Document:

ex10-3.htm

Exhibit 10.3

 

Execution Version

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

AMENDMENT dated as of  May 22, 2012 to the Credit Agreement dated as of May 24, 2010 (the “Credit Agreement”) between HOKU CORPORATION (the “Borrower”), and CHINA MERCHANTS BANK CO., LTD., NEW YORK BRANCH (the “Lender”).

 

W I T N E S S E T H :

 

WHEREAS, the parties hereto desire to amend the Credit Agreement to (i) extend the Maturity Date as hereinafter provided, (ii) adjust the rate of interest applicable to the Loans thereunder and (iii) adjust the rate of Facility Fees applicable to the Loans thereunder.

 

WHEREAS, the Borrower has requested that Lender waive, and the Lender has agreed to waive, any Default or Event of Default existing as of the date hereof pursuant to Section 6.1(C), Section 6.1(D) (resulting from a failure to comply with Sections 5.2(C), 5.8, 5.9 and 5.11 of the Credit Agreement), and clauses (ii) and (vii) of Section 6.1(E) of the Credit Agreement (the “Existing Defaults”).

 

NOW, THEREFORE, the parties hereto agree as follows:

 

Section 1.  Defined Terms; References.  Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby.

 

Section 2.  Extension of Maturity Date.  The definition of “Maturity Date” in Section 1.1 of the Credit Agreement is hereby amended by changing the date specified therein from “May 23, 2012” to “the date that is the earlier of (i) May 22, 2013 and (ii) ten (10) Business Days prior to the date on which the Letter of Credit expires or otherwise terminates.”

 

Section 3. Adjustment of Interest Rate.  The definition of “Interest Period” in Section 1.1 of the Credit Agreement is hereby amended by changing the duration specified therein from “three months” to “one year.”

 

Section 4. Adjustment of Facility Fees.  The definition of “Facility Fees” in Section 1.1 of the Credit Agreement is hereby amended by changing the rate specified therein from “0.50% per annum” to “2.50% per annum.”

 

  

  

  

 

Section 5.  Amendment of the Definition of Letter of Credit.  The definition of “Letter of Credit” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

 

“Letter of Credit” means a standby letter of credit issued by China Merchants Bank Co., Ltd., Chengdu Branch (as the same may be amended, modified, extended or replaced with the prior written consent of the Lender) which is procured by the Parent in favor of the Lender to secure the Borrower’s obligations to the Lender hereunder.

 

Section 6.  Representations of Borrower.  The Borrower represents and warrants to the Lender as of the date hereof that (i) other than with respect to Sections 4.3 and 4.4 of the Credit Agreement, the representations and warranties of the Borrower set forth in Section 4 of the Credit Agreement will be true on and as of the Amendment Effective Date and (ii) no Default or Event of Default will have occurred and be continuing on such date except for the Existing Defaults.

 

Section 7.  Waiver of Existing Defaults.  Upon the Amendment Effective Date, Lender waives the Existing Defaults.

 

Section 8.  Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

 

Section 9.  Counterparts.  This Amendment may be signed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same agreement, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

Section 10.  Effectiveness.  This Amendment shall become effective as of the date hereof after the Lender shall have received (i) from the Borrower a counterpart hereof signed by the Borrower or electronic transmission of such signed counterpart or other written confirmation that the Borrower has signed a counterpart hereof and (ii) a Letter of Credit which has a maturity date not earlier than June 7, 2013 and which are otherwise in form and substance satisfactory to the Lender (the “Amendment Effective Date”).

 

  

  

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

 

	 	
HOKU CORPORATION

 

	 	
 

By:

	
/s/ Scott Paul

	 	  	
Name:

	
Scott Paul

	 	  	
Title:

	
Chief Executive Officer

	 	
By:

	
/s/ Sean Liu

	 	  	
Name:

	
Sean Liu

	 	  	
Title:

	
Vice President of Finance and Treasurer

 

	 	
CHINA MERCHANTS BANK CO., LTD., NEW YORK BRANCH

 

	 	
 

By:

	
/s/ Hui Fang

	 	  	
Name:

	
Hui Fang

	 	  	
Title:

	
General Manager

 

	 	
By:

	
/s/ Andrew Mao

	 	  	
Name:

	
Andrew Mao

	 	  	
Title:

	
Assistant General Managerex10-4.htm

Exhibit 10.4

 

	 	As of May 22, 2012	 

 

Hoku Corporation

Hoku Materials, Inc.

1288 Ala Moana Blvd., Suite 220

Honolulu, Hawaii 96814

Attention: Chief Executive Officer

Re:       Financing Costs Reimbursement

Ladies and Gentlemen:

Reference is made to the Credit Agreement (as amended, the “Credit Agreement”) dated as of May 24, 2010 between Hoku Corporation (“Hoku”), as borrower, and China Merchants Bank Co., Ltd., New York Branch, as lender (the “Lender”), as amended by that Amendment No. 1 to Credit Agreement dated as of the date hereof (“Amendment No. 1”).  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

As an inducement and condition to the Lender’s willingness to provide a term credit facility in an aggregate principal amount of up to $20,000,000 to Hoku on the terms and conditions set forth in the Credit Agreement, Hoku requested its parent company, Tianwei New Energy Holdings Co., Ltd. (“Tianwei”), and Tianwei provided cash collateral of approximately 106% of the face amount of the Letter of Credit in Renminbi (RMB) (“Cash Collateral”) in favor of the Issuing Bank as security for the reimbursement obligations now or hereafter arising from draws under the Letter of Credit (the “Tianwei LC Obligations”).  As a continuing inducement and condition to the Lender’s willingness to extend the maturity and make other modifications with respect to the financing provided under the Credit Agreement, Tianwei has agreed to extend the term of the Letter of Credit and to continue to provide the Cash Collateral in favor of the Issuing Bank to secure the Tianwei LC Obligations.

Reimbursement Obligations

Notwithstanding (i) anything to the contrary herein or in any other document or agreement by or among any of the parties hereto and/or (ii) the occurrence or non-occurrence of the Maturity Date (as defined in the Credit Agreement) of the Loan (as defined in the Credit Agreement), and in consideration of Tianwei’s providing and continuing to provide the Cash Collateral, Hoku agrees to reimburse Tianwei for the Tianwei LC Obligations and all interest, fees and expenses incurred by Tianwei in providing and continuing to provide the Cash Collateral or in connection with or related to the Letter of Credit (including extending the term thereof) or the Credit Agreement, including but not limited to Amendment No. 1 and any financing fees (collectively, the “Reimbursement Obligations”), by promptly paying all amounts of the Reimbursement Obligations in immediately available funds to the bank account specified by Tianwei, without any requirement of presentment, demand, protest or further notice by Tianwei or any other person.

 

  

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Hoku Materials Guarantee

In consideration of Tianwei’s providing and continuing to provide the Cash Collateral, Hoku Materials, Inc. (“Hoku Materials”) hereby irrevocably and unconditionally, as primary obligor, undertakes and guarantees the full, prompt and complete performance by Hoku of the Reimbursement Obligations, and the due and punctual payment of all sums then or subsequently payable by Hoku to Tianwei under this letter agreement (including any interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of Hoku (or would accrue but for the operation of applicable bankruptcy or insolvency laws)) when the same shall become due (whether at stated maturity, upon acceleration or otherwise) (the “Subsidiary Guarantee”).  The Subsidiary Guarantee is a guaranty of payment and not of collection.

The obligations of Hoku Materials under this letter agreement shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

(i)            any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of Hoku or any other guarantor or any other person or entity under this letter agreement or any other agreement or instrument entered into or delivered in connection herewith, by operation of law or otherwise;

(ii)            any modification or amendment of or supplement to this agreement or any other agreement or instrument entered into or delivered in connection herewith;

(iii)           any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of Hoku or any other guarantor or any other person or entity under this letter agreement or any other agreement or instrument entered into or delivered in connection herewith;

 

  

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(iv)           any change in the corporate or other existence, structure or ownership of Hoku or any other guarantor or any other person or entity, or any insolvency, bankruptcy, suspension of payments, reorganization or other similar proceeding affecting Hoku or any other guarantor or any other person or entity or any of their assets or any resulting release or discharge of any obligation of Hoku or any other guarantor or any other person or entity contained in this letter agreement or any other agreement or instrument entered into or delivered in connection herewith;

(v)            the existence of any claim, set-off or other rights that Hoku Materials may have at any time against Hoku or any other guarantor, Tianwei or any other person or entity, whether in connection with this letter agreement or any other agreement or instrument entered into or delivered in connection herewith or any unrelated transactions, provided that nothing contained in this letter agreement shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;

(vi)           any invalidity or unenforceability relating to or against any other guarantor or any other person or entity for any reason of this letter agreement or any other agreement or instrument entered into or delivered in connection herewith, or any provision of applicable law or regulation purporting to prohibit the payment of any amount payable pursuant to this letter agreement or any other agreement or instrument entered into or delivered in connection herewith by any other guarantor or any other person or entity; or

(vii)          any other act or omission to act or delay of any kind by any other guarantor, any other party to this letter agreement or any other agreement or instrument entered into or delivered in connection herewith, Tianwei or any other person or entity, or any other circumstance whatsoever which might, but for the provisions of this clause (vii), constitute a legal or equitable discharge of or defense to any obligation of Hoku Materials hereunder.

Hoku Materials shall be liable under the Subsidiary Guarantee only for amounts aggregating up to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

The obligations of Hoku Materials hereunder shall remain in full force and effect until all amounts payable by Hoku under this letter agreement shall have been paid in full.  If at any time any payment of any obligation hereunder is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of Hoku or otherwise, Hoku Materials’ obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time.

 

  

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Hoku Materials irrevocably waives:

(i)             acceptance hereof, presentment, demand, protest and any notice not provided for hereunder, as well as any requirement that at any time any action be taken by any person or entity against Hoku or any other guarantor or any other person or entity;

(ii)            any right to which it may be entitled in connection with any obligation of Tianwei to sue or initiate any action and/or complete an action against Hoku or any other guarantor or any other person or entity prior to a claim being made against Hoku Materials pursuant hereto;

(iii)            any right to which it may be entitled to have the assets of Hoku or any other guarantor or any other person or entity first be used and/or applied in full and/or depleted as payment of Hoku’s or any such other guarantor's obligations hereunder, prior to any amounts being claimed from or paid by Hoku Materials pursuant hereto; and

(iv)           any right to which it may be entitled to have its obligations hereunder divided among itself and one or more other guarantors.

If Hoku Materials makes a payment with respect to any obligation hereunder, it shall be subrogated to the rights of the payee against Hoku with respect to such payment.

Grant of Security Interests

Each of Hoku and Hoku Materials hereby pledges and grants to Tianwei, and hereby creates a continuing lien and security interest in favor of Tianwei in and to all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter from time to time arising or acquired, as security for the payment and performance of all its obligations under this letter agreement:

(i)             all fixtures and personal property of every kind and nature including all accounts (including health-care-insurance receivables), goods (including inventory and equipment), documents (including, if applicable, electronic documents), instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, general intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment of money;

 

  

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(ii)            all real property (including, for the avoidance of doubt, Hoku Materials’ leasehold interest on property located in Pocatello, Idaho) and real property rights and improvements; and

(iii)           all proceeds (as such term is defined in section 9-102 of the Uniform Commercial Code as in effect from time to time in the State of New York) and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Hoku or Hoku Materials, as applicable, from time to time with respect to any of the foregoing.

Following request by Tianwei, each of Hoku and Hoku Materials shall grant Tianwei a lien and security interest in all commercial tort claims that it may have against any Person.

Miscellaneous

This letter agreement will become effective upon the execution and delivery hereof.  This letter agreement constitutes the entire agreement between the parties with respect to the subject matter of hereof.

This letter agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state that would make the laws of any other jurisdiction applicable to this letter agreement.

[Remainder of page is intentionally blank]

 

  

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	 	Very truly yours,	 

 

	 	
TIANWEI NEW ENERGY HOLDINGS CO., LTD.

	 	 
	 	 
	 	
By:

	
/s/ Yin Xiaonan

	 	  	
Name:

	
Yin Xiaonan

	 	  	
Title:

	
General Manager

Agreed and accepted:

 

	
HOKU CORPORATION

	 
	 	 
	 	 
	
By:

	
/s/ Scott Paul

	 
	  	
Name:

	
Scott B. Paul

	 
	  	
Title:

	
Chief Executive Officer

	 

	
HOKU MATERIALS, INC.

	 
	 	 
	 	 
	
By:

	
/s/ Scott Paul

	 
	  	
Name:

	
Scott B. Paul

	 
	  	
Title:

	
Chief Executive Officer

	 

Signature Page to Reimbursement Letter Agreement -- $20 million loan

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