Document:

ELECTRIC
      SERVICE AGREEMENT

    BETWEEN

    IDAHO
      POWER COMPANY

    AND

    HOKU
      MATERIALS, INC

     

    THIS
      AGREEMENT FOR ELECTRIC SERVICE is executed on ___9/17/2008_____
      by
      HOKU MATERIALS, INC, a Delaware Corporation (“Hoku”) and IDAHO POWER COMPANY, an
      Idaho Corporation (“Idaho Power”). In consideration of the mutual covenants
      hereinafter set forth, the parties hereby agree as follows:

                

    SECTION
      1 - SPECIAL CONTRACT

     

    1.1 This
      Agreement is a Special Contract as described in Idaho Power’s Schedule
      19.

     

    SECTION
      2 - DEFINITIONS

    When
      used in this Agreement:

     

    2.1. “Commission”
      shall mean the Idaho Public Utilities Commission or its successor
      agency.

     

    2.2. “Construction
      Agreement” shall mean that certain Agreement for Construction of Hoku Electric
      Substation and Associated Facilities dated as of December 28, 2007, by and
      between Hoku and Idaho Power, as such may be amended from time to
      time.

     

    2.3. “Contract
      Load Factor” shall mean 90 percent for purposes of establishing the energy
      blocks for monthly billing.

     

    2.4. “Embedded
      Date” shall mean June 1, 2013.

     

    2.5. “Embedded
      Rate” shall mean the demand and energy rates detailed in the Company’s
      then-effective Schedule 19T.

     

    2.6. “Excess
      Demand” shall mean the average kilowatts supplied during the coincident
      15-consecutive-minute period of maximum use each day, adjusted for Power Factor,
      which exceeds the Total Contract Demand.

     

    2.7. “Excess
      Energy” shall mean any kilowatt-hours of energy supplied to the Hoku Facility
      during the monthly billing period as measured by the metering equipment located
      at the Points of Delivery that exceeds the sum of the First Block Energy and
      the
      Second Block Energy.

     

    2.8. “First
      Block Contract Demand” shall mean the monthly number of kilowatts Idaho Power
      has agreed to make available to the Hoku Facility in accordance with the
      Scheduled Contract Demand in Section 6.

     

    2.9. “First
      Block Energy” shall mean the kilowatt-hours determined by multiplying the First
      Block Contract Demand by the number of hours in the billing period multiplied
      by
      the Contract Load Factor.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    2.10. “Hoku
      Facility” shall mean the Hoku Polysilicon Production complex located on One Hoku
      Way, Pocatello, Idaho.

     

    2.11. “Interconnection
      Facilities” shall mean all facilities which are reasonably required by Prudent
      Electrical Practices and the National Electric Safety Code to interconnect
      and
      deliver electrical power and energy to the Hoku Facility, including, but not
      limited to, transmission facilities, substation facilities and metering
      equipment. 

     

    2.12. “Minimum
      Billed Energy” shall mean the number of kilowatt-hours determined by multiplying
      50% of the Total Contract Demand for the billing month by the number of hours
      in
      the billing month at the Contract Load Factor.

     

    2.13. “Points
      of Delivery” shall mean the locations specified in paragraph 5.2 where the
      electrical facilities owned by Hoku are interconnected to the electrical
      facilities owned by Idaho Power and where power and energy are delivered by
      Idaho Power for the purpose of providing electrical service for the operations
      of the Hoku Facility. 

     

    2.14. “Power
      Factor” shall mean the percentage obtained by dividing the maximum demand
      recorded in kW by the corresponding kilovolt-ampere (kVa) demand established
      by
      Hoku.

     

    2.15. “Prudent
      Electrical Practices” shall mean those practices, methods and equipment that are
      commonly and ordinarily used in electrical engineering and utility operation
      to
      operate electrical equipment and deliver electric power and energy with safety,
      dependability, efficiency and economy.

     

    2.16. “Schedule
      19” shall mean the Company’s then effective Idaho Retail Tariff Schedule
      19T.

     

    2.17. “Schedule
      32” shall mean the Hoku tariff schedule of rates and charges or its successor
      schedules. 

     

    2.18. “Scheduled
      Contract Demand” is defined in Section 6.1.1 below.

     

    2.19. “Second
      Block Contract Demand” shall mean 25,000 kilowatts.

     

    2.20. “Second
      Block Energy” shall mean the total kilowatt-hours supplied to the Hoku Facility
      during the monthly billing period as measured by the metering equipment located
      at the Points of Delivery less the First Block Energy, but no greater than
      25,000 kilowatts multiplied by the number of hours in the billing period
      multiplied by the Contract Load Factor.

     

    2.21. “Total
      Contract Demand” shall mean the sum of the First Block Contract Demand and the
      Second Block Contract Demand as specified in Section 6, and as such may be
      modified pursuant to Section 6.2 below. 

     

    2.22. “Transformer
      Losses” shall mean energy losses resulting when a transformer changes the
      voltage level of alternating current electricity. Transformer losses will be
      accounted for in the initial metering installation.

     

    SECTION
      3 - TERM OF AGREEMENT 

     

    3.1 This
      Agreement shall become effective as provided in paragraph 15.1 and remain in
      effect through the Embedded Date and will be automatically renewed thereafter
      until either Hoku or Idaho Power terminates this Agreement as provided in
      paragraph 4.1.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    3.2 It
      is the
      intention of the parties that following the Embedded Date, the parties shall
      enter into a new Special Contract whereby Hoku shall pay energy and demand
      rates
      that are equal to the lesser of the then-applicable Schedule 19 rate or the
      average of the contract rates in Idaho Power’s then-effective other “Special
      Contracts”. These Special Contract rates will remain in effect on an interim
      basis until the next final Commission order in a general rate case proceeding.
      

     

    3.3 Service
      under this Agreement will commence June 1, 2009.

     

    SECTION
      4 - TERMINATION

     

    4.1 Notice
      of
      Termination: After the Embedded Date, either party to this Agreement shall
      have
      the right to terminate this Agreement by delivering written notice of
      termination to the other party. The effective date of termination will be
      specified in the termination notice, but such effective date cannot be earlier
      than 12 months after the date of the delivery of the notice of termination.
      If
      both parties give notice of termination, the earliest effective date will
      prevail. If the effective date of a termination occurs before the new Special
      Contract is effective between the Parties as described in Section 3.1 above,
      then the applicable energy and demand rates shall be the Embedded
      Rate.

     

    SECTION
      5 - SERVICES TO BE PROVIDED

     

    5.1 Supply
      Obligation: In accordance with Prudent Electrical Practices and the provisions
      of this Agreement, Idaho Power will furnish Hoku’s total requirements for
      electric power and energy at the Hoku Facility. Hoku will not resell any portion
      of the power and energy furnished under this Agreement.

     

    5.2 Points
      of
      Delivery: Electric power and energy shall be delivered by Idaho Power at each
      point generally described as the load side terminals of the substation
      transformer 13.8 kilovolt disconnect switches at the Hoku Facility.

     

    5.3 Adjustment
      for Transformer Losses: Metering on the load side of the substation transformers
      will be adjusted for Transformer Losses.

     

    5.4 Description
      of Electric Service: Idaho Power shall supply three-phase, 60 hz alternating
      current at nominal 13,800 volts, with a maximum steady state variation of plus
      or minus five percent (5%) under normal system conditions. Consistent with
      Prudent Electrical Practices, Idaho Power will operate within the capability
      of
      its existing system to minimize voltage level fluctuations, the normal frequency
      variation to be within plus or minus 0.05 hz on a 60 hz base.

     

    5.5 Available
      Capacity: Idaho Power will make power available to Hoku in an amount equal
      to
      the kilowatts of Total Contract Demand shown in Section 6.1.1.

     

    5.6 Request
      for Proposals: During the initial term of the agreement, at Hoku’s request,
      Idaho Power will use commercially reasonable efforts to obtain proposals to
      supply power to meet Hoku’s summer loads not served by Idaho Power. Idaho Power
      will customize such supply request to match Hoku’s requirements. These
      additional purchases are subject to Idaho Power’s ability to deliver the power
      to Hoku and Hoku’s acceptance of the price and terms of the proposals. Hoku is
      responsible for the full costs of these purchases and any associated
      transmission and ancillary service expense to transport such purchases to the
      Hoku Facility.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    5.7 Release
      of First Block Energy: With adequate notice and the written consent of Idaho
      Power, Hoku may request a release of all or part of its First Block Energy
      purchase commitment in return for credit on its First Block Energy Charge.
      The
      value of the credit will be determined by mutual agreement and will take into
      consideration the timing of the notice and Idaho Power’s ability to manage any
      supply commitments made on Hoku’s behalf.

     

    SECTION
      6 - CONTRACT DEMAND

     

    6.1 Contract
      Demand Provisions prior to the Embedded Date: The following provisions apply
      during the period of time from June 1, 2009 to the Embedded Date, while Hoku
      is
      changing its load at the Hoku Facility. 

     

    6.1.1 Scheduled
      Contract Demand: Hoku agrees to contract for, and Idaho Power agrees to provide
      power made available to the Hoku Facility in the following amounts expressed
      in
      kilowatts (the “Scheduled Contract Demand”):

    
      
        	 	 	 	 
	 	
                First
                  Block

              	
                Second
                  Block

              	 
	
                Time

              	
                Contract

              	
                Contract
                  

              	
                Total
                  Contract

              
	
                Period

              	
                Demand

              	
                Demand

              	
                Demand

              
	
                6/1/2009
                  - 9/15/2009

              	
                18,000

              	
                25,000

              	
                43,000
                  

              
	
                9/16/2009
                  - 12/31/2009

              	
                39,000

              	
                25,000

              	
                82,000

              
	
                1/1/2010
                  - 6/15/2010

              	
                57,000

              	
                25,000

              	
                82,000

              
	
                6/16/2010
                  - 8/15/2010

              	
                18,000

              	
                25,000

              	
                43,000

              
	
                8/16/2010
                  - 9/15/2010

              	
                42,000

              	
                25,000

              	
                67,000

              
	
                9/16/2010
                  - 12/31/2010 

              	
                57,000

              	
                25,000

              	
                82,000

              
	
                1/1/2011
                  - 6/15/2011

              	
                57,000

              	
                25,000

              	
                82,000

              
	
                6/16/2011
                  - 8/15/2011

              	
                18,000

              	
                25,000

              	
                43,000

              
	
                8/16/2011
                  - 9/15/2011

              	
                42,000

              	
                25,000

              	
                67,000

              
	
                9/16/2011
                  - 12/31/2011 

              	
                57,000

              	
                25,000

              	
                82,000

              
	
                1/1/2012
                  - 6/15/2012

              	
                57,000

              	
                25,000

              	
                82,000

              
	
                6/16/2012
                  - 8/15/2012

              	
                57,000

              	
                25,000

              	
                82,000

              
	
                8/16/2012
                  - 9/15/2012

              	
                57,000

              	
                25,000

              	
                82,000

              
	
                9/16/2012
                  - 12/31/2012 

              	
                57,000

              	
                25,000

              	
                82,000

              
	
                1/1/2013
                  - 5/31/2013

              	
                57,000

              	
                25,000

              	
                82,000

              

      

    

     

    Hoku
      acknowledges that Idaho Power is in the process of expanding its system capacity
      and the Company’s ability to provide the amount of power shown above for the
      summer load period from 6/16/2012 to 9/15/2012 is contingent on the timely
      completion of major transmission and generation projects. Hoku agrees that
      if
      there are delays in the completions of these projects, the amount of power
      to be
      made available to Hoku from 6/16/2012 to 9/15/2012 may be reduced to match
      the
      summer load in the previous year.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    6.2 Contract
      Demand Provisions after Initial Expansion: After the Embedded Date, Hoku has
      the
      option to increase or decrease its Total Contract Demand level as
      follows:

     

    6.2.1 Increases
      to Total Contract Demand: Under the terms of this Agreement, Hoku may increase
      the Total Contract Demand above 82,000 kilowatts by increasing the First Block
      Contract Demand in increments of 1,000 to 10,000 kilowatts per year up to a
      Total Contract Demand of 175,000 kilowatts. Hoku will notify Idaho Power in
      writing of the additional capacity requirements at least one year in advance.
      The new Total Contract Demand will be in effect for a minimum of one year.
      Increases to Total Contract Demand are subject to the availability of adequate
      capacity in Idaho Power’s facilities to provide the requested
      service.

     

    6.2.2 Decreases
      to Total Contract Demand: After the Embedded Date, Hoku may decrease the Total
      Contract Demand by reducing the First Block Contract Demand in decrements of
      1,000 kilowatts. Total Contract Demand may not be decreased below 25,000
      kilowatts. Hoku will notify Idaho Power in writing of the decrease in capacity
      requirements at least one year in advance. The new Total Contract Demand will
      be
      in effect for a minimum of one year.

     

    6.3 Excess
      Demand: Prior to the Embedded Date, and subject to Section 6.2.1 above, the
      availability of power in excess of the Total Contract Demand is not guaranteed,
      and if the average kilowatts supplied at the Hoku Facility during the
      15-consecutive-minute period of maximum use each day, adjusted for power factor,
      exceeds the Total Contract Demand, Idaho Power may curtail service to the Hoku
      Facility. Idaho Power reserves the right to install, at any time, at Hoku’s
      expense, any device necessary to protect Idaho Power’s system from damage which
      may be caused by the taking of Excess Demand. Hoku will be responsible for
      any
      damages to Idaho Power’s system or damages to third parties resulting from the
      taking of Excess Demand. Hoku agrees to use its best reasonable efforts to
      monitor its electric loads and to advise Idaho Power as soon as possible of
      the
      potential for Excess Demand at the Hoku Facility. Excess Demand will be subject
      to the Daily Excess Demand Charge and the Monthly Excess Demand Charge specified
      in Schedule 32.

     

    6.4 Proration:
      Billings during months that contain a change in the Scheduled Contract Demand
      will be prorated.

     

    SECTION
      7 - FACILITIES FOR DELIVERY TO HOKU FACILITY

     

    7.1 Additional
      Facilities: The parties acknowledge that they have separately entered into
      the
      Construction Agreement, pursuant to which Hoku is paying Idaho Power to
      construct the Interconnection Facilities necessary to provide the Total Contract
      Demand under this Agreement. Idaho Power represents and warrants to Hoku that
      none of the charges set forth in Schedule 32 include any cost reimbursement
      or
      adjustment that is already being paid by Hoku pursuant to the Construction
      Agreement, and that such Interconnection Facilities are sufficient to supply
      the
      Scheduled Contract Demand. To the extent that additional transmission and/or
      substation Interconnection Facilities are required to provide additional service
      pursuant to Section 6.2.1 above, special arrangements will be made in a separate
      Agreement between Hoku and Idaho Power.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    7.2 Operation
      and Maintenance: Idaho Power will operate and maintain Interconnection
      Facilities necessary to provide service to the Hoku Facility. Such
      Interconnection Facilities include Interconnection Facilities paid for by Hoku,
      including those paid for by Hoku pursuant to the Construction Agreement. Idaho
      Power shall operate and maintain such Interconnection Facilities in accordance
      with Prudent Electrical Practices.

     

    SECTION
      8 - CHARGES TO BE PAID BY HOKU TO IDAHO POWER

     

    8.1 Rates
      and
      Charges: The rates and charges for electrical power, energy and other services
      provided by Idaho Power to the Hoku Facility are identified by component in
      Schedule 32. The total amount to be paid by Hoku for electric service to the
      Hoku Facility will be the sum of the components identified on Schedule
      32.

     

    8.2 Power
      Factor: When the Hoku Facility’s Power Factor is less than 95 percent during the
      15-consecutive-minute period of maximum use for the monthly billing period,
      Idaho Power will determine the Total Billing Demand by multiplying the metered
      demand in kilowatts by 0.95 and dividing that product by the Power
      Factor.

     

    8.3 Billing
      and Metering Provisions: Idaho Power will install and maintain suitable metering
      equipment for each Point of Delivery so that coincident demand and energy
      consumption can be determined for the billing period.

     

    8.4 First
      Block Contract Demand Charge: The First Block Contract Demand Charge is fixed
      and is not subject to change through the Embedded Date. After the Embedded
      Date,
      the Contract Demand Charge is subject to change and revision by order of the
      Commission. After the Embedded Date, Idaho Power will advocate for Commission
      acceptance of the ratemaking treatment for the Special Contract described in
      Section 3.2 above.

     

    8.5 First
      Block Energy Charge: The First Block Energy Charge and Excess Energy Charge
      are
      fixed and are not subject to change through the Embedded Date. After the
      Embedded Date, the Energy Charge and Excess Energy Charge are subject to change
      and revision by order of the Commission. After the Embedded Date, Idaho Power
      will advocate for Commission acceptance of the ratemaking treatment for the
      Special Contract described in Section 3.2 above.

     

    8.6 Second
      Block Charges: The Second Block Contract Demand Charge and the Second Block
      Energy Charge will increase or decrease uniformly with any base rate change
      authorized by the Commission that is applicable to Idaho Power’s Tariff Schedule
      19T through the Embedded Date. After the Embedded Date, the Second Block
      Contract Demand Charge and the Second Block Energy Charge are subject to change
      and revision by order of the Commission.

     

    8.7 Power
      Cost Adjustment: The Power Cost Adjustment (PCA) rate as defined under Idaho
      Power’s Tariff Schedule 55 will be applied to the Second Block Energy only. The
      PCA rate will not apply to the First Block Energy or to Excess
      Energy.

     

    8.8 Conservation
      Program Funding Charge: The Conservation Program Funding Charge as specified
      in
      Idaho Power’s Tariff Schedule 91 for Schedule 19 will be applied to the sum of
      the Second Block Charges, Excess Demand Charges, and Excess Energy
      Charges.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    8.9 Minimum
      Energy Charges: Each month Hoku will be billed for the actual metered
      kilowatt-hours of energy, but no less than the Minimum Billed Energy amount
      defined in Section 2.12.

     

    SECTION
      9 - PAYMENT OF BILLS/SETTLEMENTS

     

    9.1 Billing
      Data: Hoku shall pay Idaho Power for all services provided under this Agreement.
      Invoices for payment for electric services shall be prepared and submitted
      to
      Hoku monthly. All invoices or bills shall contain such data as may be reasonably
      required to substantiate the billing.

     

    9.2 Payment
      Procedure: All bills or accounts for electric service owed by Hoku to Idaho
      Power hereunder shall be due and payable within fifteen (15) days following
      Hoku’s receipt of a bill. Payment will be made by electronic transfer of funds.
      Idaho Power will provide Hoku with current ABA routing numbers and other
      necessary instructions to facilitate the electronic transfer of funds.

     

    SECTION
      10 - ACCESS TO PREMISES

     

    10.1 During
      the term of this Agreement, and for a reasonable period following termination,
      Idaho Power shall have access to the Hoku Facility premises at all times for
      the
      purposes of reading meters, making installations, repairing and removing
      Interconnection Facilities and Idaho Power equipment and for other proper
      purposes hereunder.

     

    SECTION
      11 - ASSIGNMENT

     

    11.1 This
      Agreement shall be binding upon the heirs, legal and personal representatives,
      successors and assigns of the parties hereto.

     

    SECTION
      12 - LIABILITY

     

    12.1 Each
      party agrees to protect, defend, indemnify and hold harmless the other party,
      its officers, directors, and employees against and from any and all liability,
      suits, loss, damage, claims, actions, costs, and expenses of any nature,
      including court costs and attorney’s fees, even if such suits or claims are
      completely groundless, as a result of injury to or death of any person or
      destruction, loss or damage to property arising in any way in connection with,
      or related to, this Agreement, but only to the extent such injury to or death
      of
      any person or destruction, loss or damage to property is not due to the
      negligence or other breach of legal duty of such 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 workman’s compensation law.

     

    12.2 Limitation
      of 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

        
          

        

      

      
        
        

      

    

     

    SECTION
      13 -
      MODIFICATIONS OF CONTRACT

     

    13.1 This
      Agreement may not be modified except by writing, duly signed by both parties
      hereto.

     

    SECTION
      14 - COMMISSION JURISDICTION

     

    14.1 This
      Agreement and the respective rights and obligations of the parties hereunder,
      shall be subject to (1) Idaho Power’s General Rules and Regulations as now or
      hereafter in effect and on file with the Commission and (2) to the jurisdiction
      and regulatory authority of the Commission and the laws of the State of
      Idaho.

     

    14.2 The
      terms, conditions, and rates set forth in this Agreement and Schedule 32 are
      subject to the continuing jurisdiction of the Commission. The rates under this
      Agreement are subject to change and revision by order of the Commission upon
      a
      finding, supported by substantial competent evidence, that such rate change
      or
      revision is just, fair, reasonable, sufficient, nonpreferential, and
      nondiscriminatory. It is the parties’ intention by such provision that the rate
      making standards to be used in making any revisions or changes in rates, and
      the
      judicial review of any revisions or changes in rates, will be the same standards
      that are applicable to Idaho intrastate tariff rates.

     

    SECTION
      15 - COMMISSION APPROVAL

     

    15.1 This
      Agreement shall become effective upon the approval by the Commission of all
      terms and provisions hereof without change or condition.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    IDAHO
      POWER COMPANY

     

    
      	
              BY

            	
              /s/
                Daniel B. Minor

            	 
	
              ITS

            	
              Senior
                Vice President, Delivery

            	 

    

    

     

    HOKU
      MATERIALS, INC. 

     

    
      	
              BY

            	
              /s/
                Dustin M. Shindo

            	 
	
              ITS

            	
              CEO

            	 

    

    

    9

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              Idaho
                Power Company

            	 	 
	
            	 	 
	
              I.P.U.C.
                No. 28, Tariff No. 101

            	
              Original
                Sheet No. 32-1

            

    

    
 

    SCHEDULE
      32

    

    IDAHO
      POWER COMPANY

    ELECTRIC
      SERVICE RATE

    FOR
      HOKU MATERIALS, INC.

    POCATELLO,
      IDAHO

    

    ELECTRIC
      SERVICE AGREEMENT DATED SEPTEMBER 17, 2008

    

    

    APPLICABILITY

    

    This
      schedule is applicable to service to Hoku Materials, Inc. (Hoku) served by
      Idaho
      Power Company under the terms of an Electric Service Agreement (ESA) dated
      September 17, 2008.

    

    MONTHLY
      CHARGE

    

    The
      Monthly Charge is the sum of the following charges and may also include charges
      as wet for the in Schedule 55 (Power Cost Adjustment), Schedule 91 (energy
      efficiency Rider), and Schedule 95 (Adjustment for Municipal Franchise
      Fees).

    

    FIRST
      BLOCK MONTHLY CHARGES

    

    First
      Block Contract Demand Charge

    $2.35
      per
      kW times the First Block Contract Demand

    

    First
      Block Energy Charge

    6.166¢
      per kWh times the First Block Energy (subject to the Minimum Billed Energy
      amount specified in the ESA) 

    

    SECOND
      BLOCK MONTHLY CHARGES

    

    Second
      Block Contract Demand Charge

    $3.77
      per
      kW times the Second Block Contract Demand 

    

    Second
      Block Energy Charge

    2.3769¢
      per kWh times the Second Block Energy (subject to Minimum Billed Energy amount
      specified in the ESA) 

    

    EXCESS
      DEMAND CHARGES

    

    Daily
      Excess Demand Charge

    $0.50
      per
      each kW of Excess Demand per day

    

    Monthly
      Excess Demand Charge

    $5.00
      per
      kW for the highest Excess Demand recorded during the billing period

    

    EXCESS
      ENERGY CHARGE

    

    7.708¢
      per kWh of Excess Energy

    
      
        	 	 	 	 
	
                IDAHO

              	
                Issued
                  by IDAHO POWER COMPANY

              
	
                Issued
                  Per IPUC Order No. 30035

              	
                John
                  R. Gale, Vice President, Regulatory Affairs

              
	
                Effective
                  - June 1, 2008

              	
                 1221
                  West Idaho Street, Boise,
                  Idaho

              

      

    

     

     

    10AMENDED
        & 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.

      

      
        
          
          

        

        
          Page
            1

          
            

          

        

        
          
          

        

      

      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”).

      

      
        
          
          

        

        
          Page
            2

          
            

          

        

        
          
          

        

      

      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:

      

      
        
          
          

        

        
          Page
            3

          
            

          

        

        
          
          

        

      

      

      
        	
                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.

      

      
        
          
          

        

        
          Page
            4

          
            

          

        

        
          
          

        

      

      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.

      

      
        
          
          

        

        
          Page
            5

          
            

          

        

        
          
          

        

      

      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.

      

      
        
          
          

        

        
          Page
            6

          
            

          

        

        
          
          

        

      

      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.

      

      
        
          
          

        

        
          Page
            7

          
            

          

        

        
          
          

        

      

      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.

      

      
        
          
          

        

        
          Page
            8

          
            

          

        

        
          
          

        

      

      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

      
        
          
          

        

        
          Page
            9

          
            

          

        

        
          
          

        

      

      

      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

                
                  
 

              
	 	Title:	 
                CEO 
	 	
                

              
	 	 

        
          	 	 	 
	 	
                  IDAHO
                    POWER COMPANY

                
	 
 	 
 	 
 
	 	By:  	
                  /s/ Daniel
                    B.
                    Minor

                  
                    
 

                
	 	Title:	  Senior Vice President, Delivery 
	 	
                  

                

        
          
            
            

          

          
            Page
              10

            
              

            

          

          
            
            

          

        

      

      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

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