Document:

Unassociated Document

    EXHIBIT
      10.38

    CONSULTING
      AGREEMENT

    

    

    This
CONSULTING
      AGREEMENT
      (the “Agreement”)
      is entered into as of June 30, 2008 by and between TRUE
      NORTH
      ENERGY CORPORATION,
      a Nevada
      corporation, with its principal offices at 2 Allen Center, 1200 Smith Street,
      Houston, TX 77002 (the “Company”) and PRIME
      NATURAL RESOURCES, INC.
      with an address at
      2500 CityWest Blvd, Suite 1750, Houston, TX 77042 (“Prime”).

    

    WHEREAS,
      the
      Company wishes
      to engage Prime to provide accounting and related services to the Company and
      the Prime wishes to accept such engagement, all upon the terms and subject
      to
      the conditions contained in this Agreement;

    

    NOW,
      THEREFORE, the
      parties hereto,
      in consideration of the mutual consideration and promises contained herein
      and
      intending to be bound, hereby agree as follows:

    

    1. Retention
      of Prime.
      The Company hereby
      retains Prime, and Prime agrees to be retained by the Company, upon the terms
      in, and subject to the conditions of, this Agreement.

    

    2. Term.
      Subject to Section
      7 hereof, the term of this Agreement shall commence on July 1, 2008 (the
“Effective Date”) and shall continue in effect for one year thereafter through
      and including June 30, 2008.

    

    3. Duties
      of Prime.
      During the term of
      this Agreement, Prime shall provide such bookkeeping, accounting and financial
      reporting services and work with the Company’s chief executive officer as may be
      directed by the Company from time to time. Prime makes NO WARRANTY, express
      or
      implied, as to merchantability, fitness for purpose sold, description, quality
      or productiveness concerning the services provided hereunder.

    

    4. Compensation.
      

    

    (a) Consulting
      Fee: As
      compensation to
      Prime for the services to be rendered under this Agreement, the Company shall
      pay to Prime a consulting fee consisting of a monthly $5,000 cash payment (the
      “Cash Consulting Fee”) and grant to Prime an issuance of $60,000 in common stock
      of the Company (the “Stock Consulting Fee”) for each calendar year quarterly
      period (i.e.,
      the three months
      ending on September 30, 2008, December 31, 2008, March 31, 2009 and June 30,
      2009 and each being a “Quarter”). 

    

    (b) Payment
      of Cash
      Consulting Fee: The Company will pay the Cash Consulting Fee to Prime monthly
      in
      advance no later than the 20th
      day of the month
      prior to the month in which services will be performed. 

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    

    (c) Payment
      of Stock
      Consulting Fee: In connection with the Stock Consulting Fee, the Company will
      issue to Prime an amount of stock equal to the Stock Consulting Fee no later
      than ten (10) business days of the completion of each Quarter. The number of
      shares to be issued for each such Quarter will be determined by taking the
      sum
      of the shares for each month in such Quarter as the shares for each such month
      are determined by apportioning a number of shares equal to the amount of $20,000
      as based upon the average closing price of the Company’s common stock on the OTC
      Bulletin Board for the last five business days of each month in each such
      calendar year quarterly period then ended. In connection with the payment of
      the
      Cash Consulting Fee, Prime

    shall
      be granted
“piggyback” rights pursuant to which Prime may request that the Company include
      the stock provided as the Stock Consulting Fee in any registration statement
      filed with the Securities and Exchange Commission to register other common
      stock
      of the Company (other than a registration on Form S-4 or S-8, or any successor
      or other forms promulgated for similar purposes). 

     

    (d) Adjustments:
      In the
      event of early termination of this Agreement by either party, Prime’s cash
      payment for the month in which the Agreement will terminate will be subject
      to a
      pro rata adjustment to reflect the number of days in such month that Prime
      will
      be providing consulting services. In the event of early termination by the
      Company “With Cause” or by the Prime other than for “Good Reason,” as such terms
      are defined in Section 7 hereof, Prime’s stock payment will be subject to a pro
      rata, downward adjustment to reflect the number of days during which this
      Agreement was in effect.

    

    (e) Expenses:
      The
      Company shall reimburse Prime for all reasonable out-of-pocket business expenses
      incurred by Prime in the performance of this Agreement. Any single expense
      amount in excess of $1,000 will require advance written approval from the
      Company.

    

    5. Status
      as Independent Contractor.
      The parties intend
      and acknowledge that Prime is acting as an independent contractor. The Company
      shall not be responsible for any withholding in respect of taxes or any other
      deductions in respect of the fees to be paid to Prime and all such amounts
      shall
      be paid without any deduction or withholding. Nothing in this Agreement shall
      be
      construed to create any partnership, joint venture or similar arrangement
      between the Company and Prime or to render either party responsible for any
      debts or liabilities of the 

    

    6. Indemnity
      and Limitation of Liability.
      Except as
      otherwise arising from or attributable to the gross negligence of Prime, the
      Company shall indemnify, protect, defend and hold Prime and its employees,
      officers, directors and shareholders harmless from and against any and all
      liabilities, claims and causes of action, including without limitation, all
      legal fees and expenses incurred by Prime and its employees, officers, directors
      and shareholders in the prosecution, defense, settlement or investigation
      thereof, that shall arise or result from the services performed by Prime
      hereunder or that may otherwise relate to this Agreement. Neither party hereto
      shall be liable to the other for any consequential, special, punitive or
      indirect damages arising out of this Agreement. The maximum liability hereunder
      of Prime shall be limited to the actual amounts of the Cash Consulting Fee
      and
      Stock Consulting Fee that it receives from the Company.

    

    7. Confidentiality.
      Prime acknowledges
      that in connection with the services to be rendered under this Agreement, Prime
      may be provided with confidential business information of the Company. The
      information will include, but not be limited to, competitive information
      pertaining to the Company’s employees, business partners, land and lease
      holdings, financial results and drilling and exploration activities. Prime
      agrees to keep any information or materials (the “Confidential Information”) in
      the strictest confidence and not to disclose or disseminate any such
      Confidential Information to any person, firm or other business entity except
      to
      those employees, Prime’s or other independent contractors of the Company as
      shall be necessary or advisable for the carrying out of the purposes of this
      Agreement.

    
      
         

      

      
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    All
      materials
      relating to the business and affairs of the Company, including, without
      limitation, all manuals, documents, reports, equipment, working materials,
      lists
      of shareholders, customers and clients, and information collected or prepared
      by
      the Company or Prime in the course of Prime's engagement, are the property
      of
      the Company. Upon the termination of this Agreement for any reason, Prime shall
      cease the use of such materials, return them to the Company (including all
      copies and reproductions that may have been made or received), and delete
      related information from all retrieval systems and databases used by
      Prime

    

    Information
      will
      not be deemed to be Confidential Information restricted by this Section 6 if
      Prime can show that: (i) the information was in Prime’s possession or within
      Prime‘s knowledge before the Company disclosed it to Prime; (ii) the information
      was or became generally known to those who could take economic advantage of
      it;
      (iii) Prime obtained the information from a party having the right to disclose
      it to Prime without violation of any obligation to the Company, or (iv) Prime
      is
      required to disclose the information pursuant to legal process (e.g., a
      subpoena), provided that Prime notifies the Company immediately upon receiving
      or becoming aware of the legal process in question. No combination of
      information will be deemed to be within any of the four exceptions in the
      previous sentence, however, whether or not the component parts of the
      combination are within one or more exceptions, unless the combination itself
      and
      its economic value and principles of operation are themselves within such an
      exception or exceptions. 

    

    8. Termination.
      Either party may
      terminate this Agreement for any reason upon 30 days prior written notice,
      including but not limited to termination by the Company “With Cause” or
      termination by the Prime for “Good Reason”.

    

    “With
      Cause” shall
      be (i) Prime’s willful, material and irreparable breach of this Agreement, (ii)
      Prime’s willful dishonesty, fraud or material misconduct with respect to the
      business or affairs of the Company; (iii) Prime’s conviction for a felony; (iv)
      Prime’s gross negligence in the performance of his duties hereunder, or (v)
      Prime’s intentional nonperformance of his duties hereunder.

    

    “Good
      Reason” shall
      exist if the Company does not pay any material amount of compensation due Prime
      hereunder within seven (7) days of the due date thereof provided that Prime
      shall have provided the Company with written notice of such default and given
      the Company 3 business days to cure such default.

    

    9. Amendments,
      Modifications, Waivers, Etc.
      No amendment or
      modification to this Agreement, nor any waiver of any term or provision hereof,
      shall be effective unless it shall be in a writing signed by the party against
      whom such amendment, modification or waiver shall be sought to be enforced.
      No
      waiver of any term or provision shall be construed as a waiver of any other
      term
      or condition of this Agreement, nor shall it be effective as to any other
      instance unless specifically stated in a writing conforming with the provisions
      of this Section 8.

    
      
         

      

      
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    10. Successors
      and Assigns.
      This Agreement
      shall be enforceable against any successors in interest, if any, to the Company
      and the Prime. Except as specifically provided herein, neither the Company
      nor
      the Prime shall assign any of their respective rights or obligations hereunder
      without the written consent of the other in each instance.

    

    11. Counterparts.
      This Agreement
      may be executed in two or more counterparts, each of which shall be deemed
      an
      original, but all of which together shall constitute one and the same
      instrument. 

    

    12. Notices.
      Any notices
      required or permitted to be given under this Agreement shall be effective upon
      receipt at the respective addresses in the recitals to this Agreement unless
      the
      address for notice to either party shall have been changed by a notice given
      in
      accordance with this Section 11.

    

    13. Governing
      Law; Dispute Resolution.
      This Agreement
      shall be governed by, and construed in accordance with, the substantive laws
      of
      the State of Texas, without regard for principals of conflicts of laws. Any
      claims, demands, differences, causes of action, disputes, or controversies
      arising out of or in connection with this Agreement shall, as far as possible,
      be settled amicably. Failing an amicable settlement within thirty (30) days
      of
      the written notification by one Party to the other of such difference or
      dispute, such difference or dispute shall be referred to arbitration. The
      arbitration shall be governed by, be conducted under, and finally settled in
      conformance with the Rules of American Arbitration Association in effect on
      the
      date of this Agreement. The arbitral panel shall be composed of three
      arbitrators. Each Party shall appoint one arbitrator within thirty (30) days
      of
      the filing of the arbitration, and the two arbitrators so appointed shall then
      select the presiding arbitrator within thirty (30) days after the latter of
      the
      two arbitrators have been appointed. If a Party fails to appoint its
      Party-appointed arbitrator or if the two Party-appointed arbitrators cannot
      reach an agreement on the presiding arbitrator within the specified time period,
      then the President of the American Arbitration Association shall nominate the
      remainder of the three arbitrators not yet appointed. The arbitration shall
      take
      place in Houston, Texas and the proceedings shall be in the English language.
      

    
      
         

      

      
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    IN
      WITNESS
      WHEREOF,
      the parties hereto
      have set their respective hands this 30th day of June 2008.

    

    
      	
              TRUE
                NORTH ENERGY CORPORATION

            	
              PRIME
                NATURAL

            
	 	 	 	
              RESOURCES,
                INC.

            
	 	 	 	 	     
	 	 	 	 	     
	
              By:

            	
              /s/
                John
                Folnovic

            	 	    
	
              /s/
                John R.
                Hager

            
	 	
              Name:
                John
                Folnovic

            	 	
              Name:

            	
              John
                R.
                Hager

            
	 	
              Title:
                President

            	 	
              Title:
                

            	
              Chief
                Financial Officer

            

    

    

    
      
         

      

      
        5Credit
      Agreement

    

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

    

    I. LOAN

    

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

    

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

    

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

    

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

     

    1.05 Disbursements.
      Subject
      to the terms and conditions of the Agreement, the Bank agrees to make the
      following disbursements to the Borrower:

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    

    Any
      floating rate of interest will increase or decrease during the term of this
      Agreement if there is an increase or decrease in the rate to which the floating
      rate is tied. If the rate to which the floating rate is tied is no longer
      available, the Bank will choose a new rate that is based on comparable
      information. 

     

    
      
        
        

      

      
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    b. LIBOR.
      The
      Borrower agrees to pay interest, which will be made from the Interest Reserve,
      in respect of the unpaid principal amount of each LIBOR Loan during the period
      commencing on the date the proceeds thereof are made available to the Borrower
      for each day during each LIBOR Interest Period applicable thereto at a rate
      per
      annum which shall be equal to the sum of LIBOR for such LIBOR Interest Period;
      plus one and one-half percent (1.50%). If Borrower shall: (a) pay or convert
      any
      LIBOR Loan on any day other than the last day of the applicable Interest Period,
      whether by acceleration or otherwise; or (b) fail to borrow any LIBOR Loan
      or
      convert any loan into a LIBOR Loan or rollover in accordance with a Notice
      of
      Borrowing delivered to the Bank (whether as a result of the failure to satisfy
      any applicable conditions or otherwise), Borrower shall reimburse the Bank
      and
      hold the Bank harmless for all costs, net losses or administrative overhead
      incurred as a result of such repayment, prepayment or failure. The Bank may
      use
      any reasonable method in calculating its loss under this Section
      1.07
      (b),
      which calculation shall be binding and conclusive on Borrower absent manifest
      error. Borrower shall be obligated to manage the loans so that there are
      sufficient funds on hand to make each principal installment payment when
      required without prepaying a LIBOR Loan.

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
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    d.
      at any
      time, by reason of the requirements of Regulation D or other statutory or
      regulatory reserve requirements, LIBOR shall not represent the effective pricing
      to the Bank for funding or maintaining the affected LIBOR Loan; or

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    1.11 Repayment
      of Loans.

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    g. Prepayment.
      The
      Loan
      may be prepaid in whole or in part; subject, however, to the payment by Borrower
      of prepayment fees described as follows:

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    No
      prepayment fee for Base Rate Loans. Prepayments of principal for Libor Loans
      permitted, but are subject to a breakage fee as hereafter provided.

    

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

    

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

    

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

    

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

    

    II. CONDITIONS
      OF LENDING

    

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

    

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              i.

            	
              Loan
                Documents.
                All of the Loan Documents.

            

    

    

    
      	 	
              ii.

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

            

    

    

    
      	 	
              iii.

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

            

    

    

    
      	 	
              iv.

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

            

    

    

    
      	 	
              v.

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

            

    

    

    
      	 	
              vi.

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

            

    

    

    
      	 	
              vii.

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

            

    

    

    
      	 	
              viii.

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

            

    

    

    
      	 	
              ix.

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

            

    

    

    
      	 	
              x.

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

            

    

    

    b. Certain
      Other Events.
      On the
      Closing Date:

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              i.

            	
              The
                Borrower shall have paid to the Bank all fees and other charges to
                have
                been paid in accordance with the terms hereof and the other Loan
                Documents.

            

    

    

    
      	 	
              ii.

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

            

    

    

    
      	 	
              iii.

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

            

    

    

    
      	 	 	 	 	
              iv.

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

            

    

    

    
      	 	 	 	 	
              v.

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

            

    

    

    
      	 	 	 	 	
              vi.

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

            

    

    

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

    

    III. REPRESENTATIONS
      AND WARRANTIES

    

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

    

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

    

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

    

    3.03 No
      Breach.
      The
      execution and performance of the applicable Loan Documents will not immediately,
      or with the passage of time or the giving of notice, or both: (a) Violate any
      law or result in a default under any contract, agreement, or instrument to
      which
      Borrower is a party or by which Borrower or its property is bound; or (b) result
      in the creation or imposition of any security interest in, or lien or
      encumbrance on, any of the assets of Borrower, except in favor of the
      Bank.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    3.04 Authorization.
      Borrower has the power and authority to incur and perform the Obligations under
      the Loan Documents, and, Borrower has taken all corporate action necessary
      to
      authorize the execution and delivery of the applicable Loan Documents and its
      incurring of such Obligations.

    

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

    

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

    

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

    

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

    

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

    

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

    

    IV. AFFIRMATIVE
      COVENANTS

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    4.08 Notice
      to Bank.
      Promptly give notice to Bank of: (a) the occurrence of any Event of Default;
      (b)
      any change in the name or organizational structure of Borrower; (c) any
      uninsured loss through fire, theft, liability or property damage exceeding
      any
      material occurrences; (d) any pending or threatened litigation involving
      Borrower or any security for the Obligations exceeding any material amount;
      (e)
      any event which could have a material adverse effect on the ability of Borrower
      to continue its business operations in the ordinary course; (f) any change
      in
      Borrower’s principal place of business; and (g) any material change in the
      Property securing the Loan.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    4.09 Loan
      Proceeds.
      Use all
      Loan proceeds solely in accordance with Section
      1.03
      of this
      Agreement and the provisions of the Loan Documents, unless specifically
      consented to the contrary by Bank in writing.

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    V. NEGATIVE
      COVENANTS

    

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

    

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

    

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

    

    VI. BANK’S
      RIGHTS UPON DEFAULT

    

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

    

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

    

    b. The
      dissolution or insolvency of the Borrower.

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    VII. MISCELLANEOUS

    

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

    

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

    

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

    

    
      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

    

    

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

    

    

    
      	
              BORROWER:

            	
              BANK:

            
	 	 
	
              Hoku
                Scientific, Inc.

              1075
                Opakapaka Street

              Kapolei,
                Hawaii 96707

              PHONE:
                (808) 682-7800

              FAX:
                (808) 682-7807

              Attn:
                Mr. Darryl Nakamoto

            	
              Bank
                of Hawaii

              Corporate
                Hawaii Commercial Banking Center

              P.O.
                Box 2900

              Honolulu,
                Hawaii 96846-6000

              PHONE:
                (808) 694-8014

              FAX:
                (808) 694-8301

              Attn:
                Mr. Luke Yeh, Senior Vice President &
                Manager

            

    

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    

    7.11 Assignments.

    

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

    

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

    

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

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    

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

    

    VIII. DEFINITIONS

    

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

    

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

    

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

    

    8.3 Commitment
      shall have the meaning given in Section
      1.02.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    8.4 Default
      Rate shall have the meaning given in Section
      6.02c.

     

    8.5 Effective
      Date shall have the meaning given in the first paragraph of this
      Agreement.

     

    8.6 Eurodollar
      Reserve Requirement shall mean, with respect to each LIBOR Loan for any day,
      the
      then aggregate maximum effective rates per annum (expressed as a percentage),
      as
      determined solely by the Agent (which determination shall be final, conclusive
      and binding on all of the parties hereto, absent manifest error), of the reserve
      requirements in effect on such day (including, without limitation, basic,
      supplemental, marginal and emergency reserves) imposed pursuant to Regulation
      D
      by the Board of Governors of the Federal Reserve System or otherwise by any
      other Governmental Authority having jurisdiction with respect thereto on
“Eurocurrency Liabilities” of any Bank, having a maturity equal to the term of
      the applicable LIBOR Interest Period.

     

    8.7 Event
      of
      Default shall have the meaning given in Section
      6.01.

     

    8.8 GAAP
      shall mean generally accepted accounting principles consistently
      applied.

     

    8.9 Interbank
      Eurodollar Index Rate means the rate per annum (expressed as a percentage),
      at
      which leading banks, as determined by the Agent, are offered deposits in United
      States Dollars in the London interbank Eurodollar market as of 11:00 a.m.,
      London time, on the day which is two LIBOR Business Days prior to the beginning
      of the term of a LIBOR Loan or the LIBOR Interest Period applicable thereto,
      for
      delivery in immediately available funds on the first day of the term of such
      LIBOR Loan or such LIBOR Interest Period, in an amount equal to the then
      outstanding principal amount of such LIBOR Loan and for a period equal to the
      term of such LIBOR Interest Period.

     

    8.10 Legal
      Entity shall have the meaning given in Section 2.01a.iii.

     

    8.11 LIBOR
      shall mean, for each LIBOR Interest Period, a rate (rounded to the nearest
      0.001%) computed pursuant to the following formula and adjusted as of the date
      of any change in the Eurodollar Reserve Requirements:

     

    Interbank
      Eurodollar Index Rate x 100

    100%
      -
      Eurodollar Reserve Requirement.

    

    8.12 LIBOR
      Interest Period shall mean, with respect to each LIBOR Loan, an Interest Period
      consisting of 1, 2 or 3 months as designated by the Borrowers in accordance
      with
      Section 1.06(a)(5) hereof.

     

    8.13 LIBOR
      Loan shall mean any Loan bearing interest at a rate based on LIBOR.

     

    8.14 Loan
      shall have the meaning given in Section
      1.01.

     

    8.15 Loan
      Documents shall have the meaning given in Section 1.12.

     

    8.16 Maturity
      Date shall have the meaning given in Section
      1.01.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    8.17 Note
      shall have the meaning given in Section 1.12.

     

    8.18 Notice
      of
      Borrowing shall have the meaning given in Section 1.07.

     

    8.19 Obligations
      shall have the meaning given in Section 1.13.

     

    8.20 Participant(s)
      shall have the meaning given in Section 7.06.

     

    8.21 Paying
      Rate shall have the meaning given in Section 6.02c.

    

    [THE
      REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

    

    
      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

    

    

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

    

    
      	
              BANK
                OF HAWAII,

              a
                Hawaii corporation

            
	 	 
	
              By

            	
              /s/
                Luke Yeh      

            
	 	
              Name:
                Luke Yeh

            
	 	
              Title:
                Senior Vice President

            
	 	 
	 	
              Bank

            
	 	 
	
              HOKU
                SCIENTIFIC, INC.,

              a
                Delaware corporation

            
	 	 
	
              By

            	
              /s/
                Darryl Nakamoto    

            
	 	
              Name:
                Darryl Nakamoto

            
	 	
              Title:
                CFO

            
	 	 
	 	
              Borrower

            

    

    

    
      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

    

    

    EXHIBIT
      A

     

    All
      of
      that certain parcel of land situate at Honouliuli, District of Ewa, City and
      County of Honolulu, Island of Oahu, State of Hawaii, more particularly described
      as follows:

     

    LOT
      8004,
      area 2.283 acres, more or less, as shown on Map 645, filed in the Office of
      the
      Assistant Registrar of the Land Court to the State of Hawaii with Land Court
      Application No. 1069 of the Trustees under the Will and of the Estate of James
      Campbell, Deceased;

     

    Together
      with access across Lots 8030 and 8032, as shown on Map 645, as set forth by
      Land
      Court Order No. 112041, filed June 4, 1993;

     

    Together
      also with a nonexclusive easement over Lot 70-C-1 and 84-A-2-A, as shown on
      Map
      229, and Lot 172-C and 424-C, as shown on Map 132, as granted by GRANT OF
      NONEXCLUSIVE EASEMENT (VEHICULAR ACCESS), dated December 13, 2001, filed as
      Land
      Court Document No. 2761270; and subject to the terms and provisions contained
      therein;

     

    
      	
              -Note:-

            	
              Lot
                424-C, as shown on Map 132, Lot 425-C-1, as shown on Map 373, Lots
                3801-A-2 and 3801-A-3, as shown on Map 907, consolidated and resubdivided
                into Lots 14281, 14282, 14283, 14284 and 14285, as shown on Map 1118,
                as
                set forth by Land Court Order No. 146000, filed May 22,
                2002.

            

    

     

    Being
      land(s) described in Transfer Certificate of Title No. 720,871 issued to HOKU
      SCIENTIFIC, INC., a Hawaii corporation.

     

    BEING
      THE
      PREMISES ACQUIRED BY KAPOLEI BUSINESS PARK II LIMITED WARRANTY DEED WITH USE
      RESTRICTIONS, COVENANTS AND RESERVATIONS OF RIGHTS

     

    
      	 	
              GRANTOR

            	
              :

            	
              KBP
                LAND PARTNERS, LLC, a Delaware limited liability
                company

            

    

    

    
      	 	
              GRANTEE

            	
              :

            	
              HOKU
                SCIENTIFIC, INC., a Hawaii
                corporation

            

    

    
      	 	
              DATED

            	
              :

            	
              October
                18, 2004

            

    

    

    
      	 	
              FILED

            	
              :

            	
              Land
                Court Document No. 3182173

            

    

    

    SUBJECT,
      HOWEVER, TO:

     

    
      	
              1.

            	
              SETBACK
                (25 feet wide)

            

    

     

    
      	 	
              SHOWN

            	
              :

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

            

    

    

      EXHIBIT
        A

       

    

    
      
        
        

      

      
        Page
          1 of
          3

        
          

        

      

      
        
        

      

    

     

    
      	
              2.

            	DESIGNATION OF EASEMENT
              "5114" 

    

     

    
      	 	
              PURPOSE

            	
              :

            	
              electrical

            

    

    
      	 	
              SHOWN

            	
              :

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

            

    

    

    
      	
              3.

            	
              The
                terms and provisions contained in the
                following:

            

    

     

    
      	 	
              INSTRUMENT

            	
              :

            	
              KAPOLEI
                BUSINESS PARK DECLARATION OF CONDITIONS, COVENANTS AND
                RESTRICTIONS

            

    

    

    
      	 	
              DATED

            	
              :

            	
              May
                28, 1993

            

    

    
      	 	
              FILED

            	
              :

            	
              Land
                Court Document No. 2030298

            

    

    

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

     

    
      	 	
              (A)

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

            

    

     

    
      	 	
              (B)

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

            

    

     

    
      	 	
              (C)

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

            

    

     

    
      	 	
              (D)

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

            

    

     

    
      	 	
              (E)

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

            

    

     

    
      	 	
              (F)

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

            

    

     

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

     

    
      	
              4.

            	
              GRANT

            

    

     

    
      	 	
              TO

            	
              :

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

            

    

    

    
      	 	
              DATED

            	
              :

            	
              March
                21, 2000

            

    

    
      	 	
              FILED

            	
              :

            	
              Land
                Court Document No. 2621916

            

    

    
      	 	
              GRANTING

            	
              :

            	
              a
                perpetual right and easement over said Easement
                "5114"

            

    

     

    EXHIBIT
      A

     

    
      
        
        

      

      
        Page
          2 of
          3

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	The terms and provisions contained in the
              following: 

    

     

    
      	 	
              INSTRUMENT

            	
              :

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

            

    

    

    
      	 	
              DATED

            	
              :

            	
              January
                2, 2002

            

    

    
      	 	
              FILED

            	
              :

            	
              Land
                Court Document No. 2766591

            

    

    

    
      	
              6.

            	
              The
                terms and provisions contained in the
                following:

            

    

     

    
      	 	
              INSTRUMENT

            	
              :

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

            

    

    

    
      	 	
              DATED

            	
              :

            	
              June
                3, 2004

            

    

    
      	 	
              FILED

            	
              :

            	
              Land
                Court Document No. 3118515

            

    

    

    The
      foregoing includes, but is not limited to, matters relating to permitted use,
      water rights, and reservation of drainage easements, conduits and sewer line
      easements.

     

    
      	
              7.

            	
              The
                terms and provisions contained in the
                following:

            

    

     

    
      	 	
              INSTRUMENT

            	
              :

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

            

    

    

    
      	 	
              DATED

            	
              :

            	
              October
                18, 2004

            

    

    
      	 	
              FILED

            	
              :

            	
              Land
                Court Document No. 3182173

            

    

    

    The
      foregoing includes, but is not limited to, matters relating to permitted use,
      water rights, and reservation of rights.

     

    
      	
              8.

            	
              DESIGNATION
                OF EASEMENT "9204"

            

    

     

    
      	 	
              PURPOSE

            	
              :

            	
              utility
                and waterline

            

    

    
      	 	
              SHOWN

            	
              :

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

            

    

    

    
      	
              9.

            	
              GRANT

            

    

     

    
      	 	
              TO

            	
              :

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

            

    

    

    
      	 	
              DATED

            	
              :

            	
              December
                15, 2006

            

    

    
      	 	
              FILED

            	
              :

            	
              Land
                Court Document No. 3624845

            

    

    
      	 	
              GRANTING

            	
              :

            	
              an
                easement over said Easement "9204"

            

    

     

    END
      OF
      EXHIBIT A

    Tax
      Map Key No.: (1) 9-1-075-009

     

    EXHIBIT
      A

     

    
      
        
        

      

      
        Page
          3 of
          3

        
          

        

      

      
        
        

      

    

    

    Exhibit
      “B”

    

    Notice
      of Borrowing

    

    Date: ____________________,
      2008

    

    
      	To:	
              Bank
                of Hawaii

              
                Corporate
                  Banking 

                P.O.
                  Box 2900

                Honolulu,
                  HI 96846

                Fax:
                  694-8301

              

            

      	 	 

    

    
    

    
      	Subject:	
              Credit
                Agreement dated _____________________, 2008  

            

    

     

    The
      Borrower hereby requests and confirms the following instructions therefor
      (capitalized terms not defined herein shall have the respective meanings
      assigned in the Credit Agreement):

     

    REQUEST
      FOR NEW LOAN

     

    Disbursement
      Date: ___________________________

     

    Principal
      Amount: ___________________________

     

     ̈
Base
      Rate
      Borrowing

     

     ̈
LIBOR
      Borrowing Interest Period

     

    ___
      1
      Month

    ___
      2
      Months

    ___
      3
      Months

    

    Method
      of
      drawing:

     

     ̈
Credit
      to
      Deposit Account No. _____________________ maintained with the Bank.

     

     ̈
Wire
      funds to:

     

    ABA
      No.:
      ______________________________

    Credit
      Account No.: ______________________

    Special
      Instructions: _____________________________________________

     _____________________________________________

     _____________________________________________

    

    REQUEST
      CHANGE IN INTEREST RATE OPTION:

     

    EXHIBIT
      B

     

    
      
        
        

      

      
        Page
          1 of
          2

        
          

        

      

      
        
        

      

    

     

    Disbursement
      Date:           
___________________________

     

    Principal
      Amount:             
___________________________

     

    Rollover/Change
      Date:     ___________________________

     

     ̈
LIBOR
      Borrowing Rollover

     

     ̈
Conversion
      from Base Rate Borrowing to LIBOR Borrowing

     

     ̈
Conversion
      from LIBOR Borrowing to Base Rate Borrowing

     

    LIBOR
      Borrowing Interest Period

     

    ___
      1
      Month

    ___
      2
      Months

    ___
      3
      Months

     

    The
      Borrower hereby certifies as follows:

    1.
      The
      representations and warranties of the Borrower contained in Article III of
      the
      Credit Agreement are true and correct on and as of the date hereof, with the
      same force and effect as if made on Such date.

    

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

    

    
      	
              HOKU
                SCIENTIFIC, INC.

            
	 	 
	
              By

            	 
	 	
              Its:

            

    

     

    EXHIBIT
      B

     

    
      
        
        

      

      
        Page
          2 of
          2

        
          

        

      

      
        
        

      

    

     

    Exhibit
      “C”

    

    Promissory
      Note

    

      
        	
                Not
                  to Exceed $3,480,000.00

              	
                ________________,
                  2008

              

      

    

    

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

    

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

    

    
      	
              HOKU
                SCIENTIFIC, INC.,

            
	
              a
                Delaware corporation

            
	 	 
	
              By
                

            	 
	 	
              Name:

            
	 	
              Title:

            
	 	 
	 	
              Borrower

            

    

     

    EXHIBIT
      C

     

    
      
        
        

      

      
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          1 of
          1

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