Exhibit 10.121
 
 

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CREDIT AGREEMENT
 
dated as of
 
June 30, 2010
 
Between
 
HOKU CORPORATION
as Borrower,
 
and
 
CHINA CONSTRUCTION BANK CORPORATION,
NEW YORK BRANCH
 as Lender
   
$28,300,000

 

 

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TABLE OF CONTENTS
 

    Page No.
SECTION 1 Definitions
1      
1.1
Definitions
1
1.2
Computation of Time Periods
6
1.3
Accounting Terms
6
     
SECTION 2 THE CREDIT FACILITIES
7      
2.1
Term Loan
7
2.2
Default Rate
7
2.3
Extension
7
2.4
Prepayments
8
2.5
Capital Adequacy
8
2.6
Illegality
8
2.7
Requirements of Law
9
2.8
Taxes
10
2.9
Place and Manner of Payments
11
2.10
Break Funding Payments
11
2.11
Market Disruption
11
     
SECTION 3 CONDITIONS
12      
3.1
Conditions to Obligations of Lender
12
     
SECTION 4 REPRESENTATIONS AND WARRANTIES
13      
4.1
Corporate Status
13
4.2
Corporate Authorization
13
4.3
Liens; Indebtedness
13
4.4
Litigation
13
4.5
Governmental and Other Approvals
14
4.6
Use of Loan
14
4.7
ERISA
14
4.8
Environmental Compliance
14
4.9
Foreign Assets Control Regulations, Etc.; OFAC Compliance
14
     
SECTION 5 COVENANTS
15      
5.1
Corporate Existence
15
5.2
Reports, Certificates and Other Information
15
5.3
Other Reports
16
5.4
Mergers and Consolidations
16
5.5
Taxes
16
5.6
Insurance
16
5.7
Compliance with Laws
17
5.8
Payment of Obligations
17
5.9
Maintenance of Properties. Etc.
17
5.10
Change in the Nature of Business
17
5.11
Transactions with Affiliates
17
5.12
Foreign Assets Control Regulations
17
5.13
Disbursement Account
18
5.14
Completion of Project
18

 
 
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SECTION 6 EVENTS OF DEFAULT
18      
6.1
Events of Default
18
6.2
Rights and Remedies
19      
SECTION 7 MISCELLANEOUS
19      
7.1
Notices
19
7.2
Benefit of Agreement
20
7.3
No Waiver; Remedies Cumulative
21
7.4
Payment of Expenses, etc.
21
7.5
Amendments, Waivers and Consents
21
7.6
Counterparts
22
7.7
Headings
22
7.8
Survival of Indemnification
22
7.9
Governing Law; Jurisdiction; Waiver of Jury Trial
22
7.10
USA Patriot Act
22
7.11
Severability
23
7.12
Entirety
23
7.13
Survival of Representations and Warranties
23
7.14
Fiduciary Relationship
23            
LIST OF EXHIBITS
       
A
Letter of Credit (Definitions §)
 
B
Description of Project (Definitions§)
 
C
Notice of Borrowing (§2.1(b)(i))
 
D
Promissory Note (Definitions §)
 
E
Permitted Liens (§4.3) including Customers having Liens (§5.2E)
 
F
Form of Legal Opinion of Counsel to Borrower (§3.1(e))
 

 
 
 

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CREDIT AGREEMENT
 
THIS CREDIT AGREEMENT, dated as of June 30, 2010 (this “Credit Agreement” or
“Agreement,” as same may be amended, restated or otherwise modified from time to
time), by and between HOKU CORPORATION (the “Borrower”) and CHINA CONSTRUCTION
BANK CORPORATION, NEW YORK BRANCH (the “Lender”).
 
IN CONSIDERATION of the mutual promises and covenants herein contained, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
 

SECTION 1
 
DEFINITIONS
 
1.1           Definitions.
 
As used in this Credit Agreement, the following terms shall have the meanings
specified below unless the context otherwise requires (terms defined in the
singular to have the same meanings when used in the plural, and vice
versa).  Any capitalized term not otherwise defined in this Agreement shall have
the meaning set forth in the other Credit Documents.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Person specified.

"Applicable Permits" shall mean each and every national, autonomic, regional and
local license, authorization, certification, filing, recording, permit or other
approval with or of any Governmental Authority, including, without limitation,
each and every environmental, construction or operating permit and any
agreement, consent or approval from or with any other Person that is required by
any applicable law or that is otherwise necessary for the development and
construction of the Project.

“Approved Plans” means all plans, schematics, drawings and specifications
heretofore or hereafter delivered to and approved by all Governmental
Authorities relating to the development and construction of the Project.

“Assignment and Acceptance” means an assignment and acceptance entered into by
the Lender and an assignee (with the consent of any party whose consent is
required by Section 7.2(b)).

"Availability Period" means the ninety (90) day period that commences on the
Closing Date.

“Bankruptcy Code” means the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.

“Base Rate Loan” means any Loan bearing interest at a rate determined by
reference to the Prime Rate.

“Borrower” means Hoku Corporation, a Delaware corporation, together with its
successors and permitted assigns.

“Borrowing Date” means the date on which a borrowing is requested as such term
is defined in Section 2.1(b)(i).

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
close.

 
 

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“Capital Lease” means any lease of Property the obligations with respect to
which are required to be capitalized on a balance sheet of the lessee in
accordance with GAAP.

“Change in Control” means any Person or group of Persons acting in concert (in
each case other than the Parent) gaining the Control of the Borrower.

“Closing Date” means such term as defined in Section 3.1.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the Treasury regulations promulgated thereunder as in effect from time to
time.

“Control Account” means the account or accounts established by the Lender on its
books in Borrower’s name.  Lender shall credit the Control Account with the
amount of each Loan advanced under this Credit Agreement during the Availability
Period and shall debit the Control Account for (i) payment of unpaid Obligations
then due by Borrower to Lender under this Credit Agreement and under other
Credit Documents and (ii) to the extent of any remaining credit balance, for
transfer to Borrower’s Disbursement Account.
 
“Commitment” means the obligation of the Lender to fund the Loan in an aggregate
principal amount not to exceed the Committed Amount.

“Commitment Fee” means Lender’s charge for committing to make the Loan to
Borrower hereunder, equal to an amount determined as follows: 1.875% per annum
multiplied by the average daily pricipal balance of the un-utilized portion of
the Committed Amount during the period commencing as of the date of this
Agreement and continuing until the last day of the Availability Period from time
to time.  The Commitment Fee shall be payable by Borrower to the Lender monthly
in arrears, provided, however, that Lender shall have the right to debit the
accrued amount of any Commitment Fee from Loan disbursement(s).

“Committed Amount” means an aggregate principal amount of $28,300,000.

“Control” in relation to any entity means either the direct or indirect
ownership of more than 50% of the membership interest, share capital, or similar
rights of ownership of the entity or the power to direct or cause the direction
of the management and the policies of the entity whether through the ownership
of the applicable ownership rights, contract or otherwise.

“Credit Documents” means this Credit Agreement and any other documents executed
by the Borrower in connection herewith.

“Default” means any event, act or condition which with notice or lapse of time,
or both, would constitute an Event of Default.

“Disbursement Account” means the depository/transactional account established
and maintained by Borrower on the books of the office of the Lender specified in
Section 7.1, which account shall be subject to the control of Lender in
accordance with the terms and conditions set forth in Section 5.13.  The amount
of credit balances available in the Control Account during the Availability
Period shall be transferred to the Disbursement Account, with all disbursements
therefrom subject to the control of Lender in accordance with the terms and
conditions set forth in this Agreement.

“Dollars” and “$” means the lawful currency of the United States of America.

 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder.

“Event of Default” means such term as defined in Section 6.1.

 
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“Facility Fee” means Lender's charge for making the Loan available to the
Borrower hereunder, in the amount of $70,750 (equal to one-quarter of one
percent of the Committed Amount), which shall be deemed earned upon execution of
this Agreement but, for the convenience of Borrower, shall be debited by the
Lender upon disbursement of the initial advances of the Loan.  If the entire
Facility Fee is not sooner paid, said fee, or so much thereof as shall remain
unpaid, shall be paid by Borrower not later than one month from the date of this
Agreement.

“GAAP” means generally accepted accounting principles in the United States
applied on a consistent basis and subject to Section 1.3 hereof.

“Governmental Authority” means any Federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.

“Guaranty Obligations” means, with respect to any Person, without duplication,
any obligations of such Person (other than endorsements in the ordinary course
of business of negotiable instruments for deposit or collection) guaranteeing or
intended to guarantee any Indebtedness of any other Person in any manner,
whether direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any Property
constituting security therefor, (ii) to advance or provide funds or other
support for the payment or purchase of any such Indebtedness or to maintain
working capital, solvency or other balance sheet condition of such other Person
(including without limitation keep well agreements, maintenance agreements,
comfort letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.

“Indebtedness” means, as to any Person, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments or upon which interest payments are
customarily made, (iii) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased by such Person
(other than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (iv) all
obligations, including without limitation intercompany items, of such Person
issued or assumed as the deferred purchase price of Property or services
purchased by such Person (other than trade debt incurred in the ordinary course
of business and due within six months of the incurrence thereof) which would
appear as liabilities on a balance sheet of such Person, (v) all obligations of
such Person under take-or-pay or similar arrangements or under commodities
agreements, (vi) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production from,
Property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (vii) all Guaranty Obligations of such
Person, (viii) the principal portion of all obligations of such Person under
Capital Leases, (ix) all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements, commodity purchase
or option agreements or other interest or exchange rate or commodity price
hedging agreements and (x) the maximum amount of all letters of credit issued or
bankers’ acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent unreimbursed).
The Indebtedness of any Person shall include the Indebtedness of any partnership
in which such Person is a general partner (except for any such Indebtedness with
respect to which the holder thereof is limited to the assets of such
partnership).

"Interest Payment Date" means, (i) as to any LIBOR Loan, the last day of each
Interest Period for such Loan, the date of any prepayment and the Maturity Date
and (ii) as to any Base Rate Loan, the last Business Day of each calendar month,
the date of any prepayment and the Maturity Date. If an Interest Payment Date
falls on a date which is not a Business Day, such Interest Payment Date shall be
deemed to be the immediately succeeding Business Day, except that in the case of
LIBOR Loans where the immediately succeeding Business Day falls in the
immediately succeeding calendar month, then on the immediately preceding
Business Day.

 
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"Interest Period" means a period of three months duration commencing in each
case on the date of the borrowing (including extensions and conversions);
provided , however , that (A) if any Interest Period would end on a day which is
not a Business Day, such Interest Period shall be extended to the immediately
succeeding Business Day (except that in the case of LIBOR Loans where the
immediately succeeding Business Day falls in the immediately succeeding calendar
month, then on the immediately preceding Business Day), (B) no Interest Period
shall extend beyond the Maturity Date and (C) in the case of LIBOR Loans, where
an Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to end,
such Interest Period shall, subject to clause (A) above, end on the last
Business Day of such calendar month.

“Lender” means China Construction Bank Corporation, New York Branch, together
with its successors and permitted assigns.

“Letter of Credit” means the standby letter of credit issued by China
Construction Bank Corporation, Sichuan Branch which is procured by the Parent in
favor of the Lender to secure the Borrower's obligations to the Lender
hereunder.

"LIBOR Rate" means, with respect to any LIBOR Loan for the Interest Period
applicable thereto, the rate appearing on Page 3750 of the Dow Jones Market
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service providing rate quotations comparable
to those currently provided on such page of such Service, as determined by the
Lender from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 A.M., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with an interest period
comparable to the applicable Interest Period.  In the event that such rate is
not available at such time for any reason, then " LIBOR Rate " shall mean, with
respect to any LIBOR Loan for the Interest Period applicable thereto, the
arithmetic average, as determined by the Lender, of the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) quoted by each Reference Bank
at approximately 11:00 A.M. New York, New York time (or as soon thereafter as
practicable) two Business Days prior to the first day of the Interest Period for
such LIBOR Loan for the offering by such Reference Bank to leading banks in the
London interbank market of eurodollar deposits having a term comparable to such
Interest Period and in an amount comparable to the principal amount of the LIBOR
Loan to be made by such Reference Bank for such Interest Period; provided that
if any Reference Bank does not furnish such information to the Lender on a
timely basis the Lender shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks.

"LIBOR Loan" means any Loan bearing interest at a rate determined by reference
to the LIBOR Rate.

"LIBOR Rate Spread" means, for any LIBOR Loan for any applicable Interest
Period, One and Seven-Eighths Percent (1.875%) per annum.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or other similar recording
or notice statute, and any lease in the nature thereof).

“Loan” means, unless otherwise stated in this Credit Agreement, the principal
amount of each borrowing under this Credit Agreement or the principal amount
outstanding of that borrowing.

“Material Adverse Effect” means a material adverse effect on (i) the condition
(financial or otherwise), operations, business, assets or liabilities of the
Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower
to perform any material obligation under the Credit Documents, (iii) the
material rights and remedies of the Lender under the Credit Documents or (iv)
any rights, remedies or benefits of or to the Lender under the Letter of Credit.

 
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“Material Subsidiary” means a Subsidiary, including its Subsidiaries,
substantially all of whose voting capital stock is owned by the Borrower and/or
the Borrower’s other Subsidiaries and which meets all of the following criteria:

(i)           the Borrower’s and its other Subsidiaries’ proportionate share of
total assets (after intercompany eliminations) of such subsidiary exceeds 10% of
the total assets of the Borrower and its Subsidiaries on a consolidated basis as
of its most recently completed fiscal year; and

(ii)           the Borrower’s and its other Subsidiaries’ proportionate share of
or equity in the income from continuing operations before income taxes,
extraordinary items and the cumulative effect of a change in accounting
principle of such Subsidiary exceeds 10% of such income of the Borrower and its
Subsidiaries on a consolidated basis for the most recently completed fiscal
year.

“Maturity Date” means the earlier of June 15, 2012 or the fifteenth (15th) day
prior to the expiration date of the Letter of Credit.

“Non-Excluded Taxes” means such term as defined in Section 2.9(a).

“Notice of Borrowing” means the written notice of borrowing as referenced and
defined in Section 2.1(b)(i).

“Obligations” means the unpaid principal of, and the accrued and unpaid interest
on, the Loan, all accrued and unpaid fees and expenses payable by the Borrower
to the Lender and all other unsatisfied obligations of the Borrower arising
under any of the Credit Documents, including without limitation under Sections
2.8, 2.9 and 2.10.

“Parent” means Tianwei New Energy Holdings Co., Ltd., the Borrower's parent
company as of the date hereof.

“Participant” means such term as defined in Section 7.2(c).

"Permitted Purposes” means such term as defined in Section 4.6.

"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
and is either (i) maintained by the Borrower or any Subsidiary for employees of
the Borrower and/or any Subsidiary or (ii) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Borrower or any Subsidiary is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.

“Prime Rate” means the highest “Prime Rate” as published in the “Money Rates”
column of the Eastern Edition of the Wall Street Journal (“Wall Street Journal")
from time to time. If the Wall Street Journal should cease or temporarily
interrupt publication or if the Prime Rate is no longer reported in the Wall
Street Journal or is otherwise unavailable or is limited, regulated or
administered by a governmental or quasi governmental body, then the Lender shall
select a comparable interest rate which is readily available and verifiable by
the Lender at its sole and absolute discretion.

 
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“Prohibited Person” shall have the meaning given to such term in the Trading
with the Enemy Act, as amended, or the applicable foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended).

“Project” means the development and construction of a polysilicion production
facility having a nominal annual production capacity of four thousand metric
tons (4,000mt) as more fully described on Exhibit A annexed hereto, to be
located on approximately 67 acres (the “Property”) located in Pocatello, Idaho,
which Property is leased by Hoku Materials, Inc., the Borrower's Subsidiary,
from the City of Pocatello, Idaho pursuant to a lease having a term of
ninety-nine (99) years.
 
“Promissory Note” means the note(s) evidencing the Loan(s), in substantially the
form annexed hereto as Exhibit B.
 
“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Reference Banks” means JPMorgan Chase Bank, N.A., Bank of America, N.A. and
Citibank, N.A.

“Requirement of Law” means, as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its material property.

“Subsidiary” means, as to any Person, (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, limited liability company, association, joint venture or
other entity in which such person directly or indirectly through Subsidiaries
has more than 50% equity interest at the time. Unless otherwise specified, any
reference to a Subsidiary is intended as a reference to a Subsidiary of the
Borrower.

1.2           Computation of Time Periods.

For purposes of computation of periods of time hereunder, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding.” Time is of the essence with regard to the performance by Borrower of
any terms of this Credit Agreement and of the other Credit Documents.

1.3           Accounting Terms.

Except as otherwise expressly provided herein, all accounting terms used herein
shall be interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Lender hereunder shall
be prepared, in accordance with GAAP applied on a consistent basis. All
calculations made for the purposes of determining compliance with this Credit
Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with the most recent annual or
quarterly financial statements delivered pursuant to Section 5.2 hereof.

 
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SECTION 2
 
THE CREDIT FACILITIES

2.1           Term Loan.

(a)           Commitment. Subject to the terms and conditions of this Credit
Agreement, the Lender agrees to make a term loan to the Borrower during the
Availability Period in an aggregate principal amount specified by the Borrower
not to exceed the Committed Amount. Amounts repaid or prepaid in respect of the
Loan may not be reborrowed.
 
(b)           Loan Borrowings.

(i)           Notice of Borrowing. The Borrower shall request a Loan borrowing
by written notice (or telephone notice promptly confirmed in writing) to the
Lender not later than 11:00 A.M. (New York, New York time) on the third Business
Day (or such later day as the Lender may agree in its sole discretion) prior to
the date of the requested borrowing. Such request for borrowing shall be
irrevocable, shall be made in a notice of borrowing in substantially the form
annexed hereto as Exhibit C (a “Notice of Borrowing”), and shall specify (A)
that a Loan is requested; (B) the date of the requested borrowing (which shall
be a Business Day) (the “Borrowing Date”); (C) the aggregate principal amount to
be borrowed; and (D) the purpose for which the proceeds of the Loan shall be
applied (which shall meet the requirements of a “Permitted Purpose” as defined
in Section 4.6).

(ii)           Minimum Amounts.  The initial Loan borrowing shall be in a
minimum aggregate amount of $5,000,000 and integral multiples of $100,000 in
excess thereof (or the remaining Committed Amount, if less) and each subsequent
Loan borrowing shall be in a minimum aggregate amount of $1,000,000 and integral
multiples of $100,000 in excess thereof (or the remaining Committed Amount, if
less).

(iii)           Advances. The Lender will make the Loan borrowing available to
the Borrower on the Borrowing Date by crediting the Disbursement Account in
immediately available funds.   Lender may, but shall not be required, to advance
the Loan in more than six (6) separate tranches.  The Lender at its option may
make the Loan by causing any of its domestic or foreign branches or Affiliates
to make such Loan; provided that any exercise of such option shall not affect
the obligation of the Borrower to repay such Loan in accordance with the terms
of this Credit Agreement.

(b)           Repayment. The Borrower hereby unconditionally promises to repay
in full the principal amount of the Loan and the other Obligations outstanding,
and not previously repaid, on the Maturity Date.

(c)           Interest and Facility Fee. Subject to the provisions of Sections
2.2 and 2.11, the outstanding Loan shall bear interest at a per annum rate equal
to the LIBOR Rate for the applicable Interest Period plus the LIBOR Rate Spread.
The Borrower hereby unconditionally promises to pay to the Lender accrued
interest on the Loan in arrears on each Interest Payment Date and the Maturity
Date.

2.2           Default Rate.

The Borrower hereby unconditionally promises to pay to the Lender interest on
demand on all overdue principal and, to the extent permitted by law (after as
well as before judgment), overdue interest in respect of each Loan and any other
overdue amount payable hereunder or under the other Credit Documents at a rate
2.5% per annum greater than the rate which would otherwise be applicable (or if
no rate is applicable, then 2.5% per annum greater than the Prime Rate).

2.3           Extension.

Unless the Loan shall have been prepaid on or before the last day of the
applicable Interest Period, a new Interest Period shall automatically apply to
the Loan beginning on the Business Day immediately following the last day of the
then expiring Interest Period; provided (i) that no Interest Period shall extend
beyond the Maturity Date, and (ii) following written request by Borrower
received by Lender not less than one (1) Business Day immediately prior to the
last day of the then expiring Interest Period, which request may be granted,
withheld or delayed by Lender in the exercise of its sole discretion, the Prime
Rate shall apply to any portion of the Loan that is not less than $1,000,000 at
any time.  Any Base Rate Loan in an amount of not less than $1,000,000 may be
converted into a LIBOR Loan following written request by Borrower received by
Lender not less than three (3) Business Days’ prior written notice from Borrower
to Lender, which request may be granted, withheld or delayed by Lender in the
exercise of its sole discretion.  Any Loan or any portion of a Loan which is
converted to a Base Rate Loan on a date other than on the last day of an
Interest Period shall be subject to the payment of any amounts due under Section
2.10.  Interest applicable to any Base Rate Loan shall change as the Prime Rate
shall change, effective at the opening of business on the day the Prime Rate
shall change.

 
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2.4           Prepayments.

(a)           Voluntary Prepayments. The Borrower may prepay the Loan, in whole
or in part, at any time without any premium or penalty; provided that (i) any
such prepayment of the Loan shall include all interest accrued through the date
of payment on the portion of the Loan so prepaid and all other moneys then due
and payable under this Credit Agreement; (ii) partial prepayments shall be in a
minimum principal amount of $100,000 and multiples of $100,000 in excess thereof
and (iii) any prepayment shall be made together with all additional amounts, if
any, due under Section 2.10.

(b)           Notice. In the case of voluntary prepayments under subsection (a)
hereof, the Borrower will give notice to the Lender of its intent to make such a
prepayment by 11:00 A.M. (New York, New York time) one (1) Business Day prior to
the date of prepayment.

2.5           Capital Adequacy.

If, after the Closing Date, the Lender has determined that the adoption or
effectiveness of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Lender (including its foreign banking organization) or its holding
company with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Lender’s (including its foreign banking organization’s) or its holding
company’s capital as a consequence of its commitments or obligations hereunder
to a level below that which the Lender (including its foreign banking
organization) or its holding company could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration the Lender’s
(including its foreign banking organization’s) or its holding company’s policies
with respect to capital adequacy), then, upon notice from the Lender, the
Borrower shall pay to the Lender such additional amount or amounts as will
compensate the Lender (including its foreign banking organization) or its
holding company for such reduction. Each determination by the Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and binding
on the Borrower. Notwithstanding anything contained herein to the contrary, the
Borrower shall not be under any obligation to pay to the Lender amounts
otherwise owing under this Section 2.5 if the Lender shall not have delivered
such written notice to the Borrower within ninety (90) days following the later
of (i) the date of occurrence of the event which forms the basis for such notice
and request for compensation and (ii) the date the Lender becomes aware of such
event. Notwithstanding the foregoing, the Lender agrees that, before giving any
notice seeking a payment under this Section 2.5, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different office, branch or Affiliate of the Lender as the office,
branch or Affiliate of the Lender having the commitments and obligations of the
Lender hereunder if making such designation would avoid or reduce the amount of
such reduction in its rate of return on its capital or assets and would not, in
the reasonable judgment of the Lender, be otherwise disadvantageous to the
Lender.

2.6           Illegality.

Notwithstanding any other provision herein, if the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof occurring
after the Closing Date shall make it unlawful for the Lender to maintain LIBOR
Loan as contemplated by this Credit Agreement, (a) the Lender shall promptly
give written notice of such circumstances to the Borrower, (b) the commitment of
the Lender hereunder to continue LIBOR Loan as such and shall forthwith be
canceled and, until such time as it shall no longer be unlawful for the Lender
to maintain LIBOR Loan, the Lender shall then have a commitment only to maintain
a Base Rate Loan when the continuation of a LIBOR Loan is supposed to occur
hereunder and (c) the Lender’s Loan then outstanding as LIBOR Loan, if any,
shall be converted automatically to Base Rate Loan on the respective last days
of the then current Interest Periods with respect to such Loan or within such
earlier period as required by law. If any such conversion of a LIBOR Loan occurs
on a day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to the Lender such amounts, if any, as
may be required pursuant to Section 2.10.

 
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2.7           Requirements of Law.

If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to the Lender, or compliance by
the Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender) (it being understood and agreed that matters set forth in the
Consultation Paper issued by the Basle Committee on Banking Supervision of June
1999, including any subsequent revisions or updates thereto, shall not be
treated as having been adopted or applied prior to the Closing Date):

(i)           shall subject the Lender to any tax of any kind whatsoever with
respect to the Loan made by it or change the basis of taxation of payments to
the Lender in respect thereof (except for Non-Excluded Taxes covered by Section
2.8 (including Non-Excluded Taxes imposed solely by reason of any failure of the
Lender to comply with its obligations under Section 2.8 (b)) and changes in
taxes measured by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of the Lender or its applicable
lending office, branch, or any affiliate thereof);

(ii)           shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, deposits
or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of the
Lender; or

(iii)           shall impose on the Lender any other condition (excluding any
tax of any kind whatsoever);

and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which such Lender deems to be material, of making, continuing or
maintaining the Loan or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from the Lender, in
accordance herewith, the Borrower shall promptly pay the Lender, upon its
demand, any additional amounts necessary to compensate the Lender for such
increased cost or reduced amount receivable; provided that the Borrower shall
not be under any obligation to pay to the Lender amounts otherwise owing under
this Section 2.7 if the Lender shall not have delivered such written notice to
the Borrower, within ninety (90) days following the later of (A) the date of
occurrence of the event which forms the basis for such notice and request for
compensation and (B) the date the Lender becomes aware of such event. If the
Lender becomes entitled to claim any additional amounts pursuant to this
Section, it shall provide prompt notice thereof to the Borrower certifying (x)
that one of the events described in this Section has occurred and describing in
reasonable detail the nature of such event, (y) as to the increased cost or
reduced amount resulting from such event and (z) as to the additional amount
demanded by the Lender and a reasonably detailed explanation of the calculation
thereof. Such a certificate as to any additional amounts payable pursuant to
this Section submitted by the Lender to the Borrower shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Credit Agreement and the payment of the Loan and all other amounts payable
hereunder. Notwithstanding the foregoing, the Lender agrees that, before giving
any notice seeking a payment of additional amounts under this Section 2.7, the
Lender will use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different office, branch or
Affiliate as the office, branch or Affiliate of the Lender making, continuing or
maintaining the Loan hereunder or having the commitments and obligations
hereunder resulting in such increased cost to the Lender or reduction in the
amount receivable by the Lender hereunder if making such designation would avoid
the need for, or reduce the amount of, such increased cost or would avoid or
decrease the reduction in the amount receivable hereunder and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to the Lender.

 
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2.8           Taxes.

(a)           Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, (excluding net income taxes and
franchise taxes imposed in lieu of net income taxes imposed on the Lender as a
result of a present or former connection between the jurisdiction of the
Governmental Authority imposing such tax and the Lender (except a connection
arising solely from the Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Credit Agreement))
(all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
and withholdings being hereinafter called “ Non-Excluded Taxes ”). If any
Non-Excluded Taxes are required to be withheld from any amounts payable to the
Lender hereunder, the amounts so payable to the Lender shall be increased to the
extent necessary to yield to the Lender (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Credit Agreement, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and
shall not be required to increase any such amounts payable to the Lender that is
not organized under the laws of the United States of America or a state thereof
if the Lender fails to comply with the requirements of Section 2.8(b). Whenever
any Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Lender a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Lender the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for any
taxes, interest or penalties that may become payable by the Lender as a result
of any such failure. Notwithstanding anything contained herein to the contrary,
the Borrower shall not be under any obligation to pay to the Lender amounts
otherwise owing under this Section 2.8(a) if the Lender shall not have delivered
such written notice to the Borrower within ninety (90) days following the later
of (i) the date of occurrence of the event which forms the basis for such notice
and request for indemnity and (ii) the date the Lender becomes aware of such
event. The agreements in this subsection shall survive the termination of this
Credit Agreement and the payment of the Loan and all other amounts payable
hereunder.

(b)           The Lender agrees that it shall:

(X)(i)           so long as it is a “bank” within the meaning of Section
881(c)(3)(A) of the Code, on or before the date of any payment by the Borrower
under this Credit Agreement to the Lender, deliver to the Borrower two duly
completed copies of United States Internal Revenue Service Form W-8BEN or
W-8ECI, or successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Credit Agreement without deduction or
withholding of any United States federal income taxes;

(ii)           deliver to the Borrower two further copies of any such form or
certification on or before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event requiring a change in
the most recent form previously delivered by it to the Borrower; and

(iii)           obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower; or

(Y)           if the Lender is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code, (i) agree to furnish to the Borrower on or before the
date of any payment by the Borrower two accurate and complete original signed
copies of Internal Revenue Service Form W-8BEN, or successor applicable form
certifying to the Lender’s legal entitlement at the date of such certificate to
an exemption from U.S. withholding tax under the provisions of Section 881(c) of
the Code with respect to payments to be made under this Credit Agreement (and to
deliver to the Borrower two further copies of such form on or before the date it
expires or becomes obsolete and after the occurrence of any event requiring a
change in the most recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Borrower for filing and
completing such forms), and (ii) agree, to the extent legally entitled to do so,
upon reasonable request by the Borrower, to provide to the Borrower such other
forms as may be reasonably required in order to establish the legal entitlement
of the Lender to an exemption from withholding with respect to payments under
this Credit Agreement;

 
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unless in any such case any change in treaty, law or regulation has occurred
after the date such Person (or, in the case of a Person that shall become a
Lender or a Participant pursuant to Section 7.2, its transferor) becomes the
Lender hereunder which renders all such forms inapplicable or which would
prevent the Lender from duly completing and delivering any such form with
respect to it and the Lender so advises the Borrower. Each Person that shall
become the Lender shall, upon the effectiveness of the related transfer, be
required to provide all of the forms, certifications and statements required
pursuant to this subsection; provided that in the case of a Participant the
obligations of such Participant pursuant to this subsection (b) shall be
determined as if the Participant were a Lender except that such Participant
shall furnish all such required forms, certifications and statements to the
Lender.

2.9           Place and Manner of Payments

Except as otherwise specifically provided herein, all payments hereunder shall
be made to the Lender in Dollars in immediately available funds, without offset,
deduction, counterclaim or withholding of any kind, at its offices specified in
Section 7.1 not later than 2:00 P.M. (New York, New York time) on the date when
due. Payments received after such time shall be deemed to have been received on
the immediately succeeding Business Day. The Lender may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the Borrower maintained with the Lender
(with notice to the Borrower). The Borrower shall, at the time it makes any
payment under this Credit Agreement, specify to the Lender the principal,
interest, fees or other amounts payable by the Borrower hereunder to which such
payment is to be applied (and in the event that it fails so to specify, or if
such application would be inconsistent with the terms hereof, the Lender shall
apply the payment in such manner as the Lender may determine to be appropriate
in respect of obligations owing by the Borrower hereunder). Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the immediately succeeding Business Day
(subject to accrual of interest at non-default rates and fees for the period of
such extension (but not any default interest on amounts as to which such due
date shall have been extended)), except that in the case of LIBOR Loan, if the
extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the immediately preceding
Business Day. Except as expressly provided otherwise herein, all computations of
interest shall be made on the basis of actual number of days elapsed over a year
of 360 days. Interest shall accrue from and include the date of borrowing, but
exclude the date of payment.

2.10           Break Funding Payments.

In the event of (a) the payment of any principal of any LIBOR Loan other than on
the last day of an Interest Period applicable thereto (including as a result of
an Event of Default), or (b) the failure to borrow or prepay any LIBOR Loan on
the date specified in any notice delivered pursuant hereto, then, in any such
event, the Borrower shall compensate the Lender for the loss, cost and expense
attributable to such event. In the case of a LIBOR Loan, such loss, cost or
expense to the Lender shall be deemed to include an amount determined by the
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
interest that would have been applicable to such Loan, for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the then applicable LIBOR
Rate for a period available in the London interbank market closest in length to
such remaining period. A certificate of the Lender setting forth any amount or
amounts that the Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay the Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

2.11              Market Disruption
 
           If in relation to any Interest Period the Lender determines (which
determination shall be conclusive and binding) that by reason of circumstances
affecting the London interbank market generally, adequate and fair means do not
exist for ascertaining LIBOR for that Interest Period or that the quoted LIBOR
for that Interest Period does not accurately or reliably reflect the cost of
funding to Lender for making the Loan or to lenders, generally, for making loans
similar to the Loan (a “Market Disruption”), the Lender shall promptly notify
the Borrower accordingly.  Immediately following such notification, the Lender
and Borrower shall negotiate in good faith with a view to agreeing upon an
alternative basis for determining the applicable interest rate. If an
alternative basis is agreed in writing within a period of thirty (30) days after
such notification or such longer period for discussion as the parties may agree,
the alternative basis shall take effect in accordance with its terms.  If the
parties are unable to reach agreement as to an alternative basis for determining
the applicable interest rate for the relevant Interest Period, then each Loan
shall automatically convert to a Base Rate Loan and shall continue as a Base
Rate Loan until Lender determines, in the exercise of its sole discretion, that
the circumstances causing or contributing to the Market Disruption no longer
exist.
 
 
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SECTION 3
 
CONDITIONS

3.1           Conditions to Obligations of Lender.

This Credit Agreement, including the obligation of the Lender to make the Loan
requested to be made by it, shall not become effective until the date (the "
Closing Date ") on which each of the following conditions is satisfied or
provided for in form and substance reasonably acceptable to the Lender, or duly
waived in writing by the Lender in accordance with Section 7.5:

(a)           Executed Credit Documents. Receipt by the Lender of duly executed
copies of this Credit Agreement, the Letter of Credit, and the other Credit
Documents.

(b)           No Default; Representations and Warranties. As of the Closing Date
(i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects.

(c)           Corporate Documents. Receipt by the Lender of the following:

(i)           Charter Documents. A copy of the articles of incorporation of the
Borrower certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state of its incorporation and
certified by an officer of the Borrower to be true and correct as of the Closing
Date.

(ii)           By-laws. A copy of the by-laws of the Borrower certified by an
officer of the Borrower to be true and correct as of the Closing Date.

(iii)           Resolutions. A copy of the resolution of the board of directors
of the Borrower approving and adopting the Credit Documents to which it is a
party, the transactions contemplated thereby and authorizing execution and
delivery thereof, certified by an officer of the Borrower to be true and correct
and in force and effect as of the Closing Date.

(iv)           Good Standing. A copy of (A) the certificate of good standing,
with respect to the Borrower, certified as of a recent date by the appropriate
Governmental Authorities of the state of incorporation and each other
jurisdiction in which the failure to so qualify and be in good standing would
have a Material Adverse Effect on the business or operations of the Borrower in
such jurisdiction and (B) to the extent available, a certificate indicating
payment of all corporate franchise taxes certified as of a recent date by the
appropriate governmental taxing authorities.

(v)           Incumbency.  An incumbency certificate, including specimen
signatures, of the authorized signatories of the Borrower authorized to execute
the Credit Documents to which it is a party on behalf of the Borrower.

(d)           Material Adverse Change. Since December 31, 2009, there shall not
have occurred, nor otherwise exist, an event or condition which has a Material
Adverse Effect on the Borrower.

 
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(e)           Opinion of Borrower’s Counsel. Lender shall have received a legal
opinion addressed to the Lender and dated the Closing Date from Borrower’s
Counsel, Morgan, Lewis & Bockius LLP, in the form of Exhibit  F.
 
(f)           Public Records Searches.   Lender shall have received UCC, liens,
judgments and Bankruptcy searches, each of which shall in all respects be
satisfactory to Lender.  For purposes of this Section 3.1 (f), UCC and lien
searches reflecting only Permitted Liens identified in Exhibit E shall be deemed
satisfactory to Lender.
 
(g)           Other.  Receipt by the Lender of such other documents, agreements
or information which it may reasonably requested.
 
 
SECTION 4
 
REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lender as of the date of this Credit
Agreement and on each date on which a Loan is disbursed, as follows:

4.1           Corporate Status.

The Borrower is a corporation duly formed and organized and validly existing in
good standing in its jurisdiction of incorporation, is duly qualified and in
good standing as a foreign corporation and authorized to do business in and to
own its assets in all other jurisdictions wherein the nature of its business or
property makes such qualification necessary, except where its failure so to
qualify would not have a Material Adverse Effect, and has full power to own its
real properties and its material personal properties and to carry on its
business as now conducted.

4.2           Corporate Authorization.

The execution, delivery and performance of the Credit Documents by the Borrower
are within the powers and authority of the Borrower, have been duly authorized
by proper corporate proceedings and do not and will not contravene any provision
of applicable law or of its articles of incorporation, as amended to date, or
the by-laws, as amended to date, or any instrument binding on the Borrower or
any of its material properties or assets, or result in the creation or
imposition of any Lien upon any of its property or assets pursuant to any
agreement or any instrument to which it is a party or by which it is bound. Each
of this Credit Agreement and other Credit Documents to which it is a party has
been duly executed and delivered by the Borrower and constitutes the legal,
valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to the effect of (a) applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law affecting the
enforceability of creditors’ rights generally and (b) general principles of
equity (whether in a proceeding at law or in equity).

4.3           Liens; Indebtedness.

Neither the Borrower nor any of its Subsidiaries has outstanding any Lien except
as identified on Exhibit E.   Other than as reflected on Exhibit E, no Lien
exceeds $100,000 and the amount all Liens in a stated category do not exceed, in
the aggregate, $500,000.

4.4           Litigation.

There are no actions, suits or proceedings pending or, to the best knowledge of
the Borrower, threatened against or affecting the Borrower or any Subsidiary in
any court or arbitration or before or by any governmental department, agency or
instrumentality, domestic or foreign, which reasonably could be expected to have
a Material Adverse Effect; and none of the Borrower or any Subsidiary is in
violation of any judgment, order, writ, injunction, decree or award or in
violation of any rule or regulation of any Governmental Authority, domestic or
foreign, the violation of which would have a Material Adverse Effect.
 
 
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4.5           Governmental and Other Approvals.

 
No approval, consent or authorization of, or any other action by, or filing or
registration with, any governmental department, agency or instrumentality,
domestic or foreign, is necessary for the execution or delivery by the Borrower
of the Credit Documents or for the performance by the Borrower of any of the
terms or conditions hereof.
 
4.6           Use of Loan.
 
Proceeds of the Loan will be used and applied solely for purposes of completing
the development and construction of the Project (“Permitted
Purposes”).  Notwithstanding any conflicting or inconsistent provision of this
Agreement, Lender may, in its sole discretion, require as a condition to making
any advances or disbursements of proceeds of the Loan, require Borrower to
furnish for review by Lender, any reports, information, material or data which
shall be satisfactory to Lender in all respects, to enable Lender to determine
(which determination shall be conclusive and binding) whether the intended
purpose(s) set forth in any applicable Notice of Borrowing qualifies as a
Permitted Purpose(s).  Without limiting any other provision of this Agreement or
under applicable law, the making of any Loan or disbursement of any proceeds
thereof shall not be deemed an approval or acceptance by the Lender of any work
performed or to be performed on the Project, it being understood and agreed that
(i) any determination by Lender as to whether the intended purpose set forth in
any applicable Notice of Borrowing qualifies as a Permitted Purpose(s) shall be
for Lender’s sole benefit and (ii) Lender shall have no obligation to monitor or
determine Borrower’s use or application of any advance or disbursement of Loan
proceeds.

4.7           ERISA.

Each of the Borrower and each Subsidiary has fulfilled its obligations, if any,
under the minimum funding standards of ERISA with respect to each Plan
maintained by it and is otherwise in compliance in all material respects with
the applicable provisions of ERISA.

4.8           Environmental Compliance.

Each of the Borrower and its Subsidiaries is in substantial compliance with all
applicable federal, state and local environmental laws, regulations and
ordinances governing its business, properties or assets with respect to
discharges into the ground and surface water, emissions into the ambient air and
generation, storage, transportation and disposal of waste materials or process
by-products, except such noncompliances as are not likely to have a Material
Adverse Effect.

4.9           Foreign Assets Control Regulations, Etc.; OFAC Compliance.

Neither the execution and delivery of this Credit Agreement or the other Credit
Documents by Borrower nor the use of the proceeds of the Loan, will violate the
Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) of the Anti-Terrorism Order or any enabling legislation
or Executive Order relating to any of the same. Without limiting the generality
of the foregoing, neither the Borrower nor any of their respective Subsidiaries
(a) is or will become a blocked person described in Section 1 of the
Anti-Terrorism Order or (b) engages or will engage in any dealings or
transactions or be otherwise associated with any such blocked person.

None of the Borrower or any Subsidiary thereof or any principal of Borrower or
any Person who controls Borrower is listed on the Specially Designated Nationals
and Blocked Persons List maintained by the Office of Foreign Asset Control,
Department of the Treasury (“OFAC”) pursuant to Executive Order No. 13224, 66
Fed. Reg. 49079 (Sept. 25, 2001), and/or any other list maintained pursuant to
any of the rules and regulations of OFAC or pursuant to any other applicable
Executive Orders or otherwise subject to any sanction imposed pursuant to an
OFAC implemented regulation.
 
 
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SECTION 5
 
COVENANTS

So long as any of the Commitment is in effect and, in any event, until
indefeasible payment in full and discharge of all Obligations to the Lender,
including payment of all principal of and interest on the Loan, the Borrower
shall comply, and shall cause each Subsidiary, to the extent applicable, to
comply, with the following covenants:
 
5.1           Corporate Existence.

The Borrower will, and will cause each of its Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business; provided that the foregoing shall not prohibit any merger or
consolidation permitted under Section 5.4.

5.2           Reports, Certificates and Other Information.

The Borrower shall furnish to the Lender:

(A)           as soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, the audited consolidated balance sheet
of the Borrower and its consolidated Subsidiaries as at the end of such fiscal
year and the consolidated statements of income, cash flows and common
shareholders’ equity of the Borrower and its consolidated Subsidiaries for such
fiscal year, setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, all in reasonable detail and accompanied
by a report or opinion (which shall not be qualified by reason of any
limitations imposed by the Borrower) of an independent public accounting firm of
recognized national standing selected by the Borrower, which shall be prepared
in accordance with generally accepted auditing standards relating to reporting,
to the effect that such financial statements present fairly, in accordance with
GAAP consistently applied (except for changes in which such accountants concur),
the consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at the end of such fiscal year and their consolidated results of
operations and the consolidated cash flows for such fiscal year;

(B)           as soon as available and in any event within 90 days after the end
of each quarterly period (other than the last quarterly period) in each fiscal
year of the Borrower, the condensed consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at the end of such quarterly period and the
condensed consolidated statements of income and cash flows of the Borrower and
its consolidated Subsidiaries for that part of the fiscal year ended with such
quarterly period, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year,
all in reasonable detail and certified by a principal financial officer of the
Borrower subject to normal year-end adjustments;

(C)           immediately upon a senior officer in the Borrower’s finance
department becoming aware of (i) the existence of a Default or an Event of
Default; and (ii) any matter that has resulted or could reasonably be expected
to result in a Material Adverse Effect, including, without limitation, (a) any
dispute, litigation, investigation, proceeding or suspension between the
Borrower or any of its Subsidiaries and any Governmental Authority; (b) the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any of its Subsidiaries, including pursuant to any
applicable environmental law; and (c) any litigation, investigation or
proceeding affecting the Borrower in which the amount involved exceeds $500,000,
or in which injunctive relief or similar relief is sought, in the cases of
subclauses (ii) (a) through (c) which could reasonably be expected to have a
Material Adverse Effect, a written notice specifying the nature and period of
existence thereof and what action the Borrower is taking or proposes to take
with respect thereto;

(D)           promptly after the sending or filing thereof, copies of all
reports which the Borrower may from time to time furnish its stockholders; and

(E)           within five (5) business days following the close of each calendar
month with respect to the month just ended: (i) reports on the progress of the
development and construction of the Project; (ii) financial statements of
Borrower; (iii) reports on the business operations of Borrower (including,
without limitation, reports on production volume, customer lists, sales volume,
unit pricing and such other information required by Lender); and (iv) reports on
the performance and status of Borrower’s obligations to each of its customers
identified on Exhibit E;  each of the foregoing reports and information required
under this Section 5.2 (E) shall be in such form, substance and detail as
required by Lender, in its sole discretion, and each of which shall be duly
certified by a duly authorized officer(s) of Borrower having knowledge of the
respective contents, as shall be reasonably determined by Lender.

 
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At any reasonable time and from time to time, upon ten (10) Business Days’ prior
written notice, the Borrower shall permit the Lender or any agents or
representatives thereof, to examine and make copies of and abstracts from the
records and books of account of and visit the properties of the Borrower and any
of its Subsidiaries, and to discuss the affairs, finances and accounts of the
Borrower and any of its Subsidiaries, in each case to the extent regarding this
Credit Agreement, (i) with any of the Borrower’s senior officers or any of the
Borrower’s officers within the Borrower’s finance department and (ii) with the
Borrower’s independent public accounting firm, in the presence of one or more
officers of the Borrower if so requested by the Borrower (it being understood
that information obtained by the Lender pursuant to this Section shall be kept
confidential except to the extent any such information becomes public or is
required to be disclosed by law or requested to be disclosed by any Governmental
Authority); provided that none of the Lender and the agents and representatives
thereof shall be entitled to examine or make copies of or abstracts from the
records of the Borrower or any Subsidiary if the Borrower shall be advised by
counsel, in good faith, that the examination, copying or abstracting of such
information or material could result in a waiver of any attorney-client
privilege relating to such information or material or otherwise compromise the
Borrower’s or a Subsidiary’s position in any litigation, investigation or other
legal proceeding to which the Borrower or any Subsidiary is a party or is
subject.

5.3           Other Reports.  Borrower shall furnish or cause to be furnished to
Lender, such other and additional reports, information, material and data as may
be reasonably requested by Lender from time to time regarding the condition,
operations, status of business, legal and other affairs, financial or otherwise,
of Borrower or any Consolidated Subsidiary, as well as other evidence to
Lender’s satisfaction reflecting Borrower’s compliance with this Agreement and
other Credit Documents.

5.4           Mergers and Consolidations.

The Borrower shall not, nor shall it permit any Material Subsidiary to, (i)
merge or consolidate with or into any other entity that is not the Borrower or
another Material Subsidiary unless the Borrower or the Material Subsidiary or
another Subsidiary, all of the equity interests of which are owned by the
Borrower, directly or indirectly, is the surviving entity and no Default or
Event of Default shall exist either immediately prior to or after giving effect
thereto, or (ii) sell, lease or otherwise transfer all or substantially all of
its property, assets and business to any other entity other than the Borrower or
a Material Subsidiary or another Subsidiary, all of the equity interests of
which are owned by the Borrower, directly or indirectly.

5.5           Taxes.

The Borrower shall, and shall cause each Subsidiary to, pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or property, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been established
and except where the failure to do so would not have a Material Adverse Effect.

5.6           Insurance.

The Borrower shall, and shall cause each Subsidiary to, maintain insurance,
which may include self-insurance, in such amounts and covering such risks as is
consistent with sound business practice; provided that the Borrower and each
Subsidiary may self-insure the risks of damage to its Properties and other
losses resulting from named and other windstorms and related causes without
establishing any reserve relating to such retained risks.
 
 
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5.7           Compliance with Laws.

The Borrower shall, and shall cause each of its Subsidiaries to, comply in all
material respects with the requirements of all federal, state and local laws,
rules, regulations, ordinances and orders (including, without limitation,
environmental laws) applicable to or pertaining to their Properties or business
operations except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings or where the failure to comply is not
likely to either (i) have a Material Adverse Effect or (ii) result in a Lien
upon any of their Property.
 
5.8           Payment of Obligations.

The Borrower will, and will cause each of its Subsidiaries to, pay and discharge
as the same shall become due and payable, all its material obligations and
liabilities, including: (i) all tax liabilities, assessments and governmental
charges or levies upon it or its Properties, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves (if required by
GAAP) in accordance with GAAP are being maintained by the Borrower or such
Subsidiary; and (ii) all lawful claims which, if unpaid, would by law become a
Lien upon its Property.

5.9           Maintenance of Properties. Etc.

The Borrower shall, and shall cause each of its Subsidiaries to, maintain and
preserve all of their Properties that are used or useful in the conduct of its
business in good working order and condition, ordinary wear and tear expected,
to the extent that failure to maintain any of such Property would be reasonably
likely to have a Material Adverse Effect.

5.10           Change in the Nature of Business.

The Borrower shall not, and shall not permit any of its Subsidiaries to, engage,
in any material respect, in a business other than the manufacturing and
provision of such products and services as the Borrower and its Subsidiaries
currently manufacture and provide or products and services that are similar to
the services and products currently provided and activities related and
complementary to any of the foregoing.

5.11           Transactions with Affiliates.

The Borrower shall not, and the Borrower shall not permit or cause any of its
Subsidiaries to, enter into or consummate any transaction with any Affiliate of
such Person other than (a) as expressly permitted by, and subject to, the other
terms of this Credit Agreement, and (b) other transactions pursuant to
agreements which are entered into in the ordinary course of business and are on
fair and reasonable terms not less favorable to the Borrower or such Subsidiary
than would be obtained in an arm’s length transaction between unrelated parties
of equal bargaining power; provided , that the Borrower and its Subsidiaries may
enter into transactions that are not on an arm’s-length basis with such
Affiliates so long as the fair market value of any such transaction does not
exceed $100,000 at any time.

5.12           Foreign Assets Control Regulations.

(1) The Borrower shall not use the proceeds of the Loan in any manner that will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or the Anti-Terrorism Order of any enabling
legislation or Executive Order relating to any of the same. Without limiting the
foregoing, the Borrower will not permit itself, any principal of Borrower, any
Person who controls Borrower or any of its Subsidiaries to (a) become a blocked
person described in Section 1 of the Anti-Terrorism Order or (b) knowingly
engage in any dealings or transactions or be otherwise associated with any
person who is known by the Borrower or who (after such inquiry as may be
required by Applicable Law) should be known by the Borrower to be a blocked
person. (2) Each Person who controls Borrower or other direct or indirect
principal of Borrower shall be at all times during the term of the Loan an
entity or person which (a) is (as whose principals shall be) a reputable entity
or person of good character and in good standing as reasonably determined by the
Lender, (b) is creditworthy and not adverse to the Lender in any pending
litigation or arbitration in which the Lender is also a party, (c) is not a
Prohibited Person, and (d) is in good standing in its state or country or
organization.
 
 
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5.13           Disbursement Account.

Not later than the Closing Date, Borrower shall establish the Disbursement
Account with Lender. Borrower shall continuously maintain the Disbursement
Account with Lender during the entire term of this Agreement and continuing
until the Loan and all other Obligations of Borrower to Lender shall have been
indefeasibly repaid in full.  The Disbursement Account shall be subject to the
control of Lender and all transfers, withdrawals and disbursement of funds
deposited therein shall be subject to the prior approval of Lender.  Without
limiting any provision herein or under applicable law, Borrower hereby grants
and Lender shall have a first priority security interest in the Disbursement
Account and in all funds now or hereafter in the Disbursement Account (including
but not limited to all funds hereafter deposited in the Disbursement
Account).  This Agreement constitutes an agreement providing Lender with
“control of a deposit account” in accordance with Article 9 of the United
Commercial Code as now and hereafter in effect in the State of New York State
(the "UCC") and the Borrower and Lender intend Lender's security interest to be
automatically perfected by reason of such control.
 
5.14           Completion of Project.

The Borrower shall diligently and continuously pursue to completion, development
and construction of the Project in accordance with all Approved Plans and in
compliance with all Applicable Permits and Requirements of Law,   provided,
however, that Borrower shall not be considered in breach of this Section 5.14 to
the extent and during such period that it is prevented from performing its
obligations under this Section 5.14 by a cause or causes beyond the reasonable
control of Borrower or which could not reasonably be avoidable by Borrower,
which causes shall include, but not be limited to, any of the following that
arise after the Borrowing Date: (i) strikes or similar labor disputes (unless
restricted to employees of Borrower); (ii) changes in governmental regulations
or controls; (iii) fire, explosion, earthquake, flood or other act of God; or
(iv) inability to obtain any material or services.
 

SECTION 6
 
EVENTS OF DEFAULT

6.1           Events of Default.

Each of the following occurrences shall constitute an “Event of Default” under
this Credit Agreement:
(A) any representation or warranty made by the Borrower to the Lender in or in
connection with this Credit Agreement or any of the other Credit Documents shall
prove to have been false or misleading in any material respect when made or
furnished; (B) the Borrower shall fail to pay (i) any principal of any Loan as
and when the same shall become due and payable, or (ii) any interest on any
Loan, any costs and expenses or other Obligation as and when the same shall
become due and payable, and such failure shall continue unremedied for more than
three (3) Business Days; (C) the Borrower shall fail to pay when due, whether by
acceleration or otherwise, one or more evidences of Indebtedness (other than the
Loan hereunder) having an aggregate unpaid balance of more than $1,000,000, and
such failure shall continue for more than the period of grace, if any,
applicable thereto and shall not have been waived; (D) (i) the Borrower shall
fail to perform or observe any term, covenant or agreement contained in Sections
5.1, 5.4, 5.10, and 5.11 of this Credit Agreement on its part to be performed or
observed or (ii) the Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Credit Agreement or any other Credit
Document on its part to be performed or observed, and such failure shall
continue unremedied for a period of thirty (30) days after (I) the Borrower
shall have received notice of such failure from the Lender or (II) a senior
officer in the finance department of the Borrower shall have knowledge of such
failure, whichever shall first occur; (E) the Borrower or any Material
Subsidiary shall (i) apply for or consent to the appointment of a receiver,
custodian, trustee or liquidator of the Borrower or such Subsidiary or any of
their respective properties or assets, (ii) generally fail or admit in writing
its inability to pay its debts as they become due, (iii) make a general
assignment for the benefit of creditors, (iv) commence a voluntary case under
the Bankruptcy Code, (v) file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or readjustment of debts, (vi) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against the
Borrower or such Material Subsidiary in an involuntary case under the Bankruptcy
Code or (vii) take any corporate action for the purpose of effecting any of the
foregoing; (F) a proceeding or case shall be commenced, without the application
or consent of the Borrower or any Material Subsidiary, in any court of competent
jurisdiction seeking (i) its liquidation, reorganization, dissolution or
winding-up or the composition or readjustment of its debts, (ii) the appointment
of a trustee, receiver, custodian or liquidator of the Borrower or such Material
Subsidiary or of all or any substantial part of its assets or (iii) similar
relief in respect of the Borrower or such Material Subsidiary under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of sixty (60) days;
(G) any final judgment, final consent decree or final order for the payment of
money (or for the performance of any remedial action or other services that
would result in the expenditure of funds by the Borrower or any of its
Subsidiaries) shall be rendered against the Borrower or any of its Subsidiaries
by any federal, state or local court or administrative agency and the same shall
fail to be discharged, stayed or bonded for a period of sixty (60) days after
such final judgment, final consent decree or final order for the payment of
money (or, in the case of performance obligations, shall fail to be performed in
the manner and at the times required in such final judgment, final consent
decree or final order or shall fail to otherwise be discharged, stayed or
bonded, in any such case, for a period of sixty (60) days after the performance
of such obligations is required); provided that no occurrence described in this
subsection (G) shall constitute an Event of Default unless the aggregate
outstanding liability of the Borrower and its Subsidiaries which has resulted
from all such occurrences shall exceed $500,000 (or its equivalent in any other
currency); or (H) a Change of Control shall have occurred.

 
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6.2           Rights and Remedies.

In the case of an Event of Default described in subsection (E) or (F) of Section
6.1 relating to the Borrower or a Material Subsidiary, the Commitment of the
Lender shall be immediately terminated and the Loan, including all interest
thereon, and all other Obligations shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower. In the case of any other Event of Default, and
in any such event (other than an event described in subsection (E) or subsection
(F) of Section 6.1 relating to the Borrower or a Material Subsidiary), the
Lender may, by notice to the Borrower (i) terminate forthwith the Commitment of
the Lender and/or (ii) declare the Loan, including all interest thereon, and all
other Obligations to be forthwith due and payable, whereupon the Loan and all
such other Obligations shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower, (iii) make a drawing under the Letter
of Credit and apply the proceeds of such drawing toward the discharge of the
Obligations and/or (iv) exercise any rights or remedies provided to the Lender
under the Credit Documents or at law or equity.

SECTION 7
 
MISCELLANEOUS

7.1           Notices.

Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via confirmed telecopy (or other confirmed
facsimile device) to the number set out below, (iii) the Business Day following
the day on which the same has been delivered prepaid to a reputable national
overnight air courier service for next day delivery, or (iv) the third Business
Day following the day on which the same is sent by certified or registered mail,
postage prepaid, return-receipt requested, in each case to the respective
parties at the address set forth below or at such other address as such party
may specify by written notice to the other party hereto:
 
 
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if to the Borrower:

HOKU CORPORATION
1288 Ala Moana Blvd., Suite 220
Honolulu, Hawaii 96814
Telephone: (808) 682-7800
Fax: (808) 440-0357

if to the Lender

CHINA CONSTRUCTION BANK CORPORATION, NEW YORK BRANCH
1095 Avenue of the Americas
33rd Floor
New York, New York 10036
Telephone: (646) 781-2452
Fax: (646) 781-2459
 
7.2           Benefit of Agreement.

(a)           Generally. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that the Borrower may not assign and transfer any
of its interests without prior written consent of the Lender; provided further
that the rights of the Lender to transfer, assign or grant participations in its
rights and/or obligations hereunder shall be limited as set forth in this
Section 7.2, provided , however , that nothing herein shall prevent or prohibit
the Lender from (i) pledging or assigning its Loan hereunder to a Federal
Reserve Bank in support of borrowings made by the Lender from such Federal
Reserve Bank, or (ii) granting assignments or participations in the Lender’s
Loan and/or Commitments hereunder to its parent company and/or to any of its
Affiliate.

(b)           Assignments. The Lender may, upon obtaining the consent of the
Borrower, assign all of its rights and obligations hereunder pursuant to an
Assignment and Acceptance to another bank or financial institution; provided
that (i) no such consent shall be unreasonably withheld or delayed and (ii)
consent of the Borrower shall not be required with respect to any assignment by
the Lender to its Affiliate or to a party that is not a competitor of or adverse
to the Borrower and no such consent shall be required from the Borrower after
the occurrence and during the continuation of any Event of Default. Any
assignment hereunder shall be effective upon execution by all necessary parties
of the applicable Assignment and Acceptance. The assigning Lender will give
prompt notice to the Borrower of any such assignment. Upon the effectiveness of
any such assignment (and after notice to the Borrower as provided herein), the
assignee shall become a “Lender” for all purposes of this Credit Agreement and
the other Credit Documents and, to the extent of such assignment, the assigning
Lender shall be relieved of its obligations hereunder to the extent of the Loan
and Commitment components being assigned.

(c)           Participations. The Lender may sell, transfer, grant or assign
participations in all or any part of its interests and obligations hereunder to
one or more banks or other entities (each a “ Participant ”); provided that (i)
the selling Lender shall remain the “Lender” for all purposes under this Credit
Agreement (the selling Lender’s obligations under the Credit Documents remaining
unchanged) and the Participant shall not constitute a Lender hereunder, (ii) no
such Participant shall have, or be granted, rights to approve any amendment or
waiver relating to this Credit Agreement or the other Credit Documents except to
the extent any such amendment or waiver would (A) reduce the principal of or
rate of interest on or fees in respect of any Loan in which the Participant is
participating, or (B) postpone the date fixed for any payment of principal
(including extension of the Maturity Date or the date of any mandatory
prepayment), interest or fees in which the Participant is participating and
(iii) sub-participations by the Participant (except to an affiliate, parent
company or affiliate of a parent company of the Participant) shall be
prohibited. In the case of any such participation, except as contemplated in
clause (ii) of the proviso of the first sentence of this Section, the
Participant shall not have any rights under this Credit Agreement or the other
Credit Documents (the Participant’s rights against the selling Lender in respect
of such participation to be those set forth in the participation agreement with
the Lender creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such participation.
 
 
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7.3           No Waiver; Remedies Cumulative.

No failure or delay on the part of the Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between or among the parties hereto shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
under any other Credit Document preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder or thereunder.
The rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies which the Lender would otherwise have. No notice to or demand
on any party hereto in any case shall entitle any such party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Lender to take any other or further action in any
circumstances without notice or demand.
 
7.4           Payment of Expenses, etc.

The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and expenses
(including reasonable legal fees and disbursements) of the Lender in connection
with the preparation, negotiation, execution and delivery of any amendment,
waiver or consent relating to this Credit Agreement and the other Credit
Documents to which it shall consent, including, but not limited to, any such
amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructuring relating to the performance by the Borrower under
this Credit Agreement and of the Lender in connection with enforcement of the
Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of outside counsel for the Lender); and (ii)
indemnify the Lender, their respective officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not the Lender is a
party thereto) related to the entering into and/or performance of any Credit
Document or the use of proceeds of any Loan (including other extensions of
credit) hereunder or the consummation of any other transactions contemplated in
any Credit Document, including, without limitation, the reasonable fees and
disbursements of outside counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified). In clause (ii) of the immediately preceding sentence, to the
extent any such investigation, litigation or other proceeding shall be brought
by or relate to a third party (other than by and between the Borrower and the
Lender) then the Borrower shall be permitted to defend claims using
professionals chosen by the Borrower, subject to the approval of the Lender,
which approval shall not be unreasonably withheld or delayed. The Borrower
agrees that in any such case no claim will be settled without the prior written
consent of the indemnified Person against whom such claim is made unless such
settlement includes an unconditional release of such Person. Without limiting
the foregoing or any other provision herein, if this Credit Agreement, any other
Credit Document or the transaction contemplated herein, is referred to an
attorney for consultation regarding the assertion or enforcement of any rights
or defenses in connection with any pending or threatened legal or equitable
proceedings or through the Bankruptcy Court or if Lender is required to respond
to, appear in or otherwise expend any time or resources in connection with any
inquiry, subpoena, audit, examination, investigation, proceeding or action in
connection with this Credit Agreement, any other Credit Document, the
transaction contemplated herein or otherwise relating to the Borrower and/or its
members, shareholders partners, officers and principals (including, without
limitation, fees, costs, and expenses incurred in connection with investigating
and responding to subpeonae relating to any of the foregoing), Borrower shall,
promptly upon demand by Lender, pay or reimburse (as the case may be) all (i)
reasonable fees and expenses of lawyers, fees and expenses of accountants and
other consultants engaged by Lender for such purpose(s) and (ii) all
out-of-pocket costs, expenses and disbursements incurred by Lender
in  connection with same together with interest thereon at the Default Rate
through the date of payment.  All of the foregoing fees, costs, wages and
expenses shall be due and payable by Borrower whether or not formal legal action
has been commenced or taken.

7.5           Amendments, Waivers and Consents.

Neither this Credit Agreement nor any other Credit Document nor any of the terms
hereof or thereof may be amended, changed, waived, discharged or terminated
unless such amendment, change, waiver, discharge or termination is in writing
signed by the Lender and the Borrower.  No purported oral amendment, change,
waiver, discharge or termination shall be binding upon or effective against the
Lender notwithstanding the fact that such claimed amendment, change, waiver,
discharge or termination shall have been substantially and detrimentally relied
upon by Borrower.
 
 
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7.6           Counterparts.

This Credit Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Credit Agreement by facsimile or other
electronic imaging means shall be effective as delivery of a manually executed
counterpart of this Credit Agreement.

7.7           Headings.

The headings of the sections and subsections hereof are provided for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Credit Agreement.
 
7.8           Survival of Indemnification.

All indemnities set forth herein, including, without limitation, in Sections
2.8, 2.9, 2.10 and 7.4 shall survive the execution and delivery of this Credit
Agreement, and the making of the Loan, the repayment of the Loan and other
obligations and the termination of the Commitments hereunder; provided, however,
that payment of any such amounts shall be subject to the limitations, if any,
regarding requirements for notice set out in such Sections.

7.9           Governing Law; Jurisdiction; Waiver of Jury Trial.

(a)           THIS CREDIT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONLICTS OF LAW RULES THEREOF.

(b)           Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Credit Agreement or any other Credit Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Credit Agreement or any
other Credit Document shall affect any right that the Lender may otherwise have
to bring any action or proceeding relating to this Credit Agreement or any other
Credit Document against the Borrower or any of its properties in the courts of
any jurisdiction.

(c)           THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.

7.10           USA Patriot Act.

The Lender hereby notifies the Borrower that pursuant to the requirements of the
USA PATRIOT ACT (Title III of Pub. L. 107-56 ) (the “ Act ”), it is required to
obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow the Lender to identify the Borrower in accordance with the Act.
 
 
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7.11           Severability.

If any provision of any of the Credit Documents is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

7.12           Entirety.

This Credit Agreement together with the other Credit Documents represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.

7.13           Survival of Representations and Warranties.

All representations and warranties made by the Borrower herein shall survive the
execution of this Credit Agreement and the making of the Loan hereunder.
 
7.14           Fiduciary Relationship.

The Borrower, on behalf of itself and its Subsidiaries, agrees that in
connection with all aspects of the transactions contemplated hereby and any
communications in connection therewith, the Borrower, its Subsidiaries and their
Affiliates, on the one hand, and the Lender and its Affiliates, on the other
hand, will have a business relationship that does not create, by implication or
otherwise, any fiduciary duty on the part of the Lender or its Affiliates, and
no such duty will be deemed to have arisen in connection with any such
transactions or communications.
 
[SIGNATURES APPEAR ONN FOLLOWING PAGE]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
duly executed and delivered as of the date first above written.

HOKU CORPORATION
as the Borrower

By:           /s/ Scott
Paul                                                      
Name:      Scott Paul
Title:        President & CEO

By:           /S/ Darryl
Nakamoto                                                                
Name:      Darryl Nakamoto
Title:        CFO, Treasurer & Secretary

CHINA CONSTRUCTION BANK CORPORATION, NEW YORK BRANCH, as the Lender

By:          ________________________________
Name:
Title:

By:           /s/Wei Walter Li                                                
Name:      Wei Walter Li
Title:        General Manager

 
 
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