GUARANTY

This Guaranty (this “ Guaranty ”), dated and effective as of December 23, 2008, is made by and among HOKU SOLAR POWER I, LLC, a California limited liability company (the “ Company ”), UFA RENEWABLE ENERGY FUND I, LLC, a Delaware limited liability company (the “ Investor Member ”) and Firstar Development LLC, a Delaware limited liability company ( “FIRSTAR” ); HOKU SCIENTIFIC, INC., a Delaware corporation (“ Hoku Scientific ”) and Hoku Solar, Inc., a Delaware corporation (collectively, the “ Guarantor ”).

A.            Recitals

WHEREAS, Hoku Solar, Inc. is the managing member of the Company (and in such capacity it is the “ Managing Member ”).

WHEREAS, the Investor Member and the Managing Member are the only members of the Company.

WHEREAS, the Company is operating pursuant to that certain Operating Agreement dated as of the date hereof (the “ Operating Agreement ”).  Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Operating Agreement, as such agreement may be amended from time to time.

WHEREAS, the Company was formed for the purpose of acquiring, owning, managing, operating, and, if appropriate or desirable, selling or otherwise disposing of solar energy property, in particular the Project and to engage in the business of acting as the owner of such solar energy property.

WHEREAS, the Managing Member, under the Operating Agreement, represents, warrants and covenants, that it will use diligent efforts to construct and/or install the Project and thereafter operate it as required by the Code in order to qualify for and maintain the Tax Credits and other tax benefits anticipated in connection therewith.

WHEREAS, Hoku Scientific is the parent and sole shareholder of the Managing Member will benefit from the completion and operation of the Project.

Now, therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby agrees for the benefit of the Investor Member and Firstar as follows:

1.            Covenants, Representations and Warranties .

Each Guarantor represents and warrants to the Investor Member as follows:

(a)            the execution, delivery and performance by it of this Guaranty does not and will not contravene or conflict with any law, order, rule, regulation, writ, injunction or decree now in effect of any government, governmental instrumentality or court or tribunal having jurisdiction over it, or any contractual restriction binding on or affecting it;

(b)            the execution, delivery and performance by it of this Guaranty does not and will not conflict with or result in a breach of the terms or provisions of any indenture, agreement or instrument to which it is a party, or by which it is bound, or to which it is subject, or constitute a default thereunder;

(c)            with the assistance of counsel of its choice, it has read and reviewed this Guaranty and such other documents as it and its counsel deemed necessary or desirable to read;

(d)            it is a corporation, validly incorporated and existing and in good standing under the laws of the jurisdiction of its incorporation and all other jurisdictions where its failure to be so qualified would have a material adverse effect on its financial condition or results of operations and has the full power and authority to enter into and perform its obligations under this Guaranty; and

(e)            it has duly authorized, executed and delivered this Guaranty, and this Guaranty is fully enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and other laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether a proceeding is sought in equity or at law); and

2.            Guaranty .  Guarantor shall absolutely and unconditionally guarantee due payment, performance and fulfillment of the Managing Member’s obligations under the following sections of the Operating Agreement, Section 5.01(e)(iv) (obligations related to any Recapture Event), Section 5.05 (repurchase obligations), Sections 8.09 (a) and (b) (obligations to fund Excess Development Costs and Operating Deficits) and Section 9.05 (the Managing Member’s obligation to purchase the Investor Member’s Interest under the Put Option).

3.            Attorneys’ Fees and Expenses .  The Guarantor shall reimburse the Investor Member for all reasonable attorneys’ fees and expenses which the Investor Member pays or incurs in connection with enforcing this Guaranty, including, without limitation, all costs, attorneys’ fees and expenses incurred by the Investor Member in connection with any insolvency, bankruptcy, reorganization, arrangement or other similar proceedings involving the Guarantor which affect the exercise by the Investor Member of its rights and remedies hereunder.  Any and all such costs, attorneys’ fees and expenses not so paid shall bear interest at an annual interest rate equal to the lesser of (i) 18%, or (ii) the highest rate permitted by applicable law, from the date incurred by the Investor Member until paid by the Guarantor.

4.            Direct and Primary Obligations .  The Guarantor agrees that if the obligation guaranteed by this Guaranty is not fully and timely paid or performed according to the tenor thereof, whether by acceleration or otherwise, Guarantor shall immediately upon receipt of written demand therefor from the Investor pay all amounts due hereby guaranteed in like manner as if the obligation constituted the direct and primary obligation of the Guarantor.  The Guarantor shall not have any right of subrogation as a result of any payment hereunder or any other payment made by the Guarantor on account of the amounts due hereunder, and the Guarantor hereby waives, releases and relinquishes any claim based on any right of subrogation, any claim for unjust enrichment or any other theory that would entitle the Guarantor to a claim against the Company based on any payment made hereunder or otherwise on account of the amounts due hereunder.

5.            Continuing and Irrevocable Obligations .  This Guaranty and the obligations of the Guarantor hereunder shall be continuing and irrevocable until all amounts have been satisfied in full.  Notwithstanding the foregoing or anything else set forth herein, and in addition thereto, if at any time all or any part of any payment received by the Investor Member from the Guarantor under or with respect to this Guaranty is or must be rescinded or returned for any reason whatsoever (including, but not limited to, determination that said payment was a voidable preference or fraudulent transfer under insolvency, bankruptcy or reorganization laws), then the Guarantor’s obligations hereunder shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous receipt of payment by the Investor Member, and the Guarantor’s obligations hereunder shall continue to be effective or be reinstated as to such payment, all as though such previous payment to the Investor Member had never been made.  The provisions of the foregoing sentence shall survive termination of this Guaranty, and shall remain a valid and binding obligation of the Guarantor until satisfied.

6.            No Discharge .  Th