AMENDED & RESTATED AGREEMENT
FOR CONSTRUCTION OF HOKU ELECTRIC SUBSTATION
AND ASSOCIATED FACILITIES

THIS AMENDED & RESTATED AGREEMENT for the construction of Hoku electric
substation and associated facilities (the “Agreement”) is entered into as of the
__17th_______ day of __September____, 2008 by and between HOKU MATERIALS, INC.,
One Hoku Way, Pocatello, Idaho 83204 (“Hoku”) and IDAHO POWER COMPANY, P.O. Box
70, Boise, Idaho 83707 (“Idaho Power” or “IPCO”). Hoku and IPCO may also be
referred to hereinafter individually as “Party” or collectively as the
“Parties”.

RECITALS

A. Hoku is developing a manufacturing plant to produce polysilicon, a key
material used in the production of solar cells and integrated circuits. The
construction of an electric substation and associated transmission facilities is
required to allow IPCO to supply electric capacity and energy to Hoku’s
manufacturing complex located at One Hoku Way in Pocatello, Idaho (“Hoku
Facility”). Hoku has requested that the substation and associated facilities be
sized to allow IPCO to provide electric service to the Hoku Facility in an
amount up to 82 Megawatts (“MW”) of demand.

B. Hoku and IPCO are parties to that certain Agreement for Construction of Hoku
Electric Substation and Associated Facilities dated December 28, 2007 (the
“Prior Agreement’). This Agreement shall amend and restate in its entirety, the
Prior Agreement.

C. Because the Hoku Facility will be located in an area where Idaho Power does
not have existing facilities of adequate capacity, delivery of power to the Hoku
Facility site will require the construction of (1) approximately six (6) miles
of 138,000 volt overhead transmission line to interconnect with Idaho Power’s
existing transmission system, (2) a new 138,000-13,800 volt electric substation
at the Hoku Facility to supply up to 82 MWs with two 67 MVA transformers, and
(3) additional equipment and facilities at IPCO’s existing substations. These
facilities are sometimes hereinafter collectively referred to as the “Requested
Facilities” and are described in greater detail in Exhibit 1 to this Agreement.
This Agreement is not subject to or governed by Rule H, Idaho Power’s tariff
governing line installations, including any revisions to that rule, or any
successor rules or schedules.

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

E. Pursuant to the Prior Agreement, HOKU has paid Idaho Power the sum of
$7,402,000, the receipt of which is hereby acknowledged by Idaho Power. An
outstanding balance of $3,701,000 is presently owed under the prior Agreement
and is hereby acknowledged by Hoku. This outstanding amount is included in the
payments listed in Section 2.1 below.

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

AGREEMENTS

1. Construction of Requested Facilities Without duplicating any of the work
performed pursuant to the Prior Agreement, and in furtherance thereof:

1.1  Idaho Power will construct the Requested Facilities to provide for the
delivery of power (capacity) at a point generally described as the load side
terminals of the substation transformer 13.8 kilovolt (“kV”) disconnect switches
at the Hoku Facility (the “Delivery Point”).

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1.2  Idaho Power will use commercially reasonable efforts to provide up to 20 MW
of transmission service from the Alameda Substation by May 18, 2009. Requested
facilities, including the second transmission line from the Don Substation, will
be constructed and ready to serve up to 43 MW of demand by July 19, 2009. Idaho
Power will use commercially reasonable efforts to complete final construction of
the Requested Facilities by August 19, 2009. However, Hoku recognizes that Idaho
Power’s ability to complete the Requested Facilities on or before that date is
subject to the receipt of the payments and performance under the contract from
Hoku as described herein, Idaho Power’s ability to obtain required labor,
materials and equipment, timely receipt of satisfactory easements and rights of
way, and timely receipt of governmental regulatory authorizations.

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

2. Project Cost 

2.1  Excluding amounts previously paid for design and engineering expenses, and
including the amounts paid pursuant to the Prior Agreement, the total cost for
the construction of the Requested Facilities is estimated to be $16,542,000.
 Hoku’s payments to IPCO constitute a Contribution In Aid of Construction
(“CIAC”) and include a tax gross-up of thirty-one percent (31%) to cover IPCO’s
resulting income tax liability. Hoku shall pay IPCO in the amounts and at the
times specified below:

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September 30, 2008
 
$
3,000,000
 
October 15, 2008
 
$
2,000,000
 
November 15, 2008
 
$
2,000,000
 
December 15, 2008
 
$
2,140,000
 

 
At the completion of the project, Idaho Power will provide a true-up of the
actual work order costs to the $16,542,000 estimate. Idaho Power will provide
Hoku a report that will reflect actual dollars charged to the project by labor,
materials, purchased services, overheads, and other expenses. Idaho Power will
refund to Hoku any over collected amounts; any amounts under collected will be
invoiced to Hoku with the refund or payment to be made to Idaho Power within 30
days from the true-up date. In the event of significant scheduling changes, the
payment milestones will be delayed or accelerated accordingly. The total
estimated cost of the Requested Facilities does not include costs associated
with use of any temporary substations, transmission or distribution facilities
that may be necessary to provide Hoku with temporary demonstration power prior
to the expected August 19, 2009, completion date. The cost of such temporary
facilities will be invoiced to and paid by Hoku separately from this Agreement
and has no impact on the performance of either party under this Agreement.

2.2  If Hoku fails to pay an amount due on or before the payment milestone date
specified in Section 2.1, any obligation of Idaho Power to further perform under
this Agreement will be suspended pending receipt of such payment. If, after
Idaho Power’s delivery to Hoku of notice that such payment has not been
received, Hoku fails to make such payment within ten (10) days of Idaho Power
sending such notice, Idaho Power may, in its sole discretion, terminate this
Agreement. Hoku acknowledges that any delay in payment is likely to result in a
schedule delay pursuant to Section 1.2 of this Agreement. If this Agreement is
terminated by Idaho Power pursuant to this Section 2.2, Idaho Power shall refund
to Hoku any portion of Hoku’s previous payments that Idaho Power has not
encumbered, including any amounts that may be refunded to Idaho Power upon
cancellation by Idaho Power of its third party contracts, for work orders for
design, labor, materials and supplies, permitting costs and other expenditures
for the Requested Facilities, and IPCO shall use reasonable efforts to avoid or
mitigate such costs.

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

3. Capacity Entitlement 

3.1  Once construction of the Requested Facilities is complete, Idaho Power will
have installed facilities and equipment sufficient to provide Hoku with 82 MW of
electrical capacity measured at the Delivery Point to serve loads at the Hoku
Facility. For five (5) years following the completion of construction, Idaho
Power agrees not to serve additional customers from the two (2) substation
transformers installed or utilize the two (2) vacant transformer spaces pursuant
to this Agreement without the prior written consent of Hoku. However, if at the
conclusion of the five (5)-year period following the completion of construction,
total loads at the Hoku Facility are less than 82 MW, Hoku’s entitlement to
capacity at the Delivery Point will be limited to the amount of contract demand
established in the Electric Service Agreement referenced in Section 6 that is
currently being negotiated between the Parties. Relinquishment of any portion of
Hoku’s capacity entitlement, as discussed above, does not entitle Hoku to any
refund of the CIAC or any other payments specified in Section 2.1. Idaho Power
will send a letter to Hoku specifying the date when construction of the
Requested Facilities has been completed and notifying Hoku that the five
(5)-year time period described above has commenced.

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4. Ownership Operation and Maintenance 

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

5. Rights of Way and/or Easements

5.1  Hoku and IPCO agree to work in good faith to acquire the rights to access
and use the real property determined by IPCO to be reasonably required for
locating, constructing, operating and maintaining the Requested Facilities.
Idaho Power recognizes that Hoku does not own the land on which the Hoku
facility will be located (the “Land”), but holds a long-term ground lease under
which the City of Pocatello is the lessor. In the event IPCO purchases or
otherwise acquires additional real property rights it deems necessary consistent
with prudent utility practices to access and use the Requested Facilities, Hoku
shall fully reimburse IPCO for amounts spent by IPCO to purchase or otherwise
acquire such necessary real property interest. All such easements and rights of
way will be in a form reasonably acceptable to Idaho Power. Idaho Power will be
responsible for obtaining any and all other permits, rights-of-way, and/or
regulatory approvals required by public agencies for performance of this
Agreement and for payment of any and all permit fees and/or taxes required for
or associated with such permits, rights-of-way, and regulatory approvals.

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

6. Refunds.

6.1  The Parties are concurrently negotiating an ELECTRIC SERVICE AGREEMENT
(“ESA”) to govern the rates and terms of IPCO’s provision of electric service to
Hoku. The ESA shall be subject to the approval of the Commission and the
respective rights and obligations of the Parties hereunder shall be subject to
the continuing jurisdiction and regulatory authority of said Commission. In the
event an ESA cannot be reached that is satisfactory to the Parties and receives
regulatory approval from the Commission, or if Hoku notifies IPCO that it no
longer wishes to proceed with the construction of the Requested Facilities for
any other reason, IPCO will refund only the amounts received that exceed the
cost of constructing the Requested Facilities then completed or committed to
date as described in Section 2.2, and IPCO shall use reasonable efforts to avoid
or mitigate such costs.

7. Additional Provisions 

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

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

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

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

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

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

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

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

If to IPCO, to:          Dan Minor

Senior Vice President, Delivery

Idaho Power Company

P.O. Box 70

Boise, Idaho 83707

With a copy to:       Thomas Saldin

General Counsel

Idaho Power Company

P.O. Box 70

Boise, Idaho 83707
 
and

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If to Hoku, to:          Karl Taft

CTO

Hoku Materials, Inc.

One Hoku Way

Pocatello, Idaho 83204
 
With a copy to:       Dustin Shindo
CEO

Hoku Scientific, Inc.

1075 Opakapaka Street

Kapolei, Hawaii 96707-1887

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

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

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

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  Title:   CEO   

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IDAHO POWER COMPANY
 
   
   
    By:  
/s/ Daniel B. Minor

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  Title:   Senior Vice President, Delivery   

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EXHIBIT 1
 
HOKU REQUESTED FACILITIES

 
New 138-13.8 kV Substation to be located at Hoku Facility

•
2 - 138kV Line Terminals with relay protection

•
2 - 36/67MVA, 138-13.8kV, LTC substation power transformers

 
•
4 - 138kV circuit breakers and diagonal ring bus configuration rated for service
up to 150 MWs and space for two additional transformers

•
2 - 13.8kV 3000 amp metered bus points of delivery

•
Control enclosure for equipment protective relays and station battery

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

 
Don Substation

•
Install 1 new 138kV Transmission Line Terminal with circuit breaker and
protective relays with 1272 bus conductor for the transmission line to the new
substation located at the Hoku Facility.

 
Alameda Substation

•
Install 1 new 138kV Transmission Line Terminal with protective relays with 795
bus conductor for the transmission line to the new substation located at the
Hoku Facility.

•
Add 1 - 138kV circuit breaker and line relay protection to existing Alameda Tap
Transmission Line.

 
Transmission Lines

•
Construct approx 3-mile 138kV single pole transmission line with 1272 aluminum
conductor from Don Substation to new substation located at the Hoku Facility.

•
Construct approx 3-mile 138kV single pole transmission line with 795 aluminum
conductor from Alameda Substation to new substation located at the Hoku
Facility.

 
Kinport Substation

•
Install protective relay for redundant Kinport-Alameda-Hoku 138kV transmission
source.

 
Terry Substation

•
Install protective relay for redundant Terry-Alameda-Hoku 138kV transmission
source.

 
Pocatello Service Building

•
Install protective relay communications equipment for redundant
Kinport¬Alameda-Terry 138kV transmission source.

EXHIBIT 1