Credit Agreement

Intending to be legally bound by this Credit Agreement (the “Agreement”), dated
July 25, 2008 (the “Effective Date”), BANK OF HAWAII, a Hawaii corporation,
whose mailing address is P.O. Box 2900, Honolulu, Hawaii 96846 (the “Bank”) and
HOKU SCIENTIFIC, INC., a Delaware corporation, whose address is 1075 Opakapaka
Street, Kapolei, Hawaii 96707 (the “Borrower”) agree as follows:

I. LOAN

1.01  In General. Subject to the terms of this Agreement and the other Loan
Documents, the Bank hereby establishes a term loan in favor of the Borrower (the
“Loan”). Under the Loan, the Bank will make two (2) disbursements to the
Borrower, subject to the terms and conditions as described in Section 1.05 of
this Agreement, with a maturity date of six (6) months after the Closing Date
(the “Maturity Date”).

1.02 Maximum Principal Amount of Loan. The principal amount of the Loan shall
not exceed THREE MILLION FOUR HUNDRED EIGHTY THOUSAND AND NO/100 DOLLARS
($3,480,000.00) (the “Commitment”).

1.03 Purpose. The proceeds of the Loan shall be used by the Borrower to fund
ongoing costs associated with the Borrower’s solar module and polysilicon
business, including the purchase of new equipment, required research and
development costs, and other capital expenditures.

1.04 Security. The Loan shall be secured by an ALTA-insured first mortgage
titled Real Property Mortgage; Security Agreement; Assignment of Rents; Fixture
Filing; and Financing Statement of even date herewith made by Borrower, as
mortgagor, in favor of the Bank, as Mortgagee (the “Mortgage”) for that certain
property located at 1075 Opakapaka Street, Kapolei, Hawaii, covered by Tax Map
Key No. (1) 9-1-075: 009 (the “Property”), more particularly described in
Exhibit “A”, attached hereto and made a part hereof.
 
1.05 Disbursements. Subject to the terms and conditions of the Agreement, the
Bank agrees to make the following disbursements to the Borrower:

a. Initial Disbursement. On the Closing Date, the Bank shall make an initial
disbursement of TWO MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($2,100,000.00) (the “Initial Disbursement”) to the Borrower. Of the Initial
Disbursement, the Bank will advance to the Borrower but not disburse ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($100,000.00), which will be retained by the Bank to
fund the interest costs covering the Commitment (the “Interest Reserve”).
Notwithstanding the foregoing, the Bank shall only be obligated to make the
Initial Disbursement after the Bank has received a threshold valuation of the
Property confirming that the land portion of the Property is valued at no less
than $3,800,000.00 (the “Threshold Valuation”).
 

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b. Final Disbursement. Within thirty (30) days after the Closing Date, but after
the completion and satisfactory review of a summary appraisal of the Property
ordered by the Bank and prepared by a certified general appraiser (the “Summary
Appraisal”), the Bank shall make a second and final disbursement to the Borrower
not to exceed the amount of ONE MILLION THREE HUNDRED EIGHTY THOUSAND AND NO/100
DOLLARS ($1,380,000.00) (the “Final Disbursement”) for the remaining portion of
the Commitment. Of the Final Disbursement, the Bank will determine the amount
the Bank will retain to fund the Interest Reserve. If at any time the Bank
determines that the Interest Reserve is insufficient, the Borrower shall be
required to replenish it within thirty (30) days after receiving notice from the
Bank.

1.06 Maximum Loan to Value Ratio. The Borrower must maintain a sixty percent
(60%) Maximum Loan to Value Ratio (the “Maximum LTV Ratio”) at all times during
the Loan term. The Maximum LTV Ratio shall be based on the total amount of the
Commitment compared to the fair market value of the Property based on the
Summary Appraisal. Thereafter, the fair market value of the Property shall be
adjusted upon completion of any required updated appraisal. If at any time the
actual loan to value ratio exceeds the Maximum LTV Ratio, the Borrower shall
elect to do either of the following to restore compliance with the Maximum LTV
Ratio: 1) Pledge additional assets acceptable to the Bank, or 2) Reduce the
outstanding amount under the Loan.

1.07 Interest; Repayment of Loans. Notwithstanding any other provision of this
Agreement, the entire Commitment shall at all times during the term of the Loan
be either a Base Rate Loan or a LIBOR Loan (as both Loans are hereafter
defined). On or before the Closing Date and prior to the Final Disbursement, as
applicable, the Borrower shall execute and deliver to the Bank a “Notice of
Borrowing” in the form attached hereto as Exhibit “B” and made a part hereof.
The Notice of Borrowing must be received by the Bank no later than 10:00 a.m.
(Hawaii Standard Time) on the date one full Business Day (as defined in Section
1.11c., below) prior to the proposed disbursement date in the case of a Base
Rate Loan or two full Business Days prior to the proposed disbursement date in
the case of a LIBOR Loan.

a. Base Rate. The Borrower agrees to pay interest, which will be made from the
Interest Reserve, in respect of the unpaid principal amount of each Base Rate
Loan for each day during the period commencing on the date the proceeds thereof
are made available to the Borrower until the Maturity Date at a floating rate
per annum which shall be equal to the sum of the Base Rate in effect from time
to time.

“Base Rate” means the primary index rate established from time to time by the
Bank of Hawaii in the ordinary course of its business and with due consideration
of the money market, and published by intrabank memoranda for the guidance of
its loan officers in pricing all of its loans which float with the Base Rate.

Any floating rate of interest will increase or decrease during the term of this
Agreement if there is an increase or decrease in the rate to which the floating
rate is tied. If the rate to which the floating rate is tied is no longer
available, the Bank will choose a new rate that is based on comparable
information.
 
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b. LIBOR. The Borrower agrees to pay interest, which will be made from the
Interest Reserve, in respect of the unpaid principal amount of each LIBOR Loan
during the period commencing on the date the proceeds thereof are made available
to the Borrower for each day during each LIBOR Interest Period applicable
thereto at a rate per annum which shall be equal to the sum of LIBOR for such
LIBOR Interest Period; plus one and one-half percent (1.50%). If Borrower shall:
(a) pay or convert any LIBOR Loan on any day other than the last day of the
applicable Interest Period, whether by acceleration or otherwise; or (b) fail to
borrow any LIBOR Loan or convert any loan into a LIBOR Loan or rollover in
accordance with a Notice of Borrowing delivered to the Bank (whether as a result
of the failure to satisfy any applicable conditions or otherwise), Borrower
shall reimburse the Bank and hold the Bank harmless for all costs, net losses or
administrative overhead incurred as a result of such repayment, prepayment or
failure. The Bank may use any reasonable method in calculating its loss under
this Section 1.07 (b), which calculation shall be binding and conclusive on
Borrower absent manifest error. Borrower shall be obligated to manage the loans
so that there are sufficient funds on hand to make each principal installment
payment when required without prepaying a LIBOR Loan.

1. If the Bank shall reasonably determine (which determination shall be final
and conclusive and binding upon all parties) that:

a. on any date for determining the LIBOR for any LIBOR Interest Period, by
reason of any change after the date hereof affecting the interbank Eurodollar
market or affecting the position of the Bank in such market, adequate and fair
means do not exist for ascertaining the applicable interest rate by reference to
LIBOR, including, without limitation, if quotations of interest rates for the
relevant deposits referred to in the definition of LIBOR are not being provided
in the relevant amounts or for the relative maturities for purposes of
determining the interest rate with respect to a LIBOR Loan; or

b. at any time, by reason of: (A) the adoption of any new law, rule, regulation,
order, guideline, directive or request (whether or not having the force of law)
or any change after the date hereof in any applicable law or governmental rule,
regulation or order or any interpretation thereof by a governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or otherwise (provided that, in the case of an
interpretation not by a governmental authority, central bank or comparable
agency, such interpretation shall be made in good faith and shall have a
reasonable basis); or (B) in the case of LIBOR Loans, other circumstances
affecting the Bank or the interbank Eurodollar market or the position of the
Bank in such market, LIBOR shall not represent the effective pricing to the Bank
for funding or maintaining the affected LIBOR Loan or the cost of the Bank of
maintaining its Commitment under this Agreement is increased; or

c. at any time that the adoption of any applicable law, rule, regulation,
guideline, directive, or request (whether or not having force of law) regarding
capital requirements for banks or bank holding companies or any change therein
or in the interpretations or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any of the foregoing
imposes or increases a requirement by the Bank to allocate capital resources to
the LIBOR Loan which has or will have the effect of reducing the rate of return
on the Bank’s capital or that of the corporation controlling the Bank to a level
below that which the Bank or such other corporation could have achieved (taking
into consideration the Bank’s then existing policies with respect to capital
adequacy and assuming full utilization of the Bank’s capital) but for such
adoption, change or compliance by any amount deemed by the Bank to be material;
or
 
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d. at any time, by reason of the requirements of Regulation D or other statutory
or regulatory reserve requirements, LIBOR shall not represent the effective
pricing to the Bank for funding or maintaining the affected LIBOR Loan; or

e. at any time that the making or continuance of any LIBOR Loan has become
unlawful by reason of compliance by the Bank in good faith with any law or
governmental rule, regulation, guideline, requests, directive or order (whether
or not having the force of law), or would cause severe hardship to the Bank as a
result of a contingency occurring after the date hereof which materially and
adversely affects the interbank Eurodollar market; then, and in any such event,
the Bank shall on such date of determination give notice (by telephone confirmed
in writing) to the Borrower of such determination.

2. At any time that any of its LIBOR Loans are affected by the circumstances
described in Section (1) above, the Bank may:

i. if the affected LIBOR Loan is then being made, cancel said LIBOR Loan on the
same date that the Borrower was notified by the Bank pursuant to Section (1), or

ii. if the affected LIBOR Loan is then outstanding, convert such LIBOR Loan into
a Base Rate Loan.

In no event shall the Borrower be obligated to pay any amount under this
Agreement that exceeds the maximum amount allowable by law. If any sum is
collected in excess of the applicable maximum amount allowable by law, the
excess collected shall, at the Bank’s discretion, be applied to reduce the
principal balance of the Loans or returned to the Borrower.

1.08 Interest Computation/Maximum Interest Rate. Interest on each LIBOR Loan
shall be computed (but not compounded) on the basis of the actual number of days
elapsed and a 360-day year. Interest on each Base Rate Loan shall be computed
(but not compounded) on the basis of the actual number of days elapsed and a
year of 365 days or 366 days, as the actual case may be. In computing interest
on each Loan, the date of the making of such Loan shall be included and the date
of payment shall be excluded; provided, however, that if a Loan is repaid on the
same day on which it is made, such day shall nevertheless be included in
computing interest thereon.

In no event shall the Borrower be obligated to pay any amount under this
Agreement that exceeds the maximum amount allowable by law. If any sum is
collected in excess of the applicable maximum amount allowable by law, the
excess collected shall, at the Bank’s discretion, be applied to reduce the
principal balance of the Loans or returned to the Borrower.
 
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1.09 Interest Periods. In the case of each LIBOR Loan, upon written or
telephonic notice (confirmed in writing) to the Bank three (3) Business Days
prior to the commencement date of each LIBOR Interest Period therefor, the
Borrower shall have the option to specify whether such LIBOR Interest Period
shall be a period of 1, 2 or 3 months; provided that, in no event shall a LIBOR
Interest Period in respect of any LIBOR Loan extend beyond the Maturity Date. If
the Bank shall not have received timely notice of a designation of a LIBOR
Interest Period, the Borrower shall be deemed to have elected to convert such
LIBOR Loan to which such LIBOR Interest Period would have been applicable into a
Base Rate Loan effective on the last day of the preceding LIBOR Interest Period
applicable thereto. The Interest Period applicable to each Base Rate Loan shall
commence on the date it is made and terminate on the earliest of: (A) the
maturity date for such loan (whether by acceleration or otherwise); or (B) the
date it is paid in full. The determination of Interest Periods shall be subject
to the following provisions:

A. the initial LIBOR Interest Period for each LIBOR Loan shall commence on the
date such LIBOR Loan is made and each LIBOR Interest Period occurring thereafter
in respect of such LIBOR Loan shall commence on the day on which the immediately
preceding Interest Period therefor expires;

B. if any LIBOR Interest Period would otherwise expire on a day which is not a
Business Day, such LIBOR Interest Period shall expire on the next succeeding
Business Day; provided, however, that if such next succeeding Business Day is a
day of the next calendar month, such LIBOR Interest Period shall expire on the
next preceding Business Day; and

C. no LIBOR Interest Period in respect of any Loan shall extend beyond the
Maturity Date.

1.10 Determination of Rate of Borrowing. As soon as practicable, but in no event
less than two (2) Business Days prior to the commencement of each LIBOR Interest
Period with respect to each LIBOR Loan, the Bank shall determine (which
determination shall absent manifest effort be final, conclusive and binding upon
all parties) the rate of interest per annum which shall be applicable to such
LIBOR Loan for the next succeeding Interest Period applicable thereto. Promptly
thereafter, the Bank shall give notice thereof (in writing or by telephone,
confirmed in writing) to the Borrower. If there is no applicable rate for such
LIBOR Loan: (A) the Bank shall promptly give notice thereof (in writing or by
telephone, confirmed in writing) to the Borrower; (B) such Loan shall be
converted to a Base Rate Loan within two (2) Business Days after receipt by
Borrower of the notice described in subsection (A) above; and (C) the Base Rate
applicable to such Loan, as the case may be, shall be the rate per annum
determined pursuant to the provisions of Section 1.06(a), which rate of interest
the Bank shall include in the notice described in subsection (A) above.
 
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1.11 Repayment of Loans.

a. Payment Schedule for Loans. Accrued interest shall be payable in arrears on
each of the following dates (each called an “Interest Payment Date”): (A) in
respect of each Base Rate Loan, on the first Business Day of each calendar
month, commencing on the first Business Day of the month immediately following
the month during which the initial Borrowing is made or during which the Loan
was converted to a Base Rate Loan, as applicable; (B) in respect of each LIBOR
Loan, on the last day of each LIBOR Interest Period applicable thereto; and (C)
in respect of each Loan, on the date of any prepayment thereof and at maturity
(whether by acceleration or otherwise); and (D) after maturity of any Loan, on
demand.

b. Amount of Payments; Maturity. In accordance with payment schedule described
in Section 1.11 (a), the Borrower agrees to make periodic payments to the Bank
equal to: all accrued interest on the outstanding principal balance of each
Loan.

The Borrower agrees to pay in full on or before the Maturity Date all principal,
accrued interest and fees then outstanding with respect to the Loan, not
required to have been previously paid.

c. Currency, Place and Dates of Payments. Payments shall be denominated in
United States money and shall be deemed “made” when received at the Bank’s
address stated below, or at such other place as the Bank shall have designated
by written notice to the Borrower. Any payment due on a day that is not a
Business Day shall be made on the next succeeding Business Day and the extension
of time shall be included in the computation of interest.

“Business Day” means any day on which the Bank is open to the public for
carrying on substantially all of its banking functions.

d. Evidence of Making and Repayment of Loans. The Bank’s records evidencing the
date of disbursement and principal amount of each Loan and the amounts of all
repayments of principal and payments of interest on each Loan shall constitute
prima facie evidence of the making and repayment of such Loans and of the
payment of such interest. However, the Bank’s making of erroneous notations in
its records shall not affect the Borrower’s obligation to repay the outstanding
balance of principal under the Loan and accrued interest thereon, as provided in
this Agreement.

e. Late Charges. If any payment under this Agreement is not made when due, the
Borrower will pay to the Bank a late charge in respect of that payment, in the
amount of five percent (5.00%) of the overdue payment.

f. Application of Payments. Payments under this Agreement may be applied by the
Bank to the indebtedness evidenced by this Agreement in any manner the Bank
deems appropriate. The priority of application elected by the Bank on any one
occasion shall not determine any such election in the future.

g. Prepayment. The Loan may be prepaid in whole or in part; subject, however, to
the payment by Borrower of prepayment fees described as follows:
 
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No prepayment fee for Base Rate Loans. Prepayments of principal for Libor Loans
permitted, but are subject to a breakage fee as hereafter provided.

The Bank reserves the right to determine the order of priority between the Loans
to which such prepayments shall be applied. Partial prepayments shall be applied
against required payments of the most remote maturity, and will not extend the
dates or change the amounts of subsequent installment payments.

1.12 Evidence of Indebtedness; Loan Documents. The Loan is to be evidenced
and/or secured by this Agreement, the Mortgage, and the Note attached hereto as
Exhibit “C” (the “Note”), together with all renewals, extensions and
modifications thereto (collectively, the “Loan Documents”).

1.13 Borrower’s Obligations. The Borrower’s obligations to pay, observe and
perform all indebtedness, liabilities, covenants and other obligations on the
part of the Borrower to be paid, observed and performed under this Agreement,
the Note and the remainder of the Loan Documents are herein collectively called
the “Obligations”.

1.14 Compensation. The Borrower shall compensate the Bank, upon Bank’s written
request given promptly after learning of the same, for all losses, expenses and
liabilities (including, without limitation, breakage fees as described in
Section 1.11 above, and any interest paid by the Bank to lenders of funds
borrowed by it to make or carry its LIBOR Loans and any loss sustained by the
Bank in connection with the re-employment of such funds) which the Bank
sustains: (a) if for any reason (other than a failure of the Bank to perform its
obligations hereunder) a Borrowing or a conversion or a continuation does not
occur on a date specified therefor in a Notice of Borrowing (whether or not
withdrawn or canceled or otherwise); (b) if any prepayment or conversion of any
of its LIBOR Loans occurs on a date which is not the last day of the LIBOR
Interest Period applicable thereto; (c) if any prepayment of any of its LIBOR
Loans is not made on the date specified therefor in a notice of prepayment; or
(d) without duplication of any amounts paid pursuant to this Article I hereof,
as a consequence of any other default by the Borrower to repay LIBOR Loans when
required by the terms of this Agreement. A certificate as to any amounts payable
to the Bank under this Section 1.14 submitted to the Borrower by the Bank shall
show the amount payable and the calculations used to determine such amount and
shall, absent manifest error, be final, conclusive and binding upon the
Borrower.

II. CONDITIONS OF LENDING

2.01 Loan. The obligation of the Bank to make the Loan under this Agreement is
subject to the satisfaction of all of the following conditions on or before the
date on which the Bank shall grant such Loan (the “Closing Date”):

a. Documents Required for Closing. The Bank shall have received, in each case in
form and substance satisfactory to the Bank, such fully executed originals or
certified copies as the Bank may have requested of each of the following, in
each case as amended through the Closing Date: 
 
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i.
Loan Documents. All of the Loan Documents.

 
ii.
Consents. Evidence that all parties to the Loan Documents (except the Bank) have
obtained all necessary and appropriate authority, approvals and consents to
execute and deliver the Loan Documents.

 
iii.
Organizational Documents/Good Standing Certificate. If any party to the Loan
Documents (except the Bank) is a corporation, partnership, trust, association or
other recognized legal entity other than a natural person (a “Legal Entity”),
all instruments pursuant to which such Legal Entity was organized and by which
its internal affairs are governed and, if requested by the Bank, a Certificate
of Good Standing, or other evidence of such Legal Entity’s good standing and
authority to conduct its business in the jurisdiction(s) in which it conducts
its business.

 
iv.
Evidence of Priority. Evidence acceptable to the Bank that the Property has no
liens on and/or security interests except as approved by the Bank in writing.

 
v.
Tax Clearance Certificate. If requested by Bank, a tax clearance certificate for
the Borrower, issued by the Department of Taxation of the State of Hawaii,
evidencing that all taxes due from the Borrower to the State of Hawaii have been
paid.

 
vi.
Hazardous Materials Agreement. The Borrower shall provide the Bank a Hazardous
Materials Agreement stating that the Property is free of contamination and any
hazardous substances.

 
vii.
Lender’s Title Policy. Bank shall receive an Lender’s ALTA title insurance
policy and any endorsements the Bank may require in form and substance
acceptable to Bank.

 
viii.
Threshold Valuation. Bank shall have received a threshold valuation of the
Property confirming that the land portion of the Property is valued at no less
than $3,800,000.00.

 
ix.
Evidence of Insurance. Bank shall have received evidence of the insurance to be
maintained by Borrower as described in Section 4.10.

 
x.
Other Documents. Such other documents as may be reasonably requested by the
Bank.

b. Certain Other Events. On the Closing Date:
 
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i.
The Borrower shall have paid to the Bank all fees and other charges to have been
paid in accordance with the terms hereof and the other Loan Documents.

 
ii.
The representations and warranties contained in Article III of this Agreement
shall be true.

 
iii.
No event shall have occurred and be continuing that: (A) constitutes an Event of
Default; or (B) with the giving of notice or passage of time, or both, would
constitute such an Event of Default.

       
iv.
No material adverse change shall have occurred in the financial condition of the
Borrower since the date of the most recent of the Borrower’s financial
statements submitted to the Bank.

       
v.
No material adverse change shall have occurred in the physical condition of the
Borrower’s assets since the date of this Agreement.

       
vi.
All legal matters incidental to the Closing shall be satisfactory to legal
counsel for the Bank.

2.02 Conversion of Loans. The obligation of the Bank to convert any LIBOR Loan
or Base Rate Loan to a Base Rate Loan or LIBOR Loan is subject to: (i) the prior
satisfaction of all conditions stated above in Section 2.01a; (ii) the
satisfaction as of the date of such subsequent Loan of the conditions stated
above in Section 2.01b. of this Agreement; and (iii) the delivery to the Bank of
such additional Loan Documents as may have been reasonably requested by the Bank
in respect to such Loan conversion.

III. REPRESENTATIONS AND WARRANTIES

To induce the Bank to make the Commitment available to the Borrower, the
Borrower makes the following representations and warranties to Bank, all of
which representations and warranties shall survive the execution of this
Agreement and continue so long as the Borrower is indebted to Bank under the
Loan Documents and until payment in full of the Loan.

3.01 Organization. Borrower is duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the lawful power to
own its properties and to engage in the business it conducts.

3.02 Assumed Business Names. Borrower has filed or recorded all documents or
filings required by law related to all assumed business names used by Borrower.

3.03 No Breach. The execution and performance of the applicable Loan Documents
will not immediately, or with the passage of time or the giving of notice, or
both: (a) Violate any law or result in a default under any contract, agreement,
or instrument to which Borrower is a party or by which Borrower or its property
is bound; or (b) result in the creation or imposition of any security interest
in, or lien or encumbrance on, any of the assets of Borrower, except in favor of
the Bank.
 
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3.04 Authorization. Borrower has the power and authority to incur and perform
the Obligations under the Loan Documents, and, Borrower has taken all corporate
action necessary to authorize the execution and delivery of the applicable Loan
Documents and its incurring of such Obligations.

3.05 Validity. This Agreement is, and the remainder of the Loan Documents when
delivered will be, legal, valid, binding, and enforceable in accordance with
their respective terms.

3.06 Financial Statements. All financial statements heretofore given by Borrower
to Bank, including any schedules and notes pertaining thereto, were prepared in
accordance with generally accepted accounting principles consistently applied,
and fully and fairly present the financial condition of Borrower at the dates
thereof and the results of operations for the periods covered thereby, and as of
the date of this Agreement there have been no material adverse changes in the
financial condition or business of Borrower from the date of the most recent
financial statements given to Bank.

3.07 Taxes. Except as otherwise permitted by this Agreement, Borrower has filed
all tax returns it was required by law to have filed and has paid or caused to
be paid all taxes, assessments and other governmental charges that were due and
payable and has made adequate provision for the payment of such taxes,
assessments or other charges accruing but not yet payable, and Borrower has no
knowledge of any deficiency or additional assessment in a materially important
amount in connection with any taxes, assessments or charges not provided for on
its books.

3.08 Compliance With Law. Except to the extent that the failure to comply would
not materially interfere with the conduct of the business of Borrower, Borrower
has complied with all applicable laws in respect of: (1) restrictions,
specifications, or other requirements pertaining to products that Borrower sells
or to the services it performs; (2) the conduct of its business; and (3) the
use, maintenance, and operation of its properties.

3.09 Statements and Omissions. No representation or warranty by Borrower
contained in this Agreement or in any certificate or other document furnished by
Borrower pursuant to this Agreement contains any untrue statement of material
fact or omits to state a material fact necessary to make such representation or
warranty not misleading in light of the circumstances under which it was made.

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IV. AFFIRMATIVE COVENANTS

For so long as the Commitment or any of the Obligations remains outstanding, the
Borrower will, unless otherwise permitted by the Bank in writing:

4.01 Payments. Punctually pay when due all sums which may be due under the Loan
Documents.

4.02 Accounting Records. Maintain accurate and proper accounting records and
books in accordance with generally accepted accounting principles consistently
applied, and provide Bank with access to such books and accounting records at
Bank’s request during normal business hours.

4.03 Financial Reporting. Furnish Bank with financial reports, certified as true
and correct by Borrower, in reasonable detail and form approved by Bank.

a. Financial Statements and Related 8-K Reports. As soon as available, notify
the Bank that all financial statements and related 8-K reports for Borrower
filed with the Securities Exchange Commission (“SEC”) are available on the SEC’s
website.

4.04 Chief Executive Office. Provide Bank with reasonable prior written notice
of any change of the State of Borrower’s principal place of business at the
address shown on page one (1) of this Agreement.

4.05 State of Organization; Legal Name. Provide Bank with forty-five (45) days’
prior written notice of any change in borrower’s name or type of entity or
jurisdiction of legal formation.

4.06 Existence. Preserve and maintain Borrower’s legal existence as a business
entity and timely file all necessary and appropriate documents and exhibits and
pay all appropriate fees and charges in connection therewith.

4.07 Observance of Laws. Conduct Borrower’s business activities in an orderly,
efficient and regular manner and comply with all requirements of all applicable
state, federal and local laws, rules and regulations.

4.08 Notice to Bank. Promptly give notice to Bank of: (a) the occurrence of any
Event of Default; (b) any change in the name or organizational structure of
Borrower; (c) any uninsured loss through fire, theft, liability or property
damage exceeding any material occurrences; (d) any pending or threatened
litigation involving Borrower or any security for the Obligations exceeding any
material amount; (e) any event which could have a material adverse effect on the
ability of Borrower to continue its business operations in the ordinary course;
(f) any change in Borrower’s principal place of business; and (g) any material
change in the Property securing the Loan.
 
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4.09 Loan Proceeds. Use all Loan proceeds solely in accordance with Section 1.03
of this Agreement and the provisions of the Loan Documents, unless specifically
consented to the contrary by Bank in writing.

4.10 Insurance. Obtain, maintain and keep in force insurance of the types and in
such amounts as are satisfactory to Bank, and in no event less than amounts
customarily carried in lines of business similar to Borrower’s, including but
not limited to, property and casualty, flood, commercial general liability and
worker’s compensation insurance, and provide Bank with a schedule or schedules
or certificates of insurance form time to time setting forth all insurance then
in effect along with copies of all such policies.

4.11 Insurance Notice. The following notice is required by Hawaii law. In this
notice, the term “insurance” means any insurance required by Bank

Notice to BORROWER. Borrower may obtain any required insurance from any
insurance company which is licensed to do business in Hawaii, subject to Bank’s
right to reject a particular insurer for reasonable cause.

4.12 Facilities. Keep all of Borrower’s property and business premises in a good
state of repair and condition and make all necessary repairs, renewals and
replacements thereto from time to time so that such property and business
premises shall be fully and efficiently preserved and maintained, and keep such
property and business premises free and clear of all liens, charges or
encumbrances except those consented to by Bank in writing, and permit Bank’s
authorized representatives to make reasonable inspections of Bank’s property and
business premises.

4.13 Taxes and Other Liabilities. Pay and discharge when due all of Borrower’s
indebtedness, obligations, assessments and taxes, except such as Borrower may in
good faith contest or as to which a bona fide dispute may exist, provided that
Borrower has provided evidence satisfactory to Bank regarding Borrower’s ability
to pay the disputed items in the event they are determined to be justly due.

4.14 Performance. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, the Loan Documents, and
all other instruments and agreements between Borrower and Bank. Borrower shall
notify Bank immediately in writing of any Event of Default in connection with
any agreement.

4.15 Hazardous Materials. Abide at all times by all applicable hazardous
material laws, rules and regulations and immediately notify Bank of any claim or
threatened claim affecting any property owned, leased or occupied by Borrower.

4.16 Financial Covenants and Ratios. Borrower shall maintain the following
standards:

a Minimum Effective Tangible Net Worth. Borrower shall maintain an Effective
Tangible Net Worth of net less than $35,000,000.00. Effective Tangible Net Worth
is defined as GAAP net worth, less intangible assets.

12

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V. NEGATIVE COVENANTS

For so long as the Commitment or any of the Obligations remains outstanding, the
Borrower will not, without the prior written consent of the Bank:

5.1 Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged or
presently intends to engage in the future; (b) cease operations, liquidate,
merge, transfer, acquire or consolidate with any other entity, change its name,
dissolve or transfer out of the ordinary course of business; or (c) alter or
amend Borrower’s capital structure.

5.2 Business. Materially change the character of Borrower’s current business, or
engage in any other type of business substantially different than those in which
Borrower is presently engaged or presently intends to engage in the future.

VI. BANK’S RIGHTS UPON DEFAULT

6.01 Events of Default. Each of the following events is an “Event of Default”
under this Agreement:

a. The Borrower’s failure to pay within ten (10) days after it becomes due any
sum payable to the Bank under the Loan Documents or under any other agreement or
note between the Bank and the Borrower, whether now existing or hereafter
executed.

b. The dissolution or insolvency of the Borrower.

c. The commencement of any proceeding or the taking of any act by or against the
Borrower for any relief under bankruptcy, insolvency or similar laws for the
protection of debtors, or for the appointment of a receiver of the business or
assets of the Borrower or the Borrower’s inability (or admission of inability)
to pay its debts as they become due. 

d. Any governmental authority having jurisdiction over the Borrower revokes any
authorization or permit (i) materially affecting the Borrower’s ability to repay
the Loan, (ii) materially diminishing the value of the Property for the Loan, or
(iii) materially diminishing Borrower’s sources of repayment for the Loan.

e. A default occurs in any other agreement between the Borrower and the Bank,
and such default remains uncured beyond any applicable grace period.

f. The Borrower’s failure to pay any material debt owed by the Borrower to any
person or entity other than the Bank, if such failure results in the
acceleration of such debt.

g. Any representation, warranty, or other information made or furnished by the
Borrower in respect of the Loan is untrue and materially misleading at the time
it is made or given.
 
13

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h. The Bank reasonably believes there has been a material impairment of or
decrease in either the Borrower’s ability to pay or perform the Obligations or
the value of the Property given to secure payment of the Obligations, and the
Borrower has not remedied such impairment or decrease to the reasonable
satisfaction of Bank within thirty (30) days after written notice by Bank.

i. A final judgment (which alone or with other outstanding final judgments) is
rendered against the Borrower in an aggregate amount of $1,000,000.00 or more,
and each such judgment is not discharged or stayed pending appeal within
thirty (30) days after entry of such judgment or is not discharged within
thirty (30) days after the expiration of any such stay.

j. Any third party obtains a court order enjoining or prohibiting the Borrower
or the Bank from performing any of its respective obligations under the Loan
Documents and such order is not discharged within sixty (60) days after its
issuance.

k. The Borrower fails to pay when due any amount relating to any plan governed
by the Employee Retirement Income Security Act of 1974, as amended.

l. The Borrower shall fail to perform or observe any other material term,
covenant, agreement or obligation under this Agreement or any of the other Loan
Documents on the part of the Borrower to be performed or observed, and such
failure does not constitute an Event of Default under Section 6.01a. through k.
above, and any such failure shall remain unremedied after any applicable grace
period provided therefor in this Agreement or in the other Loan Documents, or if
no such grace period is provided, for a period of thirty (30) days after the
earlier of: (i) the date written notice thereof shall have been given by the
Bank to the Borrower; or (ii) the date the Borrower should have delivered to the
Bank a written notice of such default or Event of Default.

6.02 Bank’s Rights. If an Event of Default shall occur and be continuing the
Bank shall have, in addition to any and all other rights and remedies, legal or
equitable, available to the Bank under any and all of the Loan Documents or at
law, the following additional rights and remedies:

a. The absolute right to deny to the Borrower any further Disbursements (the
Bank’s obligation to extend any further credit to the Borrower shall immediately
terminate).

b. The right, at the option of the Bank, to declare, without notice, the entire
principal amount and accrued interest for the Loan outstanding under this
Agreement, plus any fees and charges reasonably incurred by the Bank under any
of the Loan Documents, immediately due and payable.

c. The right, at the option of the Bank, to charge interest on any principal
amount outstanding under this Agreement at the rate three (3) percentage points
above the “Paying Rate” (the “Default Rate”); the “Paying Rate” being the
interest rate which would otherwise be applicable with respect to each Loan if
the Maturity Date had not occurred or been accelerated; and, with respect to any
overdue principal and/or interest from and after the Maturity Date, whether or
not by acceleration, to determine the Paying Rate pursuant to Section 1.10a. as
if the Maturity Date had been extended to the actual date that payment is made
to the Bank.
 
14

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VII. MISCELLANEOUS

7.01 Further Assurance. From time to time within five (5) Business Days after
the Bank’s demand, the Borrower will execute and deliver such additional
documents and provide such additional information as may be reasonably requested
by the Bank to carry out the intent of this Agreement.

7.02 Enforcement and Waiver by the Bank. The Bank shall have the right at all
times to enforce the provisions of the Loan Documents, as they may be amended
from time to time, in strict accordance with their terms, notwithstanding any
conduct or custom on the part of the Bank in refraining from so doing at any
time or times. The failure of the Bank at any time or times to enforce its
rights under such provisions, strictly in accordance with the same, shall not be
construed as having created a custom in any way or manner contrary to specific
provisions of the Loan Documents or as having in any way or manner modified or
waived the same. All rights and remedies of the Bank are cumulative and
concurrent and the exercise of one right or remedy shall not be deemed a waiver
or release of any other right or remedy.

7.03 Expenses of the Bank. The Borrower will, on demand, reimburse to the Bank:
(a) all reasonable expenses, including without limitation, all attorneys’ fees
incurred by the Bank in connection with the making of the Loans and the
preparation of the Loan Documents; and (b) all reasonable expenses, including
without limitation, all reasonable attorneys’ fees incurred by the Bank in
connection with the amendment, modification or enforcement of the Loan Documents
and the collection or attempted collection of the indebtedness evidenced by the
Loan Documents, whether or not legal proceedings are commenced. Notwithstanding
any of the foregoing, the Bank agrees that the legal expenses associated with
the initial establishment of the Loan shall not exceed $10,000.00, plus general
excise taxes.

15

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7.04 Notices. Any notices or consents required or permitted by this Agreement or
the remainder of the Loan Documents shall be in writing and shall be deemed
delivered if delivered in person or if sent by certified mail, postage prepaid,
return receipt requested, or by FAX, at the following addresses or FAX numbers
noted below, unless such address or FAX number is changed by written notice
hereunder: 

BORROWER:
BANK:
   
Hoku Scientific, Inc.
1075 Opakapaka Street
Kapolei, Hawaii 96707
PHONE: (808) 682-7800
FAX: (808) 682-7807
Attn: Mr. Darryl Nakamoto
Bank of Hawaii
Corporate Hawaii Commercial Banking Center
P.O. Box 2900
Honolulu, Hawaii 96846-6000
PHONE: (808) 694-8014
FAX: (808) 694-8301
Attn: Mr. Luke Yeh, Senior Vice President & Manager

7.05 Waiver and Release by the Borrower. To the maximum extent permitted by
applicable law, the Borrower:

a. Waives notice and opportunity to be heard, after acceleration of the
indebtedness evidenced by the Loan Documents, before exercise by the Bank of the
remedy of setoff or of any other remedy or procedure permitted by any applicable
law or by any prior agreement with the Borrower, and, except where specifically
required by this Agreement or by any applicable law, notice of any other action
taken by the Bank.

b. Waives presentment, demand for payment, notice of dishonor, and any and all
other notices or demands in connection with the delivery, acceptance,
performance, or enforcement of this Agreement, and consents to any extension of
time (and even multiple extensions of time for longer than the original term),
renewals, releases of any person or organization liable for the payment of the
Obligations under this Agreement, and waivers or modifications or other
indulgences that may be granted or consented to by the Bank in respect of the
Loans and other extensions of credit evidenced by this Agreement.

c. Releases the Bank and its officers, agents, and employees from all claims for
loss or damage caused by any act or omission on the part of any of them except
willful misconduct.
 
16

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7.06 Sales and Participations. The Borrower consents to the Bank’s negotiation,
offer, and sale to other lenders (each, a “Participant” and collectively, the
“Participants”) of the Loan or participating interests in the Loan, to any and
all discussions and agreements heretofore or hereafter made between the Bank and
any Participant or prospective Participant regarding the interest rate, fees,
and other terms and provisions applicable to the Loan, and to the Bank’s
disclosure to any Participant or prospective Participant, from time to time, of
such financial and other information pertaining to the Borrower and the Loan as
the Bank and such Participant or prospective Participant may deem appropriate
(whether public or non-public, confidential or non-confidential, and including
information relating to any insurance required to be carried by the Borrower and
any financial or other information bearing on the Borrower’s creditworthiness
and the value of any collateral). Provided, however, that the Bank shall require
each Participant to agree and not to further disseminate, publish or disclose
any non-public information of Borrower, and to return or destroy such
information if Participant does not purchase a participating interest in the
Loan. The Borrower acknowledges that the Bank’s disclosure of such information
to any Participant or prospective Participant constitutes an ordinary and
necessary part of the process of effectuating and servicing the Loan.

7.07 Applicable Law. The substantive laws of the State of Hawaii shall govern
the construction of this Agreement and the rights and remedies of the parties
hereto.

7.08 Binding Effect. This Agreement shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns, and shall be
binding on the parties hereto and their respective successors and assigns.

7.09 Merger. This Agreement and the remainder of the Loan Documents constitute
the full and complete agreement between the Bank and the Borrower with respect
to the Loan, and all prior oral and written agreements (including but not
limited to letter agreements), commitments, and undertakings shall be deemed to
have been merged into the Loan Documents and such prior oral and written
agreements, commitments, and undertakings shall have no further force or effect
except to the extent expressly incorporated in the Loan Documents.

7.10 Amendments; Consents. No amendment, modification, supplement, termination,
or waiver of any provision of this Agreement or the other Loan Documents, and no
consent to any departure by the Borrower therefrom, may in any event be
effective unless in writing signed by the Parties, and then only in the specific
instance and for the specific purpose given.

7.11 Assignments.

a. The Borrower shall have no right to assign any of its rights or obligations
under the Loan Documents without the prior written consent of the Bank.

b. The Bank may sell participations in the Loan, as contemplated by Section 7.06
above, and the Bank may assign the Loan Documents (or the receivables evidenced
thereby) to a Federal Reserve Bank or to any other agency or instrumentality of
the United States of America to support borrowings of Federal Funds.

7.12 Severability. If any provision of any of the Loan Documents shall be held
invalid under any applicable law, such invalidity shall not affect any other
provision of the Loan Documents that can be given effect without the invalid
provision, and, to this end, the provisions of the Loan Documents are severable.
 
17

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

 
7.13 Bank’s Right of Setoff; Security Interest in Accounts. At any time, the
Bank may set off obligations owed by the Bank to the Borrower (such as balances
in checking and savings accounts) against the Obligations, whether or not an
Event of Default shall have occurred or shall have been declared, and without
first resorting to other collateral. To secure the Obligations, the Borrower
grants to the Bank a security interest in all checking, savings, and other
deposit accounts now or hereafter maintained by the Borrower with the Bank.

7.14 Time is of the Essence. Time is of the essence under and in respect of this
Agreement.

7.15 Headings. The headings of the various provisions of this Agreement are
inserted for convenience of reference only and shall not affect the meaning or
construction of any provision.

7.16 Counterparts. This Agreement may be executed in counterparts, each of which
shall be an original instrument and all of which shall together constitute one
and the same agreement.

7.17 Jury Waiver. Bank and Borrower hereby waive trial by jury in any action,
proceeding, claim, or counterclaim, whether in contract or tort, at law or in
equity, arising out of or in any way related to this Agreement or any of the
Loan Documents.

7.18 Indemnification. Whether or not the transactions contemplated hereby shall
be consummated: the Borrower shall pay and indemnify and hold harmless the Bank,
and its respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an “Indemnified Person”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including all fees and disbursements
of counsel, the allocated costs of internal legal services, and disbursements of
internal legal counsel) of any kind or nature whatsoever (except for such
Indemnified Person’s own gross negligence, willful misconduct or failure to
comply with the Loan Documents) with respect to and to the extent arising from
the Borrowers’ execution, delivery, enforcement or performance of this Agreement
and any other Loan Documents, or the Borrower’s use of the proceeds of the Loan,
or arising from the action or failure to act of the Borrower, or its officers,
directors, employees, counsel, agents or attorneys-in-fact.

VIII. DEFINITIONS

8.0 Base Rate Loan shall mean any Loan bearing interest at a rate based on the
Base Rate.

8.1 Business Day shall have the meaning given in Section 1.11c.

8.2 Closing Date shall have the meaning given in Section 2.01.

8.3 Commitment shall have the meaning given in Section 1.02.
 
18

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8.4 Default Rate shall have the meaning given in Section 6.02c.
 
8.5 Effective Date shall have the meaning given in the first paragraph of this
Agreement.
 
8.6 Eurodollar Reserve Requirement shall mean, with respect to each LIBOR Loan
for any day, the then aggregate maximum effective rates per annum (expressed as
a percentage), as determined solely by the Agent (which determination shall be
final, conclusive and binding on all of the parties hereto, absent manifest
error), of the reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves) imposed
pursuant to Regulation D by the Board of Governors of the Federal Reserve System
or otherwise by any other Governmental Authority having jurisdiction with
respect thereto on “Eurocurrency Liabilities” of any Bank, having a maturity
equal to the term of the applicable LIBOR Interest Period.
 
8.7 Event of Default shall have the meaning given in Section 6.01.
 
8.8 GAAP shall mean generally accepted accounting principles consistently
applied.
 
8.9 Interbank Eurodollar Index Rate means the rate per annum (expressed as a
percentage), at which leading banks, as determined by the Agent, are offered
deposits in United States Dollars in the London interbank Eurodollar market as
of 11:00 a.m., London time, on the day which is two LIBOR Business Days prior to
the beginning of the term of a LIBOR Loan or the LIBOR Interest Period
applicable thereto, for delivery in immediately available funds on the first day
of the term of such LIBOR Loan or such LIBOR Interest Period, in an amount equal
to the then outstanding principal amount of such LIBOR Loan and for a period
equal to the term of such LIBOR Interest Period.
 
8.10 Legal Entity shall have the meaning given in Section 2.01a.iii.
 
8.11 LIBOR shall mean, for each LIBOR Interest Period, a rate (rounded to the
nearest 0.001%) computed pursuant to the following formula and adjusted as of
the date of any change in the Eurodollar Reserve Requirements:
 
Interbank Eurodollar Index Rate x 100
100% - Eurodollar Reserve Requirement.

8.12 LIBOR Interest Period shall mean, with respect to each LIBOR Loan, an
Interest Period consisting of 1, 2 or 3 months as designated by the Borrowers in
accordance with Section 1.06(a)(5) hereof.
 
8.13 LIBOR Loan shall mean any Loan bearing interest at a rate based on LIBOR.
 
8.14 Loan shall have the meaning given in Section 1.01.
 
8.15 Loan Documents shall have the meaning given in Section 1.12.
 
8.16 Maturity Date shall have the meaning given in Section 1.01.
 
19

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8.17 Note shall have the meaning given in Section 1.12.
 
8.18 Notice of Borrowing shall have the meaning given in Section 1.07.
 
8.19 Obligations shall have the meaning given in Section 1.13.
 
8.20 Participant(s) shall have the meaning given in Section 7.06.
 
8.21 Paying Rate shall have the meaning given in Section 6.02c.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

20

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IN WITNESS WHEREOF, the Borrower and the Bank have duly executed this Agreement.

BANK OF HAWAII,
a Hawaii corporation
   
By
/s/ Luke Yeh      
 
Name: Luke Yeh
 
Title: Senior Vice President
     
Bank
   
HOKU SCIENTIFIC, INC.,
a Delaware corporation
   
By
/s/ Darryl Nakamoto    
 
Name: Darryl Nakamoto
 
Title: CFO
     
Borrower

21

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EXHIBIT A
 
All of that certain parcel of land situate at Honouliuli, District of Ewa, City
and County of Honolulu, Island of Oahu, State of Hawaii, more particularly
described as follows:
 
LOT 8004, area 2.283 acres, more or less, as shown on Map 645, filed in the
Office of the Assistant Registrar of the Land Court to the State of Hawaii with
Land Court Application No. 1069 of the Trustees under the Will and of the Estate
of James Campbell, Deceased;
 
Together with access across Lots 8030 and 8032, as shown on Map 645, as set
forth by Land Court Order No. 112041, filed June 4, 1993;
 
Together also with a nonexclusive easement over Lot 70-C-1 and 84-A-2-A, as
shown on Map 229, and Lot 172-C and 424-C, as shown on Map 132, as granted by
GRANT OF NONEXCLUSIVE EASEMENT (VEHICULAR ACCESS), dated December 13, 2001,
filed as Land Court Document No. 2761270; and subject to the terms and
provisions contained therein;
 
-Note:-
Lot 424-C, as shown on Map 132, Lot 425-C-1, as shown on Map 373, Lots 3801-A-2
and 3801-A-3, as shown on Map 907, consolidated and resubdivided into Lots
14281, 14282, 14283, 14284 and 14285, as shown on Map 1118, as set forth by Land
Court Order No. 146000, filed May 22, 2002.

 
Being land(s) described in Transfer Certificate of Title No. 720,871 issued to
HOKU SCIENTIFIC, INC., a Hawaii corporation.
 
BEING THE PREMISES ACQUIRED BY KAPOLEI BUSINESS PARK II LIMITED WARRANTY DEED
WITH USE RESTRICTIONS, COVENANTS AND RESERVATIONS OF RIGHTS
 

 
GRANTOR
:
KBP LAND PARTNERS, LLC, a Delaware limited liability company

 
GRANTEE
:
HOKU SCIENTIFIC, INC., a Hawaii corporation

 
DATED
:
October 18, 2004

 
FILED
:
Land Court Document No. 3182173

SUBJECT, HOWEVER, TO:
 
1.
SETBACK (25 feet wide)

 

 
SHOWN
:
on Map 645, as set forth by Land Court Order No. 112041, filed June 4, 1993

EXHIBIT A
 
Page 1 of 3

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

 
2.
DESIGNATION OF EASEMENT "5114" 

 

 
PURPOSE
:
electrical

 
SHOWN
:
on Map 737, as set forth by Land Court Order No. 118818, filed November 28, 1994

3.
The terms and provisions contained in the following:

 

 
INSTRUMENT
:
KAPOLEI BUSINESS PARK DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS

 
DATED
:
May 28, 1993

 
FILED
:
Land Court Document No. 2030298

Said above Declaration was amended and/or supplemented by the following
instruments:
 

 
(A)
dated April 22, 1994, filed as Land Court Document No. 2143431.

 

 
(B)
dated November 6, 2000, filed as Land Court Document No. 2662803.

 

 
(C)
dated May 3, 2004, filed as Land Court Document No. 3113276.

 

 
(D)
dated June 3, 2004, filed as Land Court Document No. 3118507.

 

 
(E)
dated June 3, 2004, filed as Land Court Document No. 3118512.

 

 
(F)
dated February 14, 2005, filed as Land Court Document No. 3230994.

 
The Declarant's interest, by mesne assignments, was assigned to LV KAPOLEI 54,
LLC, a Delaware limited liability company, by instrument dated April 2, 2007,
filed as Land Court Document No. 3583668.
 
4.
GRANT

 

 
TO
:
HAWAIIAN ELECTRIC COMPANY, INC. and GTE HAWAIIAN TELEPHONE COMPANY INCORPORATED,
now known as HAWAIIAN TELCOM, INC.

 
DATED
:
March 21, 2000

 
FILED
:
Land Court Document No. 2621916

 
GRANTING
:
a perpetual right and easement over said Easement "5114"

 
EXHIBIT A
 
Page 2 of 3

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

 
5.
The terms and provisions contained in the following: 

 

 
INSTRUMENT
:
TRUSTEES LIMITED WARRANTY DEED WITH USE RESTRICTIONS, COVENANTS AND RESERVATION
OF RIGHTS (KAPOLEI BUSINESS PARK)

 
DATED
:
January 2, 2002

 
FILED
:
Land Court Document No. 2766591

6.
The terms and provisions contained in the following:

 

 
INSTRUMENT
:
KAPOLEI BUSINESS PARK LIMITED WARRANTY DEED WITH USE RESTRICTIONS, COVENANTS AND
RESERVATION OF RIGHTS

 
DATED
:
June 3, 2004

 
FILED
:
Land Court Document No. 3118515

The foregoing includes, but is not limited to, matters relating to permitted
use, water rights, and reservation of drainage easements, conduits and sewer
line easements.
 
7.
The terms and provisions contained in the following:

 

 
INSTRUMENT
:
KAPOLEI BUSINESS PARK II LIMITED WARRANTY DEED WITH USE RESTRICTIONS, COVENANTS
AND RESERVATION OF RIGHTS

 
DATED
:
October 18, 2004

 
FILED
:
Land Court Document No. 3182173

The foregoing includes, but is not limited to, matters relating to permitted
use, water rights, and reservation of rights.
 
8.
DESIGNATION OF EASEMENT "9204"

 

 
PURPOSE
:
utility and waterline

 
SHOWN
:
on Map 1336, as set forth by Land Court Order No. 171077, filed June 27, 2007

9.
GRANT

 

 
TO
:
CITY AND COUNTY OF HONOLULU, a municipal corporation of the State of Hawaii, and
the BOARD OF WATER SUPPLY, City and County of Honolulu

 
DATED
:
December 15, 2006

 
FILED
:
Land Court Document No. 3624845

 
GRANTING
:
an easement over said Easement "9204"

 
END OF EXHIBIT A
Tax Map Key No.: (1) 9-1-075-009
 
EXHIBIT A
 
Page 3 of 3

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Exhibit “B”

Notice of Borrowing

Date: ____________________, 2008

To:
Bank of Hawaii
Corporate Banking
P.O. Box 2900
Honolulu, HI 96846
Fax: 694-8301

   

Subject:
Credit Agreement dated _____________________, 2008  

 
The Borrower hereby requests and confirms the following instructions therefor
(capitalized terms not defined herein shall have the respective meanings
assigned in the Credit Agreement):
 
REQUEST FOR NEW LOAN
 
Disbursement Date: ___________________________
 
Principal Amount: ___________________________
 
¨ Base Rate Borrowing
 
¨ LIBOR Borrowing Interest Period
 
___ 1 Month
___ 2 Months
___ 3 Months

Method of drawing:
 
¨ Credit to Deposit Account No. _____________________ maintained with the Bank.
 
¨ Wire funds to:
 
ABA No.: ______________________________
Credit Account No.: ______________________
Special Instructions: _____________________________________________
 _____________________________________________
 _____________________________________________

REQUEST CHANGE IN INTEREST RATE OPTION:
 
EXHIBIT B
 
Page 1 of 2

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

 
Disbursement Date:            ___________________________
 
Principal Amount:              ___________________________
 
Rollover/Change Date:     ___________________________
 
¨ LIBOR Borrowing Rollover
 
¨ Conversion from Base Rate Borrowing to LIBOR Borrowing
 
¨ Conversion from LIBOR Borrowing to Base Rate Borrowing
 
LIBOR Borrowing Interest Period
 
___ 1 Month
___ 2 Months
___ 3 Months
 
The Borrower hereby certifies as follows:
1. The representations and warranties of the Borrower contained in Article III
of the Credit Agreement are true and correct on and as of the date hereof, with
the same force and effect as if made on Such date.

2. As of the date hereof, no event has occurred and is continuing that:
(a) constitutes an Event of Default under the Credit Agreement; or (b) with the
giving of notice or passage of time, or both, would constitute an Event of
Default. The Borrower has observed and performed all of Borrower’s covenants and
other agreements, and satisfied every condition, contained in the Credit
Agreement and in the other Loan Documents, to be observed, performed or
satisfied by Borrower.

HOKU SCIENTIFIC, INC.
   
By
   
Its:

 
EXHIBIT B
 
Page 2 of 2

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Exhibit “C”

Promissory Note

Not to Exceed $3,480,000.00
________________, 2008

The undersigned (the “Borrower”) promises to pay to the order of BANK OF HAWAII,
a Hawaii corporation (the “Bank”) the principal amount which shall not exceed
THREE MILLION FOUR HUNDRED EIGHTY THOUSAND AND NO/100 DOLLARS ($3,480,000.00),
or so much thereof as shall have been disbursed by Bank and may remain
outstanding, together with interest on outstanding balances of principal in
accordance with and under the terms of that certain Credit Agreement of even
date, between Bank and Borrower, relating to the Loan therein described and all
modifications and amendments thereto.

The Borrower waives presentment, demand for payment, notice of dishonor, and any
and all other notices or demands in connection with the delivery, acceptance,
performance or enforcement of this Note, and consents to any extension of time
(and even multiple extensions of time for longer than the original term),
renewals, releases of any person or organization liable for the payment of this
Note, and waivers or modifications or other indulgences that may be granted or
consented to by the Bank with respect to the Loan evidenced by this Note.

HOKU SCIENTIFIC, INC.,
a Delaware corporation
   
By
   
Name:
 
Title:
     
Borrower

 
EXHIBIT C
 
Page 1 of 1

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