this Agreement shall occur in 2009 or earlier,
      and
      unless previously terminated as hereinafter set forth, shall remain in force
      for
      a period of eight Years beginning with the First Shipment Date. 

     

    9.2. Each
      Party may, at its discretion, upon written notice to the other Party, and in
      addition to its rights and remedies provided under this Agreement or any other
      agreement executed in connection with this Agreement and at law or in equity,
      terminate this Agreement in the event of any of the following: 

     

    9.2.1. Upon
      a
      material breach of the other Party of any material provision in this Agreement,
      and failure of the other Party to cure such material breach within sixty (60)
      days after written notice thereof;
      provided, however, that such cure period shall not modify or extend the 150-day
      cure period for HOKU’s delivery obligations pursuant to Section 3.3
      above;
      and provided, further that such sixty (60) day cure period shall not apply
      to
      SOLARFUN’s failure to make any payment to HOKU pursuant to this Agreement. In
      the event of SOLARFUN’s failure to make payment on the 30-day payment terms set
      forth in Section 5.4
      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 ten (10) business days.

     

    9.2.2. Upon
      the
      voluntary or involuntary initiation of bankruptcy or insolvency proceedings
      against the other Party; provided, that for an involuntary bankruptcy or
      insolvency proceeding, the Party subject to the proceeding shall have sixty
      (60)
      working days within which to dissolve the proceeding or demonstrate to the
      terminating Party’s satisfaction the lack of grounds for the initiation of such
      proceeding; 

     

    
      
        
        

      

      
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    9.2.3. If
      the
      other Party (i) becomes unable, or admits in writing its inability, to pay
      its
      debts generally as they mature, (ii) becomes insolvent (as such term may be
      defined or interpreted under any applicable statute); or 

     

    9.2.4. In
      accordance with the provisions of Section 12
      (Force
      Majeure) below. 

     

    9.2.5. Without
      limiting the foregoing, SOLARFUN shall have the right to terminate this
      Agreement if the First Shipment Date does not occur on or before December 31,
      2009.

     

    9.3.  

     

    9.4. HOKU
      shall have the right to terminate this Agreement if on or before February 15,
      2008 SOLARFUN has failed to either (A) enter into the Escrow Agreement with
      HOKU
      and the Escrow Agent and deposit the Main Deposit into the Escrow Account
      pursuant to Section 5.3.1
      above,
      or (B) deliver the Letter of Credit pursuant to Section 5.3.1
      above,
      in which case, HOKU shall be entitled to retain the Initial Deposit as
      liquidated damages. 

     

    9.5. Upon
      the
      expiration or termination of this Agreement howsoever arising, the following
      Sections shall survive such expiration or termination: Sections 1
      (Definitions); Section 7
      (Product
      Quality Guarantee), Section 8
      (Inspection and Return Goods Policy); Section 9
      (Term
      and Termination); Section 10
      (Liability); Section 11
      (Liquidated Damages); and Section 13
      (General
      Provisions). 

     

    9.6. If
      SOLARFUN terminates this Agreement pursuant to Section 9.2.1,
      9.2.2,
      9.2.3,
      9.2.4,
      9.2.5
      or 12
      then any funds remaining on the Total Deposit on such date of termination shall
      be returned to SOLARFUN; provided however that if SOLARFUN is in material breach
      of this Agreement at the time it terminates this Agreement, then HOKU shall
      not
      be required to repay any remaining amount of the Total Deposit up to the amounts
      of HOKU’s direct loss from such material breach (unless SOLARFUN cures such
      breach within the applicable cure period) or SOLARFUN’s other outstanding and
      unpaid obligations hereunder (including, without limitation, obligations under
      Section 11).
      “Funds
      remaining”
      on the Total Deposit are funds not applied against SOLARFUN’s purchase of
      Product, pursuant to Section 5.4
      above,
      for Product actually shipped to SOLARFUN hereunder.

     

    10. Liability.
      

     

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

     

    10.2. 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 SOLARFUN’S CONTINUING OBLIGATION TO PURCHASE THE PRODUCTS AS SET FORTH
      HEREIN. 

     

    11. Liquidated
      Damages.
      THE
      PARTIES ACKNOWLEDGE AND AGREE THAT ANY BREACH OF THIS AGREEMENT BY SOLARFUN
      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 9.2.1,
      9.2.2,
      9.2.3,
      9.2.4,
      or
9.4,
      THEN
      HOKU SHALL BE ENTITLED TO RETAIN AS LIQUIDATED DAMAGES, THE TOTAL DEPOSIT (OR
      ANY REMAINING PORTION THEREOF NOT CREDITED AGAINST PRODUCT SHIPMENTS). ANY
      AMOUNTS DUE FOR UNDELIVERED PRODUCT UNDER THIS AGREEMENT ARE STILL DUE, UNLESS
      OTHERWISE AGREED BY BOTH PARTIES IN WRITING. 

     

    
      
        
        

      

      
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    12. 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-out and other
      events beyond its reasonable control which were not reasonably foreseeable
      and
      whose effects are not capable of being overcome without unreasonable expense
      and/or loss of time to the affected Party (i.e., the Party that is unable to
      perform). If such failure or delay occurs, the affected Party shall notify
      the
      other Party of the occurrence thereof as soon as possible, and the Parties
      shall
      discuss the best way to resolve the event of force majeure. If the conditions
      of
      Force Majeure continue to materially impede performance of any material
      obligation under this Agreement for a period of more than three (3) consecutive
      calendar months, then the non-affected Party shall be entitled to terminate
      this
      Agreement by 30 days’ prior written notice to the other Party. 

     

    13. General
      Provisions.
      

     

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

     

    13.2. Upon
      notice from one Party to the other of a dispute hereunder, the Parties agree
      to
      hold a meeting within thirty (30) days of receipt of such notice with at least
      one (1) representative from each Party who has decision-making authority for
      such company. At this meeting, the Parties will attempt to resolve the dispute
      in good faith. If, after the meeting, the dispute has not been resolved, 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. 

     

    13.3. HOKU
      may
      assign this Agreement to any of its Affiliates, and 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 SOLARFUN. Except as stated in the previous sentence, neither HOKU
      nor
      SOLARFUN 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. 

     

    13.4. Except
      as
      provided elsewhere in this Agreement, a notice is effective only if the Party
      giving or making the notice has complied with this Section 13.4
      and if
      the addressee has received the notice. A notice is deemed to have been received
      as follows: 

     

    
      	 	
              (a)

            	
              If
                a notice is delivered in person, or sent by registered or certified
                mail,
                or nationally or internationally recognized overnight courier, upon
                receipt as indicated by the date on the signed receipt;
                or

            

    

     

    
      	 	
              (b)

            	
              If
                a notice is sent by facsimile, upon receipt by the Party giving the
                notice
                of an acknowledgment or transmission report generated by the machine
                from
                which the facsimile was sent indicating that the facsimile was sent
                in its
                entirety to the addressee’s facsimile number.

            

    

     

    
      
        
        

      

      
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    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: 

     

    SOLARFUN:
      

    

    SOLARFUN
      POWER HONG KONG LIMITED 

    In
      care
      of: JIANGSU LINYANG SOLARFUN CO., LTD.

    No.
      666
      Linyang Rd.,

    Qidong
      Jiangsu Province 226200

    People’s
      Republic of China

    Tel:
      +86-21-6393-8326

    Fax:
      +86-21-6393-3099

    Attn:
      William Sien, VP of Business Development

    E-Mail:
      [*]

    

    HOKU:
      

    

    HOKU
      SCIENTIFIC, INC.

    1075
      Opakapaka Street

    Kapolei,
      HI 96707

    Attn:
      Mr.
      Dustin Shindo, CEO

    E-mail:
      [*]

    Facsimile:
      +1 (808) 682-7807

     

    13.5. The
      waiver by either Party of the remedy for the other Party’s breach of or its
      right under this Agreement will not constitute a waiver of the remedy for any
      other similar or subsequent breach or right. 

     

    13.6. If
      any
      provision of this Agreement is or becomes, at any time or for any reason,
      unenforceable or invalid, no other provision of this Agreement shall be affected
      thereby, and the remaining provisions of this Agreement shall continue with
      the
      same force and effect as if such unenforceable or invalid provisions had not
      been inserted in this Agreement. 

     

    13.7. No
      changes, modifications or alterations to this Agreement shall be valid unless
      reduced to writing and duly signed by respective authorized representatives
      of
      the Parties. 

     

    13.8. No
      employment, agency, trust, partnership or joint venture is created by, or shall
      be founded upon, this Agreement. Each Party further acknowledges that neither
      it
      nor any Party acting on its behalf shall have any right, power or authority,
      implied or express, to obligate the other Party in any way. 

     

    13.9. Neither
      Party shall make any announcement or press release regarding this Agreement
      or
      any terms thereof without the other Party’s prior written consent; provided,
      however, that the Parties will work together to issue a joint press release
      within two (2) 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, and shall use commercially reasonable efforts to obtain confidential
      treatment from the applicable governing entity for all pricing and technical
      information set forth in this Agreement.

     

    13.10. This
      Agreement constitutes the entire agreement between the Parties and supersedes
      all prior proposal(s), discussions and agreements, including, without
      limitation, the Supply Agreement, relative to the subject matter of this
      Agreement and neither of the Parties shall be bound by any conditions,
      definitions, warranties, understandings or representations with respect to
      such
      subject matter other than as expressly provided herein. No oral explanation
      or
      oral information by either Party hereto shall alter the meaning or
      interpretation of this Agreement. 

     

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

     

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

     

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

    

    IN
      WITNESS WHEREOF, the Parties have executed this First Amended & Restated
      Supply Agreement as of the date last set forth below.

     

    
      	SOLARFUN:	 	HOKU:
	 	 	 	 	 
	SOLARFUN
              POWER HONG KONG LIMITED 	 	HOKU
              SCIENTIFIC, INC.
	 	 	 	 	 
	By:	/s/
              William Sien	 	By:	/s/
              Dustin Shindo
	 	 	 	 	 
	Name:	William
              Sien	 	Name:	Dustin
              Shindo
	 	 	 	 	 
	Title:	VP
              of Business Development	 	Title:	Chairman
              & CEO
	Authorized
              Signatory	 	Authorized
              Signatory
	 	 	 	 	 
	Date:	
              January
                6, 2008

            	 	Date:	
              January
                7, 2008

            

    

     

    CORPORATE
      GUARANTY

     

    As
      an
      inducement for HOKU to enter into this Agreement with SOLARFUN, it is hereby
      agreed that the undersigned does hereby guaranty to HOKU the prompt, punctual
      and full payment of all monies now or hereinafter due HOKU from SOLARFUN, and
      agrees to the following:

     

    
      	 	
              a)

            	
              Until
                termination, this guaranty is unlimited as to amount or duration
                and shall
                remain in full force and effect notwithstanding any extension, compromise,
                adjustment, forbearance, waiver, release or discharge of any party
                obligor
                or guarantor.

            

    

    

    
      	 	
              b)

            	
              The
                obligations of the undersigned 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 SOLARFUN prior to enforcing its rights
                under this guaranty against the
                undersigned.

            

    

    

    
      	 	
              c)

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

            

    

    

    
      	 	
              d)

            	
              The
                guaranty shall be valid and continuing during the term of this Agreement.
                

            

    

    

    
      	 	
              e)

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

            

    

    

    
      	 	
              f)

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

            

    

    

    
      	 	
              g)

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

            

    

    

    JIANGSU
      LINYANG SOLARFUN CO., LTD. 

    

    
      	
              By:

            	
              /s/
                William Sien

            	 	
              Date:

            	
              January
                6, 2008

            
	 	 	 	 	 
	
              Name:

            	
              William
                Sien

            	 	 	 
	 	 	 	 	 
	
              Title:

            	
              VP
                of Business Development

            	 	 	 
	Authorized
              Signatory	 	 	 

    

    

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

     

    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 [*] MT shall be invoiced at $[*]. 

     

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

     

    Appendix
      2

    Product
      Specifications

     

    [*]

     

    The
      size
      distribution of the Products shipped shall be as follows:

    

    [*]

    

    Product
      Specifications shall be tested in accordance with the following procedures:
      graphite furnace atomic absorption spectroscopy, inductively coupled plasma-mass
      spectroscopy and Fourier transform infrared absorption
      spectroscopy.

     

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

     

    APPENDIX
      3

    Form
      of
      Letter of Credit

     

    [This
      Letter of Credit may be replaced by a Letter of Credit that is mutually
      acceptable to HOKU and the Issuing Bank.]

     

    IRREVOCABLE
      Standby Letter of Credit

    

    STANDBY
      L/C FOR PAYMENT

    TO:
      HOKU
      SCIENTIFIC, INC., a Delaware corporation (“Beneficiary”)

    1075
      Opakapaka Street

    Kapolei,
      Hawaii 96707 USA

    Attn:
      Mr.
      Dustin Shindo, CEO

    E-mail:
      [*]

    

    DEAR
      SIRS,

    

    We
      refer
      to that certain First Amended & Restated Supply Agreement dated as of __,
      2007, (hereinafter referred to as the “Hoku Supply Agreement”) signed between
      you and SOLARFUN POWER HONG KONG LIMITED, located at No. 666 Linyang Rd., Qidong
      Jiangsu Province 226200, People’s Republic of China (hereinafter referred to as
“Solarfun”).

    

    Subject
      to the terms and conditions set forth herein, we, [Bank Name] (“we” or “XXXX”),
      hereby unconditionally and irrevocably issue this Irrevocable Standby Letter
      of
      Credit no.
      (the
“Standby Letter of Credit”) in your favor for the account of Solarfun in the
      amount of USD44000000.00 (Forty-Four Million U.S. Dollars) (hereinafter referred
      to as the “Total L/C Amount”).

    

    Capitalized
      terms used herein without definition shall have the respective meanings set
      forth in Annex A.

    

    We
      hereby
      agree as follows:

    

    (a) The
      Beneficiary may draw under this Standby Letter of Credit at any time on or
      prior
      to the then applicable Expiry Date (as such term is hereinafter defined) by
      presenting XXXX with an appropriately completed 1st Demand, 2nd Demand or 3rd
      Demand (each hereinafter referred to as a “Demand”) in the applicable form
      attached hereto. 

    

    (b) XXXX
      will
      not be obliged to make payment under this Standby Letter of Credit if, after
      giving effect to any such payment, the aggregate of all payments made by it
      under this Standby Letter of Credit would exceed the Total L/C
      Amount.

    

    Documents
      required:

    

    (a) Each
      of
      the 1st Demand, the 2nd Demand and the 3rd Demand shall be made by letter in
      substantially the form attached hereto as Annex B, Annex C and Annex D,
      respectively, and must be received by XXXX, by delivery in person or by
      facsimile transmission, at its address and by the particular department or
      officer (if any) as follows, provided that the original of any such Demand
      shall
      be sent to XXXX by overnight courier for receipt by XXXX within two Business
      Days of the date of any such facsimile transmission:

    

    [Insert
      XXXX address/information]

     

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

     

    All
      payments under this Standby Letter of Credit shall be made in United States
      Dollars, for value, in immediately available funds by wire transfer to such
      account as may be designated by the Beneficiary in the applicable Demand. If
      a
      Demand is presented in compliance with the terms of this Standby Letter of
      Credit to XXXX by 12:00 p.m. New York City time on any Business Day, payment
      will be made on the same Business Day and if such Demand is so presented to
      XXXX
      after 12:00 p.m. New York City time on any Business Day, payment will be made
      by
      12:00 p.m. New York City time on the following Business Day.

    

    This
      Standby Letter of Credit is effective as of the date hereof and shall remain
      in
      effect until the first anniversary of the date hereof; provided that this
      Standby Letter of Credit shall be automatically extended without amendment
      for
      successive one-year periods from the present or any future scheduled expiration
      date hereof, until the earlier of (A) the date when XXXX is notified in writing
      by the Beneficiary that Solarfun is no longer obligated to pay the Main Deposit
      pursuant to the Hoku Supply Agreement, or (B) the date when XXXX has paid the
      Total L/C Amount to the Beneficiary (the present or any future expiration date
      as aforesaid is referred to herein as the “Expiry Date”).

    

    This
      Standby Letter of Credit will be maintained in the Total L/C Amount until the
      Expiry Date; provided, however, that the Total L/C Amount may be reduced by
      the
      amount paid to Beneficiary after any drawing hereunder by the Beneficiary.
      Partial drawings under this Letter of Credit are permitted.

    

    All
      banking charges of this Standby Letter of Credit, including any transfer fees,
      advising bank charges and negotiating bank charges, are for the account of
      Solarfun.

    

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

    

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

    

    This
      Standby Letter of Credit is governed by the laws of the State of New York.
      The
      courts of the State of New York in the County of New York or of the United
      States of America in the Southern District of New York shall have exclusive
      jurisdiction to settle any dispute arising out of or in connection with this
      Standby Letter of Credit. 

    

    This
      Standby Letter of Credit may be transferred upon presentation to us of a signed
      transfer certificate in the form of Annex E hereto accompanied by this Standby
      Letter of Credit, in which you irrevocably transfer to the relevant transferee
      all of your rights hereunder, whereupon we agree to either issue a substitute
      letter of credit to such transferee or endorse such transfer on the reverse
      of
      this Standby Letter of Credit. This Standby Letter of Credit may not otherwise
      be transferred without our consent.

    

    Any
      Demand should reach our counter at least two Business Days before the Expiry
      Date. This Standby Letter of Credit shall automatically become null and void
      upon the Expiry Date, whether it is returned to us or not; provided, however,
      that in the event of an act of God, riot, civil commotion, insurrection, war
      or
      any other cause beyond XXXX’s control that interrupts XXXX’s business and causes
      the place for presentation of this Standby Letter of Credit to be closed for
      business on the last day for presentation, the Expiry Date will be automatically
      extended without amendment to a date fifteen calendar days after the place
      for
      presentation reopens for business.

     

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

     

    In
      the
      event that a Demand fails to comply with the terms of this Standby Letter of
      Credit, we shall provide the Beneficiary prompt notice of the same stating
      the
      reasons therefor and shall upon your instructions hold any non-conforming Demand
      and other documents at your disposal or return the non-conforming Demand and
      other documents to the Beneficiary at the address set forth above by delivery
      in
      person or facsimile transmission (with originals thereof sent by overnight
      courier for receipt within two Business Days). Upon being notified that the
      Demand was not effected in compliance with this Standby Letter of Credit, the
      Beneficiary may attempt to correct such non-complying Demand in accordance
      with
      this Standby Letter of Credit.

    

    All
      notices to the Beneficiary shall be delivered to its representatives at the
      address set forth above (or to any other representative(s)/address(es) which
      may
      be designated by written notice from the Beneficiary delivered to us from time
      to time prior to termination hereof).

    

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

    

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

     

    Annex
      A

    Definitions

    

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

    

    “1st
      Demand” means a demand for payment in an amount not to exceed $19,000,000
      (Nineteen Million US Dollars) in the form of Annex B to this Standby Letter
      of
      Credit.

    

    “2nd
      Demand” means a demand for payment in an amount not to exceed $20,000,000
      (Twenty Million US Dollars) in the form of Annex C to this Standby Letter of
      Credit.

    

    “3rd
      Demand” means a demand for payment in an amount not to exceed $5,000,000 (Five
      Million US Dollars) in the form of Annex D to this Standby Letter of
      Credit.

    

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

    

    “HOKU
      Supply Agreement” is the First Amended & Restated Supply Agreement which has
      been entered into by HOKU and SOLARFUN on ___________, 2007 and is the
      underlying agreement of this Stand-by Letter of Credit.

    

    “Main
      Deposit” has the meaning set forth in the Hoku Supply Agreement.

    

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

    

    “Total
      L/C Amount” means Forty-four Million U.S. Dollars ($44,000,000).

    

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

    ANNEX
      B

     

    1st
      Demand

    

    To: [ISSUING
      BANK]

    

    [Date]

    

    Standby
      Letter of Credit No. [__________] (the “Standby Letter of Credit”)

    

    1st
      Demand

    

    Dear
      Sirs,

    

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

    

    1. We
      certify that the sum of Nineteen Million U.S. Dollars ($19,000,000) is due
      under
      the Hoku Supply Agreement and Solarfun has breached its payment obligations
      and
      failed to pay the Second Deposit on the Second Deposit Date pursuant to Section
      5.4.1 of the Hoku Supply Agreement. We therefore demand payment of the above
      sum.

    

    2. Payment
      should be made to the following account:

    

    Name:

    Account
      Number:

    Bank:

    

    3. The
      date
      of this Demand is not earlier than September 30, 2008, or later than the Expiry
      Date.

    

    Yours
      faithfully

    

    (Authorized
      Signatory) 

    For

    [BENEFICIARY]

    

      
        
          
          

        

        
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          CONFIDENTIAL

        

      

    

     

    ANNEX
      C

     

    2nd
      Demand

    

    To: [ISSUING
      BANK]

    

    [Date]

    

    Standby
      Letter of Credit No. [__________] (the “Standby Letter of Credit”)

    

    2nd
      Demand

    

    Dear
      Sirs,

    

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

    

    1. We
      certify that the sum of Twenty Million U.S. Dollars ($20,000,000) is due under
      the Hoku Supply Agreement and Solarfun has breached its payment obligations
      and
      failed to pay the Third Deposit on the Third Deposit Date pursuant to Section
      5.4.2 of the Hoku Supply Agreement. We therefore demand payment of the above
      sum.

    

    2. Payment
      should be made to the following account:

    

    Name:

    Account
      Number:

    Bank:

    

    3. The
      date
      of this Demand is not earlier than March 31, 2009, or later than the Expiry
      Date.

    

    Yours
      faithfully

    

    (Authorized
      Signatory) 

    For

    [BENEFICIARY]

    

      
        
          
          

        

        
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          CONFIDENTIAL

        

      

    

     

    ANNEX
      D

     

    3rd
      Demand

    

    To: [ISSUING
      BANK]

    

    [Date]

    

    Standby
      Letter of Credit No. [__________] (the “Standby Letter of Credit”)

    

    3rd
      Demand

    

    Dear
      Sirs,

    

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

    

    1. We
      certify that the sum of Five Million U.S. Dollars ($5,000,000) is due under
      the
      Hoku Supply Agreement and Solarfun has breached its payment obligations and
      failed to pay the Fourth Deposit on the Fourth Deposit Date pursuant to Section
      5.4.3 of the Hoku Supply Agreement. We therefore demand payment of the above
      sum.

    

    2. Payment
      should be made to the following account:

    

    Name:

    Account
      Number:

    Bank:

    

    3. The
      date
      of this Demand is not earlier than March 31, 2010, or later than the Expiry
      Date.

    

    Yours
      faithfully

    

    (Authorized
      Signatory)     

    For

    [BENEFICIARY]

    

      
        
          
          

        

        
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          CONFIDENTIAL

        

      

    

     

    ANNEX
      E

     

    Transfer
      of Letter of Credit

    

    [Date]

    

    Delivered
      under [insert Bank name],

    Irrevocable
      Standby Letter of Credit No. [_____],

    dated
      [__________].

    

    [_______________]

    [_______________]
      

    [_______________]

    Attention:
      [_______________]

    

    Ladies
      and Gentlemen:

    

    Reference
      is made to [insert Bank name], Irrevocable Standby Letter of Credit No. [_____]
      dated [_______](the “Letter of Credit”), issued by you in favor of us. Any
      capitalized terms used, but not defined, herein shall have its respective
      meaning as set forth in the Letter of Credit.

    

    For
      value
      received, the undersigned, as Beneficiary under the Letter of Credit, hereby
      irrevocably assigns and transfers to [__________] (the “Transferee”) all rights
      of the undersigned to draw under the Letter of Credit in their
      entirety.

    

    By
      this
      transfer, all rights of the undersigned, as Beneficiary under the Letter of
      Credit, are transferred to the Transferee, and the Transferee shall have the
      sole rights with respect to the Letter of Credit relating to any amendments
      thereof and any notices thereunder. All amendments to the Letter of Credit
      are
      to be consented to by the Transferee without necessity of any consent of or
      notice to the undersigned.

    

    Simultaneously
      with the delivery of this notice to you, copies of this notice are being
      transmitted to the Transferee.

    

    The
      Letter of Credit is returned herewith, and we ask you to either issue a
      substitute letter of credit for the benefit of the Transferee or endorse the
      transfer on the reverse thereof, and forward it directly to the Transferee
      with
      your customary notice of transfer.

    

    Yours
      faithfully

    

    (Authorized
      Signatory)

    

    For  

    [BENEFICIARY]

    

    ACKNOWLEDGED:

    (Authorized
      Signatory)

    

    For

    [SUCCESSOR
      BENEFICIARY]

    

    
      
        
        

      

      
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        CONFIDENTIAL

      

       

    

    APPENDIX
      4

    Form
      of
      Escrow Agreement

     

    [This
      Escrow Agreement may be replaced by an Escrow Agreement that is mutually
      acceptable to HOKU and SOLARFUN, acceptance of which shall be evidenced by
      their
      execution thereof.]

     

    This
      ESCROW AGREEMENT (this “Agreement”)
      is
      entered into as of _______________, 2007 (the “Effective
      Date”),
      by
      and among HOKU SCIENTIFIC, INC., a Delaware corporation (hereinafter
“HOKU”),
      SOLARFUN
      POWER HONG KONG LIMITED, a
      company
      registered in Hong Kong (hereinafter
      “SOLARFUN”),
      and
      [_____________________], as Escrow Agent (the “Escrow
      Agent”),
      (collectively, the “Parties”).

     

    BACKGROUND

     

    On
      _______________, 2007, the Parties hereto entered into a Supply Agreement
      (“Supply
      Agreement”),
      pursuant to which HOKU has agreed to sell Product (as defined in the Supply
      Agreement) to SOLARFUN over a fixed period of time. Pursuant to the terms of
      the
      Supply Agreement, SOLARFUN is obligated to make advance deposits to HOKU.

     

    The
      execution and delivery of this Agreement by the Parties is required as a
      condition to HOKU’s completing the transactions contemplated by the Supply
      Agreement. Each term utilized but not otherwise defined herein shall have the
      meaning given to such term in the Supply Agreement.

     

    Escrow
      Agent is not a party to the Supply Agreement. Therefore, Escrow Agent has no
      duties or obligations under said Supply Agreement.

     

    TERMS

     

    NOW,
      THEREFORE, in consideration of the mutual covenants contained herein and
      intending to be legally bound, the parties hereto agree as follows:

     

    1. Escrow
      Account.

     

    1.1. Escrow
      Funds.

     

    1.1.1. The
      Escrow Funds, initially in an amount equal to Forty-Four Million U.S. Dollars
      (US$44,000,000) (the “Escrow
      Funds”),
      shall
      be deposited on the date hereof with, and shall be held from and after the
      date
      hereof by, the Escrow Agent in a separate account located in the United States
      (the “Escrow
      Account”)
      for
      the benefit of HOKU and SOLARFUN, as provided in this Agreement. The Escrow
      Agent shall not make any payment or distribution from the Escrow Account except
      as, and in the manner, expressly provided in this Agreement; provided, however,
      that the Escrow Funds shall remain the property of SOLARFUN until such time
      as
      such funds are required under the terms of this Agreement to be delivered to
      HOKU, at which time the portion of such Escrow Funds required to be delivered
      to
      HOKU shall become the property of HOKU. 

     

    1.1.2. Concurrently
      with the execution of this Agreement, SOLARFUN has delivered the Escrow Funds
      to
      the Escrow Agent pursuant to Section 5.4.1 of the Supply Agreement.

     

    1.1.3. The
      Escrow Agent shall maintain the Escrow Account reflecting (i) the amount of
      the
      Escrow Funds deposited with Escrow Agent as of the date of this Agreement,
      plus
      (ii) all amounts earned or realized on any cash or Permitted Investments (as
      defined below), minus (iii) all amounts distributed pursuant to Section 1.3
      of
      this Agreement.

     

    
      
        
        

      

      
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    1.1.4. Except
      as
      expressly provided in Section 1.1.1 or elsewhere herein, none of the Parties
      shall have any right, title or interest in or possession of the Escrow Funds.
      Therefore, (i) none of the Parties shall have the ability to pledge, convey,
      hypothecate or grant a security interest in any portion of the Escrow Funds
      unless and until such funds have been disbursed to such party in accordance
      with
      this Agreement and (ii) until disbursed pursuant to this Agreement, the Escrow
      Agent shall be in sole possession of the Escrow Funds and agrees not to
      acknowledge requests that it act as, and nothing contained in this Agreement
      shall be deemed to constitute the Escrow Agent as, custodian for any party
      for
      purposes of perfecting a security interest therein. Accordingly, the Parties
      agree that no person or entity shall have any right to have or to hold any
      of
      the Escrow Funds as collateral for any obligation and shall not be able to
      obtain a security interest in any assets (tangible or intangible) contained
      in
      or relating to the Escrow Account.

     

    1.2. Investments.

     

    1.2.1. Any
      cash
      held in the Escrow Account shall, pending disbursement, be invested in Permitted
      Investments. For purposes of this Agreement, “Permitted
      Investments”
shall
      mean (i) U.S. Treasuries in accordance with written instructions of HOKU and
      SOLARFUN; (ii) U.S. Federal Agencies in accordance with written instructions
      of
      HOKU and SOLARFUN; and (iii) Money Market Funds in accordance with written
      instructions of HOKU and SOLARFUN (a “Joint
      Direction”).
      

     

    1.2.2. The
      Escrow Agent may purchase or sell to itself or any affiliate, as principal
      or
      agent. Such investment, if registerable, shall be registered in the name of
      the
      Escrow Agent for the benefit of the Parties and held by the Escrow Agent. The
      Escrow Agent shall be entitled to sell or redeem any such investments as
      necessary to make any payments or distributions required under this Agreement.
      The Escrow Agent may act as purchaser or agent in the making or disposing of
      any
      investments. The Escrow Agent shall have no responsibility or liability for
      any
      diminution of the Funds held in the Escrow Account which may result from any
      investment made pursuant to this Agreement, including any losses on any
      investment required to be liquidated prior to maturity in order to make a
      payment or distribution required hereunder. 

     

    1.2.3. Such
      investments will be made as soon as possible following the availability of
      such
      funds to the Escrow Agent for investment, taking into consideration the
      regulations and requirements (including cut-off times) of the Federal Reserve
      wire system, the investment provider and the Escrow Agent, and compliance with
      standard operating procedures of such parties.

     

    1.2.4. Investments
      designation may be changed through written instructions jointly by HOKU and
      SOLARFUN to the Escrow Agent, substantially in the form of a letter specifying
      other Permitted Investments meeting the requirements of the Agreement. Such
      change in the designation will become effective upon receipt by the Escrow
      Agent.

     

    1.2.5. As
      and
      when any cash is needed for a payment under this Agreement, the Escrow Agent
      shall cause a sufficient amount of the Permitted Investments to be converted
      into cash. Escrow Agent shall convert such Permitted Investments as specified
      by
      HOKU and SOLARFUN or, if HOKU and SOLARFUN shall fail to so specify within
      five
      Business Days of a request therefore, as determined by Escrow Agent in its
      sole
      discretion. 

     

    1.2.6. Any
      and
      all interest, dividends and other income (including capital gains)
      (“Income”)
      earned
      on the Escrow Funds shall not be included as part of the Escrow Funds and shall
      remain as the sole property of SOLARFUN. The Escrow Agent shall distribute
      to
      SOLARFUN such income or gains quarterly during the term of this Agreement.
      Any
      losses from the Permitted Investments shall first be offset from Income and
      then
      deducted from the Escrow Funds. All Parties hereto shall file all tax returns
      consistent with such treatment. Escrow Agent shall not be responsible for any
      tax reporting hereunder. 

     

    
      
        
        

      

      
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    1.3. Claim
      Procedure.

     

    1.3.1. Nineteen
      Million U.S. Dollars (USD $19,000,000.00) of the Escrow Funds shall be paid
      to
      HOKU from the Escrow Account on September 30, 2008.

     

    1.3.2. Twenty
      Million U.S. Dollars (USD $20,000,000) of the Escrow Funds shall be paid to
      HOKU
      from the Escrow Account on March 31, 2009. 

     

    1.3.3. Five
      Million U.S. Dollars (USD $5,000,000.00) of the Escrow Funds shall be paid
      to
      HOKU from the Escrow Account on March 31, 2010.

     

    1.3.4. Distributions
      of the Escrow Funds shall be made in cash to the extent available in the Escrow
      Account, including cash derived from the liquidation of Permitted Investments
      in
      accordance with Section 1.2 hereof. 

     

    1.3.5. Joint
      Direction.
      Notwithstanding any other provision of this Agreement, the Escrow Agent shall
      promptly deliver all or any part of the Escrow Funds in accordance with the
      terms of a Joint Direction, unless a final order of a court of competent
      jurisdiction prohibits the Escrow Agent from complying with the terms thereof.
      Any amount distributed pursuant to this Section 1.3.4 shall be deducted from
      the
      Escrow Account.

     

    1.3.6. Release
      to SOLARFUN.
      The
      Escrow Agent shall release the entire amount of the Escrow Funds then being
      held
      by the Escrow Agent to SOLARFUN within fifteen (15) Business Days after
      SOLARFUN’s delivery to the Escrow Agent of the written confirmation of each of
      HOKU and SOLARFUN that the Escrow Funds are to be released to SOLARFUN pursuant
      to Section 8.6 of the Supply Agreement. In the event that HOKU fails to provide
      written confirmation of the release of the Escrow Funds to SOLARFUN pursuant
      to
      Section 8.6 of the Supply Agreement, then SOLARFUN may elect (by providing
      written notice to the Escrow Agent and HOKU) to resolve the controversy pursuant
      to the dispute resolution provisions of Section 12.2 of the Supply Agreement.
      If
      such a dispute resolution results in a finding that Section 8.6 requires the
      Escrow Funds to be released to SOLARFUN, then the Escrow Agent shall immediately
      deliver to SOLARFUN such Escrow Funds. 

     

    1.4. Distributions
      and Termination of Escrow.

     

    1.4.1. This
      Agreement shall terminate on the earlier to occur of (i) the disbursement to
      HOKU or SOLARFUN of all Escrow Funds pursuant to Section 1.3 above; or (ii)
      upon
      receipt of a Joint Direction ordering such distribution. The date when this
      Agreement terminates shall be the “Termination
      Date”.
      

     

    1.4.2. On
      the
      Termination Date, this Agreement shall terminate and the Escrow Agent shall
      distribute to SOLARFUN the then remaining balance of the Escrow Account.

     

    2. The
      Escrow Agent.

     

    2.1. Acceptance
      of Appointment as Escrow Agent. The Escrow Agent, by signing this Agreement,
      accepts the appointment as Escrow Agent and agrees to hold and distribute all
      Escrow Funds in accordance with the terms of this Agreement.

     

    
      
        
        

      

      
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    2.2. Liability
      of Agent. The Escrow Agent shall be obligated to perform only the duties
      described in this Agreement. The Escrow Agent may rely on any instrument or
      signature believed by it to be genuine and to have been signed or presented
      by
      the proper party or parties duly authorized to do so. The Escrow Agent shall
      not
      be liable for any action taken or omitted by it in good faith and believed
      by it
      to be authorized, nor for any action taken or omitted by it in accordance with
      advice of counsel, and shall not be liable for any mistake of fact or error
      of
      judgment or for any acts or omissions of any kind unless caused by its willful
      misconduct or gross negligence. Each party (other than the Escrow Agent) agrees
      jointly and severally, to indemnify the Escrow Agent and to hold it harmless
      against any and all liabilities, including reasonable attorneys’ fees, incurred
      by it as a consequence of that party’s action, and the parties (other than the
      Escrow Agent) agree jointly and severally to indemnify the Escrow Agent and
      to
      hold it harmless against any and all liabilities, including reasonable
      attorneys’ fees, incurred by it which are not a consequence of any party’s
      action, except in either case for the Escrow Agent’s own willful misconduct or
      gross negligence. The indemnity contained in this Section 2.2 shall survive
      the
      termination of this Agreement and the resignation or removal of the Escrow
      Agent.

     

    2.3. Advice
      of Counsel. The Escrow Agent shall be entitled to consult with counsel of
      its choice with respect to the interpretation of the provisions hereof, and
      any
      other legal matters relating hereto, and shall be fully protected in taking
      any
      action or omitting to take any action in good faith in accordance with the
      advice of such counsel.

     

    2.4. Fees
      of Escrow Agent. The Escrow Agent shall serve hereunder in consideration of
      the fees described on Schedule A attached hereto and the reimbursement of any
      expenses and other charges reasonably incurred by the Escrow Agent in connection
      with the performance of its duties hereunder. Except as provided in Sections
      2.2
      and 2.7, all such fees, expenses and other charges of the Escrow Agent (the
      “Escrow
      Agent Fees and Expenses”)
      shall be paid by SOLARFUN
      and deducted from the Income prior to distribution of Income to SOLARFUN. This
      Section 2.4 shall survive the termination of this Agreement and the resignation
      or removal of the Escrow Agent. Legal fees incurred by the Escrow Agent to
      establish this Agreement shall be paid by the Escrow Agent.

     

    2.5. Statements.
      The Escrow Agent shall mail to HOKU and SOLARFUN a written accounting of all
      transactions relating to the Escrow Account not less frequently than
      quarterly.

     

    2.6. Successor.
      If the Escrow Agent at any time resigns, refuses to act or is removed pursuant
      to a Joint Direction, then a successor Escrow Agent shall be jointly selected
      by
      HOKU and SOLARFUN, or if HOKU and SOLARFUN cannot agree, the successor Escrow
      Agent shall be selected by SOLARFUN. Any successor Escrow Agent shall be a
      national banking association which has a net worth in excess of $1,000,000,000
      and has a principal place of business located in the United States of
      America.

     

    2.7. Conflict.
      In the event of any conflicting or inconsistent claims or demands being made
      in
      connection with the subject matter of this Agreement, or in the event that
      the
      Escrow Agent is in doubt as to what action it should take hereunder, the Escrow
      Agent may, at its option, refuse to comply with any claims or demands on it,
      or
      refuse to take any other action hereunder so long as such disagreement continues
      or such doubt exists, and in any such event, the Escrow Agent shall not be
      or
      become liable in any way or to any person for its failure or refusal to act,
      and
      the Escrow Agent shall be entitled to continue to refrain from acting until
      (i)
      the rights of all parties have been fully and finally adjudicated by a court
      of
      competent jurisdiction and the Escrow Agent has received a copy of such
      adjudication, or (ii) all differences shall have been settled and all doubt
      resolved by agreement among all of the parties, and the Escrow Agent shall
      have
      been notified thereof in writing signed by all such parties. In addition to
      the
      foregoing rights, in the event the Escrow Agent has any doubt as to the course
      of action it should take under this Agreement, the Escrow Agent is hereby
      authorized to petition any court of competent jurisdiction for instructions
      or
      to interplead the Escrow Funds into such court. The parties agree to the
      jurisdiction of the court selected by the Escrow Agent over their persons as
      well as the Escrow Funds, waive personal service of process, and agree that
      service of process by certified or registered mail, return receipt requested,
      to
      the addresses provided in or pursuant to Section 3.6 for each party shall
      constitute adequate service. The parties to the Agreement hereby agree, jointly
      and severally, to indemnify and hold the Escrow Agent harmless from any
      liability or losses occasioned thereby and to pay any and all of its fees,
      costs, expenses, and counsel fees and expenses incurred in any such action
      and
      agree that, on such petition or interpleader action, the Escrow Agent, its
      servants, agents employees or officers will be relieved of further
      liability.

     

    
      
        
        

      

      
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    2.8. Resignation
      of Escrow Agent. The Escrow Agent may resign for any reason, upon 30 days
      written notice to the HOKU and SOLARFUN. Upon expiration of such 30 day notice
      period, the Escrow Agent may deliver all cash and other property in its
      possession, after the payment of all fees and expenses of the Escrow Agent,
      under this Agreement to any successor Escrow Agent appointed jointly by HOKU
      and
      SOLARFUN, or if no successor Escrow Agent has been so appointed, to any court
      of
      competent jurisdiction in the State of California. SOLARFUN hereby agrees to
      pay
      any and all of the Escrow Agent’s fees, costs, expenses, and counsel fees and
      expenses incurred in any such petition or action required to be filed by Escrow
      Agent. Upon either such delivery, the Escrow Agent shall be released from any
      and all liability under this Agreement. A termination under this Section shall
      in no way affect reimbursement of expenses, indemnity and fees. The Escrow
      Agent
      shall have the right to deduct from the Escrow Funds to be transferred to any
      successor agent any unpaid fees and expenses.

     

    3. Miscellaneous.

     

    3.1. Successors;
      Heirs and Assigns. The provisions of this Agreement shall be binding upon
      and shall inure to the benefit of the parties hereto and their respective
      successors, heirs and assigns; provided, however, that, except for assignments
      by HOKU of its rights under this Agreement to the Collateral Agent (as defined
      in the Supply Agreement) as collateral security for the Secured Obligations
      (as
      defined in the Supply Agreement) as contemplated by the Intercreditor Agreement
      (as defined in the Supply Agreement) and the Consent (as defined in the Supply
      Agreement), no party may assign, delegate or otherwise transfer any of its
      rights or obligations under this Agreement without the consent of the other
      parties hereto. Notwithstanding the foregoing, an assignment of this Agreement
      by any of the parties hereto 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 any other party to this Agreement. 

     

    3.2. Survival.
      All agreements, representations and warranties made in this Agreement or in
      any
      document delivered pursuant to this Agreement shall survive the execution and
      delivery of this Agreement and the delivery of any such documents.

     

    3.3. Governing
      Law. This Agreement shall be governed by and construed in accordance with
      the laws of the State of California, without giving effect to principles of
      conflicts of laws.

     

    3.4. Counterparts;
      Headings. This Agreement may be executed in one or more counterparts, each
      of which shall be deemed an original, but such counterparts shall together
      constitute but one and the same agreement. The Article and Section headings
      in
      this Agreement are inserted for convenience of reference only and shall not
      constitute a part of this Agreement.

     

    3.5. Entire
      Agreement. This Agreement and the Supply Agreement and the schedules,
      exhibits and documents referred to herein and therein contain the entire
      understanding of the parties with respect to the subject matter hereof and
      supersede all prior negotiations, agreements and undertakings among the parties
      with respect to such subject matter. There are no restrictions, promises,
      warranties, covenants or undertakings other than those expressly set forth
      herein and therein.

     

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

     

    3.6. Notices.
      All notices, requests, demands and other communications hereunder shall be
      in
      writing, and shall be deemed to have been duly given if delivered by overnight
      courier, sent by mail to the respective parties or personally delivered
      addressed as follows:

     

    If
      to
      SOLARFUN: 

    

    SOLARFUN
      POWER HONG KONG LIMITED 

    In
      care
      of: JIANGSU LINYANG SOLARFUN CO., LTD.

    No.
      666
      Linyang Rd.,

    Qidong
      Jiansu Province 226200

    People’s
      Republic of China

    Tel:
      

    Fax:
      

    Attn:
      

    E-Mail:
      

    

    If
      to
      HOKU: 

    

    HOKU
      SCIENTIFIC, INC.

    1075
      Opakapaka Street

    Kapolei,
      HI 96707

    Attn:
      Mr.
      Dustin Shindo, CEO

    E-mail:
      [*]

    Facsimile:
      +1 (808) 682-7807

    

    If
      to
      Escrow Agent:

    

    [__________________]

    [___________________]

    [___________________]

    Attn.:
      

    E-mail:
      

    Facsimile:
      

    

    or
      to
      such other address as such party may designate by written notice to the other
      parties hereto. Any such notices, requests, demands or other communications
      shall be deemed to have been duly given when received if delivered personally
      or, if mailed, on the date five (5) days after the date so deposited in the
      mails, postage prepaid, return receipt requested or on the day following the
      day
      sent if sent by prepaid overnight delivery service. Notices, requests and other
      communications hereunder may be delivered by electronic facsimile transmission
      (fax) if confirmation by sender is made within three (3) Business Days by mail
      or personal delivery. All periods of notice shall be measured from the date
      of
      deemed delivery thereof.

     

    3.7. Amendment
      or Modification of this Agreement. This Agreement may be amended or modified
      at any time with the written agreement of Escrow Agent, HOKU and
      SOLARFUN.

     

    3.8. Severability.
      Any provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions of this Agreement or affecting the validity or enforceability of
      such
      provision in any other jurisdiction.

     

    [This
      space intentionally left blank.]

     

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      on
      the day and year first written above.

    

     

    
      	SOLARFUN	 	HOKU:
	 	 	 	 	 
	SOLARFUN
              POWER HONG KONG LIMITED	 	HOKU
              SCIENTIFIC, INC.
	 	 	 	 	 
	By: 	                
                  	 	By:	          
                     
	 	 	 	 	 
	Name:	         
	 	Name: 	          
               
	 	 	 	 	 
	Title:	           
              	 	Title: 	           
               
	Authorized
              Signatory	 	Authorized
              Signatory
	 	 	 	 	 
	 	 	 	 	 
	ESCROW
              AGENT:	 	 	
            
	 	 	 	 	 
	[__________________]	 	 	 
	 	 	 	 	 
	By: 	           
              	 	 	 
	 	 	 	 	 
	Name: 	           
                 	 	 	 
	 	 	 	 	 
	Title: 	          
                  	 	 	 
	Authorized
              Signatory	 	 	 

    

    

    
      
        
        

      

      
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        CONFIDENTIAL

      

    

     

    Schedule
      A

    Escrow
      Fee Schedule

     

    

    [Schedule
      sent separately]

     

    
      
        
        

      

      
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