Exhibit 10.59

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

AGREEMENT FOR CONSTRUCTION OF HOKU ELECTRIC SUBSTATION
AND ASSOCIATED FACILITIES
 
THIS AGREEMENT for the construction of Hoku electric substation and associated
facilities (the “Agreement”) is entered into as of the 28th day of December,
2007 by and between HOKU MATERIALS, INC., One Hoku Way, Pocatello, Idaho 83204
(“Hoku”) and IDAHO POWER COMPANY, P.O. Box 70, Boise, Idaho 83707 (“Idaho Power”
or “IPCO”). Hoku and IPCO may also be referred to hereinafter individually as
“Party” or collectively as the “Parties”.
 
RECITALS
 
A. Hoku is developing a manufacturing plant to produce polysilicon, a key
material used in the production of solar cells and integrated circuits. The
construction of an electric substation and associated transmission facilities is
required to allow IPCO to supply electric capacity and energy to Hoku’s
manufacturing complex located at South Philbin Road in Pocatello, Idaho (“Hoku
Facility”). Hoku has requested that the substation and associated facilities be
sized to allow IPCO to provide electric service to the Hoku Facility in an
amount up to [*] Megawatts (“MW”) of demand.
 
B. Because the Hoku Facility will be located in an area where Idaho Power does
not have existing facilities of adequate capacity, delivery of power to the Hoku
Facility site will require the construction of (1) approximately [*] of [*] volt
overhead transmission line to interconnect with Idaho Power’s existing
transmission system, (2) a new [*] volt electric substation at the Hoku
Facility, and (3) additional equipment and facilities at IPCO’s existing
substations. These facilities are sometimes hereinafter collectively referred to
as the “Requested Facilities” and are described in greater detail in Exhibit 1
to this Agreement. This Agreement is not subject to or governed by Rule H, Idaho
Power’s tariff governing line installations, including any revisions to that
rule, or any successor rules or schedules.
 
Page 1

--------------------------------------------------------------------------------

 
C. Idaho Power will construct the Requested Facilities in accordance with
the terms and provisions of this Agreement.
 
NOW, THEREFORE, in consideration of the mutual obligations and undertakings set
forth herein, and other good and valuable consideration, the sufficiency is
hereby acknowledged, Hoku and Idaho Power agree as follows:
 
AGREEMENTS
 
1. Construction of Requested Facilities
 
1.1 Idaho Power will construct the Requested Facilities to provide for the
delivery of power (capacity) at a point generally described as the load side
terminals of the substation transformer [*] disconnect switches at the Hoku
Facility (the “Delivery Point”).
 
1.2 Idaho Power will use commercially reasonable efforts to complete
construction of the Requested Facilities by February 15, 2009. However, Hoku
recognizes that Idaho Power’s ability to complete the Requested Facilities on or
before that date is subject to the receipt of the site plans and payments from
Hoku as described herein, Idaho Power’s ability to obtain required labor,
materials and equipment, timely receipt of satisfactory easements and rights of
way, and timely receipt of governmental regulatory authorizations.
 
1.3 If Idaho Power fails to meet the completion deadline described above, and
such failure is not excused as provided in Section 1.2, the Parties agree that
Hoku may submit the matter to the Idaho Public Utilities Commission
(“Commission”) for appropriate relief, and pending final resolution, Hoku’s
obligation to make further payments pursuant to the terms of this Agreement
shall be suspended.

Page 2

--------------------------------------------------------------------------------

 
2. Project Cost
 
2.1 Excluding amounts previously paid for design and engineering expenses, the
total estimated cost for the construction of the Requested Facilities is
$14,804,000. Hoku’s payments to IPCO constitute a Contribution In Aid of
Construction (“CIAC”) and include a tax gross-up of thirty-one percent (31%) to
cover IPCO’s resulting income tax liability. Hoku shall pay IPCO in the amounts
and at the times specified below:
 
January 9, 2008
$3,701,000
March 1, 2008
$3,701,000
June 1, 2008
$3,701,000
September 1, 2008
$3,201,000
Facilities Available for Service
$500,000

 
For purposes of the payment schedule described above, “Facilities Available for
Service” shall mean the date when the capacity is first made available to
provide the requested service. In the event of significant scheduling changes,
the payment milestones will be delayed or accelerated accordingly. The total
estimated cost of the Requested Facilities does not include costs associated
with use of any temporary substations, transmission or distribution facilities
that may be necessary to provide Hoku with temporary start-up power prior to the
expected February 15, 2009 completion date. The cost of such temporary
facilities will be invoiced to and paid by Hoku separately from this Agreement.
 
Page 3

--------------------------------------------------------------------------------

 
2.2 If Hoku fails to pay an amount due on or before the payment milestone date
specified in Section 2.1, any obligation of Idaho Power to further perform under
this agreement will be suspended pending receipt of such payment. If, after
Idaho Power’s delivery to Hoku of notice that such payment has not been
received, Hoku fails to make such payment within ten (10) days of Idaho Power
sending such notice, Idaho Power may, in its sole discretion, terminate this
Agreement. If this Agreement is so terminated, Idaho Power shall refund to Hoku
any portion of Hoku’s previous payments that Idaho Power has not encumbered for
work orders for design, labor, materials and supplies, permitting costs and
other expenditures for the Requested Facilities.
 
2.3 Hoku’s payments under this Agreement shall not provide or give Hoku any
ownership rights or interest in the Requested Facilities. Ownership of the
Requested Facilities and new Hoku Substation shall remain with IPCO.
 
3. Capacity Entitlement
 
3.1 Once construction of the Requested Facilities is complete, Idaho Power will
have installed facilities and equipment sufficient to provide Hoku with [*] MW
of electrical capacity measured at the Delivery Point to serve loads at the Hoku
Facility. For five (5) years following the completion of construction, Idaho
Power agrees not to serve additional customers from the two (2) substation
transformers installed or utilize the two (2) vacant transformer spaces pursuant
to this Agreement without the prior written consent of Hoku . However, if at the
conclusion of the five (5)-year period following the completion of construction,
total loads at the Hoku Facility are less than [*] MW, Hoku’s entitlement to
capacity at the Delivery Point will be limited to the amount of contract demand
established in the Electric Service Agreement referenced in Section 6 that is
currently being negotiated between the Parties. Relinquishment of any portion of
Hoku’s capacity entitlement, as discussed above, does not entitle Hoku to any
refund of the CIAC payments specified in Section 2.1. Idaho Power will send a
letter to Hoku specifying the date when construction of the Requested Facilities
has been completed and notifying Hoku that the five (5)-year time period
described above has commenced.
 
Page 4

--------------------------------------------------------------------------------

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

Page 5

--------------------------------------------------------------------------------

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

Page 6

--------------------------------------------------------------------------------

 
7. Additional Provisions
 
7.1 Liability. Each Party will indemnify and hold harmless the other Party from
and against loss, damage or liability, exclusive of costs and attorney’s fees,
resulting from claims asserted by third persons against either or both Parties
to this Agreement on account of injury or death to persons or damage or
destruction of property occurring on such (indemnifying) Party’s side of the
aforesaid Delivery Point, unless such injury or damage shall have resulted from
the sole negligence of the other Party; provided, however, that each Party shall
be solely responsible for claims of and payment to its employees for injuries
occurring in connection with their employment or arising out of any worker’s
compensation laws.
 
7.2 Limitation on Liability. NEITHER PARTY SHALL, IN ANY EVENT, BE LIABLE TO THE
OTHER FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES
SUCH AS, BUT NOT LIMITED TO, LOST PROFITS, REVENUE OR GOOD WILL, OR INTEREST,
WHETHER SUCH LOSS IS BASED ON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY
OR OTHERWISE.
 
7.3 Waivers. Any waiver at any time by either Party of any right with respect to
any matter arising under this Agreement, or any failure to give notice provided
hereunder, shall not be deemed to be a waiver with respect to any subsequent
matter, nor as the establishment of or consent to any practice under this
Agreement or an interpretation of any term or provision hereof.
 
7.4 Regulatory Authority. This Agreement is subject to valid laws and to the
regulatory authority and orders, rules and regulations of the Commission and
such other administrative bodies having jurisdiction, as well as Idaho Power
Company’s Rules and Regulations as now or may be hereafter modified and approved
by the Commission.
 
Page 7

--------------------------------------------------------------------------------

 
 
7.5 Choice of Law and Venue. This Agreement shall be governed by and construed
in accordance with the laws of the State of Idaho, and venue for any court
proceeding arising out of this Agreement shall be in Boise, Idaho.
 
7.6 Dispute Resolution. Prior to commencement of any suit, claim or other cause
of action in any court proceeding, Hoku and IPCO agree to undertake good faith
efforts to resolve such differences through negotiations between senior business
representatives of each company. In the event of a dispute arising under this
Agreement that cannot be resolved through negotiation, the prevailing party
shall be entitled to reimbursement from the non-prevailing party for all
reasonable costs and expenses, including reasonable attorney’s fees incurred by
the prevailing party in the formal resolution of the dispute.
 
7.7 Modifications and Counterparts. This Agreement sets forth the entire
understanding and agreement of Hoku and IPCO with regard to the construction of
the Requested Facilities. This Agreement may only be amended or modified by a
writing signed by the duly authorized representatives of both parties. This
Agreement may be executed in counterparts, each of which, taken together, shall
constitute one and the same Agreement.
 
7.8 Notices. All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be
given to the intended recipient at the address specified below:
 
Page 8

--------------------------------------------------------------------------------

 
 

If to IPCO, to:  
Dan Minor
Senior Vice President, Delivery
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
      With a copy to:   Thomas Saldin
General Counsel
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
      and           If to Hoku, to:   Karl Taft
CTO
Hoku Materials, Inc. One Hoku Way
Pocatello, Idaho 83204
      With a copy to:   Dustin Shindo
CEO
Hoku Scientific, Inc.
1075 Opakapaka Street Kapolei, Hawaii 96707-1887

 
8. Commission Approval. This Agreement and the respective rights and obligations
of the Parties hereunder shall be subject to the continuing jurisdiction and
regulatory authority of the Commission.
 
Page 9

--------------------------------------------------------------------------------

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

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

--------------------------------------------------------------------------------

Title: CEO    

 

        IDAHO POWER COMPANY  
   
   
    By:   /s/ Dan Minor  

--------------------------------------------------------------------------------

Title: Senior Vice President, Delivery
   

 
Page 10

--------------------------------------------------------------------------------

 
EXHIBIT 1
 
HOKU REQUESTED FACILITIES
 
New [*] Substation to be located at Hoku Facility

·
[*] Line Terminals with relay protection

·
[*] LTC substation power transformers

·
[*] circuit breakers, diagonal ring bus configuration

·
[*] amp metered bus points of delivery

·
Control enclosure for equipment protective relays and station battery

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

 
Don Substation

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

 
Alameda Substation

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

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

 
Transmission Lines

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

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

 
Kinport Substation

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

 
Terry Substation

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

 
Pocatello Service Building

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

 
EXHIBIT1

--------------------------------------------------------------------------------