Tuesday, Hoku Materials Inc., a subsidiary of Hoku Scientific Inc. (HOKU) signed a change order agreement under its cost plus incentive construction contract with JH Kelly, LLC, to confirm the plan for JH Kelly to complete construction of Hoku's planned 4,000 metric tons per year polysilicon production plant. Earlier in July 2009, Hoku initiated a temporary slowdown of construction and procurement activities to preserve cash while Hoku sought to raise additional capital.
Under the terms of the change order agreement, JH Kelly agreed that it would resume construction activities upon receipt of notice from Hoku and Hoku's payment of $5 million of the past due amount. In the meantime, JH Kelly agreed to forbear from foreclosing on its approximately $12 million lien until after December 1, 2009, and if Hoku makes the $5 million prepayment by such date, Hoku will have until January 14, 2010 to pay the balance of the $12 million that is past due. JH Kelly also agreed to waive certain interest and other fees and charges that may be incurred as a result of the past due amounts.
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