AMENDED & RESTATED SUPPLY AGREEMENT

This Amended & Restated Supply Agreement is entered into as of this 2nd day of April, 2009 (the “ Signature Date ”) between WEALTHY RISE INTERNATIONAL, LTD., a Hong Kong company (hereinafter “ CUSTOMER ”) and HOKU MATERIALS, INC., a Delaware corporation (hereinafter “ HOKU ”).  HOKU and CUSTOMER are sometimes referred to in the singular as a “ Party ” or in the plural as the “ Parties ”.

Whereas, HOKU and CUSTOMER are parties to that certain Supply Agreement dated as of September 4, 2008 (the “ Prior Supply Agreement ”).

Whereas, HOKU and CUSTOMER desire to amend and restate the Prior Supply Agreement in its entirety as set forth herein.

Whereas, HOKU desires to supply polysilicon to CUSTOMER for its general use beginning in calendar year 2010 for a continuous period of ten years from the date of the first shipment.

Whereas, in exchange for HOKU’s agreement to allocate the supply of polysilicon, CUSTOMER 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.           Effectiveness.  This Agreement shall become effective upon CUSTOMER’s initiation of remittance in full to HOKU of the Initial Deposit (the “ Effective Date ”).  Upon the effectiveness of this Agreement, HOKU agrees irrevocably to waive any remedy that otherwise may have accrued under the Prior Supply Agreement, including, without limitation, any claim it may have had to interest.  

2.            Definitions .

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

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

2.3.             “ First Shipment Date ” shall mean the date by which HOKU has delivered to CUSTOMER an aggregate total of [*] metric tons of Products pursuant to this Agreement.

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

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

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

2.7.           “ Minimum Quarterly Quantity of Product ” means [*].

2.8.            “ Minimum Monthly Quantity of Product ” means [*].

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

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

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

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

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

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

3.            Ordering .  Starting on the First Shipment Date and each Year during the term of this Agreement thereafter, CUSTOMER agrees to purchase from HOKU, and HOKU agrees to sell to CUSTOMER, 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 CUSTOMER for [*] metric tons of Product that cannot be cancelled during the term of this Agreement, except as set forth in Section 10 below.

4.            Supply Obligations .

4.1.           HOKU shall deliver each Year pursuant to this Agreement starting on the First Shipment Date at least the Minimum Annual Quantity of Product in approximately equal monthly shipments in amounts not less than the Minimum Monthly Quantity and the Minimum Quarterly Quantity pursuant to Section 5.1 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 4.3 below).  At any time during the term of this Agreement, HOKU may ship to CUSTOMER up to the full cumulative balance of Minimum Annual Quantity of Product to be shipped through the end of the current Year (an “ Excess Shipment ”) with CUSTOMER’s written consent, which may be given or withheld in CUSTOMER’s absolute discretion. 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.

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

4.3.           Except in the case of a force majeure pursuant to Section 13 below, if at any time after [*], HOKU does not supply any Products pursuant to Section 4.1 or 4.2 within [*] days of the scheduled delivery date, HOKU will provide CUSTOMER with a purchase price adjustment.  (For the avoidance of doubt, this means that no such [*] day period shall begin to run before August 1, 2010.)  Such purchase price adjustment shall be the reduction of [*] of the price 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.  Notwithstanding anything to the contrary, the maximum amount of such purchase price reduction is limited to [*] of the price of the respective delayed Products.  Monthly shipments which are delayed beyond [*] days shall be deemed to constitute a material breach of this Agreement pursuant to Section 10.2.1 below.  Notwithstanding the foregoing, if CUSTOMER fails to make a payment to HOKU within the [*]-day period set forth in Section 6.4 below, HOKU shall not be required to supply any Product to CUSTOMER until HOKU has received the past due amount including any interest payable thereon pursuant to this Agreement.  For the avoidance of doubt, CUSTOMER’s right to reduce the purchase price pursuant to this Section 4.3 shall not apply if HOKU is not fulfilling its supply obligations for this reason.

5.            Shipping & Delivery .

5.1.           Except as provided in Section 4.2 above, shipments shall be made from the Facility on a monthly basis in accordance with a shipment schedule that will be provided by HOKU each Year under this Agreement (the “ Shipment Schedule ”) no later than [*] days prior to the applicable Year.  The Shipment Schedule shall provide for approximately equal monthly shipments in amounts not less than the Minimum Monthly Quantity that add up to the Minimum Annual Quantity of Products in the applicable Year and add up to the Minimum Quarterly Quantity in each of the four quarters of the applicable Year.

5.2.           HOKU will use commercially reasonable efforts to make available to CUSTOMER its first shipment of Products on or before June 30, 2010.

6.            Payments & Advances .

6.1.           On or before April 10, 2009, CUSTOMER shall initiate remittance in full to HOKU of Seven Million U.S. Dollars (US$7,000,000) as an advance payment for Products to be delivered under this Agreement, via wire transfer of immediately available funds (the “ Initial Deposit ”).

6.2.           CUSTOMER shall pay in cash to HOKU the additional sum of Thirteen Million Two Hundred Thousand U.S. Dollars (US$13,200,000) (the “ Main Deposit ”) as an advance payment for Products to be delivered under this Agreement in equal monthly installments (each, a “ Monthly Deposit ”) within ten (10) business days from each of the Remittance Dates set forth below:

6.3.           CUSTOMER shall pay in cash to HOKU the additional sum of Two Hundred Thousand U.S. Dollars ($200,000) (the “ Final Deposit ”) as an advance payment for Products to be delivered under this Agreement. Initiation of the remittance in the full amount of the Final Deposit shall be made within ten (10) business days of when HOKU completes the shipment to CUSTOMER of a cumulative aggregate of seven and one-half (7.5) metric tons of Product pursuant to Section 4 of this agreement.

6.4.           HOKU shall invoice CUSTOMER at or after the time of each shipment of Products to CUSTOMER. Taxes, customs and duties, if any, will be identified as separate items on HOKU invoices. All invoices shall be sent to CUSTOMER’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 12 below, shipments to CUSTOMER shall be credited against the Total Deposit  according to the schedule of credits in Appendix 1 until there are no Funds Remaining on the Deposit (as defined in Section 10.5).

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

6.6.           Late payments and outstanding balances, shall accrue interest at a rate per annum equal to the lesser of [*] per annum or the maximum allowed by law, accruing daily and calculated on the basis of a 365-day year and the actual number of days.

7.            Security Interest .

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

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

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

7.4.           The security interest granted hereby shall continue so long as HOKU continues to maintain any amount of the Total Deposit, and only to the extent of such remaining amount of the Total Deposit being held by HOKU, which has not been credited against the shipment of Products pursuant to this Agreement, or otherwise repaid to CUSTOMER.  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 CUSTOMER in accordance with the terms of this Agreement.  When the Total Deposit is no longer held by HOKU, CUSTOMER will sign such documents as are necessary to release its security interests.

7.5.           HOKU and CUSTOMER each agree to act in good faith to execute and deliver any additional document or documents that may be required in furtherance of the foregoing provisions of this Section 7, including the Collateral Agreements.  Neither HOKU nor CUSTOMER may unreasonably refuse to sign any such document.

8.            Product Quality Guarantee .

8.1.           HOKU warrants to CUSTOMER that the Products shall meet the Product Specifications. For each shipment, this warranty shall survive for [*] days after the applicable shipment date (the “ Warranty Period ”).  Upon release of the Products to a common carrier or freight forwarder, FOB origin (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 CUSTOMER’s sole option, any Product which does not meet the Product Specifications, and CUSTOMER shall comply with the inspection and return goods policy described in Section 9 below with respect to such Products.  No employee, agent or representative of HOKU has the authority to bind HOKU to any oral representation or warranty concerning the Products.  Any oral representation or warranty made prior to the purchase of any Product and not set forth in writing and signed by a duly authorized officer of HOKU shall not be enforceable by CUSTOMER.  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.

8.2.           HOKU EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING THE WARRANTIES OF MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE.  Except as otherwise provided in Section 10.2.5 below, HOKU’s sole responsibility and CUSTOMER’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.

8.3.           HOKU shall, at its own expense, indemnify and hold CUSTOMER 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 CUSTOMER or CUSTOMER’s Affiliates alleging any such infringement.  CUSTOMER agrees that:  (i) CUSTOMER shall give HOKU prompt notice in writing of any such suit; (ii) if HOKU provides evidence reasonably satisfactory to CUSTOMER of HOKU’s financial ability to defend the matter vigorously and pay any reasonably foreseeable damages, CUSTOMER shall permit HOKU, through counsel of HOKU’s choice, to answer the charge of infringement and defend such suit (but CUSTOMER, or CUSTOMER’s Affiliate may be represented by counsel and participate in the defense at its own expense); and (iii) CUSTOMER 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 w