E
xhibit
10.71
[*]
= 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.
EQUIPMENT PURCHASE & SALE AGREEMENT
This
Equipment Purchase & Sale Agreement (this “
Agreement ”),
entered into as of April 8, 2008 (the “
Effective Date ”),
by and between PVA TEPLA DANMARK, a corporation organized and
existing under the laws of the Kingdom of Denmark (hereinafter
“
SELLER ”),
and HOKU MATERIALS, INC., a corporation organized and existing
under the laws of the State of Delaware (hereinafter “
BUYER ”).
SELLER
and BUYER are each a “
Party ”
and together, the “
Parties .”
Recitals
WHEREAS,
SELLER is a manufacturer and provider of equipment and related
services for the polycrystalline silicon
industry;
WHEREAS,
BUYER is building a manufacturing facility for the production
of polycrystalline silicon in Idaho, USA; and
WHEREAS,
subject to the terms and conditions set forth in this
Agreement, BUYER intends to purchase from SELLER and SELLER
intends to sell to BUYER, the equipment and other Deliverables
(as defined below) for use in BUYER’s polycrystalline
silicon production plant;
NOW,
THEREFORE, pursuant to the terms and conditions and the mutual
consideration set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which
are acknowledged hereby, BUYER and SELLER agree as
follows:
Agreement
1.
Definitions
. The
following capitalized terms used in this Agreement shall have the
meanings set forth below:
1.1.
“
Certificate of Commissioning ”
shall mean the certificate, in substantially the form of
Appendix 7 attached
to this Agreement, to be signed by an officer of BUYER and an
officer of SELLER after the successful completion of the
Commissioning Test.
1.2.
“
Commissioning Test ”
shall mean the test to be completed by SELLER in the presence of
BUYER at the Work Site that follows the procedures described
in
Appendix 5 to
confirm that all Equipment meets the Technical
Specifications.
1.3.
“
Deliverables ”
shall mean, collectively, all Equipment, Technical Documentation
and Technical Services to be provided by SELLER to BUYER pursuant
to this Agreement.
1.4.
“
Equipment ”
shall mean the following items of equipment as more fully described
in
Appendices 1-2 :
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SELLER
Initials & Date
25/3-08
JB
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BUYER
Initials & Date
DN
4/8/08
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Item
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Quantity
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Price
Each
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Total
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SR-110
Slim rod pullers, as described in
Appendix 1
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FZ-14M
analytic Float zone crystal puller, as described in
Appendix 2
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[*
]
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Total
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$
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6,359,995.00
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SELLER
will utilize its best efforts to acquire slim rods on behalf
of BUYER.
1.5.
“
Factory Acceptance Certificate
” shall mean the certificate, in substantially the form
of
Appendix 6 attached
to this Agreement, to be signed by an officer of BUYER and an
officer of SELLER after the successful completion of the Factory
Acceptance Test.
1.6.
“
Factory Acceptance Test ”
shall mean the test to be completed by SELLER in the presence of
BUYER at the SELLER Facility that follows the procedures described
in
Appendix 4 to
confirm that all Equipment meets the Technical
Specifications.
1.7.
“
Port of Shipment ”
shall mean Copenhagen, Denmark.
1.8.
“
Port of Unloading ”
shall mean a port in the USA to be determined by the
BUYER.
1.9.
“
SELLER Facility ”
shall mean the facility where SELLER is manufacturing the
Equipment, located at Smedetoften 4, DK-3600 Frederikssund,
Denmark.
1.10.
“
Technical Documentation ”
shall mean the documentation (in English language) that includes
the technical data, specifications, drawings, inspection, erection,
commissioning, performance testing, operating and maintenance of
Equipment, as specified in
Appendix 3 .
1.11.
“
Technical Services ”
shall have the meaning set forth in Section
6
below.
1.12.
“
Technical Specifications ”
means the operating and other specifications of the Equipment set
forth on
Appendices 1 and 2 attached
hereto.
1.13.
“
Warranty Period ”
shall mean the period beginning on the Effective Date and ending
twelve (12) months after the Certificate of Commissioning has been
signed by BUYER and SELLER.
1.14.
“
Work Site ”
shall mean the BUYER’s polysilicon plant located in
Pocatello, Idaho USA.
2.
Purchase & Sale Commitment
2.1.
Subject
to the terms and conditions set forth herein, BUYER agrees to
buy from SELLER, and SELLER agrees to sell to BUYER, the
Deliverables.
3.
Payment Terms
3.1.
BUYER
shall pay to SELLER the aggregate purchase price for the
Equipment ordered pursuant to this Agreement at the per-unit
price set forth in Section 1.4
above
as the total payment for all Deliverables under this Agreement
(the “
Agreement Price ”)
in accordance with the following schedule:
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SELLER
Initials & Date
25/3-08
JB
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BUYER
Initials & Date
DN
4/8/08
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3.1.1. Within
one hundred and twenty (120) days after the Effective Date,
BUYER shall pay to SELLER 30% of the Agreement Price as an
initial payment (the “
Initial Payment ”).
Notwithstanding anything to the contrary in this Agreement, BUYER
may terminate this Agreement at any time prior to making the
Initial Payment, and shall thereupon have no liability or further
obligation to SELLER pursuant to this Agreement. !
3.1.2.
Within
thirty (30) days after BUYER and SELLER sign the Factory
Acceptance Certificate, and upon receipt of an invoice from
SELLER, BUYER shall pay to SELLER 50% of the Agreement Price.
SELLER shall not be required to ship the Equipment until such
payment has been received by SELLER.
3.1.3.
Within
thirty (30) days after BUYER and SELLER sign the Certificate
of Commissioning, and upon receipt of an invoice from SELLER,
BUYER shall pay to SELLER 15% of the Agreement Price Following
receipt of such payment, title to the Equipment shall pass to
BUYER, free and clear of all liens, third party claims and
encumbrances.
3.1.4.
Within
thirty (30) days after the later of (A) the expiration of the
Warranty Period (as defined in Section
1.13
above),
and (B) the final settlement or adjudication of all
outstanding warranty claims pursuant to Section
7.3
below,
BUYER shall pay to SELLER a final payment of 5% of the
Agreement Price less all amounts that have been validly
deducted to satisfy warranty claims pursuant to
Section 7.3
below.
3.2.
The
Agreement Price includes all excise, sales, use, import,
export or other similar taxes (collectively “
Taxes ”)
levied by Germany, Denmark, the European Union, or any other
authority in Europe, which shall be for SELLER’s account;
provided that the Agreement Price does not include Taxes levied by
the United States, the State of Idaho, or any other authority in
the United States, which shall be for BUYER’s
account.
3.3.
BUYER
shall provide SELLER with five (5) copies of each invoice for
the applicable payment pursuant to Section
3.1
above.
Shipping costs and expenses, Taxes, customs and duties, if
any, will be identified as separate items on SELLER’s
invoices. All invoices shall be sent to BUYER’s address
specified in Section 15.4
below,
unless an alternate address is provided. All payments shall be
made in U.S. Dollars.
3.4.
BUYER
shall be responsible for all transportation charges, duties or
other charges for shipping and handling; thus, the price for
the Deliverables shall not include any such charges; provided,
however, that the Equipment shall be in one lot suitably
packed for sea transport to the Work Site, FOB Port of
Shipment, according to Incoterms 2000; and provided, further,
that SELLER shall pay for all shipping, insurance, and related
costs and expenses incurred in transporting the Equipment from
the SELLER Facility to the Port of Shipment until the
Equipment is transferred FOB to the common
carrier.
3.5.
All
payments to SELLER shall be effected by wire transfer to
SELLER’s bank pursuant to the following account
information:
Danske
Bank
Holmens
Kanal 2-12
DK-1092
Copenhagen K
Denmark
Telex
27000-SWIFT-BIC: DABAKKK
IBAN
No. DK 1530003430288997
Account
no. 3430 288997
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SELLER
Initials & Date
25/3-08
JB
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BUYER
Initials & Date
DN
4/8/08
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PVA
TePla Danmark
4.
Shipment; Documentation & Packing
4.1.
Timing of Shipment .
Provided that SELLER has been paid in the aggregate 80% of the
Agreement Price, all Equipment shall be delivered FOB to the Port
of Shipment, within ten (10) months after BUYER pays to SELLER the
Initial Payment (the “
Shipment Date ”);
provided, however, that SELLER shall use its best efforts to
deliver one (1) SR-110 Slim rod puller (as described in Appendix 1)
FOB to the Port of Shipment within six (6) months after BUYER pays
to SELLER the Initial Payment (and provided that, prior to
shipment, SELLER has been paid in the aggregate 80% of the
applicable purchase price for such one (1) Slim rod puller prior to
shipment), except that SELLER shall not be liable for paying
liquidated damages pursuant to Section 4.4
below
if SELLER is unable to meet this six-month delivery
date.
4.2.
Shipping Documentation .
Prior to shipment, SELLER shall remit to BUYER the following
documentation:
4.2.1.
At
least fourteen (14) days prior to shipment of the Equipment,
SELLER shall notify BUYER by Fax of the following
information:
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(b)
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Total
gross weight of packages
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(c)
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Total
number of packages
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(f)
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Name,
weight, IMCO No. (as per International Maritime Dangerous Goods
Code) of the dangerous and/or inflammable goods
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4.2.2.
At
least fourteen (14) days prior to shipment of the Equipment,
SELLER shall send to BUYER via international courier at least
six (6) copies of the following:
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(a)
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Detailed
packing list describing with specificity all Equipment included
with the applicable shipment, including Equipment specification,
type, quantity, unit/total price, unit weight, unit/total volume,
the overall dimensions of each package (length x width x height),
and the total number of packages
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(b)
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Description
of any dangerous and/or inflammable goods indicating names,
properties, special protective measures and handling methods in
case of accident
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(c)
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Description
of the special precautions for the Equipment that requires special
storage and transportation.
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4.2.3.
Within
ten (10) calendar days before the expected departure date of
the carrying vessel from the Port of Shipment, SELLER shall
notify BUYER the nationality of the carrying vessel, estimated
date of shipment, estimated date of arrival at the Port of
Unloading, name of the Equipment, Equipment item no.,
quantity, weight, volume and other relevant
matters.
4.2.4.
Within
two (2) days after the loading of the Equipment on the ocean
vessel, SELLER shall airmail one (1) duplicate copy of the
Bill of Lading, signed commercial invoice, ex-works quality
certificate of origin and packing list to BUYER.
4.3.
Risk of Loss .
Risk of loss shall pass to BUYER FOB Port of Shipment; provided,
however, that in the case of (A) the Equipment is shipped on deck
or via transshipment; or (B) the Equipment is not insured in time
by BUYER because SELLER has failed to provide the documentation
required by Section 4.2
above,
then SELLER shall be liable for any and all damage to the
Equipment. Notwithstanding anything to the contrary in this
Agreement, if the Equipment is lost or damaged during ocean
transportation, SELLER shall upon the request from BUYER, provide
replacement Equipment and Technical Documentation for the same
Agreement Price and pursuant to the same terms and conditions
described in this Agreement.
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SELLER
Initials & Date
25/3-08
JB
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BUYER
Initials & Date
DN
4/8/08
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4.4.
Damages for Late Delivery; Liquidated Damages
.
SELLER shall pay to BUYER liquidated damages (the “
Liquidated Damages ”)
if (A) the Factory Acceptance Certificate has not been signed by
SELLER and BUYER, or (B) the Equipment has not been delivered FOB
to the Port of Shipment on or before the Shipment Date. The
Liquidated Damages shall be calculated as follows:
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a)
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If
the Equipment is delivered within four weeks after the Shipment
Date, the liquidated damages shall be zero point 5 percent (0.5%)
of the Agreement Price per week beyond the Shipment
Date.
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b)
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If
the Equipment is delivered after the fourth week, then, in addition
to the Liquidated Damages pursuant to sub-paragraph (a) above, the
Liquidated Damages shall be one percent (1%) of the Agreement Price
for each week after the fourth week from the Shipment
Date.
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c)
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Less
than one week shall not be counted as a complete week for
calculation of the Liquidated Damages.
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d)
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The
total amount of the Liquidated Damages shall not exceed five
percent (5.0%) of the Agreement Price.
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Notwithstanding
anything to the contrary in this Agreement: (A) the payment of
Liquidated Damages shall not release SELLER from its
obligation to deliver the Deliverables; and (B) any delay
beyond sixty (60) days from the Shipment Date shall constitute
a material breach of this Agreement by SELLER.
4.5.
Packing and Marking
4.5.1.
Unless
otherwise specified in the Agreement, the Equipment shall be
packed by SELLER in new wooden cases, and all packing expenses
shall be for SELLER’s account. Necessary measures shall
be taken to protect the Equipment from damages caused by
moisture, rain, rust, corrosion, shock and to ensure the
Equipment will withstand handling, loading and unloading as
well as long distance ocean and inland transportation for the
safe arrival of the Equipment at the Work Site.
4.5.2.
The
loose accessories in all packages and bundles shall be labeled
by SELLER indicating the name of the Equipment to which such
accessories are related, the name of the accessories and their
position number, and any accessory number marked on assembly
drawings. Spare parts and tools shall be marked with the word
“Spare parts or tools” in addition to the above
mentioned particulars.
4.5.3.
SELLER
shall, on four (4) adjacent sides of each crate, conspicuously
mark the following information in English with indelible
paint:
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(d)
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Name
of Equipment and item No.
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SELLER
Initials & Date
25/3-08
JB
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BUYER
Initials & Date
DN
4/8/08
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4.5.4.
Should
the Equipment weigh more than 2 metric tons, the weight, gravity
and hoisting positions shall be marked in English with
international trade transportation marks on the four adjacent sides
on each case so as to facilitate unloading and handling. In
accordance with different requirements in loading, unloading and
shipping, the package shall be conspicuously marked with
“Handle with care, right side up, keep dry” in English
and with appropriate international trade marks.
4.5.5.
The
following documents shall be enclosed in each package of the
Equipment:
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(a)
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Two
(2) duplicate copies of detailed packing list
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(b)
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Two
(2) duplicate copies of quality certificate
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(c)
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Two
duplicate copies of Technical Documentation for relevant
Equipment
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4.5.6.
Sufficient
shores or chocks shall be provided in order to prevent the
Equipment from moving inside the containers. SELLER shall be
liable for any damage to the Equipment thus incurred due to
the negligence of SELLER.
4.5.7.
In
case of container transportation, SELLER shall examine the
condition of the containers, so that only those in good
condition shall be used for delivery of the Equipment. SELLER
shall use wooden crates free from any insect infestation.
Should insect infestation be found in quarantine inspection,
SELLER shall bear the cost incurred in fumigation or
replacement of the creates at the Port of Unloading, and the
liquidated damages provision of Section
4.4
above
shall apply to any delay in shipment caused by such quarantine
inspection.
4.5.8.
If
the Equipment is damaged or lost due to improper packing or
inadequate protective measure, SELLER shall be responsible for
repair, replacement or compensation in accordance with the
Agreement. If the Equipment is mis-transported due to mistake
or ambiguousness in package or shipping marks, SELLER shall
bear additional expenses thus incurred.
5.
Standards & Inspections
5.1.
Standards .
SELLER shall engineer, design and construct the Equipment according
to the Appendices attached hereto, using professional engineering,
construction and procurement practices. All Equipment shall be
engineered and constructed to meet all applicable standards for
operation in Idaho, USA, including, without limitation, ASME, NEC,
UL, and any others required to meet standards in Pocatello, Idaho
and the United States as determined by the BUYER.
5.2.
Factory Acceptance Test .
5.2.1.
SELLER
shall inspect the Equipment to confirm that it meets the
Technical Specifications, and shall thereupon send the
ex-works quality certificate to BUYER, with notification of
the planned date for the Factory Acceptance Test. The date for
the Factory Acceptance Test must be no earlier than two (2)
weeks from the date when the notification is received by
BUYER, and shall be no later than nine (9) months after BUYER
pays the Initial Payment to SELLER.
5.2.2.
BUYER
will send its technical representatives and inspectors to
SELLER’s Facility to complete the Factory Acceptance
Test together with SELLER’s technical representatives
and inspectors. In addition to BUYER’s inspectors,
BUYER’s lenders and shareholders may also send their
inspectors. The expenses of sending BUYER’s inspectors,
or the inspectors of BUYER’s lenders and shareholders,
shall be for BUYER’s account.
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SELLER
Initials & Date
25/3-08
JB
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BUYER
Initials & Date
DN
4/8/08
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5.2.3.
Prior
to commencement of the Factory Acceptance Test, SELLER shall
provide BUYER with technical instruction in the operation and
maintenance of the Equipment as described in
Appendix 4 .
After completing the technical instruction, SELLER shall commence
the Factory Acceptance Test, and provided that the Equipment meets
the Technical Specifications, BUYER and SELLER shall sign the
Factory Acceptance Certificate. SELLER shall ship the Equipment to
BUYER as soon as practicable after successful completion of the
Factory Acceptance Test, as evidenced by the Factory Acceptance
Certificate signed by SELLER and BUYER; provided, however, that the
SELLER may not ship the Equipment until the Factory Acceptance
Certificate has been signed by BUYER; provided, however, that if
BUYER does not attend the Factory Acceptance Test after having been
given notification in accordance with Section
5.2.1
above,
and if SELLER conducts the Factory Acceptance Test in BUYER’s
absence, and confirms that the Equipment meets the Technical
Specifications, then SELLER may sign the Factory Acceptance
Certificate and the Factory Acceptance Test shall have been deemed
completed without the Factory Acceptance Certificate being signed
by BUYER.
5.2.4.
In
addition to the foregoing, BUYER, its authorized
representatives and its lenders, shareholders and their
respective authorized representatives, may inspect the
Equipment at any time prior to delivery of the Equipment FOB
to the Port of Shipment. The expenses of any such inspection
shall be for BUYER’s account.
5.2.5.
The
Factory Acceptance Test shall not be a substitute for the
inspection of the Equipment at the Port of Unloading or the
Work Site, or as a substitute for the Commissioning Test, and
the Factory Acceptance Test shall not release SELLER from its
warranty obligations as further specified in this
Agreement.
5.3.
Installation and Commissioning Test .
5.3.1.
Equipment
installation and servicing shall be carried out by BUYER under
the supervision of SELLER at the Work Site, and SELLER’s
qualified technical representatives shall provide technical
instruction to BUYER during installation and prior to
completion of the Commissioning Test as described in
Appendix 5 to
this Agreement.
5.3.2.
BUYER
and SELLER shall conduct the Commissioning Test to confirm
that the Equipment operates in accordance with the Technical
Specifications. Provided that all of the Technical
Speci
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