Exhibit
10.89

      


      [*] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED FROM PUBLIC FILING PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT SUBMITTED TO THE U.S. SECURITIES AND EXCHANGE COMMISSION. THE OMITTED
INFORMATION, WHICH HAS BEEN IDENTIFIED WITH THE SYMBOL “[*],” HAS BEEN FILED
SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

      


      
        
          

        

      

       

      HOKU
SOLAR POWER I, LLC

       

      A
CALIFORNIA LIMITED LIABILITY COMPANY

       

      OPERATING
AGREEMENT

       

      Dated
as of December 23, 2008

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      HOKU
SOLAR POWER I, LLC

       

      OPERATING
AGREEMENT

       

      This
Operating Agreement of Hoku Solar Power I, LLC, a manager-managed California
limited liability company (the “Company”), is made and entered into as of
December 23, 2008, by and among UFA Renewable Energy Fund I, LLC, a
Delaware limited liability company, as the investor member (the “Investor
Member”), and Hoku Solar, Inc., a Delaware corporation, as the managing member
(the “Managing Member”, and the Managing Member and Investor Members are the
“Members”).

       

      RECITALS

       

      WHEREAS,
the Managing Member caused the Company to be formed under the Act on
December 16, 2008, by the filing of a certificate of formation of the
Company with the Secretary of State of the State of California.  The
certificate of formation was executed by an agent of Nixon Peabody LLP on behalf
of the Company,  the filing of which is hereby ratified by the
Investor Member and the Managing Member; and

       

      WHEREAS,
the Hawaii Department of Transportation Airports Division (“HDOT” or the
“Host”)  is the owner of the following seven (7) buildings known as:
(i) the Passenger Terminal at Lihue Airport located at 3901 Mokulele Loop #
6, Lihue, Hawaii (“Building 1”), (ii) the Baseyard at the Highways Kauai
Baseyard located at 1680 Haleukana St., Lihue, Hawaii 96766 (“Building 2”),
(iii) the Harbors Kauai Baseyard located at 3242 Waapa Road, Lihue, Hawaii
96766 (“Building 3”), (iv) the Passenger Terminal at Hilo Airport located
at 2400 Kekuanaoa St., Hilo, Hawaii (“Building 4”), (v) the Cargo Building
at  Kona Airport located at 73-200 Kupipi St., Kona, Hawaii (“Building
5”), (vi) the ASAP/Cargo Building located at Kahului Airport (“Building
6”), and (vii) the T-Hangar at Kahului Airport located at 1 Kahului Airport
Road, Kahului Hawaii (“Building 7”).   Each of the Buildings 1
through 7 may be referred to as a  “Building” and collectively as the
“Buildings”; and

       

      WHEREAS,
the Company is purchasing from the Managing Member, in the aggregate, an
approximately 903 kW photovoltaic monocrystalline system, installed on the
rooftops of each of the Buildings in a manner that will qualify for the energy
credit under Section 48 of the Code; and

       

      WHEREAS,
the Company has received a commitment for an equity investment in the principal
amount of [*] to be made to the Company by the Investor Member for the sole
purpose of funding the Project; and

       

      WHEREAS,
the Company has received a commitment from the Managing Member, for an equity
investment by the Managing Member of [*]; and

       

      WHEREAS,
the Company has been formed to use and occupy the rooftop of each Building (with
each use and occupancy agreement providing for access to all areas of the
respective Building on which the Project and its parts are located so that the
Company and its agents are able to inspect, access, maintain and improve Project
equipment) and to generate and supply energy in accordance with, among other
things, the PPAs, as defined below; and

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      WHEREAS,
the parties hereto now desire to enter into this Agreement to (i) continue the
Company and admit the Members as the investor member and managing member of the
Company; (ii) set forth the Members’ respective rights and obligations as
Members of the Company; and (iii) set forth all of the provisions governing the
Company.

       

      NOW,
THEREFORE, in consideration of the foregoing, of mutual promises of the parties
hereto and of other good and valuable consideration, the receipt and sufficiency
of which hereby are acknowledged, the parties hereby agree to continue the
Company pursuant to the Act, as set forth in this Agreement, which reads in its
entirety as follows:

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      TABLE
OF CONTENTS

      


      
        
          	 
      	 
      	
                  Page

                
	 
      	 
      	 
      
	
                  ARTICLE
      I. CONTINUATION OF THE COMPANY

                	
                  1

                	 
      
	
                  1.01.

                	
                  Continuation.

                	
                  1

                	 
      
	
                  1.02.

                	
                  Name.

                	
                  1

                	 
      
	
                  1.03.

                	
                  Principal
      Executive Offices; Agent for Service of Process.

                	
                  1

                	 
      
	
                  1.04.

                	
                  Term.

                	
                  1

                	 
      
	
                  1.05.

                	
                  Filings.

                	
                  1

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      II. DEFINED TERMS

                	
                  2

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      III. PURPOSE AND BUSINESS OF THE COMPANY

                	
                  15

                	 
      
	
                  3.01.

                	
                  Purpose
      of the Company.

                	
                  15

                	 
      
	
                  3.02.

                	
                  Authority
      of the Company.

                	
                  15

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      IV. REPRESENTATIONS, WARRANTIES AND COVENANTS; DUTIES AND
      OBLIGATIONS

                	
                  16

                	 
      
	
                  4.01.

                	
                  Representations,
      Warranties and Covenants Relating to the Project and the
      Company.

                	
                  16

                	 
      
	
                  4.02.

                	
                  Duties
      and Obligations Relating to the Project and the Company.

                	
                  21

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      V. MEMBERS, COMPANY INTERESTS AND OBLIGATIONS OF THE
    COMPANY

                	
                  25

                	 
      
	
                  5.01.

                	
                  Members,
      Capital Contributions and Company Interests.

                	
                  25

                	 
      
	
                  5.02

                	
                  Return
      of Capital Contribution.

                	
                  29

                	 
      
	
                  5.03

                	
                  Withholding
      of Capital Contribution Upon Default.

                	
                  29

                	 
      
	
                  5.04

                	
                  Legal
      Opinions.

                	
                  29

                	 
      
	
                  5.05

                	
                  Repurchase
      Obligation.

                	
                  29

                	 
      
	
                  5.06

                	
                  Subordinated
      Loans.

                	
                  30

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      VI. CHANGES IN MEMBERS

                	
                  31

                	 
      
	
                  6.01.

                	
                  Withdrawal
      of a Managing Member.

                	
                  31

                	 
      
	
                  6.02.

                	
                  Admission
      of a Successor or Additional Managing Member.

                	
                  31

                	 
      
	
                  6.03.

                	
                  Effect
      of Bankruptcy, Withdrawal or Dissolution of a Managing
    Member.

                	
                  32

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      VII. ASSIGNMENT TO THE COMPANY

                	
                  34

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      VIII. RIGHTS, OBLIGATIONS AND POWERS OF THE MANAGING
MEMBER

                	
                  35

                	 
      
	
                  8.01.

                	
                  Management
      of the Company.

                	
                  35

                	 
      
	
                  8.02.

                	
                  Limitations
      Upon the Authority of the Managing Member.

                	
                  35

                	 
      
	
                  8.03.

                	
                  Management
      Purposes.

                	
                  37

                	 
      
	
                  8.04.

                	
                  Delegation
      of Authority.

                	
                  37

                	 
      
	
                  8.05.

                	
                  [Reserved]

                	
                  38

                	 
      
	
                  8.06.

                	
                  Other
      Activities.

                	
                  38

                	 
      
	
                  8.07.

                	
                  Liability
      for Acts and Omissions.

                	
                  38

                	 
      
	
                  8.08.

                	
                  Company
      Taxable as Partnership.

                	
                  38

                	 
      
	
                  8.09.

                	
                  Excess
      Development Costs, Operating Deficits.

                	
                  39

                	 
      
	
                  8.10.

                	
                  Development
      Fee.

                	
                  39

                	 
      


        

      

      


      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

      


      
        
          	
                  8.11.

                	 
      	
                  39

                	 
      
	
                  8.12.

                	 
      	
                  39

                	 
      
	
                  8.13.

                	
                  Removal
      of the Managing Member; Conversion of the Managing Member
      Interest.

                	
                  39

                	 
      
	
                  8.14.

                	 
      	
                  41

                	 
      
	
                  8.15.

                	 
      	
                  42

                	 
      
	
                  8.16.

                	 
      	
                  42

                	 
      
	
                  8.17.

                	
                  Loans
      to the Company.

                	
                  42

                	 
      
	
                  8.18.

                	
                  Operating
      Budget and Capital Budget.

                	
                  42

                	 
      
	
                  8.19.

                	
                  Reserves.

                	
                  43

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      IX. TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS OF INTERESTS OF INVESTOR
      MEMBER

                	
                  44

                	 
      
	
                  9.01.

                	
                  Investment
      and Tax Representation.

                	
                  44

                	 
      
	
                  9.02.

                	
                  No
      Restrictions on Transfer of Investor Member’s Interest.

                	
                  44

                	 
      
	
                  9.03.

                	
                  Admission
      of Substitute Investor Member.

                	
                  44

                	 
      
	
                  9.04.

                	
                  Rights
      of Assignee of Company Interest.

                	
                  45

                	 
      
	
                  9.05.

                	
                  Put
      Option

                	
                  46

                	 
      
	
                  9.06.

                	
                  Call
      Option

                	
                  47

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      X. RIGHTS AND OBLIGATIONS OF INVESTOR MEMBER

                	
                  48

                	 
      
	
                  10.01.

                	
                  Management
      of the Company.

                	
                  48

                	 
      
	
                  10.02.

                	
                  Limitation
      on Liability of Investor Member.

                	
                  48

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      XI. PROFITS, LOSSES AND DISTRIBUTIONS

                	
                  49

                	 
      
	
                  11.01.

                	
                  Allocation
      of Profits, Losses, Credits and Cash Distributions.

                	
                  49

                	 
      
	
                  11.02.

                	
                  Determination
      of Profits or Losses.

                	
                  50

                	 
      
	
                  11.03.

                	
                  Allocation
      of Profits or Losses from a Capital Transaction.

                	
                  51

                	 
      
	
                  11.04.

                	
                  Distribution
      of Proceeds from a Capital Transaction.

                	
                  51

                	 
      
	
                  11.05.

                	
                  Capital
      Accounts.

                	
                  52

                	 
      
	
                  11.06.

                	
                  Authority
      of Managing Member to Vary Allocations to Preserve and Protect Members’
      Intent.

                	
                  52

                	 
      
	
                  11.07.

                	
                  Designation
      of Tax Matters Partner.

                	
                  53

                	 
      
	
                  11.08.

                	
                  Authority
      of Tax Matters Partner.

                	
                  53

                	 
      
	
                  11.09.

                	
                  Expenses
      of Tax Matters Partner.

                	
                  54

                	 
      
	
                  11.10.

                	
                  Special
      Allocations.

                	
                  55

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      XII. SALE, DISSOLUTION AND LIQUIDATION

                	
                  57

                	 
      
	
                  12.01.

                	
                  Dissolution
      of the Company.

                	
                  57

                	 
      
	
                  12.02.

                	
                  Winding
      Up and Distribution.

                	
                  57

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      XIII. BOOKS AND RECORDS, ACCOUNTING TAX ELECTIONS, ETC.

                	
                  59

                	 
      
	
                  13.01.

                	
                  Books
      and Records; Accounting Method.

                	
                  59

                	 
      
	
                  13.02.

                	
                  Bank
      Accounts.

                	
                  59

                	 
      
	
                  13.03.

                	
                  Accountants.

                	
                  59

                	 
      
	
                  13.04.

                	
                  Reports
      to Members.

                	
                  59

                	 
      
	
                  13.05.

                	
                  Section
      754 Elections.

                	
                  63

                	 
      
	
                  13.06.

                	
                  Fiscal
      Year.

                	
                  63

                	 
      
	
                  13.07.

                	
                  Investor
      Member Inspection.

                	
                  63

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      XIV. AMENDMENTS

                	
                  64

                	 
      
	
                  14.01.

                	
                  Proposal
      and Adoption of Amendments.

                	
                  64

                	 
      


        

      

      


      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      

      


      
        
          	
                  Article
      XV. CONSENTS, VOTING AND MEETINGS

                	
                  65

                	 
      
	
                  15.01.

                	
                  Method
      of Giving Consent.

                	
                  65

                	 
      
	
                  15.02.

                	
                  Submissions
      to Investor Member.

                	
                  65

                	 
      
	 
      	 
      	 
      
	
                  ARTICLE
      XVI. GENERAL PROVISIONS

                	
                  66

                	 
      
	
                  16.01.

                	
                  Burden
      and Benefit.

                	
                  66

                	 
      
	
                  16.02.

                	
                  Applicable
      Law.

                	
                  66

                	 
      
	
                  16.03.

                	
                  Counterparts.

                	
                  66

                	 
      
	
                  16.04.

                	
                  Separability
      of Provisions.

                	
                  66

                	 
      
	
                  16.05.

                	
                  Entire
      Agreement.

                	
                  66

                	 
      
	
                  16.06.

                	
                  Liability
      of the Investor Member.

                	
                  66

                	 
      
	
                  16.07.

                	
                  Environmental
      Protection.

                	
                  67

                	 
      
	
                  16.08.

                	
                  Notices.

                	
                  67

                	 
      
	
                  16.09.

                	
                  Legal
      Fees.

                	
                  68

                	 
      


        

      

      


      SCHEDULE
A – Members, Capital Contributions and Company Interest

      SCHEDULE
B – Insurance Requirements

      SCHEDULE
C – Stoel Rives Legal Opinion

      SCHEDULE
D – Projections

      SCHEDULE
E – Source of Funds for Acquisition of the Systems

      


      
        
          
          

        

        
          v

          
            

          

        

        
          
          

        

      

    

    


    ARTICLE
I.

    CONTINUATION OF THE
COMPANY

     

    1.01.            Continuation.

     

    The
undersigned hereby continue the Company as a manager-managed limited liability
company under the Act.

     

    1.02.            Name.

     

    The name
of the Company is Hoku Solar Power I, LLC.

     

    1.03.            Principal Executive Offices;
Agent for Service of Process.

     

    The
principal executive office of the Company shall be 1288 Ala Moana Blvd., Suite
220, Honolulu, HI 96814.  The Company may change the location of its
principal executive office to such other place or places as may hereafter be
determined by the Managing Member.  The Managing Member shall promptly
notify all other Members of any change in the principal executive
office.  The Company may maintain such other offices at such other
place or places as the Managing Member may from time to time deem
advisable.

     

    The name
and address of the registered agent of the Company for service of process in the
formation state is CT Corporation System, 900 Fort Street Mall, Suite 1800,
Honolulu, Hawaii 96813.

     

    1.04.            Term.

     

    The term
of the Company commenced as of December 16, 2008, and shall continue in
perpetuity, unless the Company is sooner dissolved by law or in accordance with
the provisions of this Agreement.

     

    1.05.            Filings.

     

    The
Managing Member shall take all necessary action required by law to perfect and
maintain the Company as a limited liability company under the laws of the
Formation State and shall register the Company under any assumed or fictitious
name statute or similar law in force and effect in the State or the Formation
State, as required.  The fees and costs associated with such matters
shall be paid out of the Company’s assets.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    ARTICLE
II.

    DEFINED
TERMS

     

    In
addition to the defined terms set forth in the Recitals to this Agreement, the
following defined terms used in this Agreement shall have the meanings specified
below:

     

    “Accountants” means
Novogradac & Company LLP or such other firm of independent certified public
accountants as may be engaged by the Managing Member with the Consent of the
Investor Member to prepare the Company’s income tax returns.

     

    “Act” means the
California Limited Liability Company Act, as the same may be amended from time
to time during the term of the Company.

     

    “Actual Credits”
means, with respect to any tax year, the total amount of Tax Credits allocated
by the Company to the Investor Member representing the aggregate Tax Credits
available to be claimed by the Company’s Members on their respective tax returns
for that tax year, as subsequently adjusted, if applicable, by any Recapture
Adjustment Amount.

     

    “Adjusted Capital Account
Deficit” has the meaning set forth in Section 11.10(d).

    


    “Affiliate” means,
with respect to a specified Person, (i) any Person directly or indirectly
controlling, controlled by or under common control with the Person specified,
(ii) any Person owning or controlling 10% or more of the outstanding voting
securities or beneficial interests of the Person specified, (iii) any officer,
director, partner, trustee or member of the immediate family of the Person
specified, (iv) if the Person specified is an officer, director, general partner
or trustee, any corporation, partnership or trust for which that Person acts in
that capacity, or (v) any Person who is an officer, director, general partner,
trustee or holder of 10% or more of outstanding voting securities or beneficial
interests of any Person described in clauses (i) through (iv).  The
term “control” (including the terms “controlled by” and “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.  For
purposes of this Agreement, the Company shall not be treated as, and shall be
deemed not to be, an “Affiliate” of the Investor Member or the Managing
Member.

     

    “AFR” means the
long-term applicable Federal rate (as defined in Section 1274(d) of the
Code).

     

    “After-Tax Basis”
means, with respect to any payment to be received by the Investor Member, the
amount of such payment supplemented by a further payment or payments so that,
after deducting from such payments the amount of all taxes imposed on the
Investor Member by any governmental authority or other taxing authority with
respect to such payments, the balance of such payments shall be equal to the
original payment to be received; provided, however, for the
purposes of this definition, and for purposes of any payment to be made to the
Investor Member on an After-Tax Basis, it shall be assumed that taxes are
payable by the Investor Member at the Applicable Tax Rate, which rate shall be
certified in writing by the Investor Member to the Managing Member upon
request.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Agreement” means this
Operating Agreement, as amended from time to time.

     

    “Applicable Tax Rate”
means the combined effective federal, state, and local income tax rate of a
taxpayer applicable in any given fiscal year assuming in each case the maximum
tax rate applicable to the taxpayer without regard to actual taxable
income.  The Applicable Tax Rate shall be deemed to be
35%.

     

    “Articles” means the
certificate of formation of the Company as in effect from time to time and any
other instrument or document which may be required under the laws of the
Formation State to perfect or maintain the Company as a limited liability
company or to protect the limited liability of the Investor Member.

     

    “Bankruptcy” or “Bankrupt” as to any
Person means the filing of a petition for relief as to any such Person as debtor
or bankrupt under the Bankruptcy Code or like provision of law (except if such
petition is contested by such Person and has been dismissed within sixty (60)
days); insolvency of such Person as finally determined by a court proceeding;
filing by such Person of a petition or application to accomplish the same or for
the appointment of a receiver or a trustee for such Person or a substantial part
of its assets; commencement of any proceedings relating to such Person under any
other reorganization, arrangement, insolvency, adjustment of debt or liquidation
law of any jurisdiction, whether now in existence or hereinafter in effect,
either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates its approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within sixty (60) days.

     

    “Bankruptcy Code” has
the meaning set forth in Section 6.03(d).

     

    “Benefits” means the
sum of (a) all cash distributions received by the Investor Member, and (b) all
tax benefits (including the Energy Credits and tax losses) and detriments
(including all taxable income allocated to the Investor Member included on the
Investor Member’s tax return due to its investment in the
Company).  In performing this calculation, all tax benefits and
detriments would be calculated quarterly and based upon an effective tax rate of
35%, and the methodology for performing this calculation is set forth in the
final financial forecast provided by Accountants at the time of the execution of
this Agreement.

     

     “Budget” has the
meaning set forth in Section 8.18.

     

    “Building” has the
meaning set forth in the Recitals.

     

    “Buildings” has the
meaning set forth in the Recitals.

     

    “Capital Account”
means the capital account of a Member as described in Section
11.05.

     

    “Capital Contribution”
means with respect to any Member the total amount of money or the fair market
value of other property (net of liabilities thereon) contributed or agreed to be
contributed, as the context requires, to the Company by such Member pursuant to
the terms of this Agreement.  Any reference to the Capital
Contribution of a Member shall include the Capital Contribution made by a
predecessor holder of the Interest of such Member.

     

    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

     

    “Capital Transaction”
means (i) a sale, assignment, or other disposition of all or substantially all
of the Project; (ii) a financing or refinancing of all or substantially all of
the Project, but only to the extent of the Company’s share, if any, of any
distributions, fees, loan repayments, or other amounts arising therefrom; (iii)
a casualty (where the proceeds are not to be used for reconstruction),
condemnation or similar event of any part of the Project, where the gross
proceeds from such event exceed $20,000; or (iv) any other transaction
(including but not limited to any payment under the PPA’s by HDOT of the
Termination Value (as defined in the PPA’s) generating cash proceeds to the
Company that are not includable in determining Net Cash Flow.

     

    “Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any
corresponding provision or provisions of prior or succeeding law.

     

    “Completion Date”
means, with respect to each Building:

     

    (i)           The
Managing Member, in its capacity as Installer of the systems,  has
completed the construction and installation of the portion of the Project being
constructed and installed on such Building in accordance with the relevant
Project Documents (including,  but not limited to the PPA’s), approved
by the Investor Member and any consultant engaged by the Investor Member, and
evidenced by a certificate in form and substance acceptable to the Investor
Member indicating that construction and installation of such portion of the
Project has been completed in accordance with the relevant Project Documents and
that such portion of the Project is producing electricity; and

    


    (ii)          The
Company has received, and the Investor Member has approved, the Preliminary Cost
Certification; and

    


    (iii)         Such
portion of the Project has passed all commissioning tests required under Hawaii
law;

    


    (iv)         Such
portion of the Project has been placed in service, and the Project has received
all required local licenses and permits; and

    


    (v)          Such
portion of the Project has received approval by the local electric service
provider to be interconnected to the local electric distribution
system.

     

    “Compliance Period”
means the period commencing upon the first portion of the Project achieving
Placement In Service and ending five (5) years from the Placement In Service of
the final portion of the Project.

     

    “Consent” means the
prior written consent or approval of the Investor Member, and/or any other
Member, as the context may require, to do the act or thing for which the consent
is solicited.

     

    
      
        
           


        

        
          4

          
            

          

        

        
           


        

      

    

    


    “Cost Certification”
means the final cost certification as prepared by and certified by the
Accountants, detailing actual Project costs, including, but not limited to, the
depreciable basis in the Project and the basis for Energy Credits and including
copies of certified invoices and evidence of placement in service and the
commencement of operations, which will be certified by the Managing Member and
acceptable to the Investor Member.

     

    “Counsel” or “Counsel for the
Company” means such attorneys or law firm or firms upon which the
Investor Member and the Managing Member shall agree; provided, however, that if any
section of this Agreement either (i) designates particular counsel for the
purpose described therein, or (ii) provides that counsel for the purpose
described therein shall be chosen by another method or by another Person, then
such designation or provision shall prevail over this general
definition.

     

    “Credit Adjustment”
has the meaning set forth in Section 5.01(e)(ii).

     

    “Credit Determination”
has the meaning set forth in Section 5.01(e)(i).

     

    “Debt Service” means
all payments of principal, interest, or other charges, or any combination
thereof, due on any Loan other than such payments made with respect to any
Operating Deficit Loans and Subordinated Loans.

     

    “Depreciation” means,
for each fiscal year or other period, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable with respect to an
asset for such Fiscal Year or other period, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year or other period.  Depreciation shall
be an amount which bears the same ratio to such beginning Gross Asset Value as
the federal income tax depreciation, amortization, or other cost recovery
deduction for such Fiscal Year or other period bears to such beginning adjusted
tax basis; provided, however, that if the
adjusted basis for federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Managing Member.

     

    “Developer” means Hoku
Solar, Inc.

     

    “Development Costs”
means the costs incurred to complete the Project and achieve Placement In
Service.

     

    “Development Fee”
means the fee to be paid to the Developer pursuant to the Development
Agreement.

    


    “Development
Agreement”  that certain Development Services Agreement between
the Company and the Developer to oversee the development and completion of the
Project.

    


    “Energy Credits” means
the energy credit provided for under Section 48 of the Code.

    


    “Environmental Laws”
means the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act, 42 U.S.C. § 9601 et seq.,
and/or the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., each as
amended from time to time and any other federal, state, or local statute, code,
ordinance, rule, regulation, permit, consent, approval, license, judgment,
order, writ, judicial decision, common law rule, decree, agency interpretation,
injunction or other authorization or requirement whenever promulgated, issued,
or modified, including the requirement to register underground storage tanks,
relating to:

     

    
      
        
           


        

        
          5

          
            

          

        

        
           


        

      

    

     

    
      	
               
      

            	
              (i)

            	
              emissions,
      discharges, spills, releases, or threatened release of pollutants,
      contaminants, Hazardous Substances (as hereinafter defined), materials
      containing Hazardous Substances, or hazardous or toxic materials or wastes
      into ambient air, surface water, groundwater, watercourses, publicly or
      privately owned treatment works, drains, sewer systems, wetlands, septic
      systems or onto land; or

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      use, treatment, storage, disposal, handling, manufacturing,
      transportation, or shipment of Hazardous Substances, materials containing
      Hazardous Substances or hazardous and/or toxic wastes, material, products,
      or by-products (or of equipment or apparatus containing Hazardous
      Substances).

            


    

     

     “Excess Development
Costs” mean all Development Costs (excluding the deferred portion of the
Development Fee) in excess of all capital of the Company as of the date hereof
or hereafter contributed by the Managing Member.  Upon the Investor
Member making its contribution of capital pursuant to Section 5.01(c)(ii) of
this Agreement, Excess Development Costs shall mean all Development Costs in
excess of the capital of the Company comprised of the Capital Contributions of
the Members.

     

    “Extraordinary Event”
means an event (i) which is not required to be covered by insurance under this
Agreement; (ii) which is not covered by insurance; (iii) which is not covered by
warranty; and (iv) the occurrence of which would not have been avoided by
Prudent Utility Practices.

     

    “Final Determination”
means the earliest to occur of (i) the date on which a decision, judgment,
decree or other order has been issued by any court of competent jurisdiction,
which decision, judgment, decree or other order has become final (i.e., all
allowable appeals requested by the parties to the action have been exhausted),
(ii) the date on which the Internal Revenue Service (or, if applicable, any
state or local taxing authority) has entered into a binding agreement with the
Company with respect to such issue or on which the Internal Revenue Service (or
such state or local taxing authority) has reached a final administrative or
judicial determination with respect to such issue which, whether by law or
agreement, is not subject to appeal, (iii) the date on which the time for
instituting a claim for refund has expired, or if a claim was filed the time for
instituting suit with respect thereto has expired with no such suit having been
filed, or (iv) the date on which the applicable statute of limitations for
raising an issue regarding a federal (or, if applicable, a state or local)
income tax matter with respect to the Company has expired with such issue not
having been raised.

     

    “Flip Date” means the
date upon which the Pre-Flip Target IRR has been achieved, provided, however,
the Flip Date shall occur no later than the date upon which the Investor Member
has exercised its Put Option under Section 9.

     

    
      
        
           


        

        
          6

          
            

          

        

        
           


        

      

    

     

    “First Installment”
has the meaning set forth in Section 5.01(c)(i).

     

    “Fiscal Year” means
the calendar year or such other year that the Company is required by the Code to
use as its taxable year.

     

    “Formation State”
means the State of California.

     

    “GAAP” has the meaning
set forth in Section 13.01.

     

    “Gross Asset Value”
means, with respect to any asset, the asset’s adjusted basis for federal income
tax purposes, except as follows:

     

    
      	
               
      

            	
              (i)

            	
              The
      initial Gross Asset Value of any asset contributed by a Member to the
      Company shall be the gross fair market value of such asset, as determined
      by the contributing Member and the
Company;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              The
      Gross Asset Values of all Company assets shall be adjusted to equal their
      respective gross fair market values, as determined by the Managing Member,
      as of the following times: (a) the acquisition of an additional interest
      in the Company by any new or existing Member in exchange for more than a
      de minimis Capital Contribution; (b) the distribution by the Company to a
      Member of more than a de minimis amount of Company property as
      consideration for an interest in the Company; and (c) the liquidation of
      the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
      Treasury Regulations; provided, however, that the adjustments pursuant to
      clauses (a) and (b) above shall be made only if the Managing Member
      reasonably determines that such adjustments are necessary or appropriate
      to reflect the relative economic interests of the Members in the
      Company;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              The
      Gross Asset Value of any Company asset distributed to any Member shall be
      the gross fair market value of such asset on the date of distribution;
      and

            


    

     

    
      	
               
      

            	
              (iv)

            	
              The
      Gross Asset Values of Company assets shall be increased (or decreased) to
      reflect any adjustments to the adjusted basis of such assets pursuant to
      Code Section 734(b) or Code Section 743(b), but only to the extent that
      such adjustments are taken into account in determining Capital Accounts
      pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations and
      Section 11.05 hereof; provided, however, that Gross Asset Values shall not
      be adjusted pursuant to this clause (iv) to the extent the Managing Member
      determines that an adjustment pursuant to clause (ii) hereof is necessary
      or appropriate in connection with a transaction that would otherwise
      result in an adjustment pursuant to this clause
  (iv).

            


    

     

    If the
Gross Asset Value of an asset has been determined or adjusted pursuant to
Section (i), (ii) or (iv) hereof, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset for
purposes of computing Profits or Losses.

     

    
      
        
           


        

        
          7

          
            

          

        

        
           


        

      

    

     

    “Guarantor” means Hoku
Solar, Inc., a Delaware corporation and Hoku Scientific, Inc., a Delaware
corporation (the parent company of the Managing Member), on a joint and several
basis, in their capacity as guarantors of certain obligations pursuant to the
Guaranty.

     

    “Guaranty” means that
certain Guaranty, pursuant to which the Guarantor has guaranteed certain
obligations of the Managing Member and the Company.

     

    “Hazardous Substance”
means (i) hazardous materials, hazardous wastes, and hazardous substances as
those terms are defined under any applicable Environmental Laws, (ii) petroleum
and petroleum products including crude oil and any fractions thereof, (iii)
natural gas, synthetic gas, and any mixtures thereof, (iv) asbestos and/or any
material which contains any hydrated mineral silicate, including but not limited
to chrysolite, amosite, crocidolite, tremolite, anthophylite, and/or actinolite,
whether friable or non-friable, (v) PCBs, or PCB-containing materials or fluids,
(vi) radon, (vii) any other hazardous, radioactive, toxic, or noxious substance,
materials, pollutant, or solid, liquid or gaseous waste, and (viii) any
substance with respect to which a federal, state or local agency requires
environmental investigation, monitoring, or remediation.

     

    “HDOT”  means
the Hawaii Department of Transportation Airports Division.

     

    “Host” means Hawaii
Department of Transportation Airports Division (“HDOT”) .

     

    “Installer”  means
Hoku Solar, Inc. a Delaware corporation.

     

    “Installment(s)”
means, as the context requires, one or more of the installments of the Investor
Member’s Capital Contribution paid or payable to the Company pursuant to Section
5.01.

     

    “Interconnection
Agreements” means those certain Small Generator Interconnection
Agreements entered into by the Company with the applicable Local Utility, to
interconnect the solar energy generation facilities with the electric
distribution system.

     

    “Interest” or “Company Interest”
means the ownership interest of a Member of the Company at any particular time,
including the right of such Member to any and all benefits to which such Member
may be entitled as provided in this Agreement and in the Act, together with the
obligations of such Member to comply with all the terms and provisions of this
Agreement and of said Act.  Such Interest of each Member shall, except
as otherwise specifically provided herein, be that percentage of the aggregate
of such benefit or obligation specified by Section 5.01 as such Member’s
Percentage Interest.

     

    “Investor Member”
means UFA Renewable Energy Fund I, LLC, a Delaware limited liability company, or
any Person who replaces it as a Substitute Investor Member.

     

    “Lease Agreements”
means for each Building, that certain Use and Occupancy Agreement entered into
by the Managing Member, and to be assigned to the Company, and the State of
Hawaii, as landlord, granting the Company, among other things, access to certain
rooftop space on the Buildings for the construction, installation, operation,
repair, replacement, removal and maintenance of  solar energy
generation facilities, as the context requires.

     

    
      
        
           


        

        
          8

          
            

          

        

        
           


        

      

    

     

    “Lender” means the
lender provided for in any Loan documents.

     

    “Liquidator” means the
Managing Member or, if there are none at the time in question, such other Person
who may be appointed in accordance with applicable law and who shall be
responsible for taking all action necessary or appropriate to wind up the
affairs of, and distribute the assets of, the Company upon its
dissolution.

     

    “Loans” means the
Operating Deficit Loans and the Subordinated Loans, as  the context
requires.

     

    “Loan Agreement” means
the agreement with respect to the terms and conditions of the making of any Loan
which is anticipated to be entered into on or after the effective date of this
Agreement.

     

    “Loan Documents”
means, with respect to any Loan, any and all documents executed by the Company
in connection with such Loan, including, without limitation, any of the
following:  loan applications, loan commitments, notes, mortgages,
regulatory agreements, building loan agreements, security agreements, and
financing statements.

     

    “Local Utility” means
the Kauai Island Utility Cooperative as to Buildings 1, 2 and 3;  the
Hawaiian Electric and Light Company as to Buildings 4 and 5; and Maui Electric
Company as to Buildings 6 and 7.

     

     “Managing Member”
means Hoku Solar, Inc., a Delaware corporation, in its capacity as managing
member and a member of the Company, and its successor(s) pursuant to this
Agreement, including particularly the provisions of Sections 6.03, 8.01 and
8.12.

     

    “Member” means any or
each of the Investor Member and the Managing Member as the context shall
require.

     

    “Net Cash Flow” means
for each fiscal year the sum of (i) Operating Income and (ii) any other funds
deemed available for distribution by the Managing Member with the approval of
the Lender, if required, less the sum of all Operating Expenses, Debt Service
and all other cash expenditures (whether or not such expenditure are deducted,
amortized or capitalized for tax purposes) including any management
fees.  Net Cash Flow shall be determined separately for each fiscal
year, commencing on the day after the Completion Date and shall not be
cumulative.

     

    
      
        
           


        

        
          9

          
            

          

        

        
           


        

      

    

    


    “Net Operating Income”
means for a particular period of time, as reviewed by the Accountants, Operating
Income less the sum of (i) Operating Expenses, and (ii) all cash expenditures
which have been incurred in the operation of the Company’s business and which
are properly capitalizable (including any leasing costs, leasing commissions and
related fees) but which expenditures are paid or to be paid from Operating
Income.  For purposes of determining Net Operating Income, Operating
Expenses shall include a ratable portion of the annual amount (as reasonably
estimated by the Managing Member) of those seasonal and/or periodic expenses
(such as utilities, maintenance expenses and taxes actually due and payable with
respect to the Project or service charges in lieu of taxes to the extent not
counted above) which might reasonably be expected to be incurred on an unequal
basis during a full annual period of operation, for such period of time on an
annualized basis (based on projections of the
Company).  Notwithstanding the foregoing, if at any time the actual
amount of taxes to be due from the Company is not known, the computation of the
amount of taxes included in item (i) above, shall be based on the greater of the
amount of taxes assumed in the Investor Member’s underwriting of its investment
in the Company; or the projected assessed taxes on the value of the Project at
the time of Placement In Service.  Net Operating Income shall be
evidenced by a certification of the Managing Member with an accompanying
unaudited balance sheet and income statement of the Company indicating that all
trade payables have been satisfied (or with respect to trade payables within
sixty (60) days of the date the services were performed or goods were delivered,
the trade payables shall not be past due and the Company shall have an adequate
cash reserve for the payment of such trade payables), all as shall be subject to
the approval of the Investor Member.

     

    “Notice” means a
writing containing the information required by this Agreement to be communicated
to a Member and either given by U.S. registered or certified mail, return
receipt requested, with postage prepaid (except in the event of a postal
disruption, by strike or otherwise, in the United States), or sent by telex or
facsimile promptly confirmed in writing, or sent by personal delivery by a
nationally recognized courier service for next day delivery; provided, however, that any
written communication containing such information sent to such Member actually
received by such Member shall constitute Notice for all purposes of this
Agreement.

     

    “Operating Deficit”
means the amount by which Operating Income for any particular period of time is
exceeded by Operating Expenses and Debt Service.  For purposes of this
definition, all expenses shall be deemed payable on a ninety (90) day current
basis.

     

    “Operating Deficit
Loans” means the loans made by the Managing Member to the Company
pursuant to Section 8.09(b) of this Agreement.

     

    “Operating Documents”
means the Project Documents.

     

    “Operating Expenses”
mean all expenses of operation of the Project and the Company, as incurred by
the Company in the reasonable discretion of the Managing Member, including
without limitation, the costs of utilities, maintenance, repairs and necessary
replacements, audit fees, tax preparation, accounting fees and expenses, legal
fees, taxes determined to be actually due and payable with respect to the
Project, insurance premiums, professional and management fees, miscellaneous
expenses, and any deposit to cash reserves for working capital, capital
expenditures, repairs, replacements and anticipated expenditures, in such
amounts as may be required or may be determined from time to time by the
Managing Member with the approval of the Investor Member to be advisable for the
operation of the Company, but excluding Development Costs; Debt Service; any
payments or distributions of Net Cash Flow; and depreciation, amortization
deductions and other non-cash items.  For purposes of this definition,
all expenses shall be deemed paid on the earlier of the stated due date or on a
sixty (60) day current basis.

     

    
      
        
           


        

        
          10

          
            

          

        

        
           


        

      

    

     

    “Operating Income”
means all cash received from operation of the Project and the Company in the
ordinary course of business and recognizable by the Company for income tax
reporting purposes, including withdrawals from reserves to the extent otherwise
permitted hereunder, and all other sources; provided, however, that
Operating Income shall exclude the proceeds of any loans to the Company,
proceeds from Capital Transactions, and interest earned on Reserves (unless
withdrawn as aforesaid).

     

    “Operating Profits” or
“Operating
Losses” means, for any fiscal year, the Profits or Losses, as the case
may be, of the Company for that year as determined for federal income tax
purposes by the Accountants with the adjustments described in the definition of
“Profits or Losses,” excluding Profits or Losses from a Capital Transaction and
determined without regard to any adjustments to basis pursuant to Sections 734
or 743 of the Code.

     

    “Ordinary Income
Amount” has the meaning set forth in Section 11.03(c).

     

    “Ownership Interest”
means, with respect to each Member, the ownership interest as set forth on
Schedule A.

     

    “Percentage Interest”
means with respect to the Managing Member, and with respect to the Investor
Member, their interests as set forth on Schedule A.

     

    “Person” means any
individual, partnership, joint venture, limited liability company, corporation,
trust or other entity, and the heirs, executors, administrators, legal
representatives, successors and assigns of such Person where the context so
requires.

     

    “Placement In Service”
means, unless otherwise agreed to in writing by the Members, the receipt of all
required licenses and permits relating to the Project (or portion thereof), the
completion of any critical tests relating to the safety and functionality of the
Project (or portion thereof), the commencement of daily or regular operations,
and the synchronization of the Project (or portion thereof) into a power grid
for generating electricity to produce income, all consistent with the Internal
Revenue Service’s published guidance interpreting the terms “placement in
service” and “placed in service” for purposes of Section 48 of the
Code.

     

    “PPAs” means
collectively, those  seven Power Purchase Agreements (one for each of
the Buildings) each of which is dated as of September 30, 2008, initially
entered into by the Managing Member, as supplier, and HDOT, as purchaser, to
purchase all power that is produced by the solar generation facilities to be
installed on the Buildings. Each PPA  is being assigned by the
Managing Member to the Company pursuant to Article VII of this
Agreement.

     

    “Pre – Flip Target
IRR” means the Investor Member’s targeted internal rate of return of [*]%
per annum on an after-tax, cumulative basis over the period in which the
Investor Member owns its Interest, as reflected in the Projections, which is
determined as follows: the annual discount rate at which the net present value
of Investor Member’s capital contributions to the Company is equal to the net
present value of (a) all cash distributions received by the Investor Member, and
(b) all tax benefits (including the Energy Credits, and tax losses) and
detriments (including all taxable income allocated to the Investor Member
included on the Investor Member’s tax return due to its investment in the
Company).  In performing this calculation, all tax benefits and
detriments would be calculated quarterly and based upon an effective tax rate of
35%, and the methodology for performing this calculation is set forth in the
final financial forecast provided by Accountants at the time of the execution of
this Agreement.

     

    
      
        
           


        

        
          11

          
            

          

        

        
           


        

      

    

     

    “Preliminary Cost
Certification” means the cost certification as prepared by and certified
by the Accountants, detailing actual Project costs, including, but not limited
to, the depreciable basis in the Project and the basis for Energy
Credits.

     

    “Profits” or “Losses” means, for
each fiscal year or other period, an amount equal to the Company’s taxable
income or loss, as the case may be, for such fiscal year or period, determined
in accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:

     

    
      	
               
      

            	
              (i)

            	
              Any
      items described in Sections 705(a)(1)(B) and 705(a)(1)(C) of the Code
      which are not otherwise taken into account in computing Profits or Losses
      shall be added to such taxable income or
loss.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Any
      expenditures of the Company described in Section 705(a)(2)(B) of the Code
      or treated as Section 705(a)(2)(B) expenditures pursuant to Section
      1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not otherwise taken
      into account in computing Profits or Losses, shall be subtracted from such
      taxable income or loss.

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Gain
      or loss resulting from any disposition of Project with respect to which
      gain or loss is recognized for federal income tax purposes shall be
      computed by reference to the Gross Asset Value of the property disposed
      of, notwithstanding that the adjusted tax basis of such property differs
      from its Gross Asset Value.

            


    

     

    
      	
               
      

            	
              (iv)

            	
              In
      the event of a distribution of Company assets to a Member (whether in
      connection with a liquidation or otherwise), or in the event the Gross
      Asset Value of any Company asset is adjusted upon the acquisition of an
      additional interest in the Company, unrealized income, gain, loss and
      deduction inherent in such distributed or adjusted assets (not previously
      reflected in Capital Accounts) shall be allocated pursuant to Section
      11.01 hereof as if there had been a taxable disposition of such
      distributed or adjusted assets at fair market
  value.

            


    

     

    
      	
               
      

            	
              (v)

            	
              In
      lieu of the depreciation, amortization, and other cost recovery deductions
      taken into account in computing such taxable income or loss, there shall
      be taken into account depreciation for such Fiscal Year or other period,
      computed in accordance with the definition of “Depreciation” set forth
      herein.

            


    

     

    
      	
               
      

            	
              (vi)

            	
              Notwithstanding
      any other provision of this definition, any items which are specially
      allocated pursuant to Section 11.10 hereof shall be taken into account in
      computing Profits or Losses only if required under the applicable
      provisions of the Code and Treasury
Regulations.

            


    

     

    
      
        
           


        

        
          12

          
            

          

        

        
           


        

      

    

     

    “Profits or Losses from a
Capital Transaction” means the Profits or Losses, if any, recognized by
the Company as a result of a Capital Transaction, as determined for federal
income tax purposes by the Accountants with the adjustments described in the
definition of “Profits or Losses,” but without regard to any adjustments to
basis pursuant to Section 734 and 743 of the Code.

     

    “Project” means the
Company’s ownership interest in the solar energy generation facilities located
on each of the Buildings up to the point of interconnection with the electrical
system of the Host and all other rights and assets necessary for the ownership
and operation thereof and the sale of power from the Project, together with such
additions or improvements thereto as may hereafter be acquired by the Company in
accordance with this Agreement.

     

    “Projected Credits”
means Energy Credits as determined to be available to the Company, although
subject to recapture, based upon the Cost Certification and the Code, as
applicable, as in effect upon the date the Project or any portion thereof
achieves Placement In Service.

     

    “Project Documents”
means the Interconnection Agreements, together with the attachments thereto, the
Purchase and Sale and O and M Agreement, the plans and specifications for each
of the solar facilities the PPAs, together with the attachments thereto, the
Lease Agreements, together with the attachments thereto, the Development
Agreement and any other document or instrument executed by the Company for the
Project or any of the aforesaid documents, but not including this
Agreement.

     

    “Projections” means
the financial projections attached hereto as Schedule D.

     

    “Prudent Utility
Practices” means those practices, methods, equipment, specifications and
standards of safety and performance, of which there may be more than one, and as
the same may change from time to time, as are commonly used  for solar
energy systems of a type and size similar to the Project and in the same
geographic region as the Project that, at a particular time, in the exercise of
reasonable judgment in light of the facts known at the time a decision was made,
would be expected to accomplish the desired result in a manner consistent with
law, regulations, codes, standards, equipment manufacturer’s recommendations,
reliability, safety, environmental protection, economy and
expedition.

     

    “Purchase and Sale and O and
M Agreement”  means that
certain Purchase and Sale and Operation and Maintenance Agreement by and between
Hoku Solar, Inc. and the Company dated as of even date herewith.

     

    “Recapture Adjustment
Amount” has the meaning set forth in Section 5.01(e)(iv).

     

    “Recapture Event”
means any event that results in the recapture of Tax Credits under the Code or
any applicable state law (other than a recapture arising as a result of a sale
or disposition of the Investor Member’s Interest or as a result of the tax
structure of the ownership of the Company’s and the allocations provided for in
this Agreement).

     

    
      
        
           


        

        
          13

          
            

          

        

        
           


        

      

    

     

    “Recapture Period”
means the Compliance Period, or any longer time period during which Energy
Credits attributable to the Project are subject to recapture pursuant to the
Code.

     

    “REC Purchaser” means
the Person who purchased the RECs.

     

    “RECs” means the
Renewable Energy Certificates  generated by the operation of the
Project, which are the property of the Company.

     

    “Residual Percentage
Interests” means with respect to the Managing Member, 95.0%, and with
respect to the Investor Member, 5.0%.

     

     “State” means the
State of Hawaii.

     

    “Subordinated Loan”
means any loan made by a Member to the Company pursuant to Section
5.06.

     

    “Substitute Investor
Member” means any Person admitted to the Company as an Investor Member
pursuant to Section 9.03.

     

    “Target IRR” means the
Investor Member’s targeted internal rate of return of [*]% per annum on an
after-tax, cumulative basis over the period in which the Investor Member owns
its Interest, as reflected in the Projections, which is determined as follows:
the annual discount rate at which the net present value of Investor Member’s
capital contributions to the Company is equal to the net present value of (a)
all cash distributions received by the Investor Member, and (b) all tax benefits
(including the Energy Credits, and tax losses) and detriments (including all
taxable income allocated to the Investor Member included on the Investor
Member’s tax return due to its investment in the Company).  In
performing this calculation, all tax benefits and detriments would be calculated
quarterly and based upon an effective tax rate of 35%, and the methodology for
performing this calculation is set forth in the final financial forecast
provided by Accountants at the time of the execution of this
Agreement.

     

    “Tax Credits” means
the Energy Credits.

     

    “Tax Matters Partner”
shall mean the Member designated in Section 11.07 to be the Tax Matters Partner
as provided for in the Code.

     

    “Treasury Regulations”
or “Treasury
Reg.” means the final and temporary regulations promulgated from time to
time under the Code.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    ARTICLE
III.

    PURPOSE AND BUSINESS OF THE
COMPANY

     

    3.01.            Purpose of the
Company.

     

    The
purposes, nature, and general character of the business of the Company shall
consist of (a) acquiring, owning, managing, operating, and, if appropriate or
desirable, selling or otherwise disposing of the Project or any substantial part
thereof, the RECs and any other environmental attribute related to the Project;
(b) operating the Project in compliance with the provisions of Section 48 of the
Code and all governmental requirements; and (c)  carrying on any and
all activities incidental or related to the foregoing in accordance with this
Agreement, including, without limitation, the leasing of portions of the
Buildings from the Host.  The purposes of this Company and the nature
and character of its business shall not be extended, by implication or
otherwise, except by written consent of the Members.

    


    3.02.            Authority of the
Company.

     

    In order
to carry out its purpose, the Company is empowered and authorized to do any and
all acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of its purpose, and for the
protection and benefit of the Company, including but not limited to the
following:

     

     (a)        operate,
maintain, improve, buy, own, sell, convey, assign, mortgage,  rent or
lease any real estate and any personal property necessary to the operation of
Project, including, but not limited to the authority to cause the Company to
purchase the solar generation facilities installed at the Buildings from the
Managing Member;

     

     (b)        enter
into any kind of activity, and perform and carry out contracts of any kind
necessary to, or in connection with, or incidental to, the accomplishment of the
purposes of the Company;

     

     (c)        borrow
money and issue evidences of indebtedness in furtherance of the Company’s
business and secure any such indebtedness by mortgage, pledge, or other
lien;

     

     (d)        maintain
and operate the Project;

     

     (e)         subject
to the approval of the Lender, if required, and to other limitations expressly
set forth elsewhere in this Agreement, negotiate for and conclude agreements for
the sale, exchange, assignment or other disposition of all or substantially all
of the property of the Company, or for the refinancing of any Loan;

     

     (f)         enter
into the Operating Documents;

     

     (g)        enter
into the Loan Documents; and

     

     (h)        do
any and all other acts and things necessary or proper in furtherance of the
Company’s business.

     

    
      
        
           


        

        
          15

          
            

          

        

        
           


        

      

    

     

    ARTICLE
IV.

    REPRESENTATIONS, WARRANTIES
AND COVENANTS;

    DUTIES AND
OBLIGATIONS

     

    4.01.            Representations, Warranties
and Covenants Relating to the Project and the Company.

     

    (a)              
As of the date hereof, the Managing Member hereby represents, warrants and
covenants to the Company and to the other Members as follows:

     

    (i)       
    The Company is a duly organized limited liability
company validly existing under the laws of the Formation State and has
undertaken all acts, including without limitation, the filing of all
certificates and the payment of all fees, taxes, and other sums necessary for
the Company to operate as a limited liability company in the State of Hawaii and
to enable the Company to engage in its business.

     

    (ii)           No
event has occurred that has caused, and the Managing Member has not acted in any
manner that will cause (a) the Company to be treated for federal income tax
purposes as an association taxable as a corporation, (b) the Company to fail to
qualify as a limited liability company under the Act or (c) the Investor Member
to be liable for Company obligations other than to the extent of its required
Capital Contributions or as otherwise provided in the Act.

     

    (iii)          All
consents or approvals of any governmental authority, or any other Person,
required to be obtained by the Company or the Managing Member  in
connection with the transactions contemplated by this Agreement have been or
will be obtained by the Managing Member as and when required and the Company has
taken all action under the laws of the State and any other applicable
jurisdiction and has complied with all filing requirements necessary under the
Act for the preservation of the limited liability of the Members.

     

    (iv)          The
Managing Member has delivered to the Investor Member true copies of all
documents it reasonably believes are material to the Investor Member’s
investment in the Company and true copies of all amendments to such documents
and all other material information relevant to the Project or to the admission
of the Investor Member to the Company.  To the best of the Managing
Member’s knowledge, all such information provided to the Investor Member is
accurate and complete in all material respects as of the date of delivery and
the Managing Member has not failed to provide the Investor Member with any
information necessary to make the information provided by the Managing Member
complete and accurate in all material respects as of the date of
delivery.

     

    (v)           The
Company is under no obligation, and neither the Managing Member nor any of its
Affiliates have taken any action that would cause the Company to be obligated,
under any federal or state law, rule, or regulation to register the
Interests.  The Managing Member has complied with all filings
necessary to avail itself of any exemption available to it regarding the sale of
Interests without registration.

     

    
      
        
           


        

        
          16

          
            

          

        

        
           


        

      

    

     

    (vi)          The
Managing Member (i) is a corporation, validly existing under the laws of
Delaware and authorized to do business in the State and (ii) has full power and
authority to enter into, execute and deliver this Agreement and all instruments
pertaining hereto and to perform all acts related thereto.  The
obligations of all transactions contemplated herein and the Project Documents to
be performed by the Managing Member or its Affiliates do not and will not result
in any material breach or violation of, or default under, any governing
instrument of the Managing Member or its Affiliates or any agreements by which
the Managing Member or its Affiliates or any of its property is bound, or under
any applicable law, administrative regulation, or court decree (nor has there
occurred any continuing event which, with the giving of notice or the passage of
time or both, would constitute such a default in any material
respect).

     

    (vii)         No
event of Bankruptcy has occurred and is continuing with respect to the Managing
Member.

     

    (viii)        No
litigation, action, investigation, event, or proceeding is pending or, to the
best of its knowledge is threatened, that, if adversely resolved, would: (i)
have a material adverse effect on the Company or the Project (or, to its
knowledge, any adjacent or other property that would have a material adverse
effect on the Project or the Company’s investment in the Project); (ii) 
have a material adverse effect on the ability of the Managing Member to
perform its obligations under this Agreement,  (iii) have a
material adverse effect on the financial condition of the Managing Member; or
(iv) constitute or result in a material breach of any representation, warranty,
covenant, or agreement of the Managing Member set forth in this
Agreement.

     

    (ix)          In
all material respects, all Project Documents are in accord with applicable laws,
codes and regulations and the construction of the Project will be completed in
accordance therewith in all material respects.

     

    (x)           No
default (or event that, with the giving of notice or the passage of time or
both, would constitute a default) has occurred and is continuing under any of
the Project Documents, or any other contract, agreement, or instrument to which
the Company is subject, and the Project Documents are executed and delivered, or
when entered into, will be, in full force and effect and the Company is entitled
to the benefit of the Project Documents.

     

    (xi)           Other
than with respect to any Loan and the Guaranty or as contemplated by the Project
Documents, neither the Managing Member nor any of its Affiliates nor the Company
has entered into any agreement or contract for the payment or offset of any
construction loan or loan discounts, additional interest, yield maintenance or
other charges or financing fees or any agreement to incur any financial
responsibility with respect to the Project or providing for the guaranty of
payment of any such interest charges or financing fees other than those
disclosed in this Agreement; and except for the Project Documents, and Guaranty,
in no event have they or the Company entered into any such agreement or guaranty
of any kind whatsoever (such as an escrow arrangement or letter of credit
arrangement) that would subject the Company or any of its Members or Affiliates
to personal liability or economic risk of loss as to the Loan nor has the
Managing Member made any loan which shall be personally enforceable by any
lender on the Loan or which may in any way affect allocation of the Projected
Credit to the Investor Member.

     

    
      
        
           


        

        
          17

          
            

          

        

        
           


        

      

    

     

    (xii)         The
Managing Member is not under any commitment to any real estate broker, rental
agent, finder, syndicator or other intermediary with respect to any Project or
any portion thereof except for the arrangements specifically described in this
Agreement and the arrangements previously disclosed in writing and in the Budget
to the Investor Member.

     

    (xiii)        There
are no outstanding loans or advances from the Managing Member to the Company,
and the Company has no unsatisfied obligation to make any payments of any kind
to the Managing Member or its Affiliates.

     

    (xiv)        There
are no restrictions on the sale or refinancing of the Project, other than the
restrictions, if any, set forth in the Operating Documents, the Loan Documents,
under Section 48 of the Code, the PPAs and in the Lease Agreements.

     

    (xv)         The
Company owns the Project, free and clear of any liens, charges, or encumbrances
other than any mortgages, and mechanics’ or other liens that have been bonded
against in such a manner as to preclude the holder of such lien from having any
recourse to the Project or the Company for payment of any debt secured thereby,
and the Managing Member has not received notice of any such liens, charges, or
encumbrances.

     

    (xvi)        All
building, zoning, and other applicable certificates, permits, and licenses
necessary to permit the construction and/or installation, use and operation of
the Project will be obtained as and when required by law.  All
improvements constructed or to be constructed in connection with the Project
have been or will be constructed and equipped in full compliance with the
requirements of all governmental authorities having jurisdiction over the
Project and neither the Company nor the Managing Member has received any notice
of, or has any knowledge of, any violation with respect to the Project of any
law, rule, regulation, order, or decree of any governmental authority having
jurisdiction that would have a material adverse effect on the Project or the
Company’s investment in the Project (including the Company’s ability to transfer
the Project in accordance with terms of this Agreement) or the construction
and/or installation, use, or operation thereof.

     

    (xvii)       If
any Hazardous Substance is found to exist or be present on any Project, it will
be either removed from the Project and disposed of or encapsulated and/or
otherwise corrected, contained and made safe and inaccessible, all in strict
accordance with federal, state, and local statutes, laws, regulations, rules,
and ordinances.  The Managing Member further warrants and represents
to the best of the Managing Member’s knowledge, after due inquiry, that the
Project is in compliance with all applicable Environmental Laws and the Managing
Member has not received notice of any violations of the Environmental
Laws.

     

    
      
        
           


        

        
          18

          
            

          

        

        
           


        

      

    

     

    (xviii)      In
the event the Federal Drug Free Workplace Act of 1988 and the Regulations
promulgated thereunder, including without limitation, 54 Code of Federal
Regulations 4956 (1989), as such Act and Regulations have been amended are
applicable, the Managing Member has complied with and has caused the Company to
comply with such Act.

     

    (xix)         No
federal appropriated funds have been paid or will be paid, by or on behalf of
the Managing Member or the Company, to any Person for influencing or attempting
to influence an officer or employee of any agency, a Member of Congress, an
officer or employee of Congress, or an employee of a Member of Congress in
connection with the awarding of any federal contract, the making of any federal
grant, the making of any federal loan, the entering into of any cooperative
agreement, and/or the extension, continuation, renewal, amendment or
modification of any federal contract, grant, loan or cooperative
agreement.

     

    (xx)          No
funds have been paid for influencing or attempting to influence an officer or
employee of a Member of Congress in connection with a federal contract, grant,
loan and/or cooperative agreement benefiting the Company and/or the Managing
Member.  The Company and the Managing Member have complied with all
restrictions, certifications and disclosure requirements contained in the Byrd
Amendment to the fiscal 1990 appropriations measures for the United States
Department of the Interior (P.L. 101-121) and with any guidelines and rules
issued by any federal entity in connection therewith (“Byrd Amendment”), if
applicable.

     

    (xxi)         The
Company will use diligent efforts to construct and/or install the Project and
thereafter operate it as required by the Code in order to qualify for and
maintain the Tax Credits and other tax benefits anticipated in connection
therewith.

     

    (xxii)        The
Company has not made any elections under the Code without the Consent of the
Investor Member that would affect the amount, timing, availability, or
allocation of Energy Credits.

     

    (xxiii)       The
Managing Member has not entered into or formed a joint venture with and is not
acting as an agent of any Person with respect to ownership and operation of the
Project or the Company.

     

    (xxiv)      The
property being installed by the Company for the Project is new, and no portion
thereof has previously been used.

     

    (xxv)       Within
the meaning of Section 48 of the Code, (i) the Project uses and will use solar
energy to generate electricity, (ii) except as reflected in the Projections, no
proceeds of any issue of state or local government obligations have been used to
provide financing for the Project the interest on which is exempt from tax under
Section 103 of the Code, (iii) the Project is receiving no financing other than
that incorporated into this Agreement or the Project Documents, and (iv) no
federal tax credit (other than the Energy Credits) has been or is allowed or
allowable with respect to any property that is part of the Project.

     

    
      
        
           


        

        
          19

          
            

          

        

        
           


        

      

    

     

    (xxvi)      The
Managing Member will indemnify and hold the Company, the Investor Member and the
members thereof, their Affiliates and agents, free and harmless from any injury,
loss or damage (including, but not by way of limitation, reasonable attorneys’
fees, court costs, and amounts paid in settlement of any claims, which
settlement has been mutually agreed to by it and the party against whom such
claim has been made) resulting from the claims of any Person or Persons other
than the Investor Member and the members thereof, their Affiliates and agents,
except to the extent such claim is attributable to information and actions by
United Fund Advisors with respect to any liability arising under the Securities
Act of 1933 or the Securities Exchange Act of 1934 or the laws or regulations of
any state or other jurisdiction, which claims are based upon alleged fraud,
deceit, or untrue statement or alleged untrue statement of a material fact, or
the omission or alleged omission to state a material fact required to be stated
or necessary to make the statements not misleading and based on statements made
by the Managing Member to the Investor Member in connection with the acquisition
by the Investor Member of its interest in the Company; provided, however,
Managing Member shall not be required to indemnify any Person for any gross
negligence, misconduct, or failure to act of the Investor Member or any members
or Affiliates thereof.

     

    (xxvii)     The
Managing Member shall be responsible for the representations, warranties and
covenants assigned to it hereunder, and shall not assert as a defense in any
action by the Company or the Investor Member  the fact that the
Managing Member may have relied on other parties in connection with matters
addressed therein; provided,
however that this obligation to the Investor Member and the Company shall
not prevent the Managing Member from asserting such reliance in any action
brought by the Managing Member against such parties on which the Managing Member
has relied.

     

     (b)             
As of the date hereof, the Investor Member hereby represents, warrants and
covenants to the Company and to the other Members as follows:

     

    (i)           
The Investor Member (a) is a limited liability company, validly existing under
the laws of the State of Delaware and (b) has full power and authority to enter
into and deliver this Agreement and all instruments pertaining hereto and to
perform all acts related thereto.  This Agreement has been duly
executed and delivered and constitutes the legal, valid, and binding obligation
of the Investor Member, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, and other laws affecting creditors’ rights
and remedies generally and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether a proceeding is sought in equity or at
law).  The obligation of all transactions contemplated herein and in
the Project Documents to be performed by the Investor Member or its Affiliates
do not and will not result in any material breach or violation of, or default
under, any governing instrument of the Investor Member or its Affiliates or any
agreements by which the Investor Member or its Affiliates or any of its property
is bound, or under any applicable law, administrative regulation, or court
decree  (nor has there occurred any continuing event which, with the
giving of notice or the passage of time or both, would constitute such a default
in any material respect).

     

    
      
        
           


        

        
          20

          
            

          

        

        
           


        

      

    

     

    (ii)           No
event of Bankruptcy has occurred with respect to the Investor Member or any of
its Affiliates.

     

    (iii)          The
Investor Member is purchasing its Interest for investment for the Investor
Member’s own account only and not with a view to, or for resale in connection
with, any “distribution” thereof within the meaning of the Securities Act of
1933, as amended (the “Securities Act”).

     

    (iv)         
The Investor Member understands that the Interests have not been registered
under the Securities Act in reliance on an exemption from
registration.  The Investor Member understands that the Interest must
be held indefinitely unless the Interests subsequently are registered under the
Securities Act or unless an exemption from registration is otherwise
available.  The Investor Member understands that the Company is not
obligated to register the Interest.  The Investor Member agrees that
the Interest may not be offered, sold, transferred, pledged, or otherwise
disposed of in the absence of an effective registration statement under the
Securities Act and applicable state securities laws or an opinion of counsel
acceptable to the Company that such registration is not required.

     

    (v)           Neither
the Investor Member nor any of its Affiliates have taken any action that would
cause the Company to be obligated, under any state law, rule, or regulation of
Missouri, California, Hawaii or Delaware to register the Interest.

     

    (vi)          The
Investor Member shall be responsible for the representations, warranties and
covenants assigned to it hereunder, and shall not assert as a defense in any
action by the Company or the Managing Member  the fact that the
Investor Member may have relied on other parties in connection with matters
addressed therein; provided, however that this obligation to the Managing Member
and the Company shall not prevent the Investor Member from asserting such
reliance in any action brought by the Investor Member against such parties on
which the Investor Member has relied.

     

    (vii)         No
litigation, action, investigation, event, or proceeding is pending or, to the
best of its knowledge is threatened, that, if adversely resolved, would: (a)
have a material adverse effect on the ability of the Investor Member to
perform its obligations under this Agreement or  (b) constitute
or result in a material breach of any representation, warranty, covenant, or
agreement of the Investor Member set forth in this Agreement.

     

    4.02.            Duties and Obligations
Relating to the Project and the Company.

     

    The
Managing Member shall have the following duties and obligations with respect to
the Project and the Company:

     

      (a)       it
shall cause the Company to do all things necessary to maintain its status as a
limited liability company and had, has, and shall continue to have full power
and authority to acquire the Project and to develop, construct, operate, and
maintain the Project in accordance with the terms of this Agreement and to
enable the Company to engage in its business;

     

    
      
        
           


        

        
          21

          
            

          

        

        
           


        

      

    

     

      (b)       it
shall cause to be met all requirements applicable to the Company, including, but
not limited to, those set forth in [Sections 3 and 4 of the
PPAs,] which are
necessary to obtain all permitting, leasing and other applicable regulatory
approvals.

     

      (c)       while
conducting the business of the Company, it shall not act in any manner which it
knows or should have known after due inquiry will (i) cause the termination of
the Company for federal income tax purposes without the Consent of the Investor
Member; (ii) cause the Company to be treated for federal income tax purposes as
an association taxable as a corporation, (iii) cause the Company to fail to
qualify as a limited liability company under the Act, or (iv) cause the Investor
Member to be liable for Company obligations;

     

      (d)       it
shall prepare and submit to the Internal Revenue Service (or any other
governmental authority designated for such purpose), on a timely basis, any and
all annual reports, information returns and other certifications and information
required (i) to ensure that the Company (and its Members) qualifies for Tax
Credits and (ii) to avoid any Recapture Event or the imposition of penalties or
interest on the Company or any of its Members for failure to comply with the
requirements of the Code or any other applicable laws relating to the Tax
Credits;

     

      (e)       it
shall exercise good faith in all activities relating to the conduct of the
business of the Company, including the operation and maintenance of the Project,
and it shall take no action with respect to the business and property of the
Company which is not reasonably related to the achievement of the purpose of the
Company;

     

      (f)        it
will execute on behalf of the Company all documents necessary to elect, pursuant
to Sections 732, 734, 743 and 754 of the Code, to adjust the basis of the
Company’s property upon the request of the Investor Member, if, in the sole
opinion of the Investor Member, such election would be advantageous to the
Investor Member or any of its members;

     

      (g)       it
shall, during and after the period in which it is a Member provide the Company
with such information and sign such documents as are necessary for the Company
and the Investor Member to make timely, accurate and complete submissions of (i)
federal and state income tax returns, (ii) reports to governmental agencies, and
(iii) any other reports required to be delivered to the Investor Member or its
members;

     

      (h)       it
shall comply and cause the Company to comply with the provisions of all state
and local zoning laws, building codes, health and safety codes and all other
governmental and contractual obligations applicable to the Project ;

     

      (i)        it
shall use commercially reasonable efforts consistent with sound management
practice and with the terms of the Operating Documents to maximize Net Cash Flow
available for distribution to the Members;

     

      (j)        it
shall provide the Investor Member with Notice of any written or oral notice of
any (i) default or failure of compliance with respect to any financial,
contractual or governmental obligation of the Company or the Managing Member
related to the Project or Company; (ii) IRS proceeding regarding the Project or
the Company; (iii) litigation, criminal action or administrative proceeding
against the Managing Member or the Company related to the Project; (iv)
communication from any Person or governmental authority related to the Project
or Company which is not in the ordinary course of business;

     

    
      
        
           


        

        
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      (k)       in
operating the Project, it shall use commercially reasonable efforts to obtain
all contracts, materials, supplies, utilities and services required by the
Project on the most advantageous terms available.  Except as otherwise
approved by the Consent of the Investor Member, the Managing Member shall secure
and credit to the Company, and not receive or retain for itself, its agents,
employees or Affiliates, any discounts, compensation, rebates or commissions
obtainable with respect to any and all purchases, service contracts, and all
other transactions affecting the Project, including without limitation, any
compensation received from the assignment or transfer of any contracts affecting
the Project;

     

     
(l)        it or its Affiliates shall
cause the Project to be completed substantially in accordance with the relevant
Project Documents; it or its Affiliates shall obtain all building, zoning, and
other applicable certificates, permits, and licenses necessary to permit the
construction and/or installation, use and operation of the Project and the
Project; and all improvements constructed or to be constructed in connection
with the Project shall be constructed and equipped in full compliance with the
requirements of all governmental authorities having jurisdiction over the
Project;

     

     
(m)      it shall cause the Company or Host to
keep all public utilities necessary to the operation of the
Project;

     

     
(n)       it shall cause the Company to
maintain the Project in compliance with any and all applicable Environmental
Laws.  The Managing Member shall promptly deliver to the Investor
Member any notice received from any source whatsoever of the alleged, potential,
threatened, or actual violation of any Environmental Law with respect to the
Project.  If any Hazardous Substance is found to exist or be present
in violation of any Environmental Law, the Managing Member shall, at its sole
expense, commence promptly the taking of action to assure it will be either
removed from the Project and disposed of or encapsulated and/or otherwise
corrected, contained and made safe and inaccessible, all in strict accordance
with federal, state and local statutes, laws, regulations, rules and ordinances,
and any recommendations set forth in the Environmental Reports, and any
requirements in the Loan Documents.  If, at any time during the term
of the Company the Investor Member reasonably determines that the foregoing
representations or covenants in this Agreement relating to Hazardous Substance
and Environmental Laws may not have been true when made, or may have become
untrue, the Company shall promptly obtain an environmental audit of the
Project.  The scope of such audit and the company performing it shall
be determined by the Managing Member with the Consent of the Investor
Member;

     

     
(o)       in the event the Federal Drug Free
Workplace Act of 1988 and the Regulations promulgated thereunder, including
without limitation, 54 Code of Federal Regulations 4956 (1989), as such Act and
Regulations may be amended, are applicable, the Managing Member shall comply
with and will cause the Company and its agents to comply with such Act and
Regulations;

     

    
      
        
           


        

        
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(p)       it will comply and will cause the
Company to comply with the restrictions, certifications and disclosure
requirements contained in the Byrd Amendment, if such Act is
applicable;

     

     
(q)       it shall cause the Project to be
constructed and/or installed and thereafter operated as required by the Code,
and in order to comply with the covenants set forth in Sections 3 and 4 of the
PPAs in order to qualify for and maintain the Tax Credits and other tax benefits
anticipated in connection therewith;

     

     
(r)        it shall operate and manage
the Project in accordance with Prudent Utility Practices and in the best
interests of the Company;

     

     
(s)        it shall cause the Company to
cause the Project to achieve Placement In Service prior to March 31, 2009,
unless extended pursuant to Section 8.02(b)(xxi);

     

     
(t)        it has not and will not
permit the Company to accept any federal or non-federal grants or funds and any
other grants or funds which have previously been disclosed to the Investor
Member without the Consent of the Investor Member;

     

     
(u)       it shall, on behalf of the Company,
elect to depreciate the Project on an accelerated basis over a five (5)-year
term;

     

     
(v)       it shall cause the Company to
deliver all and any reports or certifications to any service or property
provider or purchaser;

     

     
(w)       it shall cause the Company to
maintain insurance coverages in amounts and types in accordance with the
Investor Member’s stated minimum requirements, as set forth in Schedule B, and to
diligently pursue all claims under such insurance;

     

     
(x)       prior to closing, the Managing
Member shall provide the Investor Member with copies of all insurance coverage
and/or policies in form and issued by companies satisfactory to the Investor
Member as required pursuant to Section 4.02(w) and Schedule B of this
Agreement and shall provide, upon the request of the Investor Member, Blue Oak
or another entity named by the Investor Member (the “Construction Consultant”)
with copies of all construction documents for the Construction Consultant’s
review

     

     
(y)       it shall operate and maintain the
Project in accordance with , the National Electrical Code and applicable
standards required by the relevant Local Utility; and

     

     
(z)        it shall cause the Company to
test and inspect each portion of the Project prior to interconnection in
accordance with all applicable State laws.

     

    
      
        
        

      

      
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    ARTICLE
V.

    MEMBERS, COMPANY INTERESTS
AND OBLIGATIONS OF THE COMPANY

     

    5.01.            Members, Capital
Contributions and Company Interests.

     

     
(a)       The Managing Member, its principal
address or place of business, its Capital Contribution and its Percentage
Interest are set forth in Schedule A attached hereto.  The Managing
Member shall be required to make an initial installment of Capital Contribution
upon execution of this Agreement in the amount of [*].  During
installation, the Managing Member shall be required to fund an additional [*] in
the form of capital contributions as follows:

     

    Within
three (3) business days of the Managing Member submitting its application to the
applicable Local Utilities for permission to operate (a “PTO”) with respect to
one or more Buildings (the Buildings for which an application for PTO was
submitted are referred to as the  “Initial Buildings”), but not
earlier than January 8, 2009,  the Managing Member shall make a
capital contribution to the Company in an amount equal to the aggregate of the
amounts reflected in the column entitled “Managing Member’s Capital
Contributions” on Schedule E with respect to such Initial
Buildings.  The proceeds of such Managing Member’s Capital
Contributions shall be used by the Company to purchase the solar systems
installed at the Initial Buildings and to pay to the Developer a portion of its
Development Fee, as shown on Schedule E.  For example, if a PTO was
submitted only for Building 1,  then the Managing Member would
contribute [*] to the Company,  of which [*] would be applied to the
purchase price and [*] to pay Development Fee.

     

    Within
three (3) business days of the Company submitting its application to the
applicable Local Utilities for permission to operate with respect to all
Buildings other than the Initial Buildings (the “Final Buildings”), but not
earlier than February 15, 2009,  the Managing Member shall make a
capital contribution to the Company in an amount equal to the aggregate of the
amounts reflected in the column entitled “Managing Member’s Capital
Contributions” on Schedule E with respect to such
Final  Buildings.  The proceeds of such Managing Member’s
Capital Contributions shall be used by the Company to purchase the solar systems
installed at the Final  Buildings and to pay to the Developer a
portion of its Development Fee, as shown on Schedule E.

     

    With the
exception of the initial installment of [*],  the Managing Member
Capital Contributions shall be deemed contributions to the Company and the
amounts shall be used to offset amounts owed under the Purchase and Sale and O
and M Agreement and under the Development Agreement, in accordance with Schedule
E.

     

     
(b)       The Investor Member, its principal
office or place of business, its Capital Contribution and its Percentage
Interest are set forth in Schedule A attached hereto.

     

     
(c)       Subject to the provisions of this
Agreement, including without limitation the provisions of Sections 5.01(d),
5.01(e) and 5.03, the Investor Member shall be obligated to make a Capital
Contribution to the Company in the aggregate amount of [*] (subject to
adjustment as provided in this Section 5.01) in three (3) Installments, which
Installments shall be due and payable in cash by the Investor Member, as
follows.

     

    
      
        
           


        

        
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(i)           [*] (the “First
Installment”) upon the later to occur of (A) the execution of this Agreement and
(B) the date upon which the Investor Member shall have completed,
to its satisfaction, due diligence as to the Company, the Guarantors and the
Managing Member and the future operation of the Project.

     

     
(ii)           The Second
Installment shall be payable within ten (10) business days after the latest to
occur of (A) Placement In Service of the systems located at the Initial
Buildings; (B)  receipt of Cost Certification with respect to the
Initial Buildings; (C) execution of the PPAs, and Lease Agreements with respect
to the Initial Buildings; (D) confirmation from the Company that the Company has
received all  approvals required by any and all federal, state and/or
local governmental, regulatory or agencies with jurisdiction over the Initial
Buildings other than those as will be required or issued after Placement in
Service; (E) receipt of all engineering reports with respect to the Initial
Buildings relating to transmission, interconnection and solar power issues, such
reports to be in form and substance satisfactory to the Investor Member; (F)
receipt of insurance policies for the Project in accordance with Schedule B to
this Agreement; (G) January 15, 2009; (H) Managing Member producing evidence
that, with respect to the Initial Buildings, a Memorandum of Agreement has been
properly recorded in the appropriate office of the State or (I) the receipt of a
conditional release of lien in the form attached hereto as Exhibit F from each
of the suppliers, contractors and subcontractors providing labor or materials
for the systems located at the Initial Buildings evidencing that all such
suppliers, contractors and subcontractors have been paid in full or will be paid
in full with the proceeds of the Second Installment; provided, however, that any
one or more of these subclauses (A) through (H) may be waived at the Investor
Member’s sole and absolute discretion.  The proceeds of the Second
Installment shall be used to purchase the solar systems for the Initial
Buildings and to pay to the Developer a portion of its Development Fee, as shown
on Schedule E.  The amount of the Second Installment shall be an
amount equal to the aggregate of the amounts reflected in the column entitled
“Investor  Member Capital Contributions” on Schedule E with respect to
such Initial Buildings.

     

     
(iii)           The Third
Installment shall be payable within ten (10) business days after the latest to
occur of (A) Placement In Service of the systems located at the
Final  Buildings; (B) receipt of Cost Certification with respect to
the Final  Buildings; (C) execution of the PPAs, and Lease Agreements
with respect to the Final  Buildings; (D) confirmation from the
Company that the Company has received all  approvals required by any
and all federal, state and/or local governmental, regulatory or agencies with
jurisdiction over the Final  Buildings other than those as will be
required or issued after Placement in Service; (E) receipt of all engineering
reports with respect to the Final  Buildings relating to transmission,
interconnection and solar power issues, such reports to be in form and substance
satisfactory to the Investor Member; (F) receipt of insurance policies for the
Final  Buildings in accordance with Schedule B to this Agreement; (G)
February 22, 2009; (H) Managing Member producing evidence that, with respect to
each of the Final  Buildings, a Memorandum of Agreement has been
properly recorded in the appropriate office of the State, or (I)  the
receipt of a conditional release of lien in the form attached hereto as Exhibit
F from each of the suppliers, contractors and subcontractors providing labor or
materials for the systems located at the Final Buildings evidencing that all
such suppliers, contractors and subcontractors have been paid in full or will be
paid in full with the proceeds of the Third Installment; provided, however, that
any one or more of these subclauses (A) through (H) may be waived at the
Investor Member’s sole and absolute discretion.  The proceeds of the
Third Installment shall be used to purchase the solar systems for the
Final  Buildings and to pay to the Developer a portion of its
Development Fee, as shown on Schedule E.  The amount of the Third
Installment shall be an amount equal to the aggregate of the amounts reflected
in the column entitled “Investor  Member Capital Contributions” on
Schedule E with respect to such Final  Buildings.

     

    
      
        
           


        

        
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(d)       Except as provided in Section 9.02
hereof, without the Consent of all of the Members, no additional Person may be
admitted as an additional Investor Member and a Capital Contribution may be
accepted only as and to the extent expressly provided for in this Article
V.

     

     
(e)       (i)          If,
as a result of a reduction or increase in costs incurred to complete the
Project, or for any other reason other than (A) a Recapture Event, or (B)
an event which would be a Recapture Event but for the fact it resulted from a
sale or disposition  of the Company Interest of the Investor Member,
the Accountants shall determine in preparing the Company’s tax returns (or an
amended return), or there shall be a Final Determination, that the Actual
Credits are more or less than the Projected Credits (such determination being
referred to herein as the “Credit Determination”), the provisions of Sections
5.01(e)(ii) and (e)(iii) shall apply.

     

      (ii)         After
the Credit Determination is made, the Accountants shall prepare a revised set of
financial projections and determine whether the Benefits can be achieved as set
forth in the Projections.  In the event that the Accountants determine
that the Third Installment should be increased such that the Benefits are
achieved as set forth in the Projections, then the Investor Member shall make,
together with the Third Installment, an additional installment of Capital
Contribution as determined by the Accountants (the “Credit
Adjustment”).  Notwithstanding the foregoing, positive Credit
Adjustments shall not in the aggregate exceed 15% of the Investor Member’s
Capital Contribution (prior to any Credit Adjustment provided for in this
Section 5.01(e)(ii)).  Further, in no event shall the Credit
Adjustment be an amount such that the Benefits are not achievable within six (6)
years from the Completion Date.

     

      (iii)        After
the Credit Determination is made, the Accountants shall prepare a revised set of
financial projections and determine whether the Benefits can be achieved as set
forth in the Projections.  In the event that the Accountants determine
that the Third Installment should be decreased such that the Benefits are
achieved as set forth in the Projections, then the Investor Member shall make a
downward adjustment to Third Installment, as determined by the
Accountants.

     

    
      
        
           


        

        
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     (iv)         If
a Recapture Event occurs prior to the time the Investor Member has paid in its
Capital Contribution, the amount of the next succeeding Installment (and any
Installment(s) thereafter if necessary) of the Investor Member  shall
be reduced by an amount (herein referred to as a “Recapture Adjustment Amount”)
equal to any increase in taxes payable by the Investor Member as of that date
solely as a result of such Recapture Event, measured by the Applicable Tax Rate,
but shall be limited to the amount necessary to produce a Target IRR to the
Investor Member.  Notwithstanding the aforementioned, the Recapture
Adjustment Amount shall also include any interest and/or penalties due to the
Internal Revenue Service from the Investor Member, reasonable attorney fees
and/or reasonable professional costs associated with the Audit, as provided in
Section 5.01(e)(v).  If no further Installment remains, or if the
Recapture Adjustment Amount is greater than the aggregate amount of the
remaining Installment(s), then the Managing Member shall contribute to the
Company, for immediate distribution to the Investor Member, an amount equal to
the difference between such remaining Installment(s), if any, and the Recapture
Adjustment Amount, which amount shall then be immediately distributed to the
Investor Member as a return of capital and Investor Member shall be relieved of
making any additional Installments.  Notwithstanding the foregoing, if
the effect of such a contribution of capital would be to cause Company Profits
or Losses or Tax Credits arising during the Recapture Period to be allocated
among the Members other than in accordance with their Percentage Interests as
set forth in Section 5.01, then the portion of the Recapture Adjustment Amount
that was to be contributed to the Company as aforesaid (recalculated on an
After-Tax Basis) shall be paid directly by the Managing Member to the Investor
Member promptly after demand is made therefor.  Any amounts not paid
upon demand shall bear interest at the rate of 2% over the Designated Prime Rate
in effect at the end of the preceding calendar month, until paid in
full.  The Managing Member’s obligations under this Section shall
expire upon the last day of the third year following the year in which the
recapture period for the Tax Credits pursuant to Section 48 of the Code shall
have ended.

     

     (v)       
 The Investor Member covenants and agrees that it will promptly give
written notice to the Managing Member of the occurrence of any audit by the IRS
of the Investor Member (which notice must include copies of all correspondence,
reports, and materials relevant to the controversy) if the adverse resolution of
such audit (or portion thereof) could result in a Recapture Event which could
lead to any payment by the Managing Member  (such audits or relevant
portions thereof being hereinafter referred to as an “Audit”).   The
Managing Member may participate, at its own expense, in the defense of any Audit
and, throughout the Audit, will cooperate fully, comply with all requests and
provide all information, documentation and other similar items to the Investor
Member within ten (10) business days of the Investor Member’s
request.  Throughout the Audit, the Investor Member will provide all
relevant information to the Managing Member (excluding confidential proprietary
tax information or corporate records) and will consult in good faith with the
Managing Member about defenses, settlement options, and all other matters
involving the Audit.   The Investor Member shall not settle or
compromise any tax obligation which could lead to the requirement of an
additional capital contribution under Section (iv) above without the written
consent of the Managing Member, which consent will not be unreasonably
withheld.  In its sole and absolute discretion and with written notice
to the Managing Member, the Investor Member may tender the defense of any Audit
to the Managing Member, and upon tender will appoint the Managing Member as its
agent under a power of attorney to defend the Audit.  If the Investor
Member tenders its defense in accordance with the preceding sentence, the
Managing Member will consult in good faith with the Investor Member as to
settlement or compromise of any tax obligation but the Managing Member will have
the full authority to defend, settle or compromise such claims. If the Investor
Member tenders its defense in accordance with this Section, and the results of
such Audit are favorable to the Investor Member, the Investor Member shall be
solely responsible for the costs associated therewith; provided however, if the
results of such Audit are not favorable to the Investor Member, then the
Managing Member shall be solely responsible for all costs associated
therewith.

     

    
      
        
           


        

        
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      5.02           
 Return of Capital
Contribution.

    

     

    Except as
provided in this Agreement, no Member shall be entitled to demand or receive the
return of any portion of its Capital Contribution.

     

    
      5.03             Withholding of Capital
Contribution Upon Default.

    

     

    In the
event that:  (i) the Managing Member has not substantially complied
with any material provisions of this Agreement, or (ii) foreclosure proceedings
have been commenced against any of the Buildings or portions of the Project,
then the Company and the Managing Member shall be in default of this Agreement,
and the Investor Member, at its sole election, may withhold payment of any
Installment otherwise payable to the Company; provided, however, that if a
payment of all or any portion of the then due Installment will cure the event
justifying the withholding, then the Investor Member shall pay such Installment
otherwise payable if it is applied to cure such event.  At the sole
election of the Investor Member, it may directly apply all or any part of any
unpaid Installment to cure the event justifying the withholding, including but
not limited to the failure of the Managing Member to make payments required
under Sections 5.01(e), 5.05, 8.09 and/or 11.01(a).

     

    Unless
applied as set forth above, all amounts so withheld by the Investor Member under
this Section 5.03 shall be promptly released to the Company only after the
Managing Member or the Company has cured the default justifying the withholding,
as demonstrated by evidence reasonably acceptable to the Investor
Member.

     

    
      5.04             Legal
Opinions.

    

     

    As a
condition precedent to payment of the First Installment, the Investor Member
shall have received such legal opinions of Stoel Rives LLP, special counsel to
the Company and the Managing Member, and the General Counsel of Managing Member
in form and substance as attached hereto as Schedule C.

     

    
      5.05             Repurchase
Obligation.

    

     

      (a)        If
(i) the Project has not achieved Placement In Service by April 15, 2009, unless
extended pursuant to Section 8.02(b)(xxi); (ii) an event of default described in
Section 5.03 occurs prior to Placement In Service; (iii) the Project will
qualify for less than seventy percent (70%) of the Projected Credits; or (iv) an
event of Bankruptcy has occurred with respect to the Managing Member prior to
the payment of the Third Installment; then the Managing Member shall, within
fifteen (15) days of the occurrence or notification thereof, as applicable, send
to the Investor Member Notice of such event having occurred and the availability
of an option for the Investor Member to sell its Interest to the Managing Member
at a price equal to 110% of the aggregate Capital Contribution paid to-date
pursuant to Section 5.01(c).  Upon receipt of such Notice, the
Investor Member shall have thirty (30) days during which to notify the Managing
Member whether the Investor Member elects to sell its Interest to the Managing
Member at a price equal to 110% of the aggregate Capital Contribution paid
to-date pursuant to Section 5.01(c), and if the Investor Member does so elect,
the Managing Member shall acquire the Interest of the Investor Member by making
payment to the Investor Member, in cash, of an amount equal to 110% of the
aggregate Capital Contribution paid to-date pursuant to Section 5.01(c) and for
the Investor Member’s reasonable costs, legal or otherwise, associated
therewith.  Any amounts not paid upon demand shall bear interest at
the rate of 2% over the Designated Prime Rate in effect at the end of the
preceding calendar month, until paid in full.

     

    
      
        
           


        

        
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(b)       Upon the purchase of the Interest
of the Investor Member, the Interest of the Investor Member in the Company shall
terminate and all its obligations hereunder.

     

      (c)      
The sole remedy for Investor Member with respect to the events described in
Section 5.05(a)(i) through and including (iv) is the sale of its Interest as
provided in Section 5.05(a) and if the Investor Member elects not to sell its
Interest to the Managing Member as provided in Section 5.05(a) Investor Member
shall have waived any and all claims or rights it might have against the
Company, the Project, the Guarantor, or Managing Member based directly or
indirectly on such events.

     

    
      5.06             Subordinated
Loans.

    

     

      
(a)        The Managing Member shall have the
right, but not the obligation, after funding all other obligations under this
Agreement, including, without limitation, its obligation to fund Excess
Development Costs or Operating Deficits pursuant to Section 8.09 hereof, to make
“Subordinated Loans” pursuant to this Section 5.06(a) to fund Operating Deficits
of the Company or to fund other reasonable and necessary obligations of the
Company.

     

         
(b)       Any Subordinated Loan shall be evidenced
by a non-negotiable promissory note or notes reflecting any such Subordinated
Loans made during the preceding calendar quarter. Subordinated Loans shall be on
the following terms: (i) interest shall accrue on Subordinated Loans at an
annual interest rate of eight percent (8%), compounded annually; and (ii)
Subordinated Loans shall be repayable solely as set forth in Sections 11.01 and
11.04 of this Agreement.  Subordinated Loans shall be unsecured
loans.  Subordinated Loans shall not be considered a part of a
Member’s Capital Contribution and shall not increase such Member’s Capital
Account.

     

    
      
        
        

      

      
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    ARTICLE
VI.

    CHANGES IN
MEMBERS

     

    6.01.            Withdrawal of a Managing
Member.

     

      (a)        A
Managing Member may withdraw from the Company or sell, transfer or assign its
Interest as Managing Member (or a controlling interest in the Managing Member)
only with the Consent of the Investor Member and consent of the Lender, if
required, and only after being given written approval by the necessary parties
as provided in Section 6.02 of the Managing Member(s) to be substituted for it
or to receive all or part of its Interest as Managing Member.

     

     
(b)       In the event that a Managing Member
withdraws from the Company or sells, transfers or assigns its entire Interest in
compliance with Section 6.01(a), it shall be and shall remain liable for all
obligations and liabilities incurred by it as Managing Member before such
withdrawal, sale, transfer or assignment shall have become effective, but shall
be free of any obligation or liability incurred on account of the activities of
the Company from and after the time such withdrawal, sale, transfer or
assignment shall have become effective.

     

    6.02.            Admission of a Successor or
Additional Managing Member.

     

    A Person
shall be admitted as a Member of the Company only if the following terms and
conditions are satisfied:

     

     
(a)       the admission of such Person shall
have been Consented to by the Managing Member or its successors and the Investor
Member, and consented to by the Lender, if required;

     

     
(b)       the successor or additional Person
shall have accepted and agreed to be bound by (i) all the terms and provisions
of this Agreement, by executing a counterpart thereof, and (ii) all the terms
and provisions of the Operating Documents, to the extent applicable, by
executing a counterpart thereof, and (iii) all the terms and provisions of such
other documents or instruments as may be required or appropriate in order to
effect the admission of such Person as a Member, and an appropriate document
evidencing the admission of such Person as a Member shall have been filed, if
required, and all other actions required by Section 1.05 in connection with such
admission shall have been performed;

     

     
(c)       if the successor or additional
Person is a limited liability company or corporation, it shall have provided the
Company with evidence satisfactory to counsel for the Company of its authority
to become a Member, to do business in the State and to be bound by the terms and
provisions of this Agreement; and

     

     
(d)       Counsel shall have rendered an
opinion that the admission of the successor or additional Person is in
conformity with the Act and that none of the actions taken in connection with
the admission of such Person will cause the termination or dissolution of the
Company or will cause it to be treated for federal income tax purposes as an
association taxable as a corporation.

     

    
      
        
           


        

        
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    6.03.            Effect of Bankruptcy,
Withdrawal or Dissolution of a Managing Member.

     

     
(a)       In the event of the Bankruptcy of a
Managing Member or the withdrawal, or dissolution of a Managing Member, the
business of the Company shall be continued by the other Managing Member(s), if
applicable; provided however, that if the withdrawn, Bankrupt, or dissolved
Managing Member is then the sole Managing Member, then the Company shall be
terminated, unless a majority in Interest of the other Members, within ninety
(90) days after receiving Notice of such Bankruptcy, withdrawal, or dissolution
elect to designate a successor Managing Member(s) and continue the Company upon
the admission of such successor Managing Member(s) to the Company.

     

     
(b)       Upon the Bankruptcy or dissolution
of a Managing Member, such Managing Member shall immediately cease to be a
Managing Member and its Interest shall without further action be converted to an
Investor Member Interest; provided, however, that the
converted Company Interest of such Managing Member shall be ratably reduced to
the extent necessary to insure that the remaining or substitute Managing
Member(s) hold(s) a 0.01% Percentage Interest (as set forth in Section
5.01).  If such Bankrupt or dissolved Managing Member is the sole
remaining Managing Member, such Managing Member shall cease to be a Managing
Member only upon the expiration of ninety (90) days after Notice to the other
Members of the Bankruptcy or dissolution of such Managing Member.

     

    Except as
set forth above, such conversion of a Managing Member Interest to an Investor
Member Interest shall not affect any rights, obligations or liabilities
(including without limitation, any of the Managing Member’s obligations under
Section 8.08 herein) of the Bankrupt or dissolved Managing Member existing prior
to the Bankruptcy or dissolution of such Managing Member (whether or not such
rights, obligations or liabilities were known or had matured).

     

     
(c)       If, at the time of the withdrawal,
Bankruptcy or dissolution of a Managing Member, the Bankrupt or dissolved
Managing Member was not the sole Managing Member of the Company, the remaining
Managing Member shall immediately (i) give Notice to the Investor Member of such
Bankruptcy or dissolution, and (ii) make such amendments to this Agreement and
execute and file such amendments or documents or other instruments as are
necessary to reflect the conversion of the Interest of the Bankrupt or dissolved
Managing Member and its having ceased to be a Managing Member.  Such
action or actions by the remaining Managing Member shall, in the event that
permission of a bankruptcy court is necessary, be deemed to have been taken
subject to the provisions of Paragraph 6.03(d) below.  The remaining
Managing Member is hereby granted an irrevocable power of attorney, coupled with
an interest, to execute any or all documents on behalf of the Members and the
Company and to file such documents as may be required to effectuate the
provisions of this Section 6.03.

     

     
(d)       The Managing Member, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, agrees that in the event the Managing Member should make
application for or seek protection or relief under any of the Sections or
Chapters of the United States Bankruptcy Code (the “Bankruptcy Code”), or in the
event that any involuntary petition is filed against the Managing Member, then,
in such event, any other Member shall thereupon be entitled to immediate relief
from any automatic stay imposed by Section 362 of the Bankruptcy Code, or
otherwise, on or against the exercise of the rights and remedies available to
such Member pursuant to this Agreement, or otherwise.  The foregoing
shall in no way preclude, restrict or prevent the Managing Member from filing
for protection under the Bankruptcy Code.

     

    
      
        
           


        

        
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(e)        The Members acknowledge and
agree that this Agreement is a contract under which an Investor Member is
excused from accepting performance from the Managing Member, its assignee or
trustee, in the event that the Managing Member makes application for or seeks
protection under any of the Sections or Chapters of the Bankruptcy Code, or in
the event that an involuntary petition is filed against such Managing
Member.  The effect of this Paragraph shall be that this Agreement is
hereby deemed to be subject to the exceptions to assumption and assignment of
contracts set forth in Sections 365(c)(1) and 365(e)(2)(A) of the Bankruptcy
Code and that an Investor Member, by its refusal to consent to an assumption or
assignment of this Agreement by the Managing Member after the filing of a
petition in bankruptcy by or against such Managing Member, shall be able to
prevent such assumption or assignment.

     

     
(f)        In the event that the
Managing Member makes application for or seeks relief or protection under any of
the Sections or Chapters of the Bankruptcy Code, or in the event that any
involuntary petition is filed against said Managing Member, then, in such event,
any Member may apply or move to the bankruptcy court in which such petition is
filed for a change of venue to the bankruptcy court where the Company has its
principal place of business, and the Managing Member hereby agrees not to oppose
or object to such application or motion in any way.

     

    
      
        
        

      

      
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    ARTICLE
VII.

    ASSIGNMENT TO THE
COMPANY

     

    The
Managing Member acknowledges that it has or will, concurrently with the
execution of this Agreement transfer and assign to the Company all of its
rights, title and interest in and to the Project, including without limitation
the following:

     

     
(a)       all contracts with respect to the
operation of the Project and/or the Project, including the Lease Agreements and
PPA’s for each of the Buildings,  and any and all warranties which
have been provided to the Managing Member with respect to the solar facility
panels installed at the Buildings;

     

     
(b)       all governmental approvals obtained
in connection with the operations of the Project and/or the Project;
and

     

     
(c)       any Operating Documents and other
work product related to the Project and/or the Project.

     

    Notwithstanding
anything herein to the contrary,  the Managing Member reserves all
rights granted to it under the Lease Agreement and/or the PPA’s to place kiosks
within certain Buildings in order to display system information and to promote
the work performed by the Managing Member with respect to the construction and
installation of the solar system facilities at the Buildings.  Any
rights associated with these kiosks shall be solely for the benefit of the
Managing Member.

     

    
      
        
        

      

      
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    ARTICLE
VIII.

    RIGHTS, OBLIGATIONS AND
POWERS OF THE MANAGING MEMBER

     

    8.01.            Management of the
Company.

     

     
(a)       Except as otherwise set forth in
this Agreement, the Managing Member, within the authority granted to it under
this Agreement, shall have full, complete and exclusive discretion to manage and
control the business of the Company for the purposes stated in Article III,
shall make all decisions affecting the business of the Company and shall manage
and control the affairs of the Company to the best of its ability and use its
best efforts to carry out the purpose of the Company.  In so doing,
the Managing Member shall take all actions necessary or appropriate to protect
the interests of the Investor Member and of the Company.  The Managing
Member shall devote such of its time as is necessary to the affairs of the
Company.

     

     
(b)       Except as otherwise set forth in
this Agreement and subject to the applicable rules and regulations and the
provisions of the Operating Documents, the Managing Member (acting for and on
behalf of the Company), in extension and not in limitation of the rights and
powers given by law or by the other provisions of this Agreement, shall, in its
sole discretion, have the full and entire right, power and authority in the
management of the Company business to do any and all acts and things necessary,
proper, convenient or advisable to effectuate the purpose of the
Company.  In furtherance and not in limitation of the foregoing
provisions, the Managing Member is specifically authorized and empowered to
execute and deliver, on behalf of the Company, the Operating Documents, the Loan
Documents and any bank resolution and signature card, release, discharge, or any
other document or instrument in any way related thereto or necessary or
appropriate in connection therewith.  All decisions made for and on
behalf of the Company by the Managing Member (when acting in its capacity as the
Managing Member of the Company and within the authority granted under this
Agreement) shall be binding upon the Company.  No person dealing with
the Managing Member shall be required to determine its authority to make any
undertaking on behalf of the Company, nor to determine any facts or
circumstances bearing upon the existence of such authority.

     

     
(c)       The Managing Member shall be solely
responsible for causing the Company to maintain the ability for the Project to
perform its intended function of producing electricity on a daily basis and will
provide or cause to be provided all necessary operations and maintenance of and
for the Project.

     

     
(d)       The Managing Member shall be
responsible for all acts and/or omissions of its agents.

     

    8.02.            Limitations Upon the
Authority of the Managing Member.

     

     
(a)       The Managing Member shall not have
any authority to:

     

         
(i)       perform any act in violation of any
applicable law or regulation thereunder;

     

    
      
        
           


        

        
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(ii)       perform any act in violation of
the provisions of any of the Operating Documents;

     

       
(iii)      perform any act required to be approved
or ratified in writing by an Investor Member under the Act unless the right to
do so is expressly given in this Agreement; or

     

         (iv)    
 borrow from the Company or commingle Company funds with funds of any other
Person.

     

     
(b)      The Managing Member shall not, without
the Consent of the Investor Member, have any authority to:

     

        
(i)       sell, refinance or otherwise
dispose of all or substantially all of the assets of the Company; grant or
refinance any mortgage or other indebtedness of the Company; permit or take any
action that would cause a Recapture Event;

     

        
(ii)       supplement, replace, renew, cancel or
materially amend any of the Operating Documents;

     

       
 (iii)      incur debt in excess of $20,000
in the aggregate at any one time outstanding on the general credit of the
Company, except borrowings constituting Subordinated Loans or Operating Deficit
Loans, or which are provided for in an approved Budget, if any;

     

        
(iv)     undertake any rehabilitation, repairs or other
work on the Project, participate or fund any rehabilitation, repairs or other
work on the Building, or construct any new or replacement capital improvements
on the Building or the Project which substantially alter the Project or its use
or which are at a cost in excess of $20,000 in a single Fiscal Year, except (A)
replacements in the ordinary course of business or under emergency conditions,
(B) reconstruction paid for from insurance proceeds, or (C) as and to the extent
provided for in an approved Budget;

     

         
(v)     acquire any real property;

     

         
(vi)    make any filing to begin Bankruptcy proceedings on
behalf of the Company;

     

          (vii)   make
application(s) for or accept any grant funds on behalf of the Company regardless
of the source of the grant, other than those with respect to which commitments
have previously been obtained;

     

         
(viii)  pledge or assign any of the Investor Member’s Capital Contribution
or the proceeds thereof;

     

          (ix)     cause
the Company to settle, compromise, mediate or otherwise relinquish any claim
(actual or prospective), or to release, waive or diminish any material Company
rights in any litigation or arbitration matter involving a claim in excess of
$20,000;

     

    
      
        
           


        

        
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(x)      change the nature of the Company’s
business;

     

         
(xi)     dissolve and wind up the Company;

     

         
(xii)    permit the merger or termination of the
Company;

     

         
(xiii)   take any action or fail to take any action that would
prevent the Tax Credits from being claimable;

     

         
(xiv)   admit any Person as a Member, except as otherwise provided in
this Agreement;

     

         
(xv)    permit any Person to borrow from the Company or
commingle Company funds with the funds of any Person;

     

        
(xvi)   permit the Company to pay directly or indirectly the
Managing Member a commission or fee in connection with the reinvestment or
distribution of Capital Proceeds or liquidating distributions belonging to the
Company except as provided for herein;

     

         
(xvii)  on behalf of the Company, receive any rebates or give-ups or
participate in any reciprocal business relationships in circumvention of this
Agreement;

     

         
(xviii) replace or dismiss the Managing Member from its duties and
obligations as the Managing Member, except as provided in this
Agreement;

     

         
(xix)   enter into the Project Documents, and any other similar
agreements related to the Project;

     

          (xx)    approve
the form and substance of any accountant certification of the itemized amount of
construction, installation, acquisition and development costs of the
Project;

     

         
(xxi)   extend for any period of time beyond March 31, 2009, the
date prior to which the Project must achieve Placement In Service (the Consent
of the Investor Member may be withheld at its sole and absolute discretion);
or

     

         
(xxii)  approve change orders to a construction or installation
contract, if applicable, in excess of $20,000 in the aggregate.

     

    8.03.            Management
Purposes.

     

    In
conducting the business of the Company, the Managing Member shall be bound by
the Company’s purpose(s) set forth in Article III.

     

    
      
        
        

      

      
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    8.04.            Delegation of
Authority.

     

    The
Managing Member may delegate all or any of its powers, rights and obligations
hereunder, and may appoint, employ, contract or otherwise deal with any Person
for the transaction of the business of the Company, which Person may, under
supervision of the Managing Member, perform any acts or services for the Company
as the Managing Member may approve.

     

    8.05.            [Reserved]

     

    8.06.            Other
Activities.

     

    The
Investor Member and the Managing Member may engage in or possess interests in
other business ventures of every kind and description for their own account,
including, without limitation, serving as a member of other companies which own,
either directly or through interests in other companies and/or projects similar
to the Project.  Neither the Company nor any other Member shall have
any rights by virtue of this Agreement in or to such other business ventures or
to the income or profits derived therefrom.

     

    8.07.            Liability for Acts and
Omissions.

     

    No
Managing Member shall be liable, responsible or accountable in damages or
otherwise to any of the Members for any act or omission performed or omitted by
it in good faith on behalf of the Company and in a manner reasonably believed by
it to be within the scope of the authority granted to it by this Agreement and
in the best interest of the Company, except for gross negligence, material
misconduct, fraud or any breach of fiduciary duty as Managing Member with
respect to such acts or omissions.  Any loss or damage incurred by the
Managing Member by reason of any act or omission performed or omitted by it in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of the authority granted to it by this Agreement and in the
best interests of the Company (but not, in any event, any loss or damage
incurred by any Managing Member by reason of gross negligence, material
misconduct, fraud or any breach of its fiduciary duty as Managing Member with
respect to such acts or omissions) shall be paid from Company assets to the
extent available (but the Investor Member shall not have any personal liability
to the Managing Member under any circumstances on account of any such loss or
damage incurred by the Managing Member or on account of the payment
thereof).

     

    8.08.            Company Taxable as
Partnership.

     

    (a)         The
Managing Member shall take such steps and comply with such other requirements as
may from time to time be necessary to assure that all provisions of the Code (as
now or hereafter interpreted by the Internal Revenue Service or the courts) are
met that are necessary to assure that the Company is classified as a partnership
for federal income tax purposes.

     

    (b)         Upon
request, the Managing Member shall deliver to the Investor Member financial
statements or other evidence reasonably satisfactory to the Investor Member of
compliance with the requirements with Section 8.08(a).  If the
Managing Member is unable to comply with the requirements of Section 8.08(a)
then, at the request of the Investor Member, and subject to Section 6.01, an
additional or substitute Managing Member shall be admitted who shall cause the
Managing Member to be in compliance with Section 8.07(a).

     

    
      
        
           


        

        
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    8.09.            Excess Development Costs,
Operating Deficits.

     

       
  (a)      The Managing Member hereby is
obligated to fund Excess Development Costs.  Any amounts paid by the
Managing Member pursuant to this Section 8.09(a) shall be added to the Capital
Contribution of the Managing Member.

     

      
(b)       Any Operating Deficits occurring
prior to the Completion Date shall be considered a Development Cost and shall be
governed by Section 8.09(a).  Thereafter, in the event that an
Operating Deficit exists, the Managing Member shall provide such funds to the
Company as shall be necessary to pay such Operating Deficit(s) in the form of a
contribution, which shall be added to the Capital Contribution of the Managing
Member (“Additional Contributions”) or, at the option of the Managing Member and
if permitted by law, in the form of a loan to the Company (the “Operating
Deficit Loan(s)”).  The Managing Member shall make Additional
Contributions or Operating Deficit Loans in such amounts and at such intervals
so as to allow the Company to cover accrued accounts payable on a 60-day current
basis. Any Operating Deficit Loan shall be treated as if it were a Subordinated
Loan in accordance with the provisions of Section 5.06(b); provided, however, that an
Operating Deficit Loan shall bear no interest, and shall be repaid only if the
Managing Member is not in default with respect to its obligations under this
Agreement.

     

    8.10.            Development
Fee.  The Company has entered into the Development Agreement of
even date herewith with the Developer for its services in connection with the
oversight of the Project.  In consideration for such services, a
Development Fee in a total amount equal to [*] shall be payable
by the Company, in accordance with the terms of the Development Agreement and
Article XI of this Agreement.

     

    [Reserved]

     

    8.11.

     

    [Reserved]

     

    8.12.

     

    [Reserved]

     

    8.13.            Removal of the Managing
Member; Conversion of the Managing Member Interest.

     

     
(a)        The Investor Member shall
have the right to remove the Managing Member as Managing Member, and upon any
such removal the Interest of the Managing Member shall convert to and become
that of the Non-Managing Member without requiring further Consent from the
Investor Member:

     

        
(i)       for any material misconduct, gross
negligence, malfeasance, fraud, act materially outside the scope of its
authority, breach of its fiduciary duty, or any failure to exercise reasonable
care with respect to any matter in the discharge of its duties and obligations
as Managing Member (provided the same has, or reasonably may have, a material,
adverse impact on the Company, the Investor Member or the Project);
or

     

    
      
        
           


        

        
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   (ii)      upon the occurrence of any of
the following:

     

      (A)          the
Managing Member shall have violated any provisions of any of the Operating
Documents, or any provisions of any state or federal regulations, or other
requirements applicable to the Project any of which has a material, adverse
impact on the Company, the Investor Member, or the Project;

     

      (B)          the
Managing Member shall have violated any provision of this Agreement or any
provision of applicable law, provided the same has a material, adverse impact on
the Company, the Investor Member;

     

      (C)          the
Managing Member shall have caused the any Loan to go into default;

     

      (D)          the
Managing Member shall have conducted its own affairs or the affairs of the
Company in such manner as would:

     

     
 (1)           cause
the Company to fail to qualify as a limited liability company under the
Act;

     

     
 (2)           cause
the termination of the Company for federal income tax purposes; or

     

     
 (3)           cause
the Company to be treated for federal income tax purposes as an association,
taxable as a corporation; or

     

      (E)          an
event of Bankruptcy shall have occurred with respect to the Company; or there
shall have occurred the liquidation or dissolution of the Managing
Member.

     

     
(b)      the Investor Member shall give Notice to
all Members of its determination that the Managing Member shall be removed as
Managing Member.  The Managing Member shall have forty-five (45) days
after receipt of such Notice to cure any default or other reason for such
removal as Managing Member (if susceptible to cure); provided, however, that if upon
the expiration of said forty-five (45) day period, the Managing Member shall not
have cured such default and, if in the reasonable judgment of the Investor
Member, (x) the Managing Member has made reasonable progress towards cure, and
(y) the default was not capable of being cured within said forty-five (45) day
period, then unless and to the extent the nature of the default is such that
there is a likelihood of material loss, liability or prejudice to the Investor
Member from any such delay in removal, the Managing Member shall have forty-five
(45) additional days in which to cure any such default, in which event it shall
remain as Managing Member.  If the default or other cause for removal
shall not be susceptible to cure or shall not have been cured within any
applicable cure period, the then Managing Member shall cease to be the Managing
Member and the powers and authorities conferred on it as Managing Member under
this Agreement shall cease and the Interest of such Managing Member shall be
converted to that of Non-Managing Member.  The powers exercisable by
the Managing Member under this Agreement, but not the rights
arising from conversion of the Managing Member’s interest percentages as set
forth with respect to the Managing Member’s Residual Percentage Interest after
the Flip Date and the Call Option rights of the Managing Member, may be
transferred to a Person designated by the Investor Member.  Upon the
Company engaging a Person to carryout the duties of and powers exercisable by
the Managing Member, such Person shall become the manager of the Company (the
“Manager”).  Such
Managing Member may be admitted, but need not be admitted, as a Member of the
Company.

     

    
      
        
           


        

        
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      (c)         
(i)        In the event that the
Managing Member is removed as Managing Member as aforesaid prior to Placement In
Service, it shall be and shall remain liable for all obligations and liabilities
incurred by it as Managing Member of the Company before such removal as Managing
Member became effective, including but not limited to the obligations and
liabilities of the Managing Member with respect to its obligations set forth in
Section 8.09 of this Agreement with regard to Excess Development Costs;
provided, however, that if amounts otherwise payable to the Managing Member as
fees are applied to meet the Managing Member’s obligations stated in Section
5.03 of this Agreement, such application shall serve to reduce any such
liabilities of the Managing Member or any successor, except for any liability
incurred as the result of its gross negligence, material misconduct, fraud or
breach of fiduciary duty as Managing Member of the Company.

     

    If the
Managing Member is removed as Managing Member prior to Placement In Service as
aforesaid, it shall not be entitled to payment of any further installments of
any fees which otherwise would have been due and payable under various Sections
of this Article VIII.

     

      
  (ii)      In the event that the Managing
Member is removed as Managing Member as aforesaid after the Completion Date, it
shall be and shall remain liable for all obligations and liabilities incurred by
it as Managing Member of the Company before such removal as Managing Member
became effective, including but not limited to the Managing Member’s obligations
and liabilities under Section 8.08(b) of this Agreement; provided however, that
if amounts otherwise payable to the Managing Member as fees are applied by the
Company at the request of the Investor Member to pay Operating Deficits, such
application shall serve to reduce any such liabilities after Placement In
Service, except for any liability incurred as the result of its gross
negligence, material misconduct, fraud or breach of fiduciary duty as Managing
Member of the Company.

     

     
(d)      the Investor Member hereby is granted an
irrevocable power of attorney, coupled with an interest, to execute any and all
documents on behalf of the Members and the Company as shall be legally necessary
and sufficient to affect all of the foregoing provisions of this Section
8.13.  The election by the Investor Member to remove the Managing
Member as Managing Member under this Section shall not limit or restrict the
availability and use of any other remedy which the Investor Member or any other
Member might have with respect to the Managing Member in connection with their
undertakings and responsibilities under this Agreement.

     

    8.14.

     

    [Reserved]

     

    
      
        
           


        

        
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    8.15.

     

    [Reserved]

     

    8.16.

     

    [Reserved]

     

    8.17.            Loans to the
Company.

     

    The
Company is authorized to receive Operating Deficit Loans and Subordinated Loans
on the terms set forth in this Agreement.  In addition, if (i)
additional funds are required by the Company for any purpose relating to the
business of the Company or for any of its obligations, expenses, costs or
expenditures, and (ii) the Company has not received an Additional Contribution,
Operating Deficit Loan, or Subordinated Loan to pay such amounts, then the
Company may borrow such funds as are needed from a Person or organization, in
accordance with the terms of this Section 8.17, for such period of time and on
such terms as the Managing Member and the Investor Member may agree; provided, however, that no such
additional loans shall be secured by any security interest in or encumbrance on
the Project without the Consent of the Investor Member except that such Consent
shall not be required in the case of the hypothecation of personal property
purchased by the Company and not included in the security agreements executed by
the Company as of effective date of this Agreement.  Nothing in this
Section 8.17 shall modify or affect the obligation of the Managing Member under
Section 8.09 to make Additional Contribution or Operating Deficit Loans and to
perform its obligations when and as required by this Agreement.

     

    8.18.            Operating Budget and Capital
Budget.

     

    Upon
request of the Investor Member, the annual operating budget and the capital
budget for the Project (the “Budget”) shall be prepared by the Managing Member
and submitted to the Investor Member for its review at least thirty (30) days
prior to the proposed effective date of such Budget; any such proposed Budget
shall be subject to the Consent of the Investor Member before they become
effective.  Such Budget shall specifically provide for all budget
expenses in all major categories, including, but not limited to, administration,
operation, repairs and maintenance, utilities, capital improvements, taxes,
insurance, interest and all budgeted expenses.  In the event that the
Investor Member has requested to review the proposed Budget, the review and
approval of the Budget by the Investor Member, or its objections to the Budget,
shall be made and delivered to the Managing Member within twenty (20) days of
the Investor Member’s receipt of the proposed Budget.  After
commencement of the fiscal year covered by such Budget, the Managing Member
shall notify the Investor Member in writing of any proposed modification in the
allocation of funds among the specific categories in the Budget approved by the
Investor Member by more than (i) the greater of 10% or $2,500 in any category,
or (ii) more than 5% of the overall Budget.

     

    
      
        
           


        

        
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    8.19.            Reserves.

     

    The
Managing Member shall cause the Company to establish and maintain all reserves
required to be maintained hereunder or pursuant to the Budget or the Operating
Documents.

     

    
      
        
        

      

      
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    ARTICLE
IX.

    TRANSFERS OF, AND
RESTRICTIONS ON TRANSFERS

    OF INTERESTS OF INVESTOR
MEMBER

     

    9.01.            Investment and Tax
Representation.

     

                          Investor
Member hereby represents and warrants to the Managing Member, to the Company and
to any other Investor Member that the acquisition of its Interest is made as
principal for its account for investment purposes only and not with a view to
the resale or distribution of such Interest.

     

    9.02.            No Restrictions on Transfer
of Investor Member’s Interest.

     

     
(a)       Subject to Section 4.01(b)(iv), the
offer, sale, transfer, assignment, hypothecation or pledge of the Interest of
the Investor Member and/or a security interest in the Interest of the Investor
Member shall be permitted at the sole discretion of the Investor Member and
shall not require the Managing Member’s Consent.  In the event of an
offer, sale, transfer, assignment, hypothecation or pledge pursuant to this
Section 9.02(a) the Investor Member shall provide the Managing Member with
Notice no later than ten (10) business days following such offer, sale,
transfer, assignment, hypothecation or pledge.

     

     
(b)       The Investor Member whose Interest
is being transferred shall pay such reasonable expenses as may be incurred by
the Company in connection with such transfer.

     

    Subject
to Section 4.01(b)(iv), nothing in this Section 9.02 shall limit the authority
of any member of the Investor Member to offer, sell, transfer or assign any
interests within such member of the Investor Member in such member’s sole
discretion, including, but not limited to, an Affiliate of such Investor
Member.  As used in this Section, (i) the term “Affiliate” means any
Person directly or indirectly Controlled by, or under direct or indirect common
Control with U.S. Bancorp Community Development Corporation (“USBCDC”), (ii) the
term “Person” means an individual or entity, including, but not limited to, a
corporation, general partnership, joint venture, limited partnership, limited
liability company, trust, cooperative, or association and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so requires, and (iii) the term “Control” or “Controlled”
means either ten percent (10%) or more common ownership with USBCDC or, with
respect to an entity which is a limited liability company, such entity has
USBCDC as a managing member or manager, or with respect to a general or limited
partnership, a subsidiary of a U.S. Bancorp, as its general
partner.

     

    9.03.            Admission of Substitute
Investor Member.

     

     
(a)      Subject to the other provisions of this
Article IX, an assignee of the Interest of an Investor Member (which shall be
understood to include any purchaser, transferee, donee, or other recipient of
any disposition of such Interest) shall be deemed admitted as a Substitute
Investor Member of the Company only upon the satisfactory completion of the
following:

     

    
      
        
           


        

        
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(i)        the assignee shall have
accepted and agreed to be bound by the terms and provisions of this Agreement by
executing a counterpart thereof or an appropriate amendment hereto, and such
other documents or instruments as the Managing Member may require in order to
effect the admission of such Person as an Investor Member;

     

        
(ii)      an amended Agreement and/or Articles
evidencing the admission, if necessary, of such Person as an Investor Member
shall have been filed for recording, if necessary, pursuant to the requirements
to the Act;

     

         
(iii)     the assignee shall have represented and
agreed in writing as required by Section 9.01;

     

      
   (iv)    if the assignee is a corporation, the
assignee shall have provided the Managing Member with evidence satisfactory to
Counsel of its authority to become an Investor Member under the terms and
provisions of this Agreement; and

     

       
  (v)      the assignee or the assignor
shall have reimbursed the Company for all reasonable expenses, including all
reasonable legal fees and recording charges, incurred by the Company in
connection with such assignment.

     

    (b)          For
the purpose of allocation of Profits or Losses and Tax Credits, and for the
purpose of distributing Net Cash Flow of the Company, a Substitute Investor
Member shall be treated as having become, and as appearing in, the records of
the Company as a Member upon its signing of an amendment to this Agreement,
agreeing to be bound hereby.

     

    (c)          The
Managing Member shall cooperate with the Person seeking to become a Substitute
Investor Member by preparing the documentation required by this Section and
making any official filings and publications.  The Company shall take
all such action, including the filing of any amended Agreement and/or Articles
evidencing the admission of any Person as an Investor Member, if required, and
the making of any other official filings and publications, if required, as
promptly as practicable after the satisfaction by the assignee of the Interest
of an Investor Member of the conditions contained in this Article IX to the
admission of such Person as an Investor Member of the Company.  Any
cost or expense incurred in connection with such admission shall be borne by the
Substitute Investor Member.

     

    9.04.            Rights of Assignee of
Company Interest.

     

     
(a)       Except as provided in this Article
and as required by operation of law, the Company shall not be obligated for any
purpose whatsoever to recognize the assignment by any Investor Member of its
Interest until the Company has received actual Notice thereof.

     

     
(b)      Any Person who is the assignee of all or
any portion of an Investor Member’s Interest, but does not become a Substitute
Investor Member and desires to make a further assignment of such Interest, shall
be subject to all the provisions of this Article IX to the same extent and in
the same manner as any Investor Member desiring to make an assignment of its
Interest.

     

    
      
        
           


        

        
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    9.05.            Put
Option

     

     
(a)       General.  The
Investor Member is hereby granted a right to sell its Company Interest to the
Managing Member (or the Managing Member’s assignee, including the Company) for
cash at the purchase price specified in Section 9.05(d) (the “Put Price”), at
the option of the Investor Member at any time after the date upon which the
Pre-Flip Target IRR is projected to occur as reflected in the Projections (the
“Put Period”), upon delivery to the Managing Member of a written Notice of
purchase (a “Purchase Notice”), stating that all of such Investor Member
Interest shall be purchased pursuant to the terms and conditions specified in
this Section 9.05.

     

     
(b)       Cash
Payment.  Any purchase required of the Managing Member pursuant
to the provisions of this Section 9.05 shall be consummated by the delivery of
the cash representing the Put Price to be received by the Investor Member within
fifteen (15) days following receipt of the Purchase Notice.

     

     
(c)       Effective Date of
Purchase.  The effective date of the purchase shall be deemed
to be the date of the payment to the Investor Member described in Section
9.05(b) above.  Upon receipt by the Investor Member of such payment in
full, Profits, Losses and Credits shall thereafter accrue to the then-Members of
the Company and not the Investor Member.

     

     
(d)      Determination of Put
Price.  The Put Price shall be in an amount equal to the
greater of (i) fair market value of the Investor Member’s Interest, or
(ii) $157,974 or (iii) the amount necessary for the Investor Member to
achieve the Target IRR.  The fair market value of the Investor
Member’s Interest shall be determined by the Managing Member.  If the
Put Option is being exercised prior to the Flip Date,  the fair market
value of the Investor Member’s Interest shall be determined assuming that the
Flip Date has occurred.  If the Investor Member disagrees with the
determination by the Managing Member, the fair market value of the Investor
Member’s Interest shall be determined by one or more independent appraisers, to
be selected as follows.  As soon as practicable and in any event
within fifteen (15) days following the delivery by the Investor Member of the
Purchase Notice to the Managing Member, the Managing Member and the Investor
Member shall select an independent appraiser.  In the event the
parties are unable to agree upon an independent appraiser within such fifteen
(15) day period, the Managing Member and the Investor Member each, at their own
expense, shall select an independent appraiser.  If the difference
between the two appraisals is within ten percent (10%) of the lower of the two
appraisals, the fair market value shall be the average of the two (2)
appraisals.  If the difference between the two (2) appraisals is
greater than ten percent (10%) of the lower of the two (2) appraisals, then the
two appraisers shall jointly select a third appraiser whose determination of
fair market value shall be deemed to be binding on all parties.  The
cost of the third appraiser shall be borne equally by the Investor Member and
the Managing Member.  The Investor Member shall pay any transfer taxes
or other closing costs attributable to the exercise of the Put Option, except
that each of the parties shall be responsible for their own legal and accounting
expenses.

     

    
      
        
           


        

        
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    9.06.            Call Option.

     

     
(a)       General.  The
Investor Member’s Company Interest shall be purchased by the Managing Member for
cash at the purchase price specified in Section 9.06 (d) (the “Call Price”), at
the option of the Managing Member at any time following the end of the
Compliance Period, but prior to the dissolution of the Company, upon delivery by
the Managing Member to the Investor Member of a Purchase Notice, stating that
all of such Investor Member Interest shall be purchased pursuant to the terms
and conditions specified in this Section 9.06.

     

     
(b)      Cash
Payment.  Any purchase by the Managing Member pursuant to the
provisions of Section 9.06(a) shall be consummated by the delivery of the cash
to be received by the Investor Member within fifteen (15) days following receipt
of the Purchase Notice and determination of the Call Price in accordance with
Section 9.06(d).

     

     
(c)      Effective Date of
Purchase.  The effective date of the purchase shall be deemed
to be the date of the payment to the Investor Member described in Section
9.06(b) above.  Upon receipt by the Investor Member of such payment in
full, Profits, Losses and Credits shall thereafter no longer accrue to the
Investor Member.

     

     
(d)      Determination of Call
Price.  The Call Price shall be in an amount equal to the
greater of (i) the fair market value of the Investor Member’s Interest, or (ii)
the amount necessary for the Investor Member to achieve the Target
IRR.  The fair market value of the Investor Member’s Interest shall be
determined by the Managing Member.  If the Call Option is being
exercised prior to the Flip Date,  the fair market value of the
Investor Member’s Interest shall be determined assuming that the Flip Date has
occurred.  If the Investor Member disagrees with the determination by
the Managing Member, the fair market value of the Investor Member’s Interest
shall be determined by one or more independent appraisers, to be selected as
follows:  As soon as practicable and in any event within fifteen (15)
days following the delivery by the Managing Member of the Purchase Notice to the
Investor Member, the Managing Member and the Investor Member shall select an
independent appraiser.  In the event the parties are unable to agree
upon an independent appraiser within such fifteen (15) day period, the Managing
Member and the Investor Member each shall select an independent
appraiser.  If the difference between the two appraisals is within ten
percent (10%) of the lower of the two appraisals, the fair market value shall be
the average of the two (2) appraisals.  If the difference between the
two (2) appraisals is greater than ten percent (10%) of the lower of the two (2)
appraisals, then the two appraisers shall jointly select a third appraiser whose
determination of fair market value shall be deemed to be binding on all
parties.  The Managing Member shall pay the cost of any appraiser(s)
selected pursuant to this Section 9.06(d), as well as any transfer taxes or
other closing costs attributable to the exercise of the Call
Option.

     

    
      
        
        

      

      
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    ARTICLE
X.

    RIGHTS AND OBLIGATIONS OF
INVESTOR MEMBER

     

    10.01.          Management of the
Company.

     

    An
Investor Member shall not take part in the management or control of the business
of the Company nor transact any business in the name of the
Company.  Except as otherwise expressly provided in this Agreement, no
Investor Member shall have the power or authority to bind the Company or to sign
any agreement or document in the name of the Company.  No Investor
Member shall have any power or authority with respect to the Company except
insofar as the consent of any Investor Member shall be expressly required and
except as otherwise expressly provided in this Agreement.

     

    10.02.          Limitation on Liability of
Investor Member.

     

    The
liability of each Investor Member shall be limited to its Capital Contribution
as and when payable under the provisions of this Agreement.  No
Investor Member shall have any other liability to contribute money to, or in
respect of the liabilities or obligations of, the Company except as provided in
the Act, nor shall any Investor Member be personally liable for any obligations
of the Company, including, but not limited to, any obligations, financial or
otherwise, of the Company under the Project Documents.  No Investor
Member shall be obligated to make loans to the Company.

     

    
      
        
        

      

      
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    ARTICLE
XI.

    PROFITS, LOSSES AND
DISTRIBUTIONS

     

    11.01.          Allocation of Profits,
Losses, Credits and Cash Distributions.

     

     
(a)       Prior to the Flip Date, after
application of Section 11.10, all Operating Profits and Operating Losses, except
those gains and losses referred to in Section 11.03, and all Tax Credits shall
be allocated among the Members in accordance with their Percentage Interests,
provided, however, at such time as the Investor Member’s Capital Account has
been reduced to an amount equal to four times the annual Tax Credit basis
reduction (after taking into account all Cash Flow distributions and Tax Credit
basis reductions for such year)  all Operating Losses incurred
thereafter until the Flip Date shall be allocated to the Managing
Member.

     

     
(b)       On and following the Flip Date,
after application of Section 11.10, all Operating Profits and Operating Losses,
except those gains and losses referred to in Section 11.03, and all Tax Credits
shall be allocated among the Members in accordance with Residual Percentage
Interests.

     

     
(c)       In any year in which a Member
sells, assigns or transfers all or any portion of an Interest to any Person who
during such year is admitted as a substitute Member, the share of all Profits or
Losses allocated to, and of all Net Cash Flow and of all cash proceeds
distributable under Section 11.04 distributed to, all Members which is
attributable to the Interest sold, assigned or transferred shall be allocated
and distributed to the assignee from and after the first day of the calendar
month following the month in which the assignee executes this Agreement; provided, however, that the
assignor and the assignee may, by agreement, make special provisions for the
allocation of items of Profits or Losses, deduction or credit as may from time
to time be permitted under the Code, and for the distributions of Net Cash Flow
and the proceeds of Capital Transactions, but such allocation shall be binding
as to the Company only after it shall have received Notice thereof from the
assignor and assignee.

     

     
(d)      The Company shall, subject to any
required approval by the Lender, distribute Net Cash Flow quarterly in the
manner provided in this Agreement after the reports specified in Section
13.04(b) have been received and reviewed by the Investor Member.  In
particular, the Company shall distribute Net Cash Flow, following the funding of
reserves, if any, pursuant to Section 8.19:

     

        
(i)       Prior to the Flip Date to the
Members as follows:   (A) 75% to the Investor Member first to the
repayment of any Subordinated Loans made by the Investor Member and then as a
distribution, and (B) 25% to the Managing Member first to repay any amounts owed
under the Development Agreement, then to repay any Operating Deficit Loans
and/or Subordinated Loans made by the Managing Member and then as a
distribution,  provided, however,  the Investor Member’s
share of Net Cash Flow shall, to the extent necessary, increase (and the
Managing Member’s share shall correspondingly decrease) in an amount necessary
for the Investor Member to receive cash flow in the amount set forth in the
Projections for such year; and

     

    
      
        
           


        

        
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(ii)     On and following the Flip Date, to the Members
as follows:  5% to the Investor Member and 95% to the Managing
Member.

     

      (e)       In
the event that there is a determination that there is any original issue
discount, imputed interest or stated interest attributable to the Capital
Contribution of any Member, or any loan between a Member and the Company, any
income or deduction of the Company attributable to such imputed interest, stated
interest or original issue discount on such Capital Contribution or loan
(whether stated or unstated) shall be allocated solely to such
Member.

     

     
(f)        If any Member’s Interest in
the Company is reduced but not eliminated because of the admission of new
Members or otherwise, or if any Member is treated as receiving any items of
property described in Section 751(a) of the Code, the Member’s Interest in such
items of Section 751(a) property that was property of the Company while such
Person was a Member shall not be reduced, but shall be retained by the Member so
long as the Member has an Interest in the Company and so long as the Company has
an Interest in such property.

     

     
(g)       In accordance with Section 704(c)
of the Code (relating to allocations with respect to appreciated contributed
property) and the Treasury Regulations thereunder, income, gain, loss, and
deduction with respect to any property contributed to the capital of the Company
shall be allocated, solely for tax purposes, among the Members so as to take
account of any variation between the adjusted basis of such property to the
Company for federal income tax purposes and its fair market
value.  Any elections or other decisions relating to such allocations
shall be made by the Managing Member in any manner that reasonably reflects the
purpose and intention of this Agreement.

     

     
(h)       In the event that the Managing
Member makes any Operating Deficit Loans pursuant to Section 8.09(b), any
deductions or losses of the Company attributable to the use of those funds shall
be specially allocated to the Managing Member.

     

     
(i)        Notwithstanding anything
herein to the contrary,  if the Investor Member receives Net Cash Flow
in any year less than the amount projected for such year as set forth in the
Projections (any such shortfall being referred to as the “Annual Cash
Deficiency”),  then the Managing Member shall use best efforts to
cause the Company to sell RECs (then held by the Company) to a third party for
an amount sufficient to distribute to the Investor Member proceeds equal to such
Annual Cash Deficiency.  Upon receipt of any such sale
proceeds,  the Company shall make a distribution to the Investor
Member up to an amount equal to the Annual Cash Deficiency.  Any
proceeds received by the Company in excess of the Annual Cash Deficiency shall
be distributed to the Managing Member.

     

    11.02.          Determination of Profits or
Losses.

     

    Profits
or Losses for all purposes of this Agreement shall be determined in accordance
with the accrual method of accounting for federal income tax
purposes.

     

    
      
        
           


        

        
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    11.03.          Allocation of Profits or
Losses from a Capital Transaction.

     

    After
application of Section 11.10, Profits or Losses from a Capital Transaction
recognized by the Company shall be allocated in the following
manner:

     

     
(a)      All Profits shall be allocated (i) first,
to the Members with negative Capital Account balances, in proportion to such
balances, that portion of gains (including any Profits treated as ordinary
income for federal income tax purposes) which is equal in amount to such
Members’ negative Capital Accounts in the Company; (ii) second, Profits in
excess of the amount allocated under (i) shall be allocated to the Members in
the amount and to the extent necessary to increase their Capital Accounts so
that the proceeds of such Transaction, if then distributed under Section 11.04,
would be distributed in proportion to the Members’ Percentage Interest or
Residual Percentage Interests, as applicable.

     

      (b)       Losses
shall be allocated (i) first, to the extent of and in such proportions to the
Members’ positive Capital Accounts; and (ii) second, the amount of any Losses
that remain after the allocations in subparagraph (b)(i) to the Members in
accordance with the manner in which they bear the economic risk of loss
associated with such Losses.  In the event that no Member bears an
economic risk of loss, then all Members shall be allocated Losses in excess of
the amounts allocated under (i) and (ii) in accordance with their Percentage
Interest or Residual Percentage Interests, as applicable, unless otherwise
prohibited by this Agreement.

     

     
(c)       If any portion of the gains from a
Capital Transaction are treated as ordinary income for federal income tax
purposes under Sections 1245 and 1250 of the Code (“Ordinary Income Amount”)
such amount of ordinary income shall be allocated on a dollar for dollar basis
to those Members to whom the items of Company deduction or loss giving rise to
the Ordinary Income Amount had been previously allocated.

     

    11.04.          Distribution of Proceeds
from a Capital Transaction.

     

    Except as
may be required under Section 12.02(b), the net proceeds resulting from any
Capital Transaction, as the case may be, shall be distributed and applied in the
following order of priority:

     

     
(a)      to the payment of all matured debts and
liabilities of the Company (including amounts due pursuant to any Loan and all
expenses of the Company incident to any sale or refinancing), excluding any
amounts owed under the Development Agreement and any other debts and liabilities
of the Company to Members or any Affiliates;

     

     
(b)      to the setting up of any reserves which
the Liquidator (or the Managing Member if the distribution is not pursuant to
the liquidation of the Company) deems reasonably necessary for contingent,
unmatured or unforeseen liabilities or obligations of the Company;

     

      
(c)      to the Investor Member,  in an
amount necessary for the Investor Member to achieve its Target IRR;

     

    
      
        
           


        

        
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      (d)      to
the repayment of any unrepaid debts and liabilities (including unpaid fees) owed
to the Members or any Affiliates by the Company for Company obligations,
including any loans made pursuant to Section 5.06, any amounts owed under the
Development Agreement and any Operating Deficit Loans;

     

      (e)       to
the Members in accordance with their Percentage Interests or Residual
Percentage, as applicable.

     

    11.05.          Capital
Accounts.

     

    A
separate Capital Account shall be maintained and adjusted for each
Member.  There shall be credited to each Member’s Capital Account the
amount of its Capital Contribution, the fair market value of any property
contributed to the Company (net of any liabilities secured by such property) and
such Member’s distributive share of the Profits for tax purposes of the Company;
and there shall be charged against each Member’s Capital Account the amount of
all Net Cash Flow distributed to such Member, the fair market value of any
property distributed to such Member (net of any liabilities secured by such
property), the net proceeds resulting from the liquidation of the Company’s
assets or from any Capital Transaction distributed to such Member, and such
Member’s distributive share of the Losses for tax purposes of the
Company.  Each Member’s Capital Account shall be maintained and
adjusted in accordance with the Code and the Treasury Regulations
thereunder.  The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Treasury Reg. §1.704-1(b), and shall be interpreted and applied in a manner
consistent with such regulations.  It is the intention of the Members
that the Capital Accounts maintained under this Agreement be determined and
maintained throughout the full term of this Agreement in accordance with the
accounting rules of Treasury Reg. §1.704-1(b)(2)(iv).

     

    11.06.          Authority of Managing Member
to Vary Allocations to Preserve and Protect Members’ Intent.

     

    It is the
intent of the Members that each Member’s distributive share of income, gain,
loss, deduction, or credit (or item thereof) shall be determined and allocated
in accordance with this Article XI to the fullest extent permitted by Section
704(b) of the Code.  Subject to the Consent of the Investor Member,
the Managing Member hereby is authorized and directed to allocate income, gain,
loss, deduction, or credit (or item thereof) arising in any year differently
than otherwise provided for in this Article XI to the extent that allocating
income, gain, loss, deduction or credit (or item thereof) in the manner provided
for in Article XI would, in the opinion of the tax advisor to the Company (tax
counsel or the Accountants) cause the determinations and allocations of each
Member’s distributive share of income, gain, loss, deduction, or credit (or item
thereof) not to be permitted by Section 704(b) of the Code and Treasury
Regulations promulgated thereunder.  Any allocation made pursuant to
this Section 11.06 shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Article XI and no amendment of this
Agreement or approval of any Member shall be required.

     

    
      
        
           


        

        
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    11.07.          Designation of Tax Matters
Partner.

     

    The
Managing Member hereby is designated as Tax Matters Partner of the Company, and
shall engage in such undertakings as are required of the Tax Matters Partner of
the Company, as provided in Treasury Regulations pursuant to Section 6231 of the
Code.  Each Member, by the execution of this Agreement, Consents to
such designation of the Tax Matters Partner and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate public
offices such documents as may be necessary or appropriate to evidence such
Consent.  In the event of a withdrawal or removal of the Managing
Member pursuant to Article VI or Section 8.13 hereof, the Company shall
designate a successor Tax Matters Partner and file a timely notice of such
designation with the Internal Revenue Service.

     

    Notwithstanding
any other provision of this Agreement, the Investor Member hereby is granted
authority at any time to be admitted as a Managing Member by converting all or
portion of its Investor Member Interest to a Managing Member Interest for the
purpose of acting as the Tax Matters Partner with all the authority and powers
given to the Managing Member as Tax Matters Partner of the Company under the
Code and under this Agreement.  Unless otherwise specifically provided
or agreed, the new Tax Matters Partner Managing Member in these circumstances
will not be responsible for or have the right to conduct any operational or
managerial functions of the Company besides those required to discharge its
responsibilities as Tax Matters Partner.  The Investor Member may
exercise its right to assume the Tax Matters Partner responsibilities for the
Company, as provided herewith, upon ten (10) days Notice to the then existing
Tax Matters Partner and may continue as Tax Matters Partner
indefinitely.  In the event that the Investor Member exercises its
right to become a Managing Member and to assume duties of the Tax Matters
Partner, the pre-existing Tax Matters Partner will resign in accordance with
Treasury Reg. § 301.6231(a)(7)-1(i) and will redesignate the new Managing Member
as Tax Matters Partner in accordance with Treasury Reg. §
301.6231(a)(7)-1(e).  Each Member, by its execution of this Agreement,
Consents to such admission and designation and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate public
offices such documents as may be necessary or appropriate to evidence such
Consent.  The Investor Member shall, upon such admission, replace the
Managing Member as Tax Matters Partner and shall have thereafter all the
authority and powers given to the Managing Member as Tax Matters Partner of the
Company under the Code and under this Agreement.

     

    11.08.          Authority of Tax Matters
Partner.

     

     
(a)       The Tax Matters Partner shall have
and perform all of the duties required under the Code, including the following
duties:

     

       
  (i)       furnish the name, address,
Profits interest, and taxpayer identification number of each Member to the IRS;
and

     

      
  (ii)      within five (5) calendar days
after the receipt of any correspondence or communication relating to the Company
or a Member from the IRS, the Tax Matters Partner shall forward to each Member a
photocopy of all such correspondence or communication(s).  The Tax
Matters Partner shall, within five (5) calendar days thereafter, advise each
Member in writing of the substance and form of any conversation or communication
held with any representative of the IRS.

     

    
      
        
           


        

        
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(b)      The Tax Matters Partner shall, upon
request by the Investor Member, permit the Investor Member to include its
attorney in the power of attorney (Form 2848) for the Company for any taxable
years under a tax audit or in a tax administrative appeals process.

     

     
(c)       The Tax Matters Partner shall not
without the Consent of the Investor Member :

     

      
  (i)       extend the statute of
limitations for assessing or computing any tax liability against the Company (or
the amount of character of any Company tax items);

     

      
  (ii)      settle any audit with the IRS
concerning the adjustment or readjustment of any limited liability company
items) (within the meaning of Section 6231(a)(3) of the Code);

     

      
  (iii)      file a request for an
administrative adjustment with the IRS at any time or file a petition for
judicial review with respect to any such request;

     

      
  (iv)     initiate or settle any judicial review
or action concerning the amount or character of any limited liability company
tax item(s) (within the meaning of Section 6231(a)(3) of the Code);

     

      
  (v)      intervene in any action brought by
any other Member for judicial review of a final adjustment; or

     

      
  (vi)     take any other action not expressly
permitted by this Article XI on behalf of the Company or any Member in
connection with any administrative or judicial tax proceeding.

     

     
(d)      In the event of any Company-level
proceeding instituted by the IRS pursuant to Sections 6221 through 6233 of the
Code, the Tax Matters Partner shall consult with the Investor Member regarding
the nature and content of all actions to be taken and defenses to be raised by
the Company in response to such proceeding.  The Tax Matters Partner
also shall consult with the Investor Member regarding the nature and content of
any proceeding pursuant to Sections 6221 through 6233 of the Code instituted by
or on behalf of the Company (including the decision to institute proceedings,
whether administrative or judicial, and whether in response to a previous IRS
proceeding against the Company or otherwise).

     

    
      
        
        

      

      
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    11.09.          Expenses of Tax Matters
Partner.

    


    The
Company shall indemnify and reimburse the Tax Matters Partner and the Investor
Member for all expenses, including legal and accounting fees, claims,
liabilities, losses and damages incurred in connection with any administrative
or judicial proceeding with respect to the tax liabilities of the
Members.  The payment of all such expenses shall be made before any
distributions are made from Net Cash Flow or any discretionary reserves are set
aside by the Managing Member. The taking of any action and the incurring of any
expense by the Tax Matters Partner in connection with any such proceeding,
except to the extent required by law, is a matter in the sole discretion of the
Tax Matters Partner and the provisions on limitations of liability of the
Managing Member and indemnification set forth in Section 8.07 of this Agreement
shall be fully applicable to the Tax Matters Partner in its capacity as
such.

     

    11.10.          Special
Allocations.

     

     
(a)      Notwithstanding any other provision of
this Agreement, if there is a net decrease in the Company’s minimum gain
attributable to nonrecourse liabilities during any taxable year, each Member
shall be specifically allocated a pro rata portion of each of the Company’s
items of income and gain for such year (and, if necessary for subsequent years)
in proportion to, and to the extent of, an amount equal to such Member’s share
of the net decrease in such minimum gain during such taxable year as determined
in accordance with the provisions of Treasury Reg. §§ 1.704-2(f),
1.704-2(g)(2).

     

      (b)      Notwithstanding
any other provision of this Agreement, if there is a net decrease in the amount
of the Company’s minimum gain during any taxable year with respect to a Member
nonrecourse debt, the Member bearing the economic risk of loss with respect to
such Member nonrecourse debt shall be specially allocated a pro rata portion of
each of the Company’s items of income and gain for such taxable year (and, if
necessary, for subsequent years) in proportion to, and to the extent of the
amount of such Member’s share of the net decrease in such minimum gain during
such taxable year as determined in accordance with the provisions of Treasury
Reg. §§1.704-2(i)(4), 1.704-2(j)(2))(ii).

     

     
(c)       If in any taxable year there is a
net increase in the amount of Company minimum gain attributable to a Member
nonrecourse debt, the Member bearing the economic risk of loss attributable to
such Member nonrecourse debt shall be specially allocated items of Company
deduction and loss in proportion to and to the extent of the excess
of:

     

         
(i)       the amount of such net increase,
over

     

          (ii)      the
aggregate amount of any distributions during such taxable year to such Member of
the proceeds of such Member nonrecourse debt that are allocable to such increase
in Company minimum gain.  Items to be so allocated shall be determined
in accordance with Treasury Reg. §1.704-2(j)(l).

     

    The
allocations provided for in this Section 11.10(c) are intended to comply with
the allocations required by Treasury Reg. §1.704-2(i) and shall be applied
consistently therewith.  The Company’s minimum gain shall be
determined in accordance with Treasury Reg. § 1.704-2(d).

     

     
(d)      In the event any Member unexpectedly
receives any adjustments, allocations or distributions described in Treasury
Reg. §§1.704-1(b)(2)(ii)(d)(4), (5) or (6) which cause or increase an Adjusted
Capital Account Deficit (as defined below) of such Member, items of Company
income and gain shall be specially allocated to each such Member in an amount
and manner sufficient to eliminate (to the extent required by the Treasury
Regulations under Code Section 704(b)) such Member’s Adjusted Capital Account
Deficit as quickly as possible.

     

    
      
        
           


        

        
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    For
purposes of this Section 11.10, the term “Adjusted Capital Account Deficit”
means, with respect to any Member, the deficit balance, if any, in such Member’s
Capital Account as of the end of the relevant fiscal year, after giving effect
to the following adjustments:

     

        
(i)       Credit to such Capital Account any
amounts which such Member is obligated to restore pursuant to any provision of
this Agreement or is otherwise treated as being obligated to restore under
Treasury Reg. §1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore
pursuant to the penultimate sentence of Treasury Reg. §§1.704-2(g)(1) and
1.704-2(i)(5); and

     

        
(ii)      Debit to such Capital Account the items
described in Treasury Reg. §1.704-1(b)(2)(ii)(d)(4), (5) and (6).

     

    The
foregoing definition of Adjusted Capital Account Deficit is intended to comply
with the provisions of Treasury Reg. §1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.

     

     
(e)      Notwithstanding any other provision of
this Section 11.10, in no event shall Losses of the Company be allocated to any
Investor Member if such allocation would result in such Member having an
Adjusted Capital Account Deficit at the end of any taxable year.  All
Losses in excess of the limitation set forth in this Section 11.10(e) shall be
allocated to each other Member that does not have an Adjusted Capital Account
Deficit.

     

     
(f)       In the event that income, loss or
items thereof are allocated to one or more Members pursuant to Sections
11.10(a), (b), (c), (d) or (e), subsequent income, loss or items thereof shall
be allocated (subject to the provisions of Section 11.10(a), (b), (c), (d) or
(e)) to the Members so that, to the extent possible in the judgment of the
Managing Member and permitted by Treasury Regulations, the net amount of
allocations shall be equal to the amount that would have been allocated had
Section 11.10 not been applied.

     

     
(g)      Notwithstanding any other provision of
this Agreement to the contrary, commencing in the year following the year in
which the Investor Member’s Capital Account has been reduced to an amount equal
to four times the annual Tax Credit basis reduction and continuing until the
Flip Date, the Investor Member shall be allocated gross income in an amount
equal to the amount of Cash flow distributed or to be distributed to the
Investor Member pursuant to Section 11.01(d) of this Agreement.

     

    
      
        
        

      

      
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    ARTICLE
XII.

    SALE, DISSOLUTION AND
LIQUIDATION

     

    12.01.          Dissolution of the
Company.

     

    The
Company shall be dissolved upon the earlier of the expiration of the term of the
Company, or upon:

     

     
(a)       the withdrawal, Bankruptcy or
dissolution of a Managing Member who  is at that time the sole
Managing Member, unless a majority in Interest of the other Members within
ninety (90) days after receiving Notice of such withdrawal,
Bankruptcy  or dissolution elects to designate a successor Managing
Member(s) and continue the Company upon the admission of such successor Managing
Member(s) to the Company;

     

     
(b)       the sale or other disposition of
all or substantially all of the assets of the Company; or

     

     
(c)      any other event causing the dissolution
of the Company under the laws of the Formation State.

       

    12.02.          Winding Up and
Distribution.

     

     
(a)      Upon the dissolution of the Company
pursuant to Section 12.01, (i) a Certificate of Cancellation shall be filed in
such offices within the Formation State as may be required or appropriate, and
(ii) the Company business shall be wound up and its assets liquidated as
provided in this Section 12.02 and the net proceeds of such liquidation shall be
distributed in accordance with Section 12.02(b).

     

     
(b)      After the allocation of all Profits and
Losses, including the allocation of gain or loss from Capital Transactions, the
liquidator shall distribute net assets available for distribution to Members in
accordance with the positive balances of their respective Capital
Accounts.  It is the intent of the Members that, upon liquidation of
the Company, any liquidation proceeds available for distribution to the Members
shall be distributed in accordance with the Members’ respective Capital Account
balances and the Members believe that distributions under Section 11.04 will
effectuate such intent.

     

     
(c)      The Liquidator shall file all
certificates and notices of the dissolution of the Company required by
law.  The Liquidator shall proceed without any unnecessary delay to
sell and otherwise liquidate the Company’s property and assets; provided
however, that if the Liquidator shall determine that an immediate sale of part
or all of the Company property would cause undue loss to the Members, then in
order to avoid such loss, the Liquidator may, except to the extent provided by
the Act, defer the liquidation as may be necessary to satisfy the debts and
liabilities of the Company to Persons other than the Members.  Upon
the complete liquidation and distribution of the Company assets, the Members
shall cease to be Members of the Company, and the Liquidator shall execute,
acknowledge and cause to be filed all certificates and notices required by the
law to terminate the Company.

     

    
      
        
           


        

        
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(d)      Upon the dissolution of the Company
pursuant to Section 12.01, the accountants for the Company shall promptly
prepare, and the Liquidator shall furnish to each Member, a statement setting
forth the assets and liabilities of the Company upon its
dissolution.  Promptly following the complete liquidation and
distribution of the Company property and assets, the Company accountants shall
prepare, and the Liquidator shall furnish to each Member, a statement showing
the manner in which the Company assets were liquidated and
distributed.

     

    
      
        
        

      

      
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    ARTICLE
XIII.

    BOOKS AND RECORDS,
ACCOUNTING TAX ELECTIONS, ETC.

     

    13.01.          Books and Records;
Accounting Method.

     

    The books
and records of the Company shall be maintained on an accrual basis in accordance
with generally-accepted accounting principles (“GAAP”).  These and all
other records and financial statements of the Company, including information
relating to the status of the Project and information with respect to the sale
of goods or services to the Company, shall be kept at the principal office of
the Company and shall be available for examination there by any Member or by any
member of the Investor Member, or its duly authorized representative, at any and
all reasonable times.  Any Member, or its duly authorized
representative, upon paying the costs of collection, duplication and mailing,
shall be entitled to a copy of the list of names and addresses of each Investor
Member.

     

    13.02.          Bank
Accounts.

     

    All funds
of the Company not otherwise invested shall be deposited in one or more accounts
maintained at US Bank, and withdrawals shall be made only in the regular course
of Company business on such signature or signatures as the Managing Member may,
from time to time, determine.

     

    13.03.          Accountants.

     

    The
Accountants shall annually prepare for execution by the Managing Member all tax
returns of the Company, and shall certify, in accordance with GAAP, a balance
sheet, a profits and losses statement, and a cash flow statement.  The
Accountants shall annually audit the books of the Company.  With
respect to each fiscal year during the Company’s operations, at such time as the
Accountants shall have prepared the proposed tax return for such year, the
Accountants shall provide copies of such proposed tax return to the Investor
Member’s accountants for their review and comment.  Any changes in
such proposed tax return recommended by the Investor Member’s accountants shall
be made by the Accountants prior to the completion of such tax return for
execution by the Managing Member.  A full detailed statement shall be
furnished to all Members, showing such assets, properties, and net worth and the
profits and losses of the Company for the preceding fiscal year.  All
Members shall have the right and power to examine and copy, at any and all
reasonable times, the books, records and accounts of the Company.

     

    13.04.          Reports to
Members.

     

    The
Managing Member shall, at Company expense, cause to be prepared and delivered to
the Investor Member:

     

     
(a)       Within fifteen (15) business days
of event specified:

     

         
(i)      a report of any reduction or termination
of any reserve by application of funds therein for purposes materially different
from those for which such reserve was established;

     

    
      
        
           


        

        
          59

          
            

          

        

        
           


        

      

    

     

       
  (ii)     a report of any notice of a material
fact which may substantially affect distributions pursuant to this Agreement;
and

     

      
   (iii)    a listing of insurance policy changes
providing coverage for the projects, detailing the type, level of coverage,
deductibles, insurance carrier and term.

     

     
(b)      Within fifteen (15) business days after
the end of each calendar quarter after Placement In Service:

     

       
 (i)       unaudited financial statements for
the Company which may be prepared and certified by the Managing Member,
including a balance sheet, statement of income or loss and statement of cash
sources and applications;

     

      
  (ii)      reports of Company operations,
including an unaudited comparison of actual expenditures during the applicable
quarter with the projections for such quarter as set forth in the Budget
approved pursuant to Section 8.17;

     

       
 (iii)     a report of any Excess Development
Costs or Operating Deficits or anticipated Excess Development Costs or Operating
Deficits of the Company and the manner in which such Excess Development Costs or
Operating Deficits will be funded;

     

         
(iv)    a report of any material default by the Company
under any Operating Documents or in payment of any mortgage, taxes, interest or
other obligation on secured or unsecured debt;

     

        
 (v)     a report of fees, commissions,
compensation, and other remuneration and reimbursed expenses paid by the
Company;

     

       
  (vi)    a report of the activities and investments of
the Company during the quarter;

     

       
  (vii)   a report of such other information as may be
deemed by the Company to be material to the existence or operation of the
Company or its business or of the Project;

     

       
 (viii)   a report of the activities and investments of the
Company during the quarter including a description of all
transactions;

     

        
 (ix)     an analytic report of the energy produced by
the Project and compared to the projected production incorporated into the
Projections.

     

     
(c)       By March 1 of each year:

     

        
(i)      all necessary tax reporting information
regarding the Company required by the Investor Member for preparation of its
respective federal, state, and local income or franchise tax or information
returns, or those of its members, for the preceding fiscal year, including form
K-1.

     

    
      
        
           


        

        
          60

          
            

          

        

        
           


        

      

    

     

        
(ii)      a copy of the Company’s federal, state
and local tax or information returns for the prior fiscal year, and proof of
payment of property taxes and insurance premiums for the preceding fiscal
year;

     

        
(iii)     a table reconciling taxable income to net book
income, a statement showing all major categories of adjustments to the Members’
Capital Accounts in accordance with this Agreement for the fiscal
year;

     

         
(iv)    with the first tax return prepared following
Substantial Completion, a table comparing the actual total depreciable basis
with the depreciable basis indicated in the Projections;

     

        
(v)     audited financial statements prepared by the
Accountants, including: a balance sheet, a statement of operations, a statement
of cash flows, a statement summarizing the calculation of Tax Credits and
Depreciation; a statement of changes in Members’ capital accounts; and, if
requested by the Investor Member, the Managing Member will provide copies of its
most recently filed SEC Form 10Qs;

     

        
(vi)    a statement summarizing the distributions, fees,
commissions, compensation and other remuneration and reimbursed expenses paid
for such year to any Member or any Affiliate thereof and the services performed
or goods provided therefore;

     

       
 (vii)   summary report of the activities during the fiscal
year with the report of the respective accountants thereon to the effect that
such statements present fairly the financial position of the Company at the end
of the fiscal year and the results of its operations for the year then ended, in
conformity with generally accepted accounting principles applied on a consistent
basis;

     

         
(viii)  a report on the balances of all reserve accounts of the
Company as of the end of the fiscal year; and

     

     
(d)       Immediately:

     

        
(i)       upon the occurrence of any natural
disaster and/or incident and/or widespread property, damage having an adverse
impact on the Project, a report of the extent of the damage to the Project, any
expected delay in the Rehabilitation, and the effect such damage might have on
the operations or marketing and lease-up activity of the Project;

     

         (ii)    
  the death, dissolution or Bankruptcy of the Managing
Member;

     

        
(iii)     from time to time, as may be reasonably
requested by the Investor Member, information on the state of the business,
financial condition, and affairs of the Company or the Project or any other
information required to be delivered to the members of the Investor Member
;

     

    
      
        
           


        

        
          61

          
            

          

        

        
           


        

      

    

     

        
(iv)     upon learning of a condition or circumstance
which is expected to reduce below the projected levels the amount of Tax Credits
available to the Company, a detailed statement describing such matters; or

     

        
(v)      upon learning of any violation of any
health, safety, building code, or other statute or regulation by the Company, a
detailed statement describing such matters along with any written notices
thereof received by the Company from any federal, state, or local governmental
entity.

     

     
(e)       Within three (3) business days
after receipt by the Company:

     

        
(i)       copies of all reports, notices, filings
or correspondence sent or received regarding the occurrence of any event which
has or may have a material adverse effect on the Company or the Project
(including, without limitation, any reports, notices, filings or correspondence
with any governmental agency regarding the Tax Credits; default notices, notices
of reductions or elimination of benefits under any federal, state, or local
program previously enjoyed by the Company; notice of any IRS proceeding
involving the Company; notice of any demand for payment or draw under any
construction completion guaranty, performance bond, or letter of credit
regarding the Company);

     

         
(ii)     copies of all lawsuits or legal proceedings or
alleged violations of law, and notices of all actions taken, or proposed to be
taken, affecting the Company; and

     

        
(iii)     copies of all lawsuits or legal proceedings or
alleged violations of law, and notices of all actions taken, or proposed to be
taken, against the Managing Member and either related to the Company or having
any material adverse consequences to the Company.

     

     
(f)       Within thirty (30) days after
receipt by the Company, copies of any lender’s periodic reports.

     

     
(g)       Contemporaneously with their submission
to any party, copies of all reports and information submitted.

     

     
(h)      Prior to September 1 of each year, an
estimate of the Investor Member’s share of Tax Credits, Net Cash Flow,
distributions and Profits or Losses of the Company for federal income tax
purposes for the current fiscal year.  Such estimate shall be prepared
by the Managing Member or the Accountants.

     

      (i)        In
the event that the reports or information provided for in Sections 13.04(c)(i)
or (v) above are, at any time, not provided with the time period(s) specified in
such Sections, the Managing Member shall be obligated to pay to the Investor
Member  the sum of $25 per day, as liquidated damages, for each day
from the date upon which such reports or information is (are) due pursuant to
the provisions of the aforesaid Sections until the date upon which such reports
or information is (are) provided.

     

    
      
        
           


        

        
          62

          
            

          

        

        
           


        

      

    

     

    13.05.          Section 754
Elections.

     

    In the
event of a transfer of all or any part of the Interest of a Managing Member or
of an Investor Member (or a member or partner thereof), the Company shall elect,
pursuant to Sections 743 and 754 of the Code (or any corresponding provision of
succeeding law), to adjust the basis of the Company property if, in the opinion
of the Investor Member, based upon the advice of the Accountants, such election
would be most advantageous to the Investor Member.  Each Member agrees
to furnish the Company with all information necessary to give effect to such
election.  The Managing Member shall not make other elections required
or permitted under the Code unless it has received the direction or prior
Consent of the Investor Member.

     

    13.06.          Fiscal
Year.

     

    Except as
the Code may otherwise require, the fiscal year of the Company shall be the
fiscal year of the Investor Member, which is currently the calendar
year.  The Investor Member will inform the Managing Member of any
change in its fiscal year.

     

    13.07.          Investor Member
Inspection.

     

    The
Investor Member shall have the right to physically inspect the interior and
exterior of the Project and the Company’s books, records and sublease
documents.  The Investor Member shall provide written notice to the
Managing Member of any such inspection not less than two weeks prior to the
inspection.  The Managing Member shall correct any deficiencies of
which it received written notice from the Investor Member to the Investor
Member’s reasonable satisfaction within thirty (30) days from receipt of written
notice.

     

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

     

    ARTICLE
XIV.

    AMENDMENTS

     

    14.01.          Proposal and Adoption of
Amendments.

     

     
(a)       This Agreement may be amended by
the Managing Member with the Consent of the Investor Member or by the Investor
Member with the Consent of the Managing Member.

     

     
(b)      The Company shall bear the expense,
including attorneys’ fees and filing expenses, of amendments to this Agreement
provided however, that if the Company does not have sufficient Operating Income
to bear such expenses the party proposing an amendment to this Agreement shall
bear the expenses thereof.

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

    


    ARTICLE
XV.

    CONSENTS, VOTING AND
MEETINGS

     

    15.01.          Method of Giving
Consent.

     

    Any
Consent required by this Agreement may be given by a written Consent of the
consenting Member and received by the Managing Member at or prior to the doing
of the act or thing for which the Consent is solicited.

     

    15.02.          Submissions to Investor
Member.

     

    The
Managing Member shall give Investor Member Notice of any proposal or other
matter required by any provision of this Agreement or by law to be submitted for
consideration and approval of such Investor Member.  Such Notice shall
include any information required by the relevant provision or by
law.

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

    ARTICLE
XVI.

    GENERAL
PROVISIONS

     

    16.01.          Burden and
Benefit.

     

    The
covenants and agreements contained herein shall be binding upon and inure to the
benefit of the heirs, executors, administrators, successors and assigns of the
respective parties hereto.

     

    16.02.          Applicable
Law.

     

    This
Agreement shall be construed and enforced in accordance with the laws of the
Formation State.

     

    16.03.          Counterparts.

     

    This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original copy and all of which together shall constitute one agreement
binding on all parties hereto, notwithstanding that all the parties shall not
have signed the same counterpart.

     

    16.04.          Separability of
Provisions.

     

    Each
provision of this Agreement shall be considered separable and if for any reason
any provision which is not essential to the effectuation of the basic purposes
of this Agreement is determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
provisions of this Agreement which are valid.

     

    16.05.          Entire
Agreement.

     

    This
Agreement and the documents referred to herein set forth all (and is intended by
all parties to be an integration of all) of the representations, promises,
agreements and understandings among the parties hereto with respect to the
Company, the Company business and the property of the Company, and there are no
representations, promises, agreements or understandings, oral or written,
express or implied, among them other than as set forth or incorporated herein or
therein.

     

    16.06.          Liability of the Investor
Member .

     

    Notwithstanding
anything to the contrary contained herein, neither the Investor
Member  nor any of its members, shall have any personal liability to
any of the parties to this Agreement with regard to the representations and
covenants extended, or the obligations undertaken, by the Investor
Member  under this Agreement, or as otherwise provided  by
law.  Subject to the foregoing, in the event that the Investor
Member  shall be in default under any of the terms of this Agreement,
the sole recourse of any party hereto for any indebtedness due hereunder, or for
any damages resulting from any such default by the Investor Member, shall be
against the amounts contributed or to be contributed as a Capital Contribution
of the Investor Member.

     

    
      
        
           


        

        
          66

          
            

          

        

        
           


        

      

    

     

    16.07.          Environmental
Protection.

     

     
(a)       The Managing Member represents and
warrants to the best of its knowledge that (i) it has no knowledge of any
deposit, storage, disposal, burial, discharge, spillage, uncontrolled loss,
seepage or filtration of any Hazardous Substances at, upon, under or within the
Building or any contiguous real estate, and (ii) it has not caused nor permitted
to occur, and it shall not permit to exist, any condition which may cause a
discharge of any Hazardous Substances at, upon, under or within the Building or
on any contiguous real estate.

     

     
(b)      The Managing Member further represents
and warrants to the best of its knowledge that (i) it has not been, nor will it
be involved in operations at or, pursuant to its best efforts, near the
Building, which operations could lead to (A) the imposition of liability under
the Environmental Laws on the Company or on any other subsequent or former owner
of the Project or (B) the creation of a lien on the Project under the
Environmental Laws or under any similar laws or regulations; and (ii) the
Managing Member has not permitted, and will not permit, any subtenant or
occupant of the Building to engage in any activity that could impose liability
under the Environmental Laws on such subtenant or occupant, on the Building or
on the Company.

     

     
(c)      The Managing Member shall comply strictly
and in all respects with the requirements of the Environmental Laws and related
regulations and with all similar laws and regulations relating to the Project
and/or the Company.  Further, the Managing Member shall deliver to the
Investor Member  a copy of any notice relating to the Project and/or
the Company it may receive that a violation of such laws or regulations
exist.

     

     
(d)      The Managing Member shall at all times
indemnify and hold harmless the Investor Member  and its members
against and from any and all claims, suits, actions, debts, damages, costs,
charges, losses, obligations, judgments, and expenses, of any nature whatsoever,
suffered or incurred by the Investor Member  or its members, under or
on account of the Environmental Laws or any similar laws or regulations,
including the assertion of any lien thereunder relating to the Project and/or
the Company.  The foregoing indemnification shall be a recourse
obligation of the Managing Member and shall survive the dissolution of the
Company and/or the retirement, insolvency, Bankruptcy or withdrawal of the
Managing Member.

     

    16.08.          Notices.

     

     
(a)       Any Notice required by the provisions of
this Agreement to be given to the Investor Member shall be addressed as
follows:

     

      
 UFA Renewable Energy Fund I, LLC

      
 24 NW First Avenue, Suite 470

      
 Portland, Oregon 97209

      
 Attention:  ITC Asset Manager

      
 Telephone: (503) 226-1370

      
 Facsimile: (503) 796-5865

     

    
      
        
           


        

        
          67

          
            

          

        

        
           


        

      

    

     

      
  Firstar Development LLC

      
  1307 Washington Avenue, Suite 300

     
  Saint Louis, MO 63103

      
  Attention:  Director of Asset
Management--Solar

      
  Telephone:  (314) 335-2600

      
  Facsimile:  (314) 335-2602

    


     
  With copies to:

    


      
  Nixon Peabody LLP

      
  401 Ninth Street, N.W.

      
  Suite 900

      
  Washington, D.C. 20004

     
   Attention:  Herbert F. Stevens, Esq.

      
  Telephone:  (202) 585-8000

      
  Facsimile:  (202) 585-8080

    


     
    (b)       Any Notice required
by the provisions of this Agreement to be given to the Company or the Managing
Member shall be addressed as follows:

    


         Hoku Solar,
Inc.

        
1288 Ala Moana Blvd., Suite 220

      
  Honolulu, HI  96814

        
Attention:  Dustin Shindo

      
  Telephone: (808) 682-7800

      
  Facsimile:  (808) 440-0357

    


      
  With copies to:

    
 

         Stoel Rives
LLP

         900 SW Fifth, Suite
2600

         Portland,
Oregon 97204

      
  Attention:  Patrick G. Boylston

      
  Telephone:  (503) 294-9116

      
  Facsimile:  (503) 220-2480

     

    16.09.          Legal
Fees.

     

    In the
event an action, suit or proceeding is commenced by one Member against the other
in connection with this Agreement and/or the transaction contemplated hereby,
the non-prevailing Member shall be required to reimburse the prevailing Member
for all legal fees, costs and expenses incurred by the prevailing Member in
connection therewith.

     

    [Remainder
of Page Intentionally Blank; Signature Page Follows]

     

    
      
        
           


        

        
          68

          
            

          

        

        
           


        

      

    

    


    IN
WITNESS WHEREOF, the parties have set their signatures to this Operating
Agreement of Hoku Solar Power I, LLC, as of the date first written
above.

    

      
        
          
            	 
      	
                    MANAGING
      MEMBER:

                  
	 
      	 
      
	 
      	
                    HOKU
      SOLAR, INC.,

                  
	 
      	
                    a
      Delaware corporation

                  
	 
      	 
      
	 
      	
                    By:

                  	
                       /s/ Scott
      Paul

                  
	 
      	 
      	
                    Name:
      Scott Paul

                  
	 
      	 
      	
                    Title:  Chief
      Operating Officer

                  
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                    INVESTOR
      MEMBER:

                  
	 
      	 
      
	 
      	
                    UFA
      RENEWABLE ENERGY FUND I, LLC, a

                    Delaware
      limited liability company

                  
	 
      	 
      	 
      
	 
      	
                    By:

                  	
                    United
      Fund Advisors LLC, its Managing Member

                  
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                    By:

                  	
                        /s/ Chris
      Hasle

                  
	 
      	 
      	 
      	
                    Name: Chris
      Hasle

                  
	 
      	 
      	 
      	
                    Title:   Senior
      Vice President

                  


          

        

      

    

     

    
      Hoku
Solar Power I, LLC,

      Signature
Page to Operating Agreement

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
A


    


    Members, Capital
Contributions and Company Interests

    


    
      
        
          
            
              
                
                  
                    
                      
                        	
                                Member

                              	 	
                                Capital Contribution

                              	 	 	
                                Initial Ownership Interest

                              	 
	 
      	 	 	 	 	 	 
	
                                Managing Member

                              	 	 	 	 	 	 
	 
      	 	 	 	 	 	 
	
                                Hoku
      Solar, Inc.

                              	 	 	[*]	*	 	 	0.01	%
	
                                1288
      Ala Moana Blvd., Suite 220

                              	 	 	 	 	 	 	 	 
	
                                Honolulu,
      HI 96814

                              	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                                Investor Member

                              	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                                UFA
      Renewable Energy Fund I, LLC

                              	 	 	[*]	**	 	 	99.99	%
	
                                1307
      Washington Avenue, Suite 300

                              	 	 	 	 	 	 	 	 
	
                                Saint
      Louis, MO 63103

                              	 	 	 	 	 	 	 	 


                      

                    

                  

                

              

            

          

        

      

    

    


        *
[*] is being contributed upon execution of this Agreement pursuant to Section
5.01(a), and the balance is to be contributed as set forth in Section
5.01(a).

    


       **
[*] is being contributed upon execution of this Agreement pursuant to Section
5.01(c)(i) and the balance is to be contributed as set forth in Section
5.01(c)(ii) and (iii).

     

    
      Hoku
Solar Power I, LLC, Operating Agreement

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
B

     

    Insurance
Requirements

     

    
      	
               
      

            	
              ·

            	
              Hoku Solar Power I,
      LLC

            


    

    US
Bancorp Community Development Corporation-

    Insurance
Standards-

    Please
provide an original policy, policy copy or an ACORD 25 Form (Certificate of
Liability Insurance) signed by an agent or broker evidencing the
following:

    


    
      	
               
      

            	
              ·

            	
              Partnership
      Liability Coverage

            


    

    


    
      	
               
      

            	
              ·

            	
              A Commercial General Liability
      (CGL) policy containing the following
  provisions:

            


    

    
      	
               
      

            	
              §

            	
              The
      following entity as Named
      Insured as of the date
hereof:

            


    

    
      	
               
      

            	
              §

            	
              “Hoku
      Solar Power I, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              The following entity
      as Named
      Insured at the time of placement in service (concurrent or prior to
      the Completion Date):

            


    

    
      	
               
      

            	
              §

            	
              “Hoku
      Solar Power I, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              The
      following entities as Additional Insured
      (using Form CG 20 26 or acceptable
      equivalent – Additional Insured – Designated
    Entity):

            


    

    
      	
               
      

            	
              §

            	
              “UFA
      Renewable Energy Fund I, LLC”

            


    

    
      	
               
      

            	
              §

            	
              “Firstar
      Development, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              Please
      include Firstar Development, LLC as the Certificate Holder; the address
      for Firstar is:  Firstar Development, LLC 1307 Washington
      Avenue, Suite 300, St. Louis, MO  63103 Attn: Director of ITC
      Asset Management

            


    

    
      	
               
      

            	
              §

            	
              Please
      include UFA Renewable Energy Fund I, LLC as an additional Certificate
      Holder; the address for the Fund is:  UFA Renewable Energy Fund
      I, LLC: 24 NW First Avenue,
      Suite 470 Portland, Oregon 97209 Attn: Director of ITC Asset
      Management

            


    

    


    
      	
               
      

            	
              §

            	
              Total
      limits of at least $1 million per occurrence and $2 million general
      aggregate.  The aggregate may be a blanket policy
      for all seven sites.

            


    

    


    
      	
               
      

            	
              ·

            	
              An Automobile Liability
      policy for any
      vehicles that may be owned by the partnership listed above as Named
      Insured, as well as vehicles hired or used for partnership
      business.  The policy must contain the following
      provisions:

            


    

    
      	
               
      

            	
              §

            	
              The
      following entity as Named
      Insured:

            


    

    
      	
               
      

            	
              §

            	
              “Hoku
      Solar Power I, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              All
      Additional Insured entities as in the Commercial General Liability
      Coverage

            


    

    
      	
               
      

            	
              §

            	
              Please
      include Firstar Development, LLC as the Certificate Holder; the address
      for Firstar is:  Firstar Development, LLC 1307 Washington
      Avenue, Suite 300, St. Louis, MO  63103 Attn: Director of ITC
      Asset Management

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              §

            	
              Total
      limits of at least $1 million combined single
  limit;

            


    

    


    
      	
               
      

            	
              ·

            	
              An
      Umbrella/Excess Liability policy with the Commercial
      General Liability and Automobile Liability policies scheduled as
      underlying policies.  Limits of the policy shall be at
      least $2 million per occurrence and $2 million in the aggregate as of the
      date hereof. Limits of the policy shall be at least $3 million per
      occurrence and $3 million in the aggregate prior to the end of 2008. Limits of the policy
      shall be at least $5 million per occurrence and $5 million in the
      aggregate at the time of placement in service (concurrent or prior
      to the Completion Date);

            


    

     

    Contractor’s Liability
Coverage

    


    
      	
               
      

            	
              ·

            	
              A Commercial General Liability
      policy purchased by the General Contractor during construction
      containing the following
provisions:

            


    

    
      	
               
      

            	
              §

            	
              Total
      limits of at least $1 million per occurrence and $2 million in the general
      aggregate;

            


    

    
      	
               
      

            	
              §

            	
              Completed
      Operations coverage shall be included on the
  policy;

            


    

    
      	
               
      

            	
              §

            	
              The
      following entities as Additional
      Insured:

            


    

    
      	
               
      

            	
              §

            	
              “Hoku
      Solar Power I, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              “UFA
      Renewable Energy Fund I, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              “Firstar
      Development, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              Please
      include Firstar Development, LLC as the Certificate Holder; the address
      for Firstar is:  Firstar Development, LLC 1307 Washington
      Avenue, Suite 300, St. Louis, MO  63103 Attn: Director of ITC
      Asset Management

            


    

    


    
      	
               
      

            	
              ·

            	
              An Umbrella/Excess Liability
      policy purchased by the General Contractor during construction,
      with the Commercial General Liability and Employers Liability policies
      scheduled as underlying policies.  Limits of the policy shall be
      at least $2 million per occurrence and $2 million in the
      aggregate;

            


    

    
      	
               
      

            	
               

            


    

    
      	
               
      

            	
              ·

            	
              Contractor’s
      Workers’ Compensation
Coverage

            


    

    


    
      	
               
      

            	
              ·

            	
              A Workers’ Compensation and
      Employer’s Liability policy purchased by the General
      Contractor

            


    

    
      	
               
      

            	
              §

            	
              Evidence
      of “Statutory Limits” under Workers’ Compensation; $1mm Employers
      Liability must be included.

            


    

    


    Please
provide an original policy, policy copy or an ACORD 27 Form (Evidence of
Property Insurance) signed by an agent or broker evidencing the
following:

     

    
      	
               
      

            	
              ·

            	
              Builders
      Risk Coverage / Installation
Floater

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              ·

            	
              A Builders Risk policy
      purchased by the property owner and covering the value of the
      rehabilitation activities and materials, and containing the following
      provisions and coverage:

            


    

    


    
      	
               
      

            	
              §

            	
              The
      buildings and structures being
constructed;

            


    

    
      	
               
      

            	
              §

            	
              Fixtures,
      materials, supplies, machinery and equipment to be used in
      construction;

            


    

    
      	
               
      

            	
              §

            	
              Scaffolding,
      falsework, fences, forms, etc;

            


    

    
      	
               
      

            	
              §

            	
              Trailers
      and temporary structures incidental to the
  construction;

            


    

    
      	
               
      

            	
              §

            	
              Foundations
      and underground work;

            


    

    
      	
               
      

            	
              §

            	
              Sidewalks
      and paving;

            


    

    
      	
               
      

            	
              §

            	
              Personal
      property of others for which the Partnership may be
  liable;

            


    

    


    whether
located at the site or elsewhere, including while in-transit. The construction
site shall be specifically scheduled on the policy as a Covered
Location.  Policy shall provide for claims to be paid based upon
replacement cost of the lost or damaged property without deduction for
depreciation; loss payment shall be to the Partnership.

    


    In
addition the Builder’s Risk policy should provide:

    


    
      	
               
      

            	
              §

            	
              Please
      evidence Hard & Soft Costs;

            


    

    
      	
               
      

            	
              §

            	
              All-risk
      or Special Form Completed Value coverage in non-reporting
      form;

            


    

    
      	
               
      

            	
              §

            	
              $10,000
      maximum deductible;

            


    

    
      	
               
      

            	
              §

            	
              Wind
      & Hurricane Coverage for full property value with a 2%
      deductible.

            


    

    
      	
               
      

            	
              §

            	
              No
      co-insurance; if there is a coinsurance provision, please evidence the
      specific percentage which applies (e.g.
100%);

            


    

    
      	
               
      

            	
              §

            	
              Coverage
      and limits shall be extended to include Soft Costs coverage for
      construction loan fees and refinancing charges, legal fees, design
      professional fees, real estate taxes, insurance premiums, and debt service
      payments and bond interest payments (where
  appropriate).

            


    

    
      	
               
      

            	
              §

            	
              Limits
      of policy will be at least the estimated replacement value of the
      completed rehabilitation ,plus the value of other property
      insured;

            


    

    
      	
               
      

            	
              §

            	
              The
      following entities as Named
      Insureds:

            


    

    
      	
               
      

            	
              §

            	
              “Hoku
      Solar Power I, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              The
      following entities as Additional Insured and Loss
      Payee:

            


    

    
      	
               
      

            	
              §

            	
              “UFA
      Renewable Energy Fund I, LLC”

            


    

    
      	
               
      

            	
              §

            	
              “Firstar
      Development, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              Please
      include Firstar Development, LLC as the Certificate Holder; the address
      for Firstar is:  Firstar Development, LLC 1307 Washington
      Avenue, Suite 300, St. Louis, MO  63103 Attn: Director of ITC
      Asset Management

            


    

    
      	
               
      

            	
               

            


    

    
      	
               
      

            	
              ·

            	
              Property
      Coverage – After Completion

            


    

    


    
      	
               
      

            	
              ·

            	
              A Property policy with
      limits at least equal to the replacement value of the existing
      structure(s), and containing the following provisions and
      coverage:

            


    

    
      	
               
      

            	
              §

            	
              Property
      value of at least [*];

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              §

            	
              “All
      risk” or “Special Form” coverage;

            


    

    
      	
               
      

            	
              §

            	
              Claims
      shall be paid on a Replacement Cost
basis;

            


    

    
      	
               
      

            	
              §

            	
              $10,000
      maximum deductible;

            


    

    
      	
               
      

            	
              §

            	
              Earthquake
      coverage of $2,500,000 with a $25,000
  deductible.

            


    

    
      	
               
      

            	
              §

            	
              Wind
      & Hurricane Coverage for full property value with a 2%
      deductible.

            


    

    
      	
               
      

            	
              §

            	
              No
      coinsurance; if there is a coinsurance provision, please provide evidence
      than an Agreed Amount endorsement will appear on the
    policy;

            


    

    
      	
               
      

            	
              §

            	
              If
      occupied during rehab, Business Income coverage with limits equal to at
      least 12 months expected loss of rents and other income.  No
      coinsurance is permitted;

            


    

    
      	
               
      

            	
              §

            	
              Limits
      of policy will be at least the estimated replacement value of the subject
      property, plus the value of other property
  insured;

            


    

    
      	
               
      

            	
              §

            	
              Ordinance
      or Law coverage including loss in value to the undamaged portion,
      demolition and increased cost of
construction;

            


    

    
      	
               
      

            	
              §

            	
              All
      Named Insureds, Additional Insureds, Loss Payees, and/or Mortgagees as
      noted for Builder’s Risk coverage
above.

            


    

    
      	
               
      

            	
              §

            	
              The
      following entities as Named
      Insureds:

            


    

    
      	
               
      

            	
              §

            	
              “Hoku
      Solar Power I, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              The
      following entities as Additional Insured and Loss
      Payee:

            


    

    
      	
               
      

            	
              §

            	
              “UFA
      Renewable Energy Fund I, LLC”

            


    

    
      	
               
      

            	
              §

            	
              “Firstar
      Development, LLC”;

            


    

    
      	
               
      

            	
              §

            	
              Please
      include Firstar Development, LLC as the Certificate Holder; the address
      for Firstar is:  Firstar Development, LLC 1307 Washington
      Avenue, Suite 300, St. Louis, MO  63103 Attn: Director of ITC
      Asset Management

            


    

    
      	
               
      

            	
              §

            	
              Please
      include UFA Renewable Energy Fund I, LLC as an additional Certificate
      Holder; the address for the Fund is:  UFA Renewable Energy Fund
      I, LLC: 24 NW First Avenue, Suite 470 Portland, Oregon 97209 Attn:
      Director of ITC Asset Management

            


    

     

    
      	
               
      

            	
              ·

            	
              General
      Requirements

            


    

    


    On the
ACORD 25 (Certificate of Liability Insurance), please strike the following
wording from the cancellation provision: “endeavor to” and “but failure to mail
such notice shall impose no obligation or liability of any kind upon the
company, its agents or representatives”.

    


    The
property location or description must be clearly stated on the Evidence of
Property Insurance form provided.

    


    All
insurance carriers shall have a rating of A- or better and a Financial Size
Category IX or greater by Best’s Key Rating Guide.

    


    Full
copies of all insurance policies must be provided to Traxler & Tong, Inc.
upon their issuance, but not later than ninety (90) days following issuance of
Certificates or Evidence forms.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
C

     

    Stoel Rives LLP Legal
Opinion

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
D

     

    Projections

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
E

     

    Application
of Capital Contributions to Purchase Price and Development Fee

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  PV 

                                	 	 
      	 	 
      	 	 	 	 	
                                  Development

                                  Fee-Cash

                                  portion

                                	 	 	
                                  Managing 

                                  Member Capital

                                  Contribution

                                	 	 	
                                  Investor Member

                                  Capital Contributions

                                	 
	
                                  System

                                  #

                                	 	
                                  Site

                                	 	
                                  Location

                                	 	
                                  Purchase

                                  Price

                                	 	 	
                                  paid at

                                  PIS

                                	 	 	
                                  Purchase

                                  Price

                                	 	 	
                                  Dev. Fee

                                	 	 	
                                  Purchase

                                  Price

                                	 	 	
                                  Dev. Fee

                                	 
	
                                  1

                                	 	
                                  Lihue
      Airport

                                	 	
                                  Terminal
      Rooftop

                                	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	
                                  2

                                	 	
                                  Highways
      Kauai Baseyard

                                	 	
                                  Baseyard
      Rooftop

                                	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	
                                  3

                                	 	
                                  Harbors
      Kauai Baseyard

                                	 	
                                  Rooftop

                                	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	
                                  4

                                	 	
                                  Hilo
      Airport

                                	 	
                                  Terminal
      Rooftop

                                	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	
                                  5

                                	 	
                                  Kona
      Airport

                                	 	
                                  Cargo
      Building

                                	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	
                                  6

                                	 	
                                  Kahului
      Airport

                                	 	
                                  ASAP/Cargo
      Building

                                	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	
                                  7

                                	 	
                                  Kahului
      Airport

                                	 	
                                  T-Hangar
      Rooftop

                                	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	
                                  Total

                                	 	 
      	 	 
      	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 


                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    Schedule
F

     

    Form of
Lien Release

     

    CONTRACTORS,
SUBCONTRACTORS AND

    SUPPLIER
CONDITIONAL RELEASE OF LIENS

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	
                                                  Original
      Contract Amount:

                                                	 	$	 	 
	
                                                  Approved
      Change Order:

                                                	 	$	 
      	 
	
                                                  Adjusted
      Contract Amount:

                                                	 	$	 	 
	
                                                  Completed
      to Date:

                                                	 	$	 	 
	
                                                  Retention:

                                                	 	$	 	 
	
                                                  Total
      Earned (Completed Less Retention)

                                                	 	$	 	 
	
                                                  Previous
      Payments:

                                                	 	$	 	 
	
                                                  Current
      Payment:

                                                	 	$	 	 
	
                                                  Contract
      Balance:

                                                	 	$	 	 


                                        

                                         

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    TO:

    


    The
UNDERSIGNED being duly sworn states that he is the ____________________________
(title) of _______________________________________ (firm) who has a contract
with ____________________________________ for furnishing
_____________________________ for the improvements being erected on real estate
known and identified as ___________________________________________ located in
________________________ County, State of ___________________________ and owned
by ____________________________________________.

     

    The
UNDERSIGNED, for and in consideration of the sum One Dollar ($1.00), and other
good and valuable consideration, the receipt of which is hereby acknowledged,
does hereby acknowledge and agree that upon the receipt of
_________________________ Dollars ($__________) the undersigned shall waive and
release any and all liens or claims or right of lien on the aforementioned
property and improvements thereon.

    


    Signed
this ____ day of _______________________, 19____.

    
      
        	 
      	
                    

              	 
      
	 
      	
                Contractor/Supplier/Sub-Contractor

              	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	
                     

              	 
      
	 
      	
                Name
      and Title: