Exhibit 10.42
CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk (“[****]”) to denote where omissions have been
made. The confidential material has been filed separately with the Securities
and Exchange Commission.
PV LICENSE AGREEMENT
     This PV LICENSE AGREEMENT (this “Agreement”) is made as of this 5th day of
September, 2007 (the “Effective Date”) by and between ESLR1, LLC, a Delaware
limited liability company with a principal place of business at 138 Bartlett
Street, Marlborough, MA 01752 (“ESLR1”), and TISICS Ltd., a corporation
incorporated under the laws of England and Wales with a principal place of
business at 22 Invincible Road, Farnborough, Hampshire, UK GU14 7QU (“TISICS’).
Each of ESLR1 and TISICS shall sometimes be individually referred to herein as a
“Party” and collectively referred to herein as the “Parties”.
     WHEREAS, Evergreen Solar Inc. (“Evergreen”), the sole initial member of
ESLR1, formed ESLR1 on August 27, 2007 for the purpose of, among other things,
(a) manufacturing SiC Fiber (as defined below) for Evergreen’s String Ribbon
operations based on TISICS’ technology, (b) manufacturing SiC Fiber for TISICS’
composite technologies based on TISICS’ technology, (c) conducting
manufacturing- and product technology-oriented development work required to
optimize its activities in the PV Field only and (d) conducting other activities
necessary for the manufacture, testing and shipment (including to Third Parties
(as defined below)) of SiC Fiber in the PV Field (as defined below); at the same
time as entering into this Agreement, the Parties will enter into that certain
Other Fields License Agreement (the “Other Fields License Agreement”);
     WHEREAS, the Parties will negotiate in good faith the terms and conditions
of an agreement under which TISICS will grant ESLR1 a non-exclusive license to
the TISICS IP for use in the Composite Field (the “Composite Field License
Agreement”);
     WHEREAS, Evergreen, ESLR1 and TISICS entered into that certain Securities
Purchase and Contribution Agreement dated as of September 5, 2007 (the
“Contribution Agreement”) pursuant to which, among other things, (a) Evergreen
agreed to contribute assets in consideration for membership units in ESLR1, and
(b) TISICS agreed to contribute its agreements and covenants set forth in that
certain Facilities and Start Up Agreement dated as of September 5, 2007 between
TISICS and ESLR1 (the “Facilities and Start Up Agreement”), and that certain
Supply Agreement dated as of September 5, 2007 between TISICS and ESLR1 (the
“Supply Agreement”), in each case, (among other things) in consideration for an
option to purchase membership units in ESLR1, all on the terms and conditions
set forth in the Contribution Agreement;
     WHEREAS, TISICS desires to grant ESLR1 a license to certain TISICS
technology, know-how, plans and designs related to (1) the manufacture of SiC
Fiber for use in the PV Field, which license shall be exclusive inside the PV
Field (with licenses in other fields to form the subject of the Other Fields
License Agreement and Composite Field License Agreement), and (2)

 

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the construction and operation of a SiC Fiber factory and perform related
knowledge transfer and other services on behalf of ESLR1 all on the terms and
conditions set forth herein; and
     NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, ESLR1 and TISICS hereby agree as follows:
1. Definitions
     1.1 “Affiliate” means, with respect to an entity, any entity that directly,
or through one or more intermediaries, controls, is controlled by, or is under
common control with such entity, as applicable, where “control” for purposes of
this definition means the ownership of at least fifty percent (50%) of such
company’s or entity’s capital stock or the power to direct or cause the
direction of such company’s or entity’s management, whether by ownership of
securities, by contract or otherwise.
     1.2 “Composite Field” means [****]
     1.3 “Controlled” or “Controls”, when used in reference to the rights of a
Party or a Party’s Affiliate(s) in and to Technology or Intellectual Property
Rights, means that such entity owns or purports to own or has the right or
purports to have the right to grant a license or sublicense with respect to such
Technology or Intellectual Property Rights to the other Party as provided for
herein without breaching the terms of any agreement such entity has with a Third
Party.
     1.4 “Encumbrances” means any Liens, agreements, voting trusts, proxies and
other arrangements or restrictions of any kind whatsoever.
     1.5 “ESLR1 Competitor” means any Third Party that manufactures, sells or
provides products or services in the PV Field, plus any other Third Party that
manufactures, sells or provides products or services relating to strings of
material. For the avoidance of doubt and without limitation, the following
entities are ESLR1 Competitors as of the Effective Date: Sharp, Q-Cells,
Kyocera, REC, Sanyo, BP Solar, Mitsubishi Electric, Schott, Shell, Isophoton,
SolarWorld, Photowatt, GE, Suntech, Motech, Kaneka, ErSol, ECD, Sunways, First
Solar, Solarfun, SunPower, MEMC, Crystalox, Solarforce, Solon and Conergy.
     1.6 “ESLR1 IP” means all Intellectual Property Rights Controlled by ESLR1
as of or during the Grantback License Term that is embodied in Technology
(including Improvements) related to the use of SiC Fiber-related Technology,
excluding the TISICS IP.

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     1.7 “ESLR1 Facilities” means, collectively, (i) manufacturing facilities
for the Exploitation of SiC Fiber and (ii) any equipment installed or used in
such facilities, in each case that are owned or controlled primarily by or on
behalf of ESLR1 or a ESLR1 Sublicensee.
     1.8 “Exploit” means to make, have made, import, sell, have sold, offer for
sale and otherwise use, including, but not limited to, to research, design,
develop, register, modify, enhance, improve, manufacture, export, transport,
distribute, promote, market or otherwise commercialize.
     1.9 “Governmental Entity” means (i) any federal, state, local, municipal,
foreign or other government; (ii) any governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department,
official, entity or self-regulatory organization and any court or other
tribunal); or (iii) any body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature, including any arbitral tribunal
     1.10 “Grantback License Term” means [****] commencing on the Effective
Date, plus, if on the [****] anniversary of the Effective Date TISICS owns at
least [****] of ESLR1’s outstanding LLC Units (as defined in the Contribution
Agreement), for so long after such [****] anniversary that TISICS owns at least
[****] of ESLR1’s outstanding LLC Units, in each case, unless this Agreement is
earlier terminated.
     1.11 “Improvements” means all Technology that constitutes an improvement,
enhancement, alteration or modification to or of any Technology.
     1.12 “Intellectual Property Rights” means, collectively, all rights in, to
and under (i) Patents, (ii) registered and unregistered copyrights and (iii) all
other intellectual property rights (including trade secret rights, trademarks,
service marks, trade dress and similar rights of any type under the laws of any
governmental authority), including all applications and registrations relating
to the foregoing.
     1.13 “Joint IP” means all Intellectual Property Rights embodied in
Technology that is jointly invented, created or developed by one or more
employees, consultants or contractors of each Party.
     1.14 “Key Customer” means, [****]
     1.15 “Laws” means any federal, state, local, municipal or foreign statute,
law, ordinance, regulation, rule, code, order, principle of common law or
judgment enacted, promulgated, issued, enforced or entered by any Governmental
Entity, or other requirement or rule of law.
     1.16 “Lien” or “Liens” means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind or any subordination arrangement in
favor of another Person.

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     1.17 “Other Fields” means fields not included within the PV Field or
Composite Field.
     1.18 “Patents” means patents and patent applications (which for the
purposes of this Agreement shall be deemed to include certificates of invention
and applications for certificates of invention), including provisionals,
divisionals, continuations, continuations-in-part, reissues, reexaminations,
renewals, extensions, supplementary protection certificates, and the like of any
such patents and patent applications, and any foreign equivalents thereof, and
shall include patents whose term has been extended by statutory patent term
adjustments in any jurisdiction in the world, including those patent term
adjustments granted under 35 U.S.C. § 154(b).
     1.19 “Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
     1.20 “PV Field” means (i) [****], and (ii) [****].
     1.21 “Sold” shall mean having closed a transaction under which ESLR1 or any
ESLR1 Sublicensee actually derives revenues from any sale, conveyance or other
transfer of SiC Fiber (for clarity, excluding bad debt transactions which do not
involve Evergreen and returns of SiC Fiber). Any such transaction shall be
referred to as a “Sale”. Further, any inventory of SiC Fiber that is purchased
by Evergreen or any of Evergreen’s Affiliates and that is held in ESLR1’s or a
ESLR1 Sublicensee’s inventory for more than a period of [****] days after such
purchase shall be deemed to have been Sold upon the expiration of such period.
     1.22 “SiC Fiber” means [****]
     1.23 “Technology” means, collectively, (i) know-how, show-how, trade
secrets, inventions, discoveries, developments, methods, modifications, designs,
chemical and biological materials, formulae, processes, information, documents,
studies, techniques, algorithms, results, data, data structures, databases, data
collections, mask works, manufacturing processes and data, specifications,
sourcing information, supplier and customer lists, and quality control and
testing procedures, and (ii) original published and unpublished works of
authorship fixed in a tangible medium of expression, including software and code
(including software and firmware listings, assemblers, applets, compilers,
source code, object code, net lists, design tools, user interfaces, application
programming interfaces, protocols, formats, documentation, annotations,
comments, system build software and instructions), graphics or images, text,
audio or visual works, materials that document design or design processes, or
that document research or testing, schematics, diagrams, product specifications
and other works of authorship, in each case of clauses (i) and (ii), whether or
not patented or patentable and whether or not in written form.
     1.24 “Third Party” shall mean any Person, other than ESLR1, TISICS and
their respective Affiliates.
     1.25 “TISICS Competitor” means any Third Party that (i) develops,
manufactures, distributes or sells composite materials or components utilizing
silicon carbide monofilaments in

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the Composite Field and/or (ii) develops, manufactures, distributes or sells
silicon carbide fiber or similar filamentary reinforcements in the Composite
Field.
     1.26 “TISICS IP” means all Intellectual Property Rights Controlled by
TISICS or any of its Affiliates as of the Effective Date or during the Term that
is embodied in Technology (including Improvements) related to (a) the research,
design, development, manufacture or testing of SiC Fiber or (b) the planning,
design, construction, commissioning, operation, maintenance, support or other
use (collectively, “Construction and/or Operation”) of the ESLR1 Facilities. A
description of TISICS IP existing as of the Effective Date is set forth in
Exhibit B. For the avoidance of doubt, TISICS IP shall not include any
Intellectual Property Rights embodied in Technology or Improvements created
after the Effective Date that are identified pursuant to a written notice
delivered in good faith by TISICS to ESLR1 as not Controlled by TISICS, which
notice (i) is delivered on or prior to TISICS’ first delivery or making
available of any such Technology or Improvements to ESLR1 and (ii) describes the
substance of such Technology or Improvements and identifies the applicable Third
Party that owns or controls such Technology or Improvements.
2. License.
     2.1 TISICS IP License.
          (a) License. TISICS, for itself and on behalf of its Affiliates,
hereby grants ESLR1 an irrevocable, perpetual, worldwide, royalty-bearing (in
accordance with Section 4 and subject to Section 4.4), transferable (in
accordance with Section 11.7), sublicensable (in accordance with Section 2.1(b))
right and license under the TISICS IP within the PV Field only to (i) Exploit
SiC Fiber, (ii) Construct and/or Operate the ESLR1 Facilities and (iii) copy,
distribute, display, perform and modify (including the right to create
derivative works (for use in the PV Field only) of) the TISICS IP for the
purpose of engaging in the activities described in the foregoing clauses (i) and
(ii). The license granted pursuant to the preceding sentence shall be exclusive
(even as to TISICS and its Affiliates) in the PV Field.
          (b) Sublicensing. The license contained in Section 2.1(a) includes the
right to grant sublicenses in the PV Field only to Third Parties other than
TISICS Competitors (each Third Party sublicensee, a “ESLR1 Sublicensee”),
provided that ESLR1 shall remain responsible for the performance of the ESLR1
Sublicensees hereunder and any such sublicense granted by ESLR1 shall be
pursuant to a written agreement that is at least as protective of TISICS, with
respect to the license contained in Section 2.1(a), as this Agreement and
provided that TISICS has consented to the granting of such sublicense, such
consent not to be unreasonably withheld or delayed, provided further that ESLR1
may grant Evergreen and Evergreen’s Affiliates a sublicense without TISICS’
consent or any requirement of a written agreement (but subject to prior written
notice of such sub-license being given to TISICS). ESLR1 Sublicensees shall not
have the right to grant any further sublicenses under any such sublicense
granted by ESLR1. The terms of the agreement with ESLR1 Sublicensees will
expressly prohibit in writing all of its ESLR1 Sublicensees from exercising the
license grant contained in Section 2.1(a) (but not any other sublicenses such
ESLR1 Sublicensee may be granted, for example, under the Composite Field License
Agreement or Other Fields License Agreement) outside the PV Field. Subject to
Section 2.5, any purchaser of SiC Fiber in the PV Field shall, by operation of
this Agreement,

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receive the right to sell, offer for sale, resell, offer for resale, import and
otherwise use such SiC Fiber in the PV Field by operation of the patent
exhaustion/first sale doctrine, but otherwise shall receive no licenses,
sublicenses or other rights under the TISICS IP by virtue of its purchase of SiC
Fiber in the PV Field from ESLR1 or a ESLR1 Sublicensee.
     2.2 Reservation of Rights. Subject to Section 2.3(d), ESLR1 shall acquire
no right, title or interest in, to or under, and TISICS and its Affiliates
hereby reserve all right, title and interest in, to and under, the TISICS IP, by
implication, estoppel or otherwise, other than the express license grant to
ESLR1 set forth in Section 2.1(a) or as otherwise expressly provided herein.
     2.3 Ownership of Intellectual Property Rights. The following shall apply to
all Technology (and all Intellectual Property Rights embodied therein) invented,
created or developed under this Agreement, the Other Fields License Agreement,
the Composite Field License Agreement, the Supply Agreement, the Facilities and
Start Up Agreement and any other written agreement between the Parties during
the respective terms of such agreements:
          (a) TISICS IP. As between the Parties, TISICS and/or its Affiliate(s)
shall have exclusive ownership of the TISICS IP.
          (b) ESLR1 IP. As between the Parties, ESLR1 shall have exclusive
ownership of the ESLR1 IP.
          (c) Newly Developed Intellectual Property. As between the Parties,
subject to Section 2.3(d), (i) TISICS and/or its Affiliate(s) shall have
exclusive ownership of (A) all Technology (and all Intellectual Property Rights
embodied therein) invented, created or developed by one or more employees,
consultants or contractors of TISICS and/or its Affiliate(s), as applicable,
during the Term without any employees, consultants or contractors of ESLR1,
except to the extent that any such Technology constitutes an Improvement solely
to the ESLR1 IP or any other Intellectual Property Rights then-Controlled by
ESLR1 (i.e., such Technology does not constitute an Improvement to any of the
TISICS IP or Joint IP) (such Improvement, a “ESLR1 IP Improvement”), and
(B) TISICS IP Improvements (as defined below) and (ii) ESLR1 shall exclusively
own (A) all Technology (and all Intellectual Property Rights embodied therein)
invented, created or developed by one or more employees, consultants or
contractors of ESLR1 and/or its Affiliate(s), as applicable, during the Term
without any employees, consultants or contractors of TISICS or Affiliates of
TISICS, except to the extent that any such Technology constitutes an Improvement
solely to the TISICS IP or any other Intellectual Property Rights
then-Controlled by TISICS and/or its Affiliate(s) (i.e., such Technology does
not constitute an Improvement to any of the ESLR1 IP or Joint IP) (such
Improvement, a “TISICS IP Improvement”) and (B) ESLR1 IP Improvements.
          (d) Joint IP. If Technology is jointly invented, created or developed
by one or more employees, consultants or contractors of each of ESLR1 and/or its
Affiliate(s), on the one hand, and TISICS and/or its Affiliate(s), on the other
hand, then such Technology, and all Joint IP therein, shall be jointly owned by
ESLR1, on the one hand, and TISICS and/or its Affiliate(s), on the other hand,
as applicable, without any duty to account.

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          (e) Assignment. To the extent any Party or its Affiliates retains any
ownership interest in, to or under any Technology or Intellectual Property
Rights that are properly owned (in accordance with this Section 2.3) by the
other Party or such other Party’s Affiliates, such Party hereby assigns, and
will assign, on behalf of itself and its Affiliates, to such other Party or such
other Party’s Affiliates, as applicable, all of its ownership interest in, to
and under such Technology and Intellectual Property Rights in all countries and
territories worldwide and under any international conventions, free and clear of
any and all Encumbrances. Each Party shall provide to the other Party all
assistance (including the execution of any applicable documents of assignment or
registration) reasonably requested by such other Party to perfect the rights
described in this Section 2.3.
          (f) Licenses. For the avoidance of doubt and without limitation, the
Intellectual Property Rights embodied in the Technology covered by this
Section 2.3 shall be deemed TISICS IP or ESLR1 IP, as applicable, and thus
subject to the licenses granted in the applicable agreement between the Parties,
to the extent the scope of the definitions of “TISICS IP” or “ESLR1 IP”,
respectively, cover such Technology.
     2.4 Assignment of Inventions by Personnel. Each Party shall enter into
binding agreements obligating all employees, consultants and contractors
performing activities related to, under or as contemplated by this Agreement,
the Other Fields License Agreement, the Composite Field License Agreement, the
Supply Agreement, the Facilities and Start Up Agreement or any other written
agreement between the Parties (i) to assign his/her interest in any Technology
conceived or reduced to practice in the course of such activities (and all
Intellectual Property Rights therein) to the Party for which such employee,
consultant or contractor is providing its services and (ii) to maintain the
confidentiality of the same in accordance with reasonable confidentiality
provisions at least as protective of the Technology and Intellectual Property
Rights owned by the other Party or such other Party’s Affiliates as those
provisions set forth in Section 6.
     2.5 Third Party Sales. All sales of SiC Fiber to Third Parties by ESLR1 and
ESLR1 Sublicensees must contain appropriate restrictions preventing the use by
Third Parties of SiC Fiber in the Composite Field, whether directly or as a
recycled material. If ESLR1 becomes aware of any use by a Third Party of such
SiC Fiber in the Composite Field, ESLR1 shall reasonably cooperate with TISICS,
at TISICS’ cost, in enforcing such restrictions.
     2.6 Field Limitation. For the avoidance of doubt, without limiting and
subject to the rights granted pursuant to the Composite Field License Agreement,
ESLR1 shall not intentionally develop Technology under the license granted in
Section 2.1(a) that is specifically and exclusively targeted for the production
and use of SiC Fiber in the Composite Field.
3. Delivery of TISICS IP; Other Obligations.
     3.1 Delivery of TISICS IP.
          (a) As soon as practicable after the Effective Date, TISICS shall make
available for inspection by ESLR1, in hardcopy or electronic format, a copy of
documents relevant to the Construction and/or Operation of the ESLR1 Facilities
and to the manufacture of

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SiC Fiber (excluding, for clarity, any documents that are irrelevant to the
performance of such activities in the PV Field), including documents, drawings
and specifications (“TISICS Materials”), in each case, existing as of the
Effective Date and for use in the PV Field. TISICS shall provide ESLR1 with
copies of such TISICS Materials that are material to the performance of such
activities in the PV Field as soon as commercially possible but in any event
within the earlier of (i) [****] calendar days following the Effective Date or
(ii) [****] calendar days after the receipt of written notice from ESLR1 if
ESLR1 determines in good faith that TISICS is not cooperating with ESLR1 or
otherwise not complying with its obligations in this Section 3.1(a), in each
case, which TISICS Materials shall include the documents, drawings and
specifications set forth in Exhibit C.
          (b) Thereafter, TISICS shall continue to give ESLR1 access to TISICS
Materials as ESLR1 may reasonably request for the purposes of ESLR1’s
Construction and/or Operation of the ESLR1 Facilities and manufacturing of SiC
Fiber in the PV Field. Further, TISICS shall [****] develop a process for
manufacturing SiC Fiber for use in the PV Field that is reasonably acceptable to
ESLR1. Without limiting any of ESLR1’s remedies, TISICS shall deliver to ESLR1
copies of all TISICS Materials (for any field) not already delivered to ESLR1
within one (1) month of the occurrence of any of the following: (A) TISICS
having not developed such a process within [****] after the Effective Date or
(B) ESLR1 delivering written notice to TISICS at any time that TISICS is not
using its best efforts to develop such a process, provided that TISICS shall
have [****] after receiving such notice to cure such failure to [****]. For the
purposes of assessing [****] of TISICS, TISICS shall provide monthly plans
indicating milestone targets for the development of such process in accordance
with such [****] timetable, which plans shall be subject to the written approval
of ESLR1. The Parties acknowledge that the direction and timescales of such
plans will evolve as work progresses and TISICS and ESLR1 will work in good
faith to keep the milestone plans current to the progress achieved.
          (c) The Parties acknowledge that the initial specifications for SiC
Fiber for use with Evergreen’s String Ribbon process are set forth in Exhibit A,
and that such specifications represent a starting point for the development of
SiC Fiber by the Parties for use in the PV Field. The Parties shall work
together in good faith to improve and modify such specifications, in conjunction
with the development of a process for manufacturing SiC Fiber for use in the PV
Field, to achieve the SiC Fiber performance and quality characteristics
reasonably required by ESLR1.
          (d) Where TISICS requires String Ribbon process trials in order to
assess the performance of the SiC Fiber during development, these trials will be
conducted in a timely manner and any delay that may be required by Evergreen
and/or ESLR1 for operational reasons will be added to the delivery time frame
referred to in 3.1(b)(A) above. Evergreen and/or ESLR1 will provide TISICS with
timely feedback with respect to such trials and will specify to TISICS which
aspects of the tested SiC Fiber does not provide the performance and
functionality required by Evergreen and/or ESLR1.
          (e) TISICS’ obligations to make and deliver copies of TISICS Materials
shall be subject to any applicable Third Party copyright and confidentiality
agreements. TISICS shall deliver to ESLR1 updates (if any) to such TISICS
Materials on no less than a calendar quarterly

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basis to reflect changes in or additions to (if any) the TISICS Materials.
Further, TISICS shall update Exhibit B upon ESLR1’s reasonable request in order
to maintain an up-to-date inventory of TISICS IP within the PV Field. and at a
minimum to maintain a complete and accurate list of all Patents contained within
the TISICS IP (the “TISICS Patents”).
     3.2 Fiber Development Documentation. At the Effective Date TISICS will not
be able to determine which TISICS IP is essential to the development,
manufacture and maintenance of SiC Fiber for the PV Field. Without limiting the
generality of Section 3.1, upon completion of the development of Technology for
manufacturing SiC Fiber in the PV Field, TISICS will provide all TISICS
Materials generated for such Technology and any background TISICS Materials
deemed to be essential for the future maintenance and control of such
Technology.
     3.3 Outsourced Services. Notwithstanding the foregoing, the Parties
acknowledge and agree that ESLR1 may request that Evergreen (or any of ESLR1’s
other Affiliates), TISICS (or any of TISICS’ Affiliates) or Third Parties
perform, whether on a permanent or temporary basis, certain services (such as
services relating to infrastructure, management, operations, technology support
and development) to the extent that ESLR1 determines, after consultation with
the relevant entity, that such entity can perform such services on a more
cost-effective basis than if ESLR1 were to perform such services itself. To the
extent that Evergreen (or any of ESLR1’s other Affiliates) or TISICS (or any of
TISICS’ Affiliates) agrees to perform such services, ESLR1 shall pay for such
services on a cost-plus basis to be reasonably determined by the applicable
parties. Outsourcing to a TISICS Competitor for performance of the services
described in this section will be subject to the consent of TISICS, such consent
to be withheld by TISICS in its sole discretion.
     3.4 Compliance with Laws. The Parties shall comply with all applicable Laws
(including any intellectual property marking Laws) in the exercise of their
rights or performance of their obligations hereunder.
4. Payments.
     4.1 Payments. Subject to the terms and conditions hereof (including
Section 4.4), ESLR1 shall pay TISICS the Conditional Fees and PV Royalties (each
as defined in Exhibit D) as set forth in Exhibit D.
          (a) Further, subject to Section 4.4, in the event (i) ESLR1 grants a
sublicense to a Third Party (other than a Key Customer of ESLR1) pursuant to
Section 2.1(b) and (ii) in consideration for the grant of such sublicense, such
ESLR1 Sublicensee pays ESLR1 amounts in the form of a royalty or sublicense fee
based on the Sale of SiC Fiber by such ESLR Sublicensee in the PV Field, which
amounts are in excess of the PV Royalties payable to TISICS hereunder based on
such Sale or, if applicable, the underlying sale which triggered ESLR1’s
obligation to pay PV Royalties (such excess, the “Excess Fees”), then during the
Term ESLR1 shall pay TISICS an amount (the “PV Shared Excess Fees”) equal to the
Excess Percentage (as defined below) of the Excess Fees received by ESLR1. The
“Excess Percentage” shall equal (i) [****] percent ([****]%) if TISICS has not
exercised Tranche One (as defined in that certain LLC Membership Interest
Purchase Option granted to TISICS dated as of September 5, 2007 (the

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“Option”)), (ii) [****] percent ([****] %) if TISICS exercises Tranche One or
(iii) [****] percent ([****] %) if TISICS exercises Tranche Two (as defined in
the Option).
          (b) ESLR1 shall not have any obligation to pay any PV Shared Excess
Fees based on the following: (i) any sales by Evergreen, ESLR1’s other
Affiliates or ESLR1’s Key Customers as ELSR1 Sublicensees hereunder, (ii) any
sales by ESLR1 Sublicensees of SiC Fiber to Evergreen, ESLR1’s other Affiliates
or ESLR1’s Key Customers in or after Period 7 or to Third Parties (other than
ESLR1’s Key Customers) in or after Year 11; and (iii) any sales by ESLR1
Sublicensees of SiC Fiber to the extent that the the manufacture or sale of such
SiC Fiber does not infringe or misappropriate or otherwise involve the use of
any of the the TISICS IP (other than any Joint IP).
     4.2 Payment Terms; Reports; Records; Taxes; Audits.
          (a) Payment. All payments to be made by ESLR1 hereunder shall be made
in U.S. dollars by wire transfer to such bank account as TISICS may designate.
          (b) Reports. For as long as PV Royalties or PV Shared Excess Fees are
due hereunder, ESLR1 shall furnish to TISICS a written report, within [****]
days after the end of each calendar quarter, showing the amount of (i) SiC Fiber
Sold for which PV Royalties and/or PV Shared Excess Fees are due hereunder and
(ii) the PV Royalties and/or PV Shared Excess Fees due for such calendar
quarter. PV Royalty and PV Shared Excess Fee payments for each calendar quarter
shall be due at the same time as such written report for such calendar quarter.
All such reports shall be treated as Confidential Information of ESLR1.
          (c) Records. ESLR1 and ESLR1 Sublicensees shall keep adequate books
and records of accounting for the purpose of calculating all PV Royalties and PV
Shared Excess Fees payable to TISICS hereunder. For the [****] years following
the end of the calendar year to which each shall pertain, such books and records
of accounting shall be kept at each of their principal place of business and
shall be open for inspection at reasonable times and upon reasonable notice by
an independent certified accountant selected by TISICS, and which is reasonably
acceptable to ESLR1, for the sole purpose of inspecting the PV Royalties and PV
Shared Excess Fees due to TISICS under this Agreement. In no event shall such
inspections be conducted hereunder more frequently than once every [****]. Such
accountant must have executed and delivered to ESLR1 and ESLR1 Sublicensees, as
applicable, a confidentiality agreement as reasonably requested by ESLR1, which
shall include provisions limiting such accountant’s disclosure to TISICS to only
the results and basis for such results of such inspection. The results of such
inspection, if any, shall be binding on both Parties. Any underpayments shall be
paid by ESLR1 within [****] days of notification of the results of such
inspection. Any overpayments shall be fully creditable against amounts payable
in subsequent payment periods. TISICS shall pay for such inspections, except
that in the event there is any upward adjustment in aggregate PV Royalties and
PV Shared Excess Fees payable for any calendar year shown by such inspection of
more than [****] percent ([****] %) of the amount paid, ESLR1 shall reimburse
TISICS for any reasonable out-of-pocket costs of such accountant.
     4.3 Taxes and Interest; Setoff.

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          (a) Taxes. Any applicable withholding tax shall be deducted by ESLR1
from any payments due under this Agreement and borne by TISICS. ESLR1 shall
cooperate with TISICS to enable TISICS to claim exemption therefrom under any
double taxation or similar agreement in force and shall use commercially
reasonable efforts to provide to TISICS proper evidence of payments of
withholding tax and assist TISICS by obtaining or providing in as far as
possible the required documentation for the purpose of TISICS’ tax returns.
          (b) Interest. ESLR1 shall pay TISICS interest on any payments that are
not paid on or before the date such payments are due under this Agreement at a
rate of one and one-half percent (1.5%) per month or the maximum applicable
legal rate, if less, calculated on the total number of days payment is
delinquent.
          (c) Setoff. ESLR1 shall have the right to setoff any PV Royalties and
PV Shared Excess Fees due TISICS hereunder against amounts owed by TISICS to
ESLR1 under the Supply Agreement, provided that PV Royalties and PV Shared
Excess Fees will first be set-off against payments due under that certain
Promissory Note, dated as of September 5, 2007 (“Loan Agreement”), and only to
the extent that there are any remaining PV Royalties and PV Shared Excess Fees
available for set-off after such payments have been made, will these be applied
against amounts due by TISICS to ESLR1 under the Supply Agreement.
          (d) Credits Against Overhead Payments. Further, ESLR1 shall have the
right to credit any PV Royalties, PV Shared Excess Fees, Conditional Fees or
other amounts due to TISICS hereunder against any Overhead Overage Payments (as
defined in the Facilities and Start Up Agreement) made to TISICS under the
Facilities and Start Up Agreement. For the avoidance of doubt, even if ESLR1
does not credit such PV Royalties, PV Shared Excess Fees, Conditional Fees or
other amounts due to TISICS hereunder against such Overhead Overage Payments,
the amount of Overhead Overage Payments against which such royalties, fees or
amounts are creditable under this Section 4.3(d) shall not bear interest or be
refundable (without limiting the refundability of Overhead Overage Payments for
other reasons).
          (e) Priority. After the Maturity Date (as defined in the Loan
Agreement), any PV Royalties and PV Shared Excess Fees that may be set-off or
credited in accordance with Section 4.3(c) or 4.3(d) shall first be set-off
against amounts owed by TISICS to ESLR1 under the Supply Agreement or Loan
Agreement pursuant to Section 4.3(c) before such PV Royalties and PV Shared
Excess Fees may be credited against Overhead Overage Payments pursuant to
Section 4.3(d).
     4.4 Default of Note. If Evergreen elects to exercise its Note Default
Option (as defined in the Loan Agreement), then automatically, without any
further action of the Parties, (i) the license set forth in Section 2.1(a) shall
become royalty-free and fully paid-up, (ii) ESLR1 shall not owe any future
Conditional Fees, PV Royalties and/or PV Shared Excess Fees or other future fees
or payments hereunder, and (iii) Sections 4.1, 4.2, 4.3(b) and Exhibit D shall
terminate and have no further force or effect.
5. Prosecution; Infringement.

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     5.1 Appointment and Cooperation. With respect to the rights and activities
of ESLR1 set forth in this Section 5, TISICS hereby appoints ESLR1 as its agent
for such purposes with the authority to act on TISICS’ behalf with respect to
the TISICS IP relating to the PV Field. TISICS shall cooperate with ESLR1 in the
exercise of ESLR1’s authority granted herein, and shall execute such documents
and take such additional action as ESLR1 may reasonably request in connection
therewith.
     5.2 Patent Prosecution and Maintenance.
          (a) By TISICS. TISICS shall, at its sole cost, be solely responsible
for and make all decisions with respect to the preparation, prosecution
(including any interferences, oppositions, reissue proceedings and
reexaminations) and maintenance of the TISICS Patents. TISICS shall provide to
ESLR1 copies of any papers relating to the filing, prosecution or maintenance of
TISICS Patents within the PV Field promptly upon receipt and shall provide ESLR1
with a reasonable opportunity to review and comment on such papers with respect
to applications within the PV Field.
          (b) By ESLR1. TISICS shall not knowingly permit any of the TISICS
Patents within the PV Field to be abandoned in any country without ESLR1 first
being given an opportunity to assume full responsibility for the continued
prosecution and maintenance of same. In the event that TISICS decides not to
continue the prosecution or maintenance of any TISICS Patent within the PV Field
in any country, TISICS shall provide ESLR1 with notice of this decision at least
[****] days prior to any pending lapse or abandonment thereof. In the event that
ESLR1 elects to assume responsibility for such prosecution and maintenance
within [****] days of TISICS’ notice, Section 5.2(a) shall thereafter apply to
such TISICS Patent(s) except that the role of TISICS and ESLR1 shall be reversed
thereunder (including that ESLR1 shall be solely responsible for all costs
arising from those activities). Such TISICS Patent(s) shall otherwise continue
to be subject to all of the terms and conditions of the Agreement in the same
way as the other TISICS Patents within the PV Field.
     5.3 Enforcement of TISICS IP.
          (a) Notice of Infringement. In the event that either Party becomes
aware of a suspected infringement or misappropriation of the subject matter of
any TISICS IP in the PV Field, or any such TISICS IP is challenged in any action
or proceeding (other than any patent interferences, oppositions, reissue
proceedings or reexaminations, which are addressed in Section 5.2), such Party
shall notify the other Party promptly, and following such notification, the
Parties shall confer.
          (b) Enforcement. In the case of infringement or misappropriation of
the TISICS IP in the PV Field, ESLR1 shall have the right, but not the
obligation, to initiate and prosecute such legal action or proceeding or to
control the defense of any action or proceeding relating to the ESLR1 IP (other
than any patent interferences, oppositions, reissue proceedings or
reexaminations, which are addressed in Section 5.2), in its own discretion and
at its own expense. If ESLR1 fails to take steps reasonable under the
circumstances to resolve such actual or suspected infringement or
misappropriation or initiate a lawsuit within [****] days of receiving written
notice of such actual or suspected infringement or misappropriation from TISICS
or delivering written notice of such actual or suspected infringement to TISICS,
as applicable, TISICS shall have the right, but not the obligation, to initiate
an action or proceeding, in its own discretion and at its own expense.

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          (c) Withdrawal. If either Party brings an action or proceeding under
this Section 5.3 and subsequently ceases to pursue or withdraws from such action
or proceeding, it shall promptly notify the other Party and the other Party may
substitute itself for the withdrawing Party under the terms of this Section 5.3.
          (d) Recovery Allocation. In the event that either Party exercises the
rights conferred in this Section 5.3 and recovers any damages or other sums in
such action or proceeding or in settlement thereof, such damages or other sums
recovered shall first be applied to all out-of-pocket costs and expenses
incurred by the Parties in connection therewith (including attorneys’ fees),
unless not reimbursable hereunder. If such recovery is insufficient to cover all
such costs and expenses of both Parties, the controlling Party’s costs shall be
paid in full first before any of the other Party’s costs. If after such
reimbursement any funds shall remain from such damages or other sums recovered,
such funds shall be retained by the Party that controlled the action or
proceeding under this Section 5.3.
6. Confidentiality.
     6.1 Definition of Confidential Information. “Confidential Information”
means, subject to the exceptions set forth below in Section 6.2, any information
or data, regardless of whether it is in tangible form, of a Party (the
“Disclosing Party”) that the Disclosing Party has either marked as confidential
or proprietary, or has identified in writing as confidential or proprietary
within thirty (30) days of disclosure to the other Party (the “Receiving
Party”), and has provided to the Receiving Party under this Agreement; provided
that any Disclosing Party’s business plans, strategies, Technology, customers,
customer lists, billing records and products shall be deemed Confidential
Information of the Disclosing Party even if not so marked or identified and the
terms of this Agreement will be deemed Confidential Information. For the
avoidance of doubt, any trade secrets contained within the TISICS IP with
application in the PV Field shall be deemed the Confidential Information of both
Parties, subject to the provisions of this Section 6.
     6.2 Exceptions. The obligations in Section 6.1 shall not apply with respect
to any portion of the Confidential Information that the Receiving Party can show
by competent proof: (i) is publicly disclosed by the Disclosing Party, either
before or after it is disclosed to the Receiving Party hereunder; (ii) was known
to the Receiving Party or any of its Affiliates, without any obligation to keep
it confidential or any restriction on its use, prior to disclosure by the
Disclosing Party; (iii) is subsequently disclosed to the Receiving Party or any
of its Affiliates by a Third Party lawfully in possession thereof and without
any obligation to keep it confidential or any restriction on its use; (iv) is
published by a Third Party or otherwise becomes publicly available or enters the
public domain, either before or after it is disclosed to the Receiving Party; or
(v) has been independently developed by employees or contractors of the
Receiving Party or any of its Affiliates without the aid, application or use of
Confidential Information of the Disclosing Party.
     6.3 Confidentiality Obligations. Except as expressly provided herein, each
of the Parties agrees that, for itself and its Affiliates, and for as long as
this Agreement is in effect and thereafter, a Party and its Affiliates (the
“Receiving Party”) receiving Confidential Information of the other Party or its
Affiliates (the “Disclosing Party”) shall not (i) use any such Confidential
Information in any way, for its own account or the account of any Third Party,
except for the

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exercise of its rights and performance of its obligations under this Agreement,
or (ii) disclose any such Confidential Information to any party, other than
furnishing such Confidential Information to (a) its employees and consultants
who are required to have access to the Confidential Information in connection
with the exercise of its rights and performance of its obligations under this
Agreement, (b) investors, prospective acquirers and professional advisers and
(c) ESLR1 Sublicensees and TISICS Sublicensees; provided that such employees and
consultants, investors, prospective acquirers and professional advisers and
ESLR1 Sublicensees and TISICS Sublicensees are bound by written agreements or,
in the case of professional advisers, ethical duties respecting such
Confidential Information in accordance with the terms of this Section 6. The
Receiving Party agrees that it will not allow any unauthorized Person access to
such Confidential Information, and that the Receiving Party will use reasonable
measures to protect the confidentiality of such Confidential Information,
including implementing and enforcing procedures to minimize the possibility of
unauthorized use or copying of such Confidential Information. In the event that
the Receiving Party is required by law to make any disclosure of any of such
Confidential Information, by subpoena, judicial or administrative order or
otherwise, the Receiving Party shall first give written notice of such
requirement to the Disclosing Party, and shall permit the Disclosing Party to
intervene in any relevant proceedings to protect its interests in such
Confidential Information, and provide reasonable cooperation and assistance to
the Disclosing Party in seeking to obtain such protection. Notwithstanding the
foregoing, ESLR1 and ESLR1 Sublicensees may make such disclosures of Technology
covered by the TISICS IP specifically concerning SiC Fiber and relating to the
PV Field as any of them may deem reasonably necessary for the purpose of
Exploiting the SiC Fiber in the PV Field.
     6.4 Terms of this Agreement; Publicity. The Parties agree that the terms of
this Agreement shall be treated as Confidential Information of both Parties, and
thus may be disclosed only as permitted by Section 6.3. Notwithstanding the
foregoing, TISICS agrees that Evergreen may file a copy of this Agreement with
the United States Securities and Exchange Commission and other similar or
comparable governmental bodies, authorities or agencies, if necessary. Subject
to the foregoing, neither Party shall make any public announcements relating to
the terms, conditions or existence of this Agreement without the prior written
consent of the other Party.
     6.5 Return of Confidential Information. The Receiving Party agrees that,
upon the termination of this Agreement, the Receiving Party will immediately
return all Confidential Information of the Disclosing Party and any tangible
expression thereof (including all copies, summaries and notes of the contents or
parts thereof) to the Disclosing Party and no part thereof shall be retained by
the Receiving Party in any form and/or for any reason; provided that the
Receiving Party may retain one copy of such Confidential Information for
archival purposes to satisfy the Receiving Party’s obligations under any
applicable laws. Notwithstanding the foregoing, ESLR1 shall not be obligated to
return any Confidential Information of TISICS that is in whole or in part the
subject of the license grant set forth in Section 2.1(a), the license granted to
ESLR1 in the Composite Field License Agreement or the license granted to ESLR1
in the Other Fields License Agreement, in each case, only for so long as such
license is effective.
7. Representations and Warranties; Disclaimer of Implied Warranties.
     7.1 Representations and Warranties.

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          (a) Mutual. Each Party hereby represents and warrants to the other
Party as of the Effective Date that:
          (i) such Party is a corporation duly organized, validly existing and
in good standing under the laws of the state or jurisdiction in which such Party
is incorporated, and such Party has full right and authority to enter into this
Agreement and to grant the licenses and other rights, without payment to a Third
Party, granted by such Party as herein described;
          (ii) this Agreement has been duly authorized by all requisite
corporate action, and when executed and delivered will become a valid and
binding contract of such Party enforceable against such Party in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other law affecting creditors’ rights generally from time to time
if effect, and to general principles of equity;
          (iii) the execution, delivery and performance of this Agreement does
not conflict with any other agreement, contract, instrument or understanding,
oral or written, to which such Party is a party, or by which it is bound, nor
will it violate any Law applicable to such Party; and
          (iv) all necessary consents, approvals and authorizations of all
regulatory and governmental authorities and other Persons required to be
obtained by such Party in connection with the execution and delivery of this
Agreement and the performance of such Party’s obligations hereunder have been
obtained.
          (b) TISICS. In addition, TISICS hereby represents and warrants to
ESLR1 as of the Effective Date that:
          (i) Exhibit B-1 contains an accurate list of all TISICS IP relevant to
SiC Fiber manufacturing in the PV Field. Exhibit B-2 contains an accurate list
of TISICS IP relating to SiC Fiber manufacturing for all fields as of the
Effective Date (except to the extent already listed on Exhibit B-1). Exhibit B-3
contains a complete and accurate list of (A) all licenses, sublicenses or other
agreements under which TISICS or its Affiliates has granted rights to others in
TISICS IP (“Licenses Out”), (B) all licenses, sublicenses or other agreements
under which TISICS or its Affiliates are granted rights by others in the TISICS
IP (“Licenses In”) and (C) any obligations of exclusivity, covenants not to sue,
noncompetition, nonsolicitation, right of first refusal, parity of treatment
and/or most favored nation status, or right of first negotiation to which TISICS
or its Affiliates is subject in favor of a Third Party that relate to and/or
restrict any of the TISICS IP.
          (ii) Except as set forth in Exhibit E:
               (A) with respect to the TISICS IP (1) owned or purported to be
owned by TISICS or an Affiliate of TISICS, TISICS or an Affiliate of TISICS
exclusively owns such TISICS IP and, without payment to a Third Party, possesses
adequate and enforceable rights in and to such TISICS IP as necessary to Exploit
SiC Fiber in the PV Field and the Construction and/or Operation of the ESLR1
Facilities, and (2) otherwise Controlled by TISICS or an Affiliate of

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TISICS, TISICS or an Affiliate of TISICS possesses adequate and enforceable
rights in and to all such TISICS IP as necessary to Exploit SiC Fiber in the PV
Field and the Construction and/or Operation of the ESLR1 Facilities; in the case
of the foregoing clauses (1) and (2) above, free and clear of all Encumbrances;
               (B) the TISICS IP constitutes all of the Intellectual Property
Rights (1) used in the designing, manufacturing, selling, distributing and
commercializing the SiC Fiber in the PV Field and (2) necessary for the
Construction and/or Operation of the ESLR1 Facilities to manufacture SiC Fiber
in the PV Field;
               (C) all TISICS IP that has been issued by, or registered, or is
the subject of an application filed with, as applicable, the U.S. Patent and
Trademark Office, the U.S. Copyright Office or any similar office or agency
anywhere in the world is currently in compliance with formal legal requirements
(including, as applicable, payment of filing, examination and maintenance fees,
inventor declarations, proofs of working or use, timely post-registration filing
of affidavits of use and incontestability, and renewal applications), and, to
the knowledge of TISICS, all TISICS IP is valid and enforceable;
               (D) there are no pending or, to the knowledge of TISICS,
threatened claims against TISICS or any of its employees alleging that any
practice of the TISICS IP infringes or violates (or in the past infringed or
violated) the rights of others in, to or under any Intellectual Property Rights
(“Third Party IP”) or constitutes a misappropriation of (or in the past
constituted a misappropriation of) any subject matter of any Intellectual
Property Rights of any Person or that any of the TISICS IP is invalid or
unenforceable;
               (E) to the knowledge of TISICS, the practice of the TISICS IP
does not infringe on or violate (and has not in the past infringed on or
violated) any Third Party IP or constitute a misappropriation of (and has not in
the past constituted a misappropriation of) any subject matter of any Third
Party IP;
               (F) all former and current employees, consultants and contractors
of TISICS and its Affiliates have executed written instruments with TISICS or
its Affiliates, as applicable, that assign to TISICS or its Affiliates all
right, title and interest in and to any and all TISICS IP and all Technology
embodying the TISICS IP;
               (G) to the knowledge of TISICS, there is no, nor has there been
any, infringement or violation by any Person of any TISICS IP or the TISICS’ or
its Affiliates rights therein or thereto, and there is no, nor has there been
any, misappropriation by any Person of any of the TISICS IP or the subject
matter thereof; and

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               (H) TISICS and its Affiliates has taken reasonable security
measures to protect the secrecy, confidentiality and value of all trade secrets
contained in the TISICS IP.
     7.2 Disclaimer of Implied Warranties. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
NEITHER TISICS NOR ESLR1 MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE OR NON-INFRINGEMENT.
     7.3 Without limiting Section 9, for the avoidance of doubt, any warranty
given in Section 7.1 in relation to TISICS IP excludes any TISICS IP that is not
Controlled by TISICS or any of its Affiliates as of the Effective Date.
8. LIMITATION OF LIABILITY.
     8.1 EXCEPT FOR ANY LIABILITY ARISING FROM (A) A BREACH BY TISICS OR ITS
AFFILIATES OF THE EXCLUSIVE NATURE OF THE LICENSE GRANTED TO ESLR1 IN SECTION
2.1(a) OR ANY OTHER EXCLUSIVITY PROVISIONS SET FORTH HEREIN, (B) A BREACH BY A
PARTY OF ITS CONFIDENTIALITY OBLIGATIONS UNDER SECTION 6 (C) TISICS’
INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 9, AND/OR (D) A BREACH BY ESLR1
OR ITS AFFILIATES OF SECTION 2.1 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES (INCLUDING ANY DAMAGES RESULTING FROM LOSS OF USE, LOSS OF
DATA, LOSS OF PROFITS OR LOSS OF BUSINESS) ARISING IN ANY WAY UNDER THIS
AGREEMENT AND UNDER ANY THEORY OF LIABILITY (INCLUDING BREACH OF CONTRACT,
STRICT LIABILITY, NEGLIGENCE, OR OTHER TORT), EVEN IF SUCH PARTY IS INFORMED IN
ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES.
     8.2 EXCEPT FOR ANY LIABILITY ARISING FROM (A) A BREACH BY TISICS OR ITS
AFFILIATES OF THE EXCLUSIVE NATURE OF THE LICENSE GRANTED TO ESLR1 IN SECTION
2.1(a) OR ANY OTHER EXCLUSIVITY PROVISIONS SET FORTH HEREIN, (B) A BREACH BY A
PARTY OF ITS CONFIDENTIALITY OBLIGATIONS UNDER SECTION 6 (C) TISICS’
INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 9 AND/OR (D) A BREACH BY ESLR1
OR ITS AFFILIATES OF SECTION 2.1, EACH PARTY’S CUMULATIVE LIABILITY TO THE OTHER
PARTY OR ANY THIRD PARTY IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR BREACH OF
STATUTORY DUTY, OR OTHERWISE, FOR ANY LOSS OR DAMAGES RESULTING FROM ANY CLAIMS,
DEMANDS, OR ACTIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT, SHALL NOT
EXCEED IN THE AGGREGATE THE GREATER OF (I) [****] OR (II) THE AGGREGATE AMOUNT
OF PV ROYALTIES, CONDITIONAL FEES, PV SHARED EXCESS FEES AND OTHER AMOUNTS PAID
OR PAYABLE BY ESLR1 TO TISICS HEREUNDER.
9. Indemnification.

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     9.1 TISICS Indemnity. TISICS on its own behalf and on behalf of its
successors, executors, administrators, estate, heirs and assigns, hereby agrees
to indemnify, defend and hold ESLR1 and ESLR1 Sublicensees, and each of their
Affiliates and direct and indirect partners and members, stockholders,
directors, officers, employees and agents and each person who controls any of
them within the meaning of Section 15 of the Securities Act or 1933, as amended,
or Section 20 of the Exchange Act of 1934, as amended, (each a “ESLR1
Indemnitee,” and collectively, the “ESLR1 Indemnitees”) harmless from and
against all claims, liabilities, threatened claims, damages, expenses (including
reasonable attorneys’ fees), suits, proceedings, losses or judgments, whether
for money or equitable relief, of any kind (collectively, “Losses,” and, each a
“Loss”), arising from (i) any claim that the exercise by any of the ESLR1
Indemnitees of any rights under the TISICS IP (excluding Joint IP) granted
herein infringes on, constitutes a misappropriation of the subject matter of, or
otherwise violates any Third Party IP, (ii) any breach or alleged breach of any
of the representations or warranties of TISICS set forth in Section 7 or
(iii) the gross negligence, recklessness or willful misconduct of TISICS or any
of its Affiliates or TISICS Sublicensees.
     9.2 ESLR1 Indemnity. ESLR1 on its own behalf and on behalf of its
successors, executors, administrators, estate, heirs and assigns, hereby agrees
to indemnify, defend and hold TISICS, and each of its Affiliates and direct and
indirect partners and members, stockholders, directors, officers, employees and
agents and each person who controls any of them within the meaning of Section 15
of the Securities Act or 1933, as amended, or Section 20 of the Exchange Act of
1934, as amended, (each a “TISICS Indemnitee,” and collectively, the “TISICS
Indemnitees”) harmless from and against all Losses, arising from (i) any Third
Party claim that any use of any Technology embodying the TISICS IP (excluding
Joint IP) not in accordance with this Agreement or alteration of any such
Technology, in each case, by any of ESLR1 or ESLR1 Sublicensees infringes on,
constitutes a misappropriation of the subject matter of, or otherwise violates
any Third Party IP, solely to the extent that such Loss would not have arisen
but for such alteration or improper or unauthorized use, (ii) any breach or
alleged breach of any of the representations or warranties of ESLR1 set forth in
Section 7 or (iii) the gross negligence, recklessness or willful misconduct of
ESLR1 or ESLR1 Sublicensees.
     9.3 The ESLR1 Indemnitees and the TISICS Indemnitees are together referred
to in the remainder of this section 9 as “the Indemnitees” and ESLR1 and TISICS
each as an “Indemnifying Party” as the context requires.
     9.4 Notice of Loss. An Indemnitee shall give the Indemnifying Party notice
of any matter which an Indemnitee has determined has given or could give rise to
a right of indemnification under this Agreement, within 60 days of such
determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises.
     9.5 Third Party Claims. If an Indemnitee shall receive notice of any
action, audit, demand or assessment (each, a “Third Party Claim”) against it or
which may give rise to a claim for Loss under this Section 9, within [****] days
of the receipt of such notice, the Indemnitee shall give the Indemnifying Party
notice of such Third Party Claim; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations

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under this Section 9 except to the extent that the Indemnifying Party is
materially prejudiced by such failure. Subject to the following sentence, the
Indemnifying Party may assume control of the defense of any Third Party Claim
provided that (i) the Indemnifying Party shall (within [****] business days of
notice from Indemnitee) deliver to the Indemnitee an unconditional written
agreement to defend, and satisfy if the defense is unsuccessful, such Third
Party Claim at the Indemnifying Party’s sole cost and expense and (ii) the
Indemnifying Party provides adequate assurances that it is financially capable
for providing indemnification for such Third Party Claim; provided, however, in
any defense assumed by it, the Indemnifying Party will promptly engage qualified
reputable attorneys, who shall be subject to the reasonable approval of the
Indemnitee; and provided, further, if at any time the Indemnitee determines that
it is in its best interests to assume and control the defense of such Third
Party Claim, the Indemnitee shall be entitled to assume and control such defense
(without limiting the Indemnifying Party’s other indemnification obligations
hereunder). Notwithstanding the foregoing, if there exists a conflict of
interest that would make it inappropriate for the same counsel to represent both
the Indemnitee and the Indemnifying Party as determined in the reasonable
judgment of the Indemnitee, then the Indemnitee shall be entitled to retain its
own counsel in each jurisdiction for which the Indemnitee determines counsel is
required, at the expense of the Indemnifying Party. In the event that the
Indemnifying Party exercises the right to undertake any such defense against any
such Third Party Claim as provided above, the Indemnitee shall cooperate with
the Indemnifying Party in such defense and make available to the Indemnifying
Party, at the Indemnifying Party’s expense, all witnesses, pertinent records,
materials and information in the Indemnitee’s possession or under the
Indemnitee’s control relating thereto as is reasonably required by the
Indemnifying Party. Similarly, in the event the Indemnitee is, directly or
indirectly, conducting the defense against any such Third Party Claim, the
Indemnifying Party shall cooperate with the Indemnitee in such defense and make
available to the Indemnitee, at the Indemnifying Party’s expense, all such
witnesses, records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitee. No such
Third Party Claim may be settled by the Indemnifying Party without the prior
written consent of the Indemnitee unless the settlement contains a full and
complete release of the Indemnitee and does not impose any equitable relief or
any other restriction or condition on any of them.
     9.6 Indemnification Procedure. If (and to the extent) an Indemnifying Party
is responsible pursuant hereto to indemnify an Indemnitee in respect to Third
Party Claims, then within ten days after the occurrence of a final
determination, finding, order, and/or judgment (a “Final Determination”) (or
sooner if required by such determination), the Indemnifying Party shall pay the
Indemnitee , in immediately available funds denominated in US Dollars, the
amount of any Losses (or such portion thereof as the Indemnifying Party shall be
responsible for pursuant to the provisions hereof). In the event that any Losses
incurred by the Indemnitee do not involve payment by the Indemnitee of a Third
Party claim, then, if (and to the extent) the Indemnifying Party is responsible
pursuant hereto to indemnify the Indemnitee against such Losses, the
Indemnifying Party shall within ten days after agreement on the amount of the
Losses, or the occurrence of a Final Determination of such amount, pay to the
Indemnitee, in immediately available funds the amount of such Losses (or such
portion thereof as the Indemnifying Party shall be responsible for pursuant to
the provisions hereof).

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     9.7 Cost Offsets. Each of ESLR1 or TISICS as an Indemnitee shall have the
right to reduce any payments owed by it to the other under any written agreement
between ESLR1 and TISICS by the amount of any indemnifiable Losses suffered by
any such Indemnitee (including investigation, defense, settlement or judgment
satisfaction and all professional fees).
10. Term; Termination.
     10.1 Term. This Agreement shall commence as of the Effective Date and,
unless sooner terminated in accordance with the terms hereof or by mutual
written consent, shall continue until the later of the end of Period 6 or [****]
(as defined in Exhibit D) (the “Term”).
     10.2 Termination.
          (a) Termination. In addition to any other termination rights provided
for in this Agreement, either Party may terminate this Agreement immediately
upon written notice to the other Party in the event of a material breach of this
Agreement by the other Party if such breach is incapable of cure or the
breaching Party otherwise fails to cure such breach within [****] days following
notice of such breach from the non-breaching Party.
          (b) Abandonment. In the event an Abandonment of Construction of ESLR1
Facilities (as defined below) occurs prior to the completion of the initial
construction of manufacturing facilities for the Exploitation of SiC Fiber owned
or controlled by ESLR1, TISICS may terminate this Agreement immediately upon
written notice to ESLR1. “Abandonment of Construction of ESLR1 Facilities” means
ESLR1’s failure, manifested over a period of [****] or more consecutive days
during the Term, to use reasonable efforts to perform activities relating to the
design, construction and/or development of manufacturing facilities for the
Exploitation of SiC Fiber, excluding any failure due to (i) a breach by TISICS
of its obligations under this Agreement or the Facilities and Start Up Agreement
or (ii) causes beyond ESLR1’s reasonable control, such as any of the following
events (each, a “Force Majeure Event”): (A) any fire, explosion, unusually
severe weather, natural disaster or Act of God; (B) epidemic; any nuclear,
biological, chemical, or similar attack; any other public health or safety
emergency; any act of terrorism; and any action reasonably taken in response to
any of the foregoing; (C) any act of declared or undeclared war or of a public
enemy, or any riot or insurrection; (D) damage to machinery or equipment; any
disruption in transportation, communications, electric power or other utilities,
or other vital infrastructure; or any means of disrupting or damaging internet
or other computer networks or facilities; (E) any strike, lockout or other labor
dispute or action; or (F) any action taken in response to any of the foregoing
events by any civil or military authority. In the event that ESLR1 ceases to
manufacture SiC Fiber for use within the PV Field for more than a period of
[****] consecutive months following completion of the initial construction of
the SiC Facilities, TISICS may terminate this Agreement immediately upon written
notice to ESLR1, except if such cessation is due to (1) a breach by TISICS of
its obligations under this Agreement or the Facilities and Start Up Agreement or
(2) causes beyond ESLR1’s reasonable control, such as a Force Majeure Event.
     10.3 Termination Damages. Without prejudice to any other remedies either
Party may expressly have hereunder in respect of any breach of this Agreement,
neither Party shall be liable

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to the other for damages by solely reason of the termination or cancellation of
this Agreement in accordance with the provisions set forth above.
     10.4 Continuing Obligations. The following shall survive the expiration or
termination hereof: (i) the obligation of ESLR1 to pay any accrued, but unpaid,
payments due to TISICS hereunder (subject to Section 4.4), (ii) the obligation
of TISICS to pay any accrued, but unpaid, taxes, duties, and other levies (if
any) applied by any government authority on payments made by ESLR1 to TISICS
hereunder (in accordance with Section 4.3(a)), and (iii) the provisions of this
Section 10.4, Sections 1 (and any other definitions contained herein), 2.1, 2.2,
2.3, 2.4, 2.5, 2.6, 3.1(b), 3.1(e), 3.3, 3.4, 4.2(c), 4.3, 4.4, 5, 6, 7, 8, 9,
10.3, 10.5 and 11 and the last sentence of Section 3.1, provided that, subject
to Section 4.4, if TISICS terminates this Agreement for Abandonment of
Construction of ESLR1 Facilities, the provisions of Section 2.1 shall not
survive such termination except as otherwise set forth in Section 10.5.
     10.5 Inventory Sell-Down Period. Without limiting Section 4.4, upon any
termination of this Agreement pursuant to Section 10.2(b), ESLR1 may continue to
distribute its then-current inventory of SiC Fiber and manufacture and
distribute any inventory of SiC Fiber for orders then-confirmed by ESLR1. During
this period, the provisions of this Agreement shall continue in force to the
extent required for the limited purpose of permitting ESLR1 to distribute its
inventory of SiC Fiber in accordance with the foregoing.
11. Miscellaneous.
     11.1 Fees and Expenses. The Parties shall pay all of their own costs, fees
and expenses incurred in connection with this Agreement and the consummation (or
the preparation for the consummation) of the transactions contemplated hereby
(including fees and expenses of legal counsel, accountants and other
representatives and consultants and advisors and due diligence (including
travel-related) costs, fees and expenses).
     11.2 Remedies. Each Party acknowledges and agrees that the other Party
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached. Accordingly, each Party agrees that the other Party shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter.
     11.3 Consent to Amendments. This Agreement may be amended, or any provision
of this Agreement may be waived; provided that any such amendment or waiver
shall be binding upon each Party only if agreed by each party and with the terms
of such agreement set forth in writing executed by each Party and referring
specifically to the provision alleged to have been amended or waived. No course
of dealing between or among the Parties shall be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any Party under or by reason of this Agreement.
     11.4 Relationship of Parties. The relationship of ESLR1 and TISICS created
under this Agreement shall be that of independent contractors. Nothing in this
Agreement shall be

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construed to place the Parties hereto in an agency, employment, franchise, joint
venture, or partnership relationship. Neither Party shall have the authority to
obligate or bind the other in any manner with respect to the transaction
contemplated by this Agreement, and nothing herein contained shall give rise or
is intended to give rise to any rights of any kind to any Third Parties. Neither
Party will represent to the contrary, either expressly, implicitly or otherwise.
     11.5 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, three (3) days after being sent to the recipient by reputable
overnight courier service (charges prepaid), upon machine-generated
acknowledgment of receipt after transmittal by facsimile or seven (7) days after
being mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
shall be sent to the Parties at the addresses indicated below or to such other
address or to the attention of such other person as the recipient Party has
specified by prior written notice to the sending Party.
to:

ESLR1:

138 Bartlett Street
Marlborough, MA 01752
Attention: Richard Chleboski
Telephone: (508) 597-2318
Telecopy: (508) 229-0747
with a copy to:
(which shall not constitute notice to ESLR1)

Goodwin Procter LLP
Exchange Place
53 State Street
Boston, MA 02109
Attention: William J. Schnoor, Jr., Esq.
Telephone: 617.570.1020
Telecopy: 617.523.1231
to:

TISICS:

TISICS Ltd
22 Invincible Road
Farnborough
Hampshire
GU14 7QU

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Attention: Stephen Kyle-Henney
Telephone: 44 1252 516678
Telecopy: 44 1252 548211
with a copy to:
(which shall not constitute notice to TISICS)

Hugh Fraser International Legal Consultancy
Al Attar Business Tower (Floor 20)
Sheikh Zayed Road
Dubai
United Arab Emirates
PO Box 118273
Attention: Hugh Fraser
Telephone: +971 4 332 0007
Telecopy: +971 4 332 0008
     11.6 Governing Law; Venue. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement
(including the Exhibits and Schedules hereto) shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware. In
furtherance of the foregoing, the internal law of the State of Delaware shall
control the interpretation and construction of this Agreement (including the
Exhibits and Schedules hereto), even though under that jurisdiction’s choice of
law or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply. Any and all disputes between the Parties which may arise
pursuant to this Agreement will be heard and determined before an appropriate
federal court located in Boston, Massachusetts. The Parties hereto acknowledge
that such court has the jurisdiction to interpret and enforce the provisions of
this Agreement and the parties waive any and all objections that they may have
as to personal jurisdiction or venue in the above courts.
     11.7 Assignment and Benefit.
          (a) ESLR1 may not assign this Agreement without the prior written
consent of TISICS to any Third Party, which consent will not be unreasonably
withheld, except that ESLR1 may assign this Agreement in whole without the prior
written consent of TISICS to any Third Party, including a TISICS Competitor or
any Affiliate of a TISICS Competitor, if such Third Party succeeds to all or
substantially all the assets and business of ESLR1 or Evergreen by merger or
purchase.
          (b) TISICS may not assign this Agreement without the prior written
consent of ESLR1 to any Third Party, which consent will not be unreasonably
withheld, except that TISICS may assign this Agreement in whole without the
prior written consent of ESLR1 to any Third Party, including a ESLR1 Competitor
or any Affiliate of a ESLR1 Competitor, if such Third Party succeeds to all or
substantially all the assets and business of TISICS by merger or purchase.

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          (c) Any attempted assignment, delegation or transfer by an assigning
Party in violation hereof shall be null and void. Subject to the foregoing, this
Agreement shall be binding on the Parties and their successors and assigns.
     11.8 Consequences of Bankruptcy. All licenses and rights of granted under
or pursuant to this Agreement shall be deemed to be, for the purposes of Section
365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”), licenses to
rights in “intellectual property” as defined under the Bankruptcy Code.
     11.9 Successors and Assigns; Third-Party Beneficiaries. Except as provided
herein to the contrary, this Agreement and all of the covenants and agreements
contained herein and rights, interests or obligations hereunder, by or on behalf
of any of the Parties hereto, shall bind and inure to the benefit of the
respective successors and assigns of the Parties hereto whether so expressed or
not. This Agreement is for the sole benefit of the Parties and their permitted
successors and assigns and nothing herein expressed or implied shall give or be
construed to give any non-Party any rights, benefits or claims hereunder;
provided, however, that each Indemnitee is intended to be, and is expressly
made, a third party beneficiary of this Agreement, entitled to enforce its
rights under Section 9 in its own name.
     11.10 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held to be prohibited by,
illegal or unenforceable under applicable Law in any respect by a court of
competent jurisdiction, such provision shall be ineffective only to the extent
of such prohibition or illegality or unenforceability, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
     11.11 Counterparts. This Agreement may be executed simultaneously in
counterparts (including by means of telecopied signature pages), any one of
which need not contain the signatures of more than one Party, but all such
counterparts taken together shall constitute one and the same Agreement.
     11.12 No Waiver. Failure by either Party to enforce any provision of this
Agreement shall not be deemed a waiver of future enforcement of that or any
other provision.
     11.13 Descriptive Headings; Interpretation. The headings and captions used
in this Agreement and the table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Any capitalized terms used in any Schedule or Exhibit attached
hereto and not otherwise defined therein shall have the meanings set forth in
this Agreement. The use of the word “including” herein shall mean “including
without limitation.” The Parties intend that each representation, warranty and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract from or mitigate
the fact that the Party is in breach of the first representation, warranty or
covenant.

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     11.14 Entire Agreement. This Agreement and the agreements and documents
referred to herein contain the entire agreement and understanding between the
Parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, relating to such subject
matter in any way.
     11.15 Exhibits and Schedules. All Exhibits and Schedules attached hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein.
     11.16 No Strict Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as
of the date first above written.

            ESLR1, LLC
      By:   /s/ Richard G. Chleboski         Name:   Richard G. Chleboski       
Title:   President and Secretary     

            TISICS LTD.
      By:   /s/ Stephen Kyle-Henney         Name:   Stephen Kyle-Henney       
Title:   Managing Director     

 

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EXHIBIT A
SiC Fiber Specifications
Outlined below are initial specifications (as of the Effective Date) for SiC
Fiber necessary for applications in the PV Field. This is a general
specification and may be modified as the SiC Fiber is developed.
Physical Characteristics: [****]

 

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EXHIBIT B-1
TISICS IP: PV Field
Patents
[****]

 

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EXHIBIT B-2
TISICS IP: All Fields
Patents
[****]

2

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Registered Trade Marks
[****]

 

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EXHIBIT B-3
Licenses Out, Licenses In and Other Rights
“‘Grant Back IP Licence’ means the [****].

2

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EXHIBIT C
TISICS Materials as of the Effective Date
PV = Photo-Voltaic Fibre related materials
Note this is not an exhaustive list and additional documents may be added. In
some instances customer names or other commercial details may need to be removed
from the documents listed before release.
[****]
In addition to the above-listed reports and files, TISICS has the following
materials, which constitute TISICS Materials:
[****]

 

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EXHIBIT D
Conditional Fees and PV Royalties
[****]

 

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SCHEDULE 1 TO EXHIBIT D
Full Cost
[****]

 

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EXHIBIT E
Exceptions to Certain TISICS Representations and Warranties
None.