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Hoku and SANYO Enter Polysilicon Supply Contract

Hoku Materials, a division of Hoku Scientific, Inc. today announced the signing of a definitive contract with Sanyo Electric Company, Ltd., for the sale and delivery of polysilicon to SANYO over a seven-year period beginning in January 2009.

Under the contract, up to approximately $370 million may be payable to Hoku during the seven-year period, subject to the achievement of milestones, the acceptance of product deliveries and other conditions. The contract provides for the delivery of predetermined volumes of polysilicon each year at set prices from January 2009 through December 2015. The contract also provides for an initial direct deposit of $2 million to Hoku upon signing and requires that SANYO place approximately 30% of the total purchase amount in an escrow account with Bank of Hawaii. “This is a major step forward in our plan to launch Hoku Materials and execute our polysilicon business strategy,” said Dustin Shindo, Chief Executive Officer of Hoku Scientific. Hoku now plans to build a plant capable of producing 2,000 metric tons of polysilicon per year. and estimates that it may require construction costs of approximately $260 million, for which Hoku intends to seek debt capital of approximately $130 million. Under the agreement, Hoku and SANYO each have the right to terminate the agreement if Hoku is unsuccessful in raising the additional capital required to complete the construction of the polysilicon plant within the next six months.