Document:

Exhibit
      10.77

    
      	 	
              CONFIDENTIAL

            

    

     

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

     

    SUPPLY
      AGREEMENT

     

    This
      Supply Agreement is made as of the last date set forth on the signature page
      hereto (the “Effective
      Date”)
      between JIANGXI KINKO ENERGY CO., LTD., a People’s Republic of China (Jiangxi)
      company (hereinafter “KINKO”)
      and
HOKU
      MATERIALS, INC., a
      Delaware corporation (hereinafter “HOKU”).
      HOKU
      and KINKO are sometimes referred to in the singular as a “Party”
or
      in
      the plural as the “Parties”.

     

    Recitals

     

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

     

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

     

    Whereas,
      KINKO is a high-tech overseas funded enterprise and a subsidiary of Hong Kong
      Paker Technology Co., Ltd, which manufactures monocrystalline and
      multicrystalline ingots for photovoltaic applications.

     

    Whereas,
      in exchange for HOKU’s agreement to allocate the supply of polysilicon, KINKO
      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 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.“First
      Shipment Date”
shall
      mean the first day after November 30, 2009, when HOKU commences deliveries
      to
      KINKO of Products pursuant to this Agreement.

     

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

     

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

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page
        1
of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

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

     

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

     

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

     

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

     

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

     

    1.11.“Total
      Deposit”
shall
      mean all deposits or prepayments actually made by KINKO to HOKU hereunder,
      including, the Initial Deposit, the Second Deposit and the Third Deposit, each
      as defined in Section 5
      below.

     

    1.12.“Year”
shall
      mean each of the ten (10) 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, KINKO agrees to purchase from HOKU, and HOKU agrees to sell to
      KINKO, 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 KINKO 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,
      which provides that if HOKU does not supply any Products pursuant to
      Section 3.1
      or
      3.2 within
      [*]
      days of
      the scheduled delivery date, HOKU will provide KINKO with a purchase price
      adjustment equal to [*]
      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.). At any time during the term of this Agreement, HOKU may ship to KINKO
      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
      KINKO’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.
      HOKU
      shall deliver any deficiency in the Minimum Annual Quantity of Product within
      the first quarter in the next Year. Any deficient shipments of the Minimum
      Annual Quantity of Product which are delayed beyond the first quarter of the
      next Year shall be deemed to constitute a material breach of this Agreement
      pursuant to section 9.2.1.

    
      

        
          	
                  KINKO
                    Initials & Date __XDL
                    July 25, 2008________

                	
                  HOKU
                    Initials & Date __DS_________________________

                   

                

        

        Page 2
          of 
          18

         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

    3.2.HOKU
      intends to manufacture the Products at its Facility; however, notwithstanding
      anything to the contrary herein, HOKU may deliver to KINKO 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 KINKO 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 KINKO 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.
      Notwithstanding the foregoing, if KINKO fails to make a payment to HOKU within
      the 30-day period set forth in Section 5.6
      below,
      HOKU shall not be required to supply any Product to KINKO until HOKU has
      received the past due amount including any interest payable thereon pursuant
      to
      this Agreement. For the avoidance of doubt, KINKO’s right to reduce the purchase
      price pursuant to this Section 3.3
      shall
      not apply if HOKU is not fulfilling its supply obligations for this
      reason.
      Monthly
      shipments which are delayed more than [*]
      days in
      a calendar year AND are less than [*]
      of the
      Minimum Annual Quantity of Product shall be deemed to constitute a material
      breach of this Agreement pursuant to Section 9.2.1.

     

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

     

    3.5.HOKU
      hereby covenants and agrees that during the term of this Agreement, and provided
      that KINKO is not in breach of any material term of this Agreement, including,
      without limitation, its payment obligations hereunder, HOKU shall not ship
      any
      Products to any third party that is not one of HOKU’s Other Customers (e.g.,
      spot market sales), until HOKU has satisfied its delivery obligations to KINKO
      pursuant to Section 3.1
      of this
      Agreement.

     

    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
      and reviewed and approved by KINKO (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, but not less than [*]
      of the
      Minimum Annual Quantity of Products. HOKU will use commercially reasonable
      efforts to make monthly shipments available on or about the fifteenth
      (15th)
      day of
      each month, and will advise KINKO approximately seven (7) days prior to the
      expected ship date; provided, however, that KINKO may request an alternate
      shipping date that is within fourteen (14) days after the advised schedule.
      Product shall be ready to ship FOB the HOKU Facility (INCOTERMS
      2000).

     

    4.2.HOKU
      will
      use commercially reasonable efforts to make available to KINKO its first
      shipment of Products on or before December 1, 2009. Any delay (but no later
      than
      December 31, 2009) shall be given by written notice to KINKO not later than
      [*].
      

    
      

        
          	
                  KINKO
                    Initials & Date __XDL
                    July 25, 2008________

                	
                  HOKU
                    Initials & Date __DS_________________________

                   

                

        

        Page 3
          of 
          18

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

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

     

    5.1.As
      soon
      as possible after signing this Agreement, and no later than August 20, 2008,
      KINKO shall provide HOKU with a deposit of Ten Million U.S. Dollars
      (US$10,000,000) via wire transfer of immediately available funds (the
“Initial
      Deposit”)
      as
      advance payment for Products to be delivered under this Agreement.

     

    5.2.On
      or
      before December 20, 2008, KINKO shall provide HOKU with a deposit of Twenty
      Million U.S. Dollars (US$20,000,000) via wire transfer of immediately available
      funds (the “Second
      Deposit”)
      as
      advance payment for Products to be delivered under this Agreement.

     

    5.3.On
      or
      before March 31, 2009, KINKO shall provide HOKU with a deposit of Twenty-five
      Million U.S. Dollars ($25,000,000) via wire transfer of immediately available
      funds (the “Third
      Deposit”
and
      together with the Initial Deposit and the Second Deposit, the “Total
      Deposit”)
      as
      advance payment for Products to be delivered under this Agreement.

     

    5.4.On
      or
      before August 31, 2008, KINKO shall provide to HOKU an irrevocable stand-by
      letter of credit in substantially the form of Appendix
      3
      attached
      hereto (the “First Letter
      of Credit”)
      in the
      amount of the Second Deposit. The First 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 has a credit rating that is
      acceptable to HOKU in its sole discretion (the “Issuing
      Bank”).
      The
      First Letter of Credit shall be issued in US Dollars for the full amount of
      the
      Second Deposit, and shall be freely assignable by HOKU in connection with any
      assignment of this Agreement by HOKU pursuant to Section 14.4
      below.
      Payment to HOKU of the Second Deposit shall be made by the Issuing Bank upon
      its
      receipt of written notice that KINKO has failed to make such payment on the
      applicable date. The First Letter of Credit shall expire after payment of the
      Second Deposit.

     

    5.5.On
      or
      before December 31, 2008, KINKO shall provide to HOKU an irrevocable stand-by
      letter of credit in substantially the form of Appendix
      3
      attached
      hereto (the “Second
      Letter of Credit”)
      in the
      amount of the Third Deposit. The Second Letter of Credit shall be issued to
      HOKU
      by the Issuing Bank. The Second Letter of Credit shall be issued in US Dollars
      for the full amount of the Third Deposit, and shall be freely assignable by
      HOKU
      in connection with any assignment of this Agreement by HOKU pursuant to
      Section 14.4
      below.
      Payment to HOKU of the Third Deposit shall be made by the Issuing Bank upon
      its
      receipt of written notice that KINKO has failed to make such payment on the
      applicable date. The Second Letter of Credit shall expire after payment of
      the
      Third Deposit.

     

    5.6.HOKU
      shall invoice KINKO at or after the time of each shipment of Products to KINKO.
      Taxes, customs and duties, if any, will be identified as separate items on
      HOKU
      invoices. All invoices shall be sent to KINKO’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 KINKO shall be credited against the Total Deposit on
      a
      straight-line basis during the second through tenth Year.

     

    5.7.The
      prices are FOB prices (INCOTERMS 2000). 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 KINKO, provided that KINKO is legally or contractually
      obliged to pay such taxes. KINKO shall be responsible for all transportation
      charges, duties or charges, liabilities and risks for shipping and handling
      (and
      hereby indemnifies HOKU for such costs, liabilities and risks); thus, the price
      for the Products shall not include any such charges.

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page 4
        of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

    5.8.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 or payment of any portion of the Total Deposit
      HOKU hereby grants to KINKO a security interest to secure the repayment by
      HOKU
      to KINKO of amounts of the Total Deposit actually paid to HOKU, following any
      of
      the events set forth in Section 9.5
      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.KINKO
      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 KINKO hereby. KINKO shall enter into subordination agreements with the Senior
      Lenders on terms and conditions reasonably acceptable to the Senior
      Lenders. 

     

    6.3.In
      addition, KINKO 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., Solarfun Power Hong Kong
      Limited, 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. KINKO may not unreasonably refuse to sign any such Collateral
      Agreement, provided that such Collateral Agreement grants KINKO 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 KINKO. 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 KINKO in
      accordance with the terms of this Agreement. When the Total Deposit is no longer
      held by HOKU, KINKO will sign such documents as are necessary to release its
      security interests.

     

    6.5.HOKU
      and
      KINKO 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, and in any event, HOKU and KINKO shall
      enter into the Collateral Agreements prior to HOKU granting any senior security
      interest to the Senior Lenders. Neither HOKU nor KINKO may unreasonably refuse
      to sign any such document.

     

    7. Product
      Quality Guarantee.

     

    7.1.HOKU
      warrants to KINKO that the Products shall meet the Product Specifications.
      For
      each shipment, this warranty shall survive for the lesser of (a) [*]
      days
      after KINKO receives the Products; or (b) [*]
      days
      after the release of the Products by HOKU at FOB origin (INCOTERMS 2000) (the
      “Warranty
      Period”).
      Upon
      release of the Products to a common carrier or freight forwarder, FOB origin
      (INCOTERMS 2000), HOKU warrants that the Products shall be free of all liens,
      mortgages, encumbrances, security interests or other claims or rights. HOKU
      will, upon prompt notification and compliance with HOKU’s instructions, refund
      or replace, at KINKO’s sole option, any Product which does not meet the Product
      Specifications, and KINKO shall comply with the inspection and return goods
      policy described in Section 8
      below
      with respect to such Products. HOKU shall be responsible for all replacement
      costs, including but not limited to transportation, taxes and customs charges,
      and, in the case of a replacement, shall use commercially reasonable efforts
      to
      replace such non-confirming Products within [*]
      days
      after expiration of the [*]
      day
      period described in Section 8.3
      below.
      No employee, agent or representative of HOKU has the authority to bind HOKU
      to
      any oral representation or warranty concerning the Products. Any oral
      representation or warranty made prior to the purchase of any Product and not
      set
      forth in writing and signed by a duly authorized officer of HOKU shall not
      be
      enforceable by KINKO. 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.

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page 5
        of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

    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 KINKO’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 KINKO 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 KINKO or KINKO’s
      Affiliates alleging any such infringement. KINKO agrees that: (i) KINKO shall
      give HOKU prompt notice in writing of any such suit; (ii) if HOKU provides
      evidence reasonably satisfactory to KINKO of HOKU’s financial ability to defend
      the matter vigorously and pay any reasonably foreseeable damages, KINKO shall
      permit HOKU, through counsel of HOKU’s choice, to answer the charge of
      infringement and defend such suit (but KINKO, or KINKO’s Affiliate may be
      represented by counsel and participate in the defense at its own expense);
      and
      (iii) KINKO 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 KINKO, 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 KINKO
      in
      accordance with sound business practice upon the delivery of the Product, and
      in
      no case later than [*]
      after
      delivery at KINKO’s factory. KINKO 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 KINKO discovers under the inspection of
      appearance. 

     

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

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page 6
        of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

    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 KINKO a return goods authorization number
      within 48 hours of KINKO’s request. Provided that HOKU communicates this number
      to KINKO within such timeframe, KINKO 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 KINKO if, upon return, such Product is determined
      by an Independent Expert not to be defective.
      The
      conclusion of the Independent Expert shall be final, binding and non-appealable
      in respect of the conformity of the Products to the warranties set forth in
      Section 7.1
      above.
      The fees and expenses of the Independent Expert shall be paid solely by the
      party that does not succeed in the dispute.

     

    8.4.The
      following shall be deemed to constitute a material breach of this Agreement
      by
      HOKU pursuant to Section 9.2.1:
      (A) if
      HOKU delivers [*]
      consecutive monthly shipments where more than [*]
      percent
      ([*]%)
      of the
      Products in each such shipment do not meet the Product Specifications, or (B)
      HOKU delivers [*]
      or more
      monthly shipments during any Year where [*]
      percent
      ([*]%)
      of the
      Products in each such shipment do not meet the Product Specifications.

     

    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 on December 31, 2009
      or
      earlier, and unless previously terminated as hereinafter set forth, shall remain
      in force for a period of ten 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
      KINKO’s failure to make any payment to HOKU pursuant to this Agreement. In the
      event of KINKO’s failure to make payment on the 30-day payment terms set forth
      in Section 5.6
      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.
      For
      purposes of this Section 9.2.1,
      a
“material breach” means a monthly shipment which is delayed beyond one hundred
      fifty (150) days, a payment default or any other material breach of this
      Agreement which materially and adversely affects a Party or which occurs on
      multiple occasions.

     

    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; 

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page 7
        of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

    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; provided, however, that KINKO may not terminate this Agreement
      pursuant to Section 12
      if HOKU
      is supplying Products to KINKO pursuant to Section 3.2
      of this
      Agreement. 

     

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

     

    9.3.HOKU
      shall have the right to terminate this Agreement if (A) on or before August
      20,
      2008, KINKO has failed to pay the Initial Deposit;
      (B) on
      or before August 31, 2008, KINKO has failed to deliver the First Letter of
      Credit, in which case HOKU may immediately terminate this Agreement and retain
      the Initial Deposit as liquidated damages; or (C) on or before December 31,
      2008, KINKO has failed to deliver the Second Letter of Credit, in which case
      HOKU may immediately terminate this Agreement and retain the Initial Deposit
      and
      the Second Deposit as liquidated damages. 

     

    9.4.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). 

     

    9.5.If
      KINKO
      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 KINKO, plus interest equal to the amount set forth in
      Section 5.8
      for each
      year since such funds were paid to HOKU by KINKO; provided however that if
      KINKO
      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 KINKO cures such breach within the applicable cure period) or KINKO’s
      other outstanding and unpaid obligations hereunder (including, without
      limitation, obligations under Section 11).
      If
      HOKU
      terminates this Agreement pursuant to Section 9.2.1,
      9.2.2,
      9.2.3,
      9.2.4,
      or 12
      then
      HOKU shall be entitled to retain the Total Deposit including any funds remaining
      on the Total Deposit on such date of termination in accordance with Section
      11.
      “Funds
      remaining”
on
      the
      Total Deposit are funds not applied against KINKO’s purchase of Product,
      pursuant to Section 5.6
      above,
      for Product actually shipped to KINKO hereunder.
      If KINKO
      terminates this Agreement pursuant to Section 9.2.1
      or 9.2.5
      due to
      HOKU’s failure to deliver Products pursuant to this Agreement, then one hundred
      fifty percent (150%) of the funds remaining on the Total Deposit on such date
      of
      termination shall be returned to KINKO.

     

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

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page 8
        of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

    11. Liquidated
      Damages.
      THE
      PARTIES ACKNOWLEDGE AND AGREE THAT ANY BREACH OF THIS AGREEMENT BY KINKO 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, 9.3
      or
      12,
      THEN
      HOKU SHALL BE ENTITLED TO RETAIN AS LIQUIDATED DAMAGES, THE TOTAL DEPOSIT
      (INCLUDING 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. 

     

    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. For
      the
      purposes of this Section 12,
      the
      inability of KINKO to receive, accept or take delivery of Products that have
      been made available by HOKU pursuant to this Agreement shall not constitute
      an
      event of force majeure.

     

    13. Visitation
      Rights; Project Updates.

     

    13.1.Beginning
      on the Effective Date, and until the First Shipment Date or the earlier
      termination of this Agreement pursuant to Section 9
      above,
      KINKO shall have the right to visit the HOKU Facility in Pocatello, Idaho,
      USA,
      for the limited purpose of evaluating HOKU’s progress towards completing the
      construction of its polysilicon production facilities. KINKO shall provide
      HOKU
      with at least five (5) business days’ prior notice of any such visit, and may
      not visit more than two times each calendar quarter. HOKU reserves the right
      to
      refuse access to any individual who is not subject to HOKU’s non-disclosure
      agreement. KINKO shall agree to abide by all of HOKU’s safety and security
      requirements and instructions for the HOKU Facility.

     

    13.2.Beginning
      on the Effective Date, and until the First Shipment Date or the earlier
      termination of this Agreement pursuant to Section 9
      above,
      HOKU shall provide KINKO with monthly updates on the progress of the
      construction of the HOKU polysilicon production facilities, including, without
      limitation, an explanation of any potential delays in meeting its shipment
      obligations to KINKO.

     

    14. General
      Provisions.
      

     

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

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page 9
        of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

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

     

    14.3.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. 

     

    14.4.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 KINKO. Except as stated in the previous sentence, neither HOKU nor
      KINKO 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. 

     

    14.5.All
      notices delivered pursuant to this Agreement shall be in writing and in the
      English language. Except as provided elsewhere in this Agreement, a notice
      is
      effective only if the Party giving or making the notice has complied with this
      Section 14.5
      and if
      the addressee has received the notice. A notice is deemed to have been received
      as follows: 

     

    
      	 	
              (a)

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

            

    

     

    
      	 	
              (b)

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

            

    

     

    Each
      Party giving a notice shall address the notice to the appropriate person at
      the
      receiving Party at the addresses listed below or to a changed address as the
      Party shall have specified by prior written notice: 

     

    KINKO:
      

    

    JIANGXI
      KINKO ENERGY CO., LTD. 

    Kinko
      Road, Xuri District, Economic Development Zone, Shangrao, China

    Tel:
      +86-793-8469699

    Fax:
      +86-793-8461152

    Attn:
      Mr.
      Xian De Li

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page
        10
of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

    

    With
      a
      copy to:

    

    SHANGHAI
      GUANGWEI ELECTRONICS MATERIALS Co., Ltd.

    No.
      808,
      Minta Road,Songjiang District, Shanghai, China 201600 

    Tel:
      +86-21-57847791 

    Fax:
      +86-21-57847790

    Attn:
      Mr.
      Wei Li

    

    HOKU:
      

    

    HOKU
      MATERIALS, INC.

    1075
      Opakapaka Street

    Kapolei,
      HI 96707

    Attn:
      Mr.
      Dustin Shindo, CEO

    Facsimile:
      +1 (808) 682-7807

     

    14.6.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. 

     

    14.7.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. 

     

    14.8.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. 

     

    14.9.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. 

     

    14.10.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 fourteen (14) 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.

     

    14.11.This
      Agreement constitutes the entire agreement between the Parties and supersedes
      all prior proposal(s) and discussions, relative to the subject matter of this
      Agreement and neither of the Parties shall be bound by any conditions,
      definitions, warranties, understandings or representations with respect to
      such
      subject matter other than as expressly provided herein. No oral explanation
      or
      oral information by either Party hereto shall alter the meaning or
      interpretation of this Agreement. 

     

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

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page
        11
of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

      

    

     

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

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Page
        12
of 
        18

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        Exhibit
          10.77

        
          	 	
                  CONFIDENTIAL

                

        

      

       

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

    

     

    
      	
              KINKO:

            	 	
              HOKU:

            
	 	 	 
	
              JIANGXI
                KINKO ENERGY CO., LTD.

            	 	
              HOKU
                MATERIALS, INC.

            
	 	 	 
	
              By:

            	
              /s/
                X.D. LI 

            	 	
              By:

            	
              /s/
                DUSTIN M. SHINDO 

            
	 	 	 	 	 
	
              Name:

            	
              X.D.
                Li 

            	 	
              Name:

            	
              Dustin
                M. Shindo 

            
	 	 	 	 	 
	
              Title: 

            	
              Chairman 

            	 	
              Title:  

            	
              Chairman
                and CEO

            
	Authorized
              Signatory	 	Authorized
              Signatory 
	 	 	 	 	 
	
              Date:

            	
              July
                25, 2008 

            	 	
              Date:

            	
              July
                24, 2008 

            

    

     

    
      Signature
        Page to Supply Agreement

    

    Page
      13
      of  18

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                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 [*]
      shall
      be
      invoiced at [*].
      

    

      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Appendix
        1 to Supply Agreement

      Page
        14
of
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      10.77

    
      	 	
              CONFIDENTIAL

            

    Appendix
      2 — Product
      Specifications

     

    [*]

    

    1.
      Description

    

    [*]

    

    2.
      Bulk & Surface Impurity Specifications

    

    [*]

    3.
      Size Specifications

    

    [*]

    

    4.
      Certification & Elemental Analysis

    

    [*]

    

    5.
      Packaging

    

    [*]

    

    6. Qualified
      Laboratories:

    

    [*]

     

    
      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Appendix
        2 to Supply Agreement

      Page
        15
of 
        18

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      10.77

    
      	 	
              CONFIDENTIAL

            

    APPENDIX
      3 —
      Form of Letter of Credit

     

    IRREVOCABLE
      STANDBY LETTER OF CREDIT 

    

      
        	
                BENEFICIARY:

              	
                ADVISING
                  BANK:

              
	 	 
	
                HOKU
                  MATERIALS, INC.

              	
                [INSERT ADVISING BANK NAME]

              
	
                ONE HOKU WAY

              	
                [INSERT BANK ADDRESS]

              
	
                POCATELLO, IDAHO 83204

              	 

      

       

    

    Gentlemen:

    

    We
      hereby
      establish in your favor our Irrevocable Standby Letter of Credit
      No.______________, available by your drafts at sight on (ISSUING BANK’S NAME) )
      for the account of _______________, up to an aggregate amount of ___________
      U.S. Dollars (US$__________).

     

    Alternatively,
      electronic drawings may be made by authenticated Swift indicating the amount
      drawn and stating “Drawn under Credit No. ___________ of (ISSUING BANK’S NAME
      AND ADDRESS) dated _______, 2008. 

    

    Multiple
      presentations permitted.

    

    All
      drafts must bear or be electronic drawings with the clause "Drawn under Credit
      No. ___________ of (ISSUING BANK’S NAME) dated __________, 2008."

    

    This
      Letter of Credit is subject to an automatic extension, without a written
      amendment, to extend the expiration date for an additional period of one year
      from the present or each future expiration date unless at least thirty (30)
      days
      prior to any expiration date we notify you in writing by certified or registered
      mail or other similarly expeditious receipted service at the above address
      that
      this Letter of Credit will not be extended for any such additional period.
      Upon
      receipt by you of such notice, you may draw hereunder on or before the then
      relevant expiration date by means of your draft on us at sight or alternatively,
      by electronic drawings as mentioned above.

    

    Any
      and
      all banking charges are for the account of the applicant.

    

    Pursuant
      to U.S. Law, we are prohibited from issuing, transferring, accepting or paying
      letters of credit to any party or entity identified on the Office of Foreign
      Asset Control, U.S. Department of Treasury list or subject to the denial of
      export privileges by the U.S. Department of Commerce.

     

    This
      Credit is issued subject to the International Standby Practices 1998 (ISP98),
      International Chamber of Commerce Publication No. 590.

    

    It
      is a
      condition of this letter of credit that it is transferable and may be
      transferred in its entirety, but not in part, and may be successively
      transferred by you or any transferee hereunder to a successor transferee(s).
      Transfer under this letter of credit to such transferee must be jointly signed
      by Beneficiary and shall be effected upon presentation to us of the original
      of
      this letter of credit and any amendments hereto accompanied by a request
      designating the transferee in the form of Annex A, attached hereto,
      appropriately completed.

    
      	
              KINKO
                Initials & Date __XDL
                July 25, 2008________

            	
              HOKU
                Initials & Date __DS_________________________

               

            

    

    Appendix
      2 to Supply Agreement

    Page
      16
of
      18

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
        10.77

      
        	 	
                CONFIDENTIAL

              

    

    We
      hereby
      engage with you that all drawings under and in compliance with the terms and
      conditions of this Credit shall be duly honored if drawn and presented on or
      before [*],
      the
      expiration date, or any extended date as provided above, at (ISSUING BANK’S NAME
      AND ADDRESS).

    

    
      	 
              	 	
              Sincerely,

            	 
	 	 	 	 
	
               

            	 	
               

            	 
	
              Authorized
                Signature

            	 	
              Authorized
                Signature

            	 

    

     

    
      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Appendix
        2 to Supply Agreement

      Page
        17
of 
        18

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      10.77

    
      	 	
              CONFIDENTIAL

            

    ANNEX
      A

    

    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]

     

    
      
        	
                KINKO
                  Initials & Date __XDL
                  July 25, 2008________

              	
                HOKU
                  Initials & Date __DS_________________________

                 

              

      

      Appendix
        2 to Supply Agreement

      Page
        18
of 
        18Exhibit 10.1

     

    MDC
      PARTNERS INC.

    2008
      Key Partner Incentive Plan

    (May
      30, 2008)

    

    1. Purpose
      of the Plan

     

    This
      2008
      Key Partner Incentive Plan (this “Plan”) of MDC Partners Inc. (the “Company” or
“MDC”) is intended to promote the interests of the Company and its shareholders
      by providing employees and consultants of the Company and its operating
      subsidiaries (the “Partner Subsidiaries”), who are largely responsible for the
      management, growth and protection of the operating businesses of the Partner
      Subsidiaries, with incentives and rewards to encourage them to continue in
      the
      service of the Partner Subsidiaries. The Plan is designed to meet this intent
      by
      providing such employees and consultants with a proprietary interest in pursuing
      the long-term growth, profitability and financial success of the Partners
      Subsidiaries and the Company.

     

    2. Definitions

     

    As
      used
      in the Plan, the following definitions apply to the terms indicated
      below:

     

    (a) “Board
      of
      Directors” means the Board of Directors of MDC Partners Inc.

     

    (b) “Change
      in Control” means the occurrence of any of the following:

     

    (i) Any
      Person becoming the beneficial owner (within the meaning of Rule 13d-3
      promulgated under the Exchange Act, a “Beneficial Owner”) of twenty-five percent
      (25%) or more of the combined voting power of MDC's then outstanding voting
      securities (“Voting Securities”); provided,
      however
      that a
      Change in Control shall not be deemed to occur by reason of an acquisition
      of
      Voting Securities directly from MDC or by (i) an employee benefit plan (or
      a trust forming a part thereof) maintained by (A) MDC or any Person of
      which a majority of its voting power or its voting equity securities or equity
      interest is owned, directly or indirectly, by MDC (the “MDC Group”),
      (B) any member of the MDC Group, or (C) any Person in connection with
      a Non-Control Transaction (as such term is hereinafter defined);

     

    (ii) The
      individuals who, as of April 1, 2008, are members of the Board of Directors
      (the
      "Incumbent Board"), cease for any reason to constitute at least two-thirds
      of
      the members of the Board of Directors; provided,
      however
      that if
      the election, or nomination for election by MDC's shareholders, of any new
      director was approved by a vote of at least two-thirds of the Incumbent Board,
      such new director shall, for purposes of the Plan, be considered as a member
      of
      the Incumbent Board; provided,
      further,
      however, that no individual shall be considered a member of the Incumbent Board
      if such individual initially assumed office as a result of an actual or
      threatened solicitation of proxies or consents by or on behalf of a Person
      other
      than the Board (a "Proxy Contest") including by reason of any agreement intended
      to avoid or settle any Election Contest or Proxy Contest; or

     

    (iii) The
      consummation of:

     

    (A) A
      merger,
      consolidation or reorganization with or into MDC or in which securities of
      MDC
      are issued, unless such merger, consolidation or reorganization is a
      "Non-Control Transaction." A "Non-Control Transaction" is a merger,
      consolidation or reorganization with or into MDC or in which securities of
      MDC
      are issued where:

     

    (I) the
      stockholders of MDC, immediately before such merger, consolidation or
      reorganization, own, directly or indirectly immediately following such merger,
      consolidation or reorganization, at least sixty percent (60%) of the combined
      voting power of the outstanding voting securities of the corporation resulting
      from such merger or consolidation or reorganization (the "Surviving
      Corporation") in substantially the same proportion as their ownership of the
      Voting Securities immediately before such merger, consolidation or
      reorganization,

     

    (II) the
      individuals who were members of the Incumbent Board immediately prior to the
      execution of the agreement providing for such merger, consolidation or
      reorganization constitute at least two-thirds of the members of the board of
      directors of the Surviving Corporation, or a corporation beneficially owning
      a
      majority of the voting securities of the Surviving Corporation,

     

    (III) no
      Person
      other than (1) any member of the MDC Group, (2) any employee benefit plan (or
      any trust forming a part thereof) maintained immediately prior to such merger,
      consolidation or reorganization by any member of the MDC Group, or (3) any
      Person who, immediately prior to such merger, consolidation or reorganization
      Beneficially Owns twenty-five percent (25%) or more of the then outstanding
      Voting Securities, owns, directly or indirectly, twenty-five percent (25%)
      or
      more of the combined voting power of the Surviving Corporation's voting
      securities outstanding immediately following such transaction;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (B) A
      complete liquidation or dissolution of the Company; or

     

    (C) The
      sale
      or other disposition of all or substantially all of the assets of the Company
      to
      any Person (other than a member of the MDC Group).

     

    Notwithstanding
      the foregoing, a Change in Control shall not be deemed to occur solely because
      any Person (the "Subject Person") becomes the Beneficial Owner of more than
      the
      permitted amount of the outstanding Voting Securities as a result of the
      acquisition of Voting Securities by the Company which, by reducing the number
      of
      Voting Securities outstanding, increases the proportional number of shares
      Beneficially Owned by the Subject Persons, provided that if a Change in Control
      would occur (but for the operation of this sentence) as a result of the
      acquisition of Voting Securities by the Company, and after such share
      acquisition by the Company, the Subject Person becomes the Beneficial Owner
      of
      any additional Voting Securities which increases the percentage of the then
      outstanding Voting Securities Beneficially Owned by the Subject Person, then
      a
      Change in Control shall occur.

     

    (c) “Class
      A
      Shares” means MDC’s Class A subordinate voting shares, without par value, or any
      other security into which such shares shall be changed pursuant to the
      adjustment provisions of Section 10 of the Plan.

     

    (d) “Code”
      means the Internal Revenue Code of 1986, as amended from time to
      time.

     

    (e) “Committee”
      means the Human Resources & Compensation Committee of the Board of Directors
      or such other committee as the Board of Directors shall appoint from time to
      time to administer the Plan and to otherwise exercise and perform the authority
      and functions assigned to the Committee under the terms of the
      Plan.

     

    (f) “Company”
      means MDC and each of its Subsidiaries, collectively.

     

    (g) “Covered
      Employee” means a Participant who at the time of reference is a “covered
      employee” as defined in Code Section 162(m) and the regulations promulgated
      under Code Section 162(m), or any successor statute.

     

    (h) “Director”
      means a member of the Board of Directors who is not at the time of reference
      an
      employee of the Company.

     

    (i) “Exchange
      Act” means the Securities Exchange Act of 1934, as amended.

     

    (j) “Fair
      Market Value” means, with respect to a Class A Share, as of the applicable date
      of determination (i) the volume weighted average trading price of the Class
      A
      Shares on the principal securities exchange on which such shares are then listed
      or admitted to trading for the five (5) trading days immediately preceding
      the
      applicable date of determination, or (ii) if there has been no trading in the
      Class A Shares on such securities exchange for the five (5) trading days
      immediately preceding the applicable date of determination, the average of
      the
      closing bid and ask prices for the Class A Shares on the immediately preceding
      business day as reported on the National Association of Securities Dealers
      Automated Quotation System, or (iii) if not so reported, as determined by the
      Committee in its absolute discretion.

     

    (k) “Incentive
      Award” means an Option, SAR or Other Stock-Based Award granted to a Participant
      pursuant to the terms of the Plan.

     

    (l) “MDC”
      means MDC Partners Inc., a corporation established under the Canadian Business
      Corporation Act, and any successor thereto.

     

    (m) “Option”
      means a non-qualified stock option to purchase Class A Shares granted to a
      Participant pursuant to Section 6.

     

    (n) “Other
      Stock-Base Award” means an equity or equity-related award granted to a
      Participant pursuant to Section 8.

     

    (o) “Participant”
      means (i) an employee or consultant of any of the Partner Subsidiaries,
      including any person or company engaged to provide ongoing management or
      consulting services for the Partner Subsidiaries and (ii) an employee of the
      Company whose compensation expense is allocated to any of the Partner
      Subsidiaries, and, at the discretion of any of the foregoing persons, and
      subject to any required regulatory approvals and conditions, a personal holding
      company controlled by such person, who or which is eligible to participate
      in
      the Plan and to whom one or more Incentive Awards have been granted pursuant
      to
      the Plan and, following the death of any such natural person, his successors,
      heirs, executors and administrators, as the case may be. Any participation
      in
      this Plan by a Participant shall be voluntary.

     

    (p) “Partner
      Subsidiary” means any direct or indirect, majority or wholly-owned “subsidiary
      corporation” within the meaning of Section 424(f) of the Code, or any other
      entity that is controlled by the Company that the Committee determines from
      time
      to time should be treated as a subsidiary corporation for purposes of this
      Plan.

     

    (q) “Performance-Based
      Compensation” means compensation that satisfies the requirements of Section
      162(m) of the Code for deductibility of remuneration paid to Covered
      Employees.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (r) “Performance
      Measures” means such measures as are described in Section 9 on which performance
      goals are based in order to qualify certain awards granted hereunder as
      Performance-Based Compensation.

     

    (s) “Performance
      Period” means the period of time during which the performance goals must be met
      in order to determine the degree of payout and/or vesting with respect to an
      Incentive Award that is intended to qualify as Performance-Based
      Compensation.

     

    (t) “Permitted
      Acceleration Event” means (i) with respect to any Incentive Award that is
      subject to performance-based vesting, the full or partial vesting of such
      Incentive Award based on satisfaction of the applicable performance-based
      conditions, (ii) the occurrence of a Change in Control or an event described
      in
      Section 10(b), (c) or (d) or (iii) any termination of the employment of a
      Participant, other than a termination for cause (as defined by the Committee)
      or
      voluntary termination prior to retirement (as defined by the
      Committee).

     

    (u) “Person”
      means a “person” as such term is used in Section 13(d) and 14(d) of the Exchange
      Act.

     

    (v) “Plan”
      means this 2008 Key Partner Incentive Plan, as it may be amended from time
      to
      time.

     

    (w) “SAR”
      means a stock appreciation right granted to a Participant pursuant to Section
      7.

     

    (x) “Securities
      Act” means the Securities Act of 1933, as amended.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      3.Stock
        Subject to the Plan

    

     

    (a) In
      General

     

    Subject
      to adjustment as provided in Section 10 and the following provisions of this
      Section 3, the maximum number of Class A Shares that may be covered by Incentive
      Awards granted under the Plan shall not exceed 600,000 Class A Shares. Class
      A
      Shares issued under the Plan may be either authorized and unissued shares or
      treasury shares, or both, at the discretion of the Committee.

     

    For
      purposes of the preceding paragraph, Class A Shares covered by Incentive Awards
      shall only be counted as used to the extent they are actually issued and
      delivered to a Participant (or such Participant’s permitted transferees as
      described in the Plan) pursuant to the Plan. For purposes of clarification,
      in
      accordance with the preceding sentence if an Incentive Award is settled for
      cash
      or if Class A Shares are withheld to pay the exercise price of an Option or
      to
      satisfy any tax withholding requirement in connection with an Incentive Award
      only the shares issued (if any), net of the shares withheld, will be deemed
      delivered for purposes of determining the number of Class A Shares that are
      available for delivery under the Plan. In addition, if Class A Shares are issued
      subject to conditions which may result in the forfeiture, cancellation or return
      of such shares to the Company, any portion of the shares forfeited, cancelled
      or
      returned shall be treated as not issued pursuant to the Plan. In addition,
      if
      Class A Shares owned by a Participant (or such Participant’s permitted
      transferees as described in the Plan) are tendered (either actually or through
      attestation) to the Company in payment of any obligation in connection with
      an
      Incentive Award, the number of shares tendered shall be added to the number
      of
      Class A Shares that are available for delivery under the Plan. In addition,
      if
      the Company uses cash received by the Company in payment of the exercise price
      or purchase price in connection with any Incentive Award granted pursuant to
      the
      Plan to repurchase Class A Shares from any Person, the shares so repurchased
      will be added to the aggregate number of shares available for delivery under
      the
      Plan. For purposes of the preceding sentence, Class A Shares repurchased by
      the
      Company shall be deemed to have been repurchased using such funds only to the
      extent that such funds have actually been previously received by the Company
      and
      that the Company promptly designates in its books and records that such
      repurchase was paid for with such funds. Class A Shares covered by Incentive
      Awards granted pursuant to the Plan in connection with the assumption,
      replacement, conversion or adjustment of outstanding equity-based awards in
      the
      context of a corporate acquisition or merger (within the meaning of NASD Rule
      4350) shall not count as used under the Plan for purposes of this Section
      3.

     

    Subject
      to adjustment as provided in Section 10, the maximum number of Class A Shares
      that may be covered by Incentive Awards granted under the Plan to any single
      Participant in any fiscal year of the Company shall not exceed 60,000 shares,
      prorated on a daily basis for any fiscal year of the Company that is shorter
      than 365 days.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) Prohibition
      on Substitutions and Repricings

     

    In
      no
      event shall any new Incentive Awards be issued in substitution for outstanding
      Incentive Awards previously granted to Participants, nor shall any repricing
      (within the meaning of US generally accepted accounting practices or any
      applicable stock exchange rule) of Incentive Awards issued under the Plan be
      permitted at any time under any circumstances, in each case unless the
      shareholders of the Company expressly approve such substitution or
      repricing.

     

    (c)
      Annual
      Limitation on Grants.

     

    The
      Committee shall limit annual grants of equity awards under this Plan to an
      aggregate amount equal to not more than two percent (2%) of the number of issued
      and outstanding shares of the Company’s capital stock at the beginning of the
      Company’s fiscal year.

     

    4. Administration
      of the Plan

     

    The
      Plan
      shall be administered by a Committee of the Board of Directors consisting of
      two
      or more persons, each of whom qualify as non-employee directors (within the
      meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act), and
      as
“outside directors” within the meaning of Treasury Regulation Section
      1.162-27(e)(3). The Committee shall, consistent with the terms of the Plan,
      from
      time to time designate those who shall be granted Incentive Awards under the
      Plan and the amount, type and other terms and conditions of such Incentive
      Awards. All of the powers and responsibilities of the Committee under the Plan
      may be delegated by the Committee, in writing, to any subcommittee thereof.
      In
      addition, the Committee may from time to time authorize a committee consisting
      of one or more Directors to grant Incentive Awards to persons who are not
“executive officers” of MDC (within the meaning of Rule 16a-1 under the Exchange
      Act), subject to such restrictions and limitation as the Committee may specify.
      In addition, the Board of Directors may, consistent with the terms of the Plan,
      from time to time grant Incentive Awards to Directors.

     

    The
      Committee shall have full discretionary authority to administer the Plan,
      including discretionary authority to interpret and construe any and all
      provisions of the Plan and the terms of any Incentive Award (and any agreement
      evidencing any Incentive Award) granted thereunder and to adopt and amend from
      time to time such rules and regulations for the administration of the Plan
      as
      the Committee may deem necessary or appropriate. Without limiting the generality
      of the foregoing, (i) the Committee shall determine whether an authorized leave
      of absence, or absence in military or government service, shall constitute
      termination of employment and (ii) the employment of a Participant with the
      Company shall be deemed to have terminated for all purposes of the Plan if
      such
      person is employed by or provides services to a Person that is a Subsidiary
      of
      the Company and such Person ceases to be a Subsidiary of the Company, unless
      the
      Committee determines otherwise. Decisions of the Committee shall be final,
      binding and conclusive on all parties.

     

    On
      or
      after the date of grant of an Incentive Award under the Plan, the Committee
      may
      (i) accelerate the date on which any such Incentive Award becomes vested,
      exercisable or transferable, as the case may be, (ii) extend the term of any
      such Incentive Award, including, without limitation, extending the period
      following a termination of a Participant’s employment during which any such
      Incentive Award may remain outstanding, (iii) waive any conditions to the
      vesting, exercisability or transferability, as the case may be, of any such
      Incentive Award or (iv) provide for the payment of dividends or dividend
      equivalents with respect to any such Incentive Award.

     

    No
      member
      of the Committee shall be liable for any action, omission, or determination
      relating to the Plan, and MDC shall indemnify and hold harmless each member
      of
      the Committee and each other director or employee of the Company to whom any
      duty or power relating to the administration or interpretation of the Plan
      has
      been delegated against any cost or expense (including counsel fees) or liability
      (including any sum paid in settlement of a claim with the approval of the
      Committee) arising out of any action, omission or determination relating to
      the
      Plan, unless, in either case, such action, omission or determination was taken
      or made by such member, director or employee in bad faith and without reasonable
      belief that it was in the best interests of the Company.

     

    5. Eligibility

     

    The
      Persons who shall be eligible to receive Incentive Awards pursuant to the Plan
      shall be (i) an employee or consultant of any of the Partner Subsidiaries,
      including any person or company engaged to provide ongoing management or
      consulting services for the Partner Subsidiaries and (ii) an employee of the
      Company whose compensation expense is allocated to any of the Partner
      Subsidiaries, including any person or company engaged to provide ongoing
      management or consulting services for the Partner Subsidiaries and, at the
      discretion of any of the foregoing persons, and subject to any required
      regulatory approvals and conditions, a personal holding company controlled
      by
      such person, whom the Committee shall select from time to time. All Incentive
      Awards granted under the Plan shall be evidenced by a separate written agreement
      entered into by the Company and the recipient of such Incentive Award.

     

    6. Options

     

    The
      Committee may from time to time grant Options, subject to the following terms
      and conditions:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a) Exercise
      Price

     

    The
      exercise price per Class A Share covered by any Option shall be not less than
      100% of the Fair Market Value of a Class A Share on the date on which such
      Option is granted.

     

    (b) Term
      and Exercise of Options

     

    (1) Each
      Option shall become vested and exercisable on such date or dates, during such
      period and for such number of Class A Shares as shall be determined by the
      Committee on or after the date such Option is granted; provided,
      however
      that no
      Option shall be exercisable after the expiration of ten years from the date
      such
      Option is granted; provided,
      further
      that no
      Option shall become exercisable earlier than one year after the date on which
      it
      is granted, other than upon the occurrence of a Permitted Acceleration Event;
      and, provided,
      further,
      that
      each Option shall be subject to earlier termination, expiration or cancellation
      as provided in the Plan or in the agreement evidencing such Option.

     

    (2) Each
      Option may be exercised in whole or in part; provided,
      however
      that no
      partial exercise of an Option shall be for an aggregate exercise price of less
      than $1,000. The partial exercise of an Option shall not cause the expiration,
      termination or cancellation of the remaining portion thereof.

     

    (3) An
      Option
      shall be exercised by such methods and procedures as the Committee determines
      from time to time, including without limitation through net physical settlement
      or other method of cashless exercise.

     

    (4) Options
      may not be sold, pledged, assigned, hypothecated, transferred, or disposed
      of in
      any manner other than by will or by the laws of descent or distribution and
      may
      be exercised, during the lifetime of a Participant, only by the
      Participant.

     

    (c) Effect
      of Termination of Employment or other Relationship

     

    The
      agreement evidencing the award of each Option shall specify the consequences
      with respect to such Option of the termination of the employment, service as
      a
      director or other relationship between the Company and the Participant holding
      the Option.

     

    (d) Effect
      of Change in Control

     

    Upon
      the
      occurrence of a Change in Control, each Option outstanding at such time shall
      become fully and immediately vested and exercisable and shall remain exercisable
      until its expiration, termination or cancellation pursuant to the terms of
      the
      Plan and the agreement evidencing such Option.

     

    7. Stock
      Appreciation Rights

     

    The
      Committee may from time to time grant SARs, subject to the following terms
      and
      conditions:

     

    (a) Stand-Alone
      and Tandem; Cash and Stock-Settled

     

    SARs
      may
      be granted on a stand-alone basis or in tandem with an Option. Tandem SARs
      may
      be granted contemporaneously with or after the grant of the Options to which
      they relate. SARs may be settled in Class A Shares or in cash.

     

    (b) Exercise
      Price

     

    The
      exercise price per Class A Share covered by any SAR shall be not less than
      100%
      of the Fair Market Value of a Class A Share on the date on which such SAR is
      granted; provided,
      however
      that the
      exercise price of an SAR that is tandem to an Option and that is granted after
      the grant of such Option may have an exercise price less than 100% of the Fair
      Market Value of a Class A Share on the date on which such SAR is granted
      provided that such exercise price is at least equal to the exercise price of
      the
      related Option.

     

    (c) Benefit
      Upon Exercise

     

    The
      exercise of an SAR with respect to any number of Class A Shares prior to the
      occurrence of a Change in Control shall entitle the Participant to (i) a cash
      payment, for each such share, equal to the excess of (A) the Fair Market Value
      of a Class A Share on the effective date of such exercise over (B) the per
      share
      exercise price of the SAR, (ii) the issuance or transfer to the Participant
      of
      the greatest number of whole Class A Shares which on the date of the exercise
      of
      the SAR have an aggregate Fair Market Value equal to such excess or (iii) a
      combination of cash and Class A Shares in amounts equal to such excess, as
      determined by the Committee. The exercise of an SAR with respect to any number
      of Class A Shares upon or after the occurrence of a Change in Control shall
      entitle the Participant to a cash payment, for each such share, equal to the
      excess of (i) the greater of (A) the highest price per share of Class A Shares
      paid in connection with such Change in Control and (B) the Fair Market Value
      of
      Class A Shares on the effective date of exercise over (ii) the per share
      exercise price of the SAR. Such payment, transfer or issuance shall occur as
      soon as practical, but in no event later than five business days, after the
      effective date of exercise.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d) Term
      and Exercise of SARs

     

    (1) Each
      SAR
      shall become vested and exercisable on such date or dates, during such period
      and for such number of Class A Shares as shall be determined by the Committee
      on
      or after the date such SAR is granted; provided,
      however
      that no
      SAR shall be exercisable after the expiration of ten years from the date such
      SAR is granted; provided,
      further
      that no
      SAR shall become exercisable earlier than one year after the date on which
      it is
      granted, other than upon the occurrence of a Permitted Acceleration Event;
      and,
provided,
      further,
      that
      each SAR shall be subject to earlier termination, expiration or cancellation
      as
      provided in the Plan or in the agreement evidencing such SAR.

     

    (2) Each
      SAR
      may, to the extent vested and exercisable, be exercised in whole or in part;
      provided,
      however
      that no
      partial exercise of an SAR shall be for an aggregate exercise price of less
      than
      $1,000. The partial exercise of an SAR shall not cause the expiration,
      termination or cancellation of the remaining portion thereof.

     

    (3) An
      SAR
      shall be exercised by such methods and procedures as the Committee determines
      from time to time.

     

    (4) SARs
      may
      not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
      any
      manner other than by will or by the laws of descent or distribution and may
      be
      exercised, during the lifetime of a Participant, only by the
      Participant.

     

    (5) The
      exercise with respect to a number of Class A Shares of an SAR granted in tandem
      with an Option shall cause the immediate cancellation of the Option with respect
      to the same number of shares. The exercise with respect to a number of Class
      A
      Shares of an Option to which a tandem SAR relates shall cause the immediate
      cancellation of the SAR with respect to an equal number of shares.

     

    (e) Effect
      of Termination of Employment or other Relationship

     

    The
      agreement evidencing the award of each SAR shall specify the consequences with
      respect to such SAR of the termination of the employment, service as a director
      or other relationship between the Company and Participant holding the
      SAR.

     

    (f) Effect
      of Change in Control

     

    Upon
      the
      occurrence of a Change in Control, each SAR outstanding at such time shall
      become fully and immediately vested and exercisable and shall remain exercisable
      until its expiration, termination or cancellation pursuant to the terms of
      the
      Plan and the agreement evidencing such SAR.

     

    8. Other
      Stock-Based Awards

     

    The
      Committee may grant equity-based or equity-related awards not otherwise
      described herein in such amounts and subject to such terms and conditions as
      the
      Committee shall determine. Without limiting the generality of the preceding
      sentence, each such Other Stock-Based Award may (i) involve the transfer of
      actual Class A Shares to Participants, either at the time of grant or
      thereafter, or payment in cash or otherwise of amounts based on the value of
      Class A Shares, (ii) be subject to performance-based and/or service-based
      conditions, (iii) be in the form of phantom stock, restricted stock, restricted
      stock units, performance shares, or share-denominated performance units and
      (iv)
      be designed to comply with applicable laws of jurisdictions other than the
      United States. Notwithstanding anything in this Section 8, no Other Stock-Based
      Award shall vest or otherwise become payable earlier than three years following
      the date on which it is granted, other than upon the occurrence of a Permitted
      Acceleration Event.

     

    9. Performance
      Measures

     

    (a) Performance
      Measures

     

    The
      performance goals upon which the payment or vesting of any Incentive Award
      (other than Options and SARs) to a Covered Employee that is intended to qualify
      as Performance-Based Compensation depends shall relate to one or more of the
      following Performance Measures: revenue growth, operating income, operating
      cash
      flow, net income, earnings per share, cash earnings per share, return on sales,
      return on assets, return on equity, return on invested capital and total
      shareholder return.

     

    Performance
      Periods may be equal to or longer than, but not less than, one fiscal year
      of
      the Company. Within 90 days after the beginning of a Performance Period, and
      in
      any case before 25% of the Performance Period has elapsed, the Committee shall
      establish (a) performance goals and objectives for the Company for such
      Performance Period, (b) target awards for each Participant, and (c) schedules
      or
      other objective methods for determining the applicable performance percentage
      to
      be applied to each such target award.

     

    The
      measurement of any Performance Measure(s) may exclude the impact of charges
      for
      restructurings, discontinued operations, extraordinary items, and other unusual
      or non-recurring items, and the cumulative effects of accounting changes, each
      as defined by generally accepted accounting principles and as identified in
      the
      Company’s audited financial statements, including the notes thereto. Any
      Performance Measure(s) may be used to measure the performance of the Company
      or
      a Subsidiary as a whole or any business unit of the Company or any Subsidiary
      or
      any combination thereof, as the Committee may deem appropriate, or any of the
      above Performance Measures as compared to the performance of a group of
      comparator companies, or a published or special index that the Committee, in
      its
      sole discretion, deems appropriate.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Nothing
      in this Section 9 is intended to limit the Committee’s discretion to adopt
      conditions with respect to any Incentive Award that is not intended to qualify
      as Performance-Based Compensation that relate to performance other than the
      Performance Measures. 

     

    (b) Committee
      Discretion

     

    In
      the
      event that the requirements of Section 162(m) and the regulations thereunder
      change to permit Committee discretion to alter the Performance Measures without
      obtaining shareholder approval of such changes, the Committee shall have sole
      discretion to make such changes without obtaining shareholder
      approval.

     

    10. Adjustment
      Upon Changes in Class A Shares

     

    (a)
      Shares
      Available for Grants

     

    In
      the
      event of any change in the number of Class A Shares outstanding by reason of
      any
      stock dividend or split, recapitalization, merger, consolidation, combination
      or
      exchange of shares or similar corporate change, the maximum aggregate number
      of
      Class A Shares with respect to which the Committee may grant Incentive Awards
      and the maximum aggregate number of Class A Shares with respect to which the
      Committee may grant Incentive Awards to any individual Participant in any year
      shall be appropriately adjusted by the Committee. In the event of any change
      in
      the number of Class A Shares outstanding by reason of any other similar event
      or
      transaction, the Committee may, but need not, make such adjustments in the
      number and class of Class A Shares with respect to which Incentive Awards may
      be
      granted as the Committee may deem appropriate.

     

    (b) Increase
      or Decrease in Issued Shares Without Consideration

     

    Subject
      to any required action by the shareholders of MDC, in the event of any increase
      or decrease in the number of issued Class A Shares resulting from a subdivision
      or consolidation of Class A Shares or the payment of a stock dividend (but
      only
      on the Class A Shares), or any other increase or decrease in the number of
      such
      shares effected without receipt or payment of consideration by the Company,
      the
      Committee shall proportionally adjust the number of Class A Shares subject
      to
      each outstanding Incentive Award and the exercise price per Class A Share of
      each such Incentive Award.

     

    (c) Certain
      Mergers

     

    Subject
      to any required action by the shareholders of MDC, in the event that MDC shall
      be the surviving corporation in any merger or consolidation (except a merger
      or
      consolidation as a result of which the holders of Class A Shares receive
      securities of another corporation), each Incentive Award outstanding on the
      date
      of such merger or consolidation shall pertain to and apply to the securities
      which a holder of the number of Class A Shares subject to such Incentive Award
      would have received in such merger or consolidation.

     

    (d) Certain
      Other Transactions

     

    In
      the
      event of (i) a dissolution or liquidation of MDC, (ii) a sale of all or
      substantially all of MDC’s assets, (iii) a merger or consolidation involving MDC
      in which MDC is not the surviving corporation or (iv) a merger or consolidation
      involving MDC in which MDC is the surviving corporation but the holders of
      Class
      A Shares receive securities of another corporation and/or other property,
      including cash, the Committee shall, in its absolute discretion, have the power
      to:

     

    (i)
      cancel, effective immediately prior to the occurrence of such event, each
      Incentive Award (whether or not then exercisable), and, in full consideration
      of
      such cancellation, pay to the Participant to whom such Incentive Award was
      granted an amount in cash, for each Class A Share subject to such Incentive
      Award equal to the value, as determined by the Committee in its reasonable
      discretion, of such Incentive Award, provided that with respect to any
      outstanding Option or SAR such value shall be equal to the excess of (A) the
      value, as determined by the Committee in its reasonable discretion, of the
      property (including cash) received by the holder of Class A Shares as a result
      of such event over (B) the exercise price of such Option or SAR; or

     

    (ii)
      provide for the exchange of each Incentive Award (whether or not then
      exercisable or vested) for an incentive award with respect to, as appropriate,
      some or all of the property which a holder of the number of Class A Shares
      subject to such Incentive Award would have received in such transaction and,
      incident thereto, make an equitable adjustment as determined by the Committee
      in
      its reasonable discretion in the exercise price of the incentive award, or
      the
      number of shares or amount of property subject to the incentive award or, if
      appropriate, provide for a cash payment to the Participant to whom such
      Incentive Award was granted in partial consideration for the exchange of the
      Incentive Award.

     

    (e) Other
      Changes

     

    In
      the
      event of any change in the capitalization of MDC or corporate change other
      than
      those specifically referred to in paragraphs (b), (c) or (d), the Committee
      may,
      in its absolute discretion, make such adjustments in the number and class of
      shares subject to Incentive Awards outstanding on the date on which such change
      occurs and in such other terms of such Incentive Awards as the Committee may
      consider appropriate to prevent dilution or enlargement of rights.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f) No
      Other Rights

     

    Except
      as
      expressly provided in the Plan, no Participant shall have any rights by reason
      of any subdivision or consolidation of shares of stock of any class, the payment
      of any dividend, any increase or decrease in the number of shares of stock
      of
      any class or any dissolution, liquidation, merger or consolidation of MDC or
      any
      other corporation. Except as expressly provided in the Plan, no issuance by
      MDC
      of shares of stock of any class, or securities convertible into shares of stock
      of any class, shall affect, and no adjustment by reason thereof shall be made
      with respect to, the number of Class A Shares subject to any Incentive
      Award.

     

    11. Rights
      as a Stockholder

     

    No
      person
      shall have any rights as a stockholder with respect to any Class A Shares
      covered by or relating to any Incentive Award granted pursuant to the Plan
      until
      the date of the issuance of a stock certificate with respect to such shares.
      Except as otherwise expressly provided in Section 10 hereof, no adjustment
      of
      any Incentive Award shall be made for dividends or other rights for which the
      record date occurs prior to the date such stock certificate is
      issued.

     

    12. No
      Special Employment Rights; No Right to Incentive Award

     

    (a)
      Nothing contained in the Plan or any Incentive Award shall confer upon any
      Participant any right with respect to the continuation of his employment by
      or
      service to the Company or interfere in any way with the right of the Company
      at
      any time to terminate such employment or to increase or decrease the
      compensation of the Participant from the rate in existence at the time of the
      grant of an Incentive Award.

     

    (b)
      No
      person shall have any claim or right to receive an Incentive Award hereunder.
      The Committee’s granting of an Incentive Award to a Participant at any time
      shall neither require the Committee to grant an Incentive Award to such
      Participant or any other Participant or other person at any time nor preclude
      the Committee from making subsequent grants to such Participant or any other
      Participant or other person.

     

    13. Securities
      Matters

    

    (a) MDC
      shall
      be under no obligation to effect the registration pursuant to the Securities
      Act
      of any Class A Shares to be issued hereunder or to effect similar compliance
      under any state laws. Notwithstanding anything herein to the contrary, MDC
      shall
      not be obligated to cause to be issued or delivered any certificates evidencing
      Class A Shares pursuant to the Plan unless and until MDC is advised by its
      counsel that the issuance and delivery of such certificates is in compliance
      with all applicable laws, regulations of governmental authority and the
      requirements of any securities exchange on which Class A Shares are traded
      and
      that the Participant has delivered all notices and documents required to be
      delivered to the Company in connection therewith. The Committee may require,
      as
      a condition to the issuance and delivery of certificates evidencing Class A
      Shares pursuant to the terms hereof, that the recipient of such shares make
      such
      covenants, agreements and representations, and that such certificates bear
      such
      legends, as the Committee deems necessary or desirable.

    

    (b) The
      exercise of any Option granted hereunder shall only be effective at such time
      as
      counsel to MDC shall have determined that the issuance and delivery of Class
      A
      Shares pursuant to such exercise is in compliance with all applicable laws,
      regulations of governmental authority and the requirements of any securities
      exchange on which Class A Shares are traded. MDC may, in its sole discretion,
      defer the effectiveness of an exercise of an Option hereunder or the issuance
      or
      transfer of Class A Shares pursuant to any Incentive Award pending or to ensure
      compliance under federal or state securities laws. MDC shall inform the
      Participant in writing of its decision to defer the effectiveness of the
      exercise of an Option or the issuance or transfer of Class A Shares pursuant
      to
      any Incentive Award. During the period that the effectiveness of the exercise
      of
      an Option has been deferred, the Participant may, by written notice, withdraw
      such exercise and obtain the refund of any amount paid with respect
      thereto.

    

    14. Withholding
      Taxes

    

    (a) Cash
      Remittance

    

    Whenever
      Class A Shares are to be issued upon the exercise of an Option or the grant
      or
      vesting of an Incentive Award, MDC shall have the right to require the
      Participant to remit to MDC in cash an amount sufficient to satisfy federal,
      state and local withholding tax requirements, if any, attributable to such
      exercise, grant or vesting prior to the delivery of any certificate or
      certificates for such shares or the effectiveness of the lapse of such
      restrictions. In addition, upon the exercise or settlement of any Incentive
      Award in cash, MDC shall have the right to withhold from any cash payment
      required to be made pursuant thereto an amount sufficient to satisfy the
      federal, state and local withholding tax requirements, if any, attributable
      to
      such exercise or settlement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Stock
      Remittance

    

    At
      the
      election of the Participant, subject to the approval of the Committee, when
      Class A Shares are to be issued upon the exercise, grant or vesting of an
      Incentive Award, the Participant may tender to MDC a number of Class A Shares
      that have been owned by the Participant for at least six months (or such other
      period as the Committee may determine) having a Fair Market Value at the tender
      date determined by the Committee to be sufficient to satisfy the federal, state
      and local withholding tax requirements, if any, attributable to such exercise,
      grant or vesting but not greater than such withholding obligations. Such
      election shall satisfy the Participant’s obligations under Section 14(a) hereof,
      if any.

    

    (c) Stock
      Withholding

    

    At
      the
      election of the Participant, subject to the approval of the Committee, when
      Class A Shares are to be issued upon the exercise, grant or vesting of an
      Incentive Award, MDC shall withhold a number of such shares having a Fair Market
      Value at the exercise date determined by the Committee to be sufficient to
      satisfy the federal, state and local withholding tax requirements, if any,
      attributable to such exercise, grant or vesting but not greater than such
      withholding obligations. Such election shall satisfy the Participant’s
      obligations under Section 14(a) hereof, if any. 

    

    15. Amendment
      or
      Termination of the Plan

    

    The
      Board
      of Directors may at any time suspend or discontinue the Plan or revise or amend
      it in any respect whatsoever; provided,
      however,
      that
      without approval of the shareholders no revision or amendment shall except
      as
      provided in Section 10 hereof, (i) increase the number of Class A Shares that
      may be issued under the Plan; (ii) materially modify the requirements as to
      eligibility for participation in the Plan; (iii) reduce the applicable
      exercise price of any option or award; (iv) amend the number of Class A Shares
      which may be issued to insiders of the Company; or (v) permit the Company
      to extend the term of any option or award where the original expiration date
      falls within a blackout period or other trading restriction imposed by the
      Company; provided, however, that if the expiration date of any option or award
      falls on, or within nine (9) trading days immediately following, a date upon
      which a Participant is prohibited from exercising such option or award due
      to a
      blackout period or other trading restriction imposed by the Company, then the
      expiration date of such option or award shall be automatically extended to
      the
      tenth (10th) trading day following the date the relevant black-out period or
      other trading restriction imposed by the Company is lifted, terminated or
      removed. Nothing herein shall restrict the Committee’s ability to exercise its
      discretionary authority hereunder pursuant to Section 4 hereof, which discretion
      may be exercised without amendment to the Plan. No action hereunder may, without
      the consent of a Participant, reduce the Participant’s rights under any
      previously granted and outstanding Incentive Award. Nothing herein shall limit
      the right of the Company to pay compensation of any kind outside the terms
      of
      the Plan.

    

    If
      any
      provision of the Plan or any agreement entered into pursuant to the Plan
      contravenes any law or any order, policy, by-law or regulation of any regulatory
      body or stock exchange having authority over the Company or the Plan,
then
      such provision shall be deemed to be immediately amended, at the time of such
      contravention, to the extent required to bring such provision into compliance
      therewith.

    

    16. No
      Obligation to Exercise

    

    The
      grant
      to a Participant of an Option or SAR shall impose no obligation upon such
      Participant to exercise such Option or SAR.

    

    17. Transfers
      Upon Death

    

    Upon
      the
      death of a Participant, outstanding Incentive Awards granted to such Participant
      may be exercised only by the executors or administrators of the Participant’s
      estate or by any person or persons who shall have acquired such right to
      exercise by will or by the laws of descent and distribution. No transfer by
      will
      or the laws of descent and distribution of any Incentive Award, or the right
      to
      exercise any Incentive Award, shall be effective to bind MDC unless the
      Committee shall have been furnished with (a) written notice thereof and with
      a
      copy of the will and/or such evidence as the Committee may deem necessary to
      establish the validity of the transfer and (b) an agreement by the transferee
      to
      comply with all the terms and conditions of the Incentive Award that are or
      would have been applicable to the Participant and to be bound by the
      acknowledgements made by the Participant in connection with the grant of the
      Incentive Award.

     

    18. Expenses
      and Receipts

    

    The
      expenses of the Plan shall be paid by MDC. Any proceeds received by MDC in
      connection with any Incentive Award will be used for general corporate
      purposes.

    19. Governing
      Law

    

    The
      Plan
      and the rights of all persons under the Plan shall be construed and administered
      in accordance with the laws of the State of New York, without regard to its
      conflict of law principles, except to the extent that the application of New
      York law would result in a violation of the Canadian Business Corporation
      Act.

    

    22. Effective
      Date and Term of Plan

    

    The
      Plan
      was adopted by the Board of Directors on April 24, 2008, subject to the approval
      of the Plan by the shareholders of MDC on May 30, 2008. The Plan was adopted
      by
      the shareholders on May 30, 2008. No grants may be made under the Plan after
      May
      30, 2018.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}]]