[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

Exhbit 10.55

HOKU MATERIALS, INC.

- and -

DYNAMIC ENGINEERING INC

 

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ENGINEERING SERVICES & TECHNOLOGY TRANSFER AGREEMENT NUMBER:

0743.01

 

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PROCESS:    TRICHLOROSILANE PROJECT :   

HOKU MATERIALS, INC.

POCATELLO, IDAHO, USA

POLYSILICON PLANT

 

 

 

DEI Agreement Number: 0743.01   - 1/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

TABLE OF CONTENTS

 

Article 1 Definitions

   3

Article 2 Purpose of this Agreement

   5

Article 3 Grant of license

   6

Article 4 DEI’s INFORMATION

   7

Article 5 Disclosure of technical information under the license, scope and
schedule

   7

Article 6 CLIENT’s undertaking

   8

Article 7 Assistance and services from DEI

   9

Article 8 Financials

   11

Article 9 Warranties and liabilities

   14

Article 10 Indemnification Obligations

   17

Article 11 Insurance

   17

Article 12 Confidentiality

   19

Article 13 Other agreements

   21

Article 14 Assignment

   22

Article 15 Miscellaneous

   23

Article 16 Notices

   24

Article 17 Conciliation, arbitration

   24

Article 18 Effective Date, termination

   25

SCHEDULE 1 – PROCESS BOOK — DESIGN PACKAGE SPECIFICATION

   28

SCHEDULE 2 – DETAILED ENGINEERING DOCUMENTS TO BE TRANSMITTED TO DEI

   34

SCHEDULE 3 – PERFORMANCE GUARANTEES

   35

SCHEDULE 4 – DEI PATENTS

   51

 

DEI Agreement Number: 0743.01   - 1/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

SCHEDULE 3—PERFORMANCE GUARANTEES

 

A DEFINITIONS

 

B CONDITIONS OF PERFORMANCE GUARANTEES

 

C DEI’s ASSISTANCE—RULES OF CONDUCT OF DEI ADVISORS

 

  1. Assistance during the initial stages of operation of the LICENSED UNIT

  2. Rules of conduct of DEI’s advisors

 

D START-UP AND TESTING

 

  1. Inspection, ADSORBENT loading and Start-up

  2. PERFORMANCES TEST PERIOD proceedings

  3. Substitute PERFORMANCE GUARANTEES

 

E DELAYS and INTERRUPTIONS

 

F FAILURE TO MEET PERFORMANCE GUARANTEES

 

G MODIFICATIONS TO THE LICENSED UNIT

 

H [RESERVED]

 

I PERFORMANCE GUARANTEES FIGURES

 

  1. CHARGE specifications

  2. Make up products specifications

  3. PRODUCT definition

  4. PERFORMANCE GUARANTEES

J ROYALTY CALCULATION COMPUTATION

 

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DEI Agreement Number: 0743.01   - 1/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

It is agreed by and between:

Dynamic Engineering, Inc., a company organized under the laws of the State of
Michigan in the United States of America and having its main office at 215
Broadus Road, Suite 100, Sturgis, MI 49091-1384 United States of America
(hereinafter referred to as “DEI”); and

Hoku Materials, Inc., a company organized under the laws of the State of
Delaware in the United States of America, having its main office at One Hoku
Way, Pocatello, Idaho 83204, (hereinafter referred to as “CLIENT”)

WHEREAS:

CLIENT is constructing and intends to operate a manufacturing facility capable
of producing approximately 2,500 metric tons of polysilicon per annum in
Pocatello, Idaho (the “PROJECT”). CLIENT wishes to procure the basic engineering
package and related services for the production of trichlorosilane, and
corresponding license for the PROJECT.

CLIENT desires to procure the detailed process engineering for the production of
trichlorosilane, on-site services related to the installation and operation of
the process for producing trichlorosilane, including inspection and training on
its JOBSITE of certain facilities exploiting the PROCESS from DEI.

DEI is a professional engineering firm and an international provider of
technologies and specialized services to the chemical industry with specific
knowledge, experience and intellectual property related to the production and
purification of trichlorosilane, including the PROCESS and the LICENSED UNIT (as
defined herein).

CLIENT is interested in receiving, for the purpose of the engineering,
construction and subsequent operation of the PROJECT, the appropriate rights and
technical information from DEI.

DEI is willing to (A) engineer the PROCESS; (B) work with CLIENT and its
AFFILIATES and CONTRACTORS, to integrate the PROCESS and the LICENSED UNIT into
the PROJECT; (C) deliver the PROCESS BOOK; and (D) grant to CLIENT the required
non-exclusive license rights and technical information related to the PROCESS
and the LICENSED UNIT, subject to the terms and conditions provided herein.

In order to accelerate project execution, DEI may initiate the process design
work and to begin the preparation of the PROCESS BOOK prior to the date CLIENT

DEI Agreement Number: 0743.01   - 2/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

will be ready to acquire the license to the LICENSED UNIT pursuant to this
Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, the parties hereto agree to the following:

Article 1 Definitions

Except as otherwise expressly provided, the following terms as used herein shall
have the meanings assigned to them in this article and shall include the plural
as well as the singular:

“ACCEPTANCE DATE” means the date of completion by DEI of its obligations under
this Agreement in respect of the PERFORMANCES TEST PERIOD according to Sections
B, D-2 and D-3 of the Schedule hereafter.

“AFFILIATE” shall mean, in relation with any one of the parties, any company
which, directly or indirectly, controls, is controlled by, or is under common
control with such party. For the purposes of this definition of “AFFILIATE” ,
“control” means one owns another by more than fifty percent (50%) of voting
shares or voting power.

“AGREEMENT” means this Engineering Services & Technology Transfer Agreement
Number 0743.01, including all appendices, schedules, annexes, and exhibits
hereto.

“CONFIDENTIAL INFORMATION” means all information, including but not limited to
TECHNICAL INFORMATION and the PROCESS BOOK, which may be of a technical,
commercial, or other nature, whether written or oral, provided, directly or
indirectly, by DEI to CLIENT, or by CLIENT to DEI under this Agreement, or which
CLIENT or DEI, as applicable, might acquire or discover during visits to
facilities of DEI or CLIENT, as applicable, or third parties where such
information is designed or exploited, or during discussions with DEI or CLIENT,
together with all analyses, compilations, forecasts, studies or other documents
that contain or otherwise reflect such information.

“CONTRACTOR” means any company selected by CLIENT who shall conduct or perform
engineering, procurement, supply, construction or commissioning for the PROJECT,
including, without limitation, The Shaw Group Inc., JH Kelly LLC, Graeber
Engineering Consultants GmbH, MSA Apparatus for the Construction of Chemical
Equipment, Ltd., Chemical Design, Inc., and each of their respective AFFILIATES
and subcontractors.

 

DEI Agreement Number: 0743.01   - 3/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

“CUT-OFF DATE” shall mean the date of third anniversary of the EFFECTIVE DATE.

“DEI PATENTS” shall mean all of DEI’s patents and pending patent applications
listed on Schedule 4 to this AGREEMENT.

“DEI SUBCONTRACTORS” shall mean all contractors and consultants hired by DEI to
perform any portion of DEI’s work pursuant to this AGREEMENT.

“DESIGN CAPACITY” of the LICENSED UNIT shall mean 20,000 metric tons per annum
of trichlorosilane, based on a stream factor of 7,776 operating hours per annum
and 24 hours per day.

“EFFECTIVE DATE” shall mean the date of the last signature of this Agreement
between the parties.

“INTELLECTUAL PROPERTY” means all algorithms, application programming interfaces
(APIs), apparatus, concepts, Confidential Information, data, databases and data
collections, designs, diagrams, documentation, drawings, flow charts, formulae,
gate arrays, ideas and inventions (whether or not patentable or reduced to
practice), IP cores, know-how, materials, marketing and development plans, marks
(including brand names, product names, logos, and slogans), methods, models, net
lists, network configurations and architectures, photomasks, procedures,
processes, protocols, schematics, semiconductor devices, software code (in any
form including source code and executable or object code), specifications,
subroutines, techniques, test vectors, tools, uniform resource identifiers
including uniform resource locators (URLs), user interfaces, web sites, works of
authorship, and other forms of technology.

“INTELLECTUAL PROPERTY RIGHTS” means all past, present, and future rights of the
following types, which may exist or be created under the laws of any
jurisdiction in the world: (a) rights associated with works of authorship,
including exclusive exploitation rights, copyrights, moral rights, and mask work
rights; (b) trademark and trade name rights and similar rights; (c) trade secret
rights; (d) patent and industrial property rights; (e) other proprietary rights
in Intellectual Property of every kind and nature; and (f) rights in or relating
to registrations, renewals, extensions, combinations, divisions, and reissues
of, and applications for, any of the rights referred to in clauses (a) through
(e) of this sentence.

“JOBSITE” means the construction site of the PROJECT located at Pocatello,
Idaho, USA.

DEI Agreement Number: 0743.01   - 4/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

“KICK-OFF DATE” shall mean the date of the last of the following occurances:
last signature of this Agreement between the parties; receipt of down payment by
DEI; confirmation of raw material, utilities and site conditions.

“LICENSED UNIT” means the facilities that DEI will design for CLIENT, and which
will be constructed and operated at JOBSITE by CLIENT, using the PROCESS under
license from DEI under this Agreement.

“PERFORMANCE GUARANTEES” means the guaranteed performance of the LICENSED UNIT
as specified in Schedule 3 to this Agreement.

“PROCESS” shall mean the Trichlorosilane (TCS) manufacturing and purification
process licensed by DEI which [*] to meet the guaranteed quality and production
volume specifications set forth in this AGREEMENT.

“PROCESS BOOK” means the deliverable file of DEI’s Basic Process Design as
described in Schedule 1 hereof.

“STANDARD SCOPE” means the content description of the PROCESS BOOK containing
(1) the process information necessary to ensure that the detailed engineering,
procurement, expediting, inspection and construction of the LICENSED UNIT will
not deviate from the PERFORMANCE GUARANTEES of the LICENSED UNIT and (2) the
typical basic procedures necessary to ensure that control, operation and
maintenance of the LICENSED UNIT (mainly start-up, shut-down and emergency
procedures) will not deviate from the PERFORMANCE GUARANTEES of the LICENSED
UNIT.

“TECHNICAL INFORMATION” means the technical data and knowledge related to or
useful for the commercial practice of the PROCESS in DEI’s possession prior to
the date of remittance of the PROCESS BOOK.

“WORK PRODUCT” means, collectively, the PROCESS BOOK, the TECHNICAL INFORMATION,
the PROCESS, and the LICENSED UNIT.

Article 2 Purpose of this Agreement

 

2.1 The purpose of this Agreement is to define the terms and conditions under
which DEI shall (A) prepare and deliver to CLIENT the PROCESS BOOK; (B) engineer
and design the PROCESS and the LICENSED UNIT; and (C) grant a license to the
LICENSED UNIT using the PROCESS for the purpose of producing polysilicon, as
more fully described in Article 3 of this AGREEMENT.

DEI Agreement Number: 0743.01   - 5/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

2.2 As between DEI and CLIENT, CLIENT will at all times remain solely
responsible for the detailed engineering, procurement, expediting, inspection,
construction, alteration, reconstruction, operation and maintenance of the
overall PROJECT; provided, however, that DEI will at all times remain solely
responsible for the warranties and guarantees it is providing to CLIENT with
respect to the WORK PRODUCT pursuant to this Agreement, subject to DEI’s maximum
liability limit set forth in Article 9.3.

Article 3 Grant of license

 

3.1 As of the EFFECTIVE DATE, and so long as CLIENT is not in default of its
obligations hereunder:

 

  a) DEI hereby grants to CLIENT a non-exclusive right to use the TECHNICAL
INFORMATION disclosed in accordance with Article 4 hereof to design, build,
operate and maintain the LICENSED UNIT using the PROCESS.

 

  b) Except as specified in Article 14.1 hereof, this license is not
transferable.

 

  c) Subject to its maximum liability described in Article 9.3, DEI further
agrees to indemnify and hold CLIENT harmless from suit with regards to the
foregoing grant or to the use and/or sale of the products made using the PROCESS
from any infringement suit under any patent owned or controlled by DEI or its
affiliated companies or to which and to the extent and subject to the terms that
DEI has the right to extend such indemnity.

 

3.2

DEI unconditionally grants to CLIENT a non-exclusive, perpetual, irrevocable
(except as set forth in Article 18.5 below), worldwide, fully-paid right and
license, with the right to sublicense to its AFFILIATES through multiple levels
of AFFILIATE sublicensees in (i) DEI’s INTELLECTUAL PROPERTY RIGHTS related to
the manufacture and purification of Trichlorosilane and (ii) any and all WORK
PRODUCT (whether or not identified or described in this Agreement, and
including, without limitation, the DEI PATENTS), solely for purposes of
(a) using the WORK PRODUCT as necessary in accordance with the CONFIDENTIALITY
limitations described in Article 12, for the timely construction of one
(1) Trichlorosilane facility at JOBSITE, and (b) to use, make, have made, sell,
offer to sell, import, and otherwise exploit any product based on, embodying,
incorporating, or derived from the LICENSED UNIT. Notwithstanding the foregoing,
nothing contained in the license grant herein shall be construed or interpreted
to allow CLIENT or its AFFILIATES to (i) breach, circumvent, or fail to comply
with the confidentiality requirements set forth in this Agreement (in this
regard, CLIENT agrees to obtain signed agreements from any of its AFFILIATES
that bind the AFFILIATES to the confidentiality provisions), or (ii) to provide
any CONFIDENTIAL INFORMATION to third parties, except for

DEI Agreement Number: 0743.01   - 6/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

 

CLIENT’s CONTRACTORS who have signed confidentiality agreements with CLIENT, and
otherwise permitted pursuant to Article 12 hereof.

 

3.3 Except as provided herein, DEI grants no other rights, whether express or
implied, by operation of law or otherwise. In particular, no right is granted
herein to CLIENT for the manufacture or sale of any specified catalysts,
adsorbents or special equipments if any, unless otherwise provided in Article
3.1 above.

Article 4 DEI’s INFORMATION

 

4.1 Promptly after execution of this Agreement, DEI shall make TECHNICAL
INFORMATION in its possession available to CLIENT as specified in the PROCESS
BOOK to enable the CONTRACTORS to complete the detailed engineering of the
PROJECT and to begin ordering long lead-time equipment necessary for the
construction, installation and operation of the LICENSED UNIT.

 

4.2 At the request of CLIENT, DEI will make every reasonable effort to arrange
for CLIENT’s representatives to visit the facilities of other users of the
PROCESS for the purpose of observing and better understanding the TECHNICAL
INFORMATION; provided, however, that any such observation will not expose CLIENT
to any confidential information or trade secrets of a third party.

Article 5 Disclosure of technical information under the license, scope and
schedule

 

5.1 DEI shall, within the scope and the time schedule specified below, prepare
and deliver the PROCESS BOOK to CLIENT.

 

5.2 Scope of the PROCESS BOOK

 

  a) The content description of the PROCESS BOOK is specified in Schedule 1
hereof.

 

  b) DEI shall in no event be responsible for the supply to CLIENT of any other
services than those provided for herein or for the supply of goods and/or
services by others, such as, but not limited to, supply by CONTRACTORS, vendors,
fabricators, manufacturers or any other third parties, of detailed engineering
work, procurement, expediting, inspection, equipments construction of acceptance
thereof.

5.3 Time schedule

 

  a) DEI shall complete the [*] within [*] after the KICK-OFF DATE.

 

  b) DEI shall complete the [*] and [*] [*] after the KICK-OFF DATE.

 

  c) DEI shall complete the [*] and [*] within [*] after the KICK-OFF DATE.

DEI Agreement Number: 0743.01   - 7/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  d) DEI shall complete the [*] within [*] after the KICK-OFF DATE.

 

  e) DEI shall complete the [*] within [*] after the KICK-OFF DATE.

 

  f) DEI shall complete the [*] and the [*] within [*] after the KICK-OFF DATE.

 

  g) DEI shall complete the entire [*], which shall include the foregoing items
(a) – (d) and the [*] within [*] after the KICK-OFF DATE.

 

5.4 The PROCESS BOOK shall be written in English.

Article 6 CLIENT’s undertaking

 

6.1 The LICENSED UNIT shall be constructed and operated in all material respects
in conformity with TECHNICAL INFORMATION.

 

6.2 CLIENT undertakes to obtain the prior written approval of DEI if it desires:

 

  a) to depart from the undertaking made in Article 6.1, or,

 

  b) to use TECHNICAL INFORMATION for any other purpose than the design, the
construction, the operation and the maintenance of the LICENSED UNIT.

 

6.3 DEI shall have the right to have a process-holder plate of mutually
agreeable size affixed to the control room panel of the LICENSED UNIT at a
mutually agreeable place.

 

6.4 Until the CUT-OFF DATE:

 

  a) DEI representatives shall have the right to visit the LICENSED UNIT. The
times of such visits and their duration shall be mutually agreed upon.

 

  b) CLIENT will permit technical visits of the LICENSED UNIT during normal
business hours by third parties as specified from time to time by DEI, provided,
however, that all such third parties’ representatives or visitors shall (A) not
be CLIENT’s competitors, as determined by CLIENT in its sole discretion, and
(B) agree in writing to CLIENT’s safety and secrecy rules then in force in the
LICENSED UNIT and to any other reasonable requirement of CLIENT prior to
accessing the LICENSED UNIT.

 

  c) CLIENT will permit DEI to take pictures of the LICENSED UNIT and enable DEI
to use those pictures for promotional purposes, subject to reasonable
limitations and prior approval by CLIENT to maintain the secrecy of CLIENT’s
operations and facilities.

DEI Agreement Number: 0743.01   - 8/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

6.5 The PERFORMANCES GUARANTEEs stated in Schedule 3 are subject to:

 

  a) DEI’s participation prior to, during the start-up of the LICENSED UNIT,
during the initial operation and during the PERFORMANCES TEST PERIOD, as
described in Sections C and D of the attached Schedule 3, and

 

  b) for those equipments and supplies designated as qualified in the Process
Book, the selection by CLIENT of vendors only from the list of qualified vendors
listed in said Process Book, or such other vendors that are reasonably
acceptable to DEI.

Article 7 Assistance and services from DEI

 

7.1 Promptly after execution of this Agreement, during a Kick-Off Meeting (the
first meeting held after the KICK-OFF DATE) held at CONTRACTOR facilities, the
parties will mutually agree on a coordination procedure, and on a time schedule.
The parties will also schedule the other meetings as described below.

 

Weeks after KICK-OFF DATE

  

Name of Meeting

   Location of Meetings

[*]

   Kick-off meeting & Basic Engineering review    CONTRACTOR’S SITE

[*]

   Review of deliverables per 5.3(a)    Michigan, USA

[*]

   Review of deliverables per 5.3(c)    CLIENT or CONTRACTOR’S SITE

[*]

   Review of deliverables per 5.3(d)    Michigan, USA

[*]

   Review of deliverables per 5.3(f)    CLIENT or CONTRACTOR’S SITE

 

7.2 Review of Detailed Engineering Documents

 

  a) Promptly after their completion, the documents listed in Schedule 2 shall
be submitted to DEI at DEI’s offices in order to allow their examination for
conformity with the process specifications and design furnished hereunder. All
such documents shall be treated as the CONFIDENTIAL INFORMATION of CLIENT
pursuant to this AGREEMENT.

 

  b) Except as otherwise agreed between the parties these documents will be in
English language.

 

  c) Save as agreed during the Kick-off meeting, DEI will complete such
examination within 15 (fifteen) working days from the date of DEI’s receipt of
said documents and will notify such completion to CLIENT, whether or not DEI has
remarks to convey. CLIENT shall have no obligation to update or revise the
documents listed

 

DEI Agreement Number: 0743.01   - 9/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

       in Schedule 2 or to incorporate any of DEI’s comments to such documents
unless the comments and/or revisions are reasonably consistent with the
specifications or data previously provided by DEI. DEI’s failure to provide any
comments within such fifteen (15) day period shall be deemed as DEI’s acceptance
of the documents, which shall satisfy DEI’s approval requirement set forth in
Section B-2(a)(iv) of Schedule 3.

 

7.3 Consultations by DEI

 

  a) After delivery of the PROCESS BOOK, DEI will provide consultation to
CLIENT, and/or to CONTRACTOR as necessary for the purpose of clarifications
related to the PROCESS BOOK, answering questions related to completing the
detailed design.

 

  b) In the event that CLIENT requests in writing consultation from DEI beyond
the man-days described in Article a) and/or to be held outside DEI’s office, DEI
agrees to provide such consultation which shall be compensated by CLIENT in
accordance with DEI’s then-applicable base rates; in addition corresponding
pre-approved and reasonable travel expenses of DEI’s personnel shall be borne by
CLIENT.

 

7.4 Any assistance and service that DEI shall render under this Agreement shall
comply with generally accepted engineering practices.

 

7.5 DEI shall not utilize any SUBCONTRACTORS without prior written approval from
CLIENT, which shall not be unreasonably withheld.

 

7.6 All personnel provided by DEI shall be English speaking and expert in the
PROCESS. DEI shall give all necessary explanations to CLIENT’s personnel for the
proper understanding of the PROCESS operation.

 

7.7 Assistance during the initial stages of operation of the LICENSED UNIT.
Under the conditions set forth in Section C-1, D-1 and D-2 of Schedule 3, a team
of DEI advisors shall be in attendance during start-up and initial operations
and, subject to the provisions set forth in Schedule 3, until the end of the
last PERFORMANCE PROBE permitted under Section F of Schedule 3. It is the policy
of DEI to have concern for the safety, health, and environment of its employees.
Employees visiting a client facility are instructed to follow established safety
procedures and advise CLIENT of any potential hazards that they believe may
prevent the performance of their tasks in a safe manner. To the extent
appropriate, CLIENT, in turn, is requested to take corrective action. Should no
action be taken or, if in the judgment of the DEI employee the hazard still
exists, the employee may elect to stop work until the hazard is eliminated.

 

DEI Agreement Number: 0743.01   - 10/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

7.8 Hazardous Materials – Suspension of Services. Both parties acknowledge that
DEI’s scope of services does not include any services related to the presence of
any hazardous or toxic materials. In the event DEI or any other party encounters
any hazardous or toxic materials, or should it become known to DEI that such
materials may be present on or about the jobsite or any adjacent areas that may
affect the performance of DEI’s services, DEI may, at its option and without
liability for consequential or any other damages, suspend performance of its
services under this Agreement until CLIENT retains qualified consultants or
contractors to identify and abate or remove the hazardous or toxic materials and
warrants that the jobsite is in full compliance with all applicable laws and
regulations.

 

7.9 Jobsite Safety. Neither the professional activities of DEI, nor the presence
of DEI or its employees and subconsultants at a construction/project site, shall
relieve the General Contractor of its obligations, duties and responsibilities
including, but not limited to, construction means, methods, sequence, techniques
or procedures necessary for performing, superintending and coordinating the Work
in accordance with the contract documents and any health or safety precautions
required by any regulatory agencies. DEI and its personnel have no authority to
exercise any control over any construction contractor or its employees in
connection with their work or any health or safety programs or procedures.
CLIENT agrees that General Contractor shall be solely responsible for jobsite
safety, and warrants that this intent shall be carried out in CLIENT’s contract
with the General Contractor. CLIENT also agrees that CLIENT, DEI and DEI’s
subconsultants shall be indemnified by the General Contractor and shall be made
additional insureds under the General Contractor’s policies of general liability
insurance.

 

7.10 Further Services. At CLIENT’s request, DEI is prepared to execute a
mutually acceptable Service Contract under which it shall render, after the
assistance foreseen in Article 7.7 is terminated, continuous assistance to
technically support the on-going operation of the LICENSED UNIT by the CLIENT,
through a close follow-up of the LICENSED UNIT operation or through further
specific studies aimed at improving its performance or adapting its operation to
any new situation.

Article 8 Financials

 

8.1 Services.

 

  a) CLIENT agrees to pay DEI for the performance and delivery of DEI’s services
to provide the Work Product and all other services under this Agreement,
including, without limitation the PROCESS BOOK and the services pursuant to
Article 7 on a fully reimbursable basis for the rates, costs, expenses, fees,
and other consideration set forth on Schedule 5 (collectively, the “SERVICE
FEES”); provided, however, that the aggregate SERVICE FEES under this AGREEMENT

 

DEI Agreement Number: 0743.01   - 11/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

       shall not exceed [*] ([*]) (the “MAXIMUM SERVICE FEE”). In the event that
the SERVICE FEES are less than the MAXIMUM SERVICE FEE, DEI shall be entitled to
[*] of the savings up to a maximum of [*].

 

  b) In the event CLIENT decides, in particular under Articles 7.1 or 7.3
hereof, to request modifications in the scope of work such as changes in design
basis, request for additional services or request for a change in the nature of
services offered, DEI will only implement such changes if DEI agrees to do so
and after agreeing to the associated change order (including impact on the
MAXIMUM SERVICE FEE and delivery schedule).

 

  c) This amount shall be invoiced by DEI as follows:

 

       [*] of the MAXIMUM SERVICE FEE shall be invoiced at the EFFECTIVE DATE
(the “INITIAL SERVICE FEE PAYMENT”).

 

       All accrued and unpaid SERVICE FEES shall be invoiced upon delivery and
acceptance by CLIENT of the [*] (the “PHASE 1 PAYMENT”).

 

       All SERVICE FEES that have accrued since the PHASE 1 PAYMENT shall be
invoiced upon delivery and acceptance by CLIENT of the [*] and [*] (the “PHASE 2
PAYMENT”).

 

       All SERVICE FEES that have accrued since the PHASE 2 PAYMENT shall be
invoiced upon delivery and acceptance by CLIENT the [*] and [*] (the “PHASE 3
PAYMENT”).

 

       All SERVICE FEES that have accrued since the PHASE 3 PAYMENT shall be
invoiced upon delivery and acceptance by CLIENT of the [*] (the “PHASE 4
PAYMENT”).

 

       All SERVICE FEES that have accrued since the PHASE 4 PAYMENT shall be
invoiced upon delivery and acceptance by CLIENT of the entire [*] (the “PHASE 5
PAYMENT”)

 

       All SERVICE FEES that have accrued since the PHASE 5 PAYMENT minus the
INITIAL SERVICE FEE PAYMENT shall be invoiced upon the successful [*] (the
“PHASE 6 PAYMENT”).

 

       CLIENT shall withhold [*] of the invoiced amounts from each of the PHASE
1 PAYMENT, the PHASE 2 PAYMENT, the PHASE 3 PAYMENT, the PHASE 4 PAYMENT, the
PHASE 5 PAYMENT, and the PHASE 6 PAYMENT (such amount, the “RETAINAGE”). The
RETAINAGE shall be paid in full to DEI upon the successful completion of the
[*].

 

8.2 Royalty.

 

  a) In addition to the SERVICE FEES, CLIENT shall pay to DEI a royalty for the
rights granted under Article 3.1 above (the “ROYALTY”). The ROYALTY is to be

 

DEI Agreement Number: 0743.01   - 12/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

       calculated in accordance with Section J of Schedule 3; provided, however,
that the minimum ROYALTY is [*] (the “MINIMUM ROYALTY”), and the maximum
aggregate ROYALTY is [*] (the “MAXIMUM ROYALTY”). The ROYALTY shall be invoiced
by DEI upon the successful completion of the [*] and execution by DEI and CLIENT
of Annex B to Schedule 3 attached hereto, which the parties agree to execute in
good faith.

 

  b) The payment of such paid-up royalty shall relieve CLIENT of further payment
of royalties hereunder with respect to the license granted pursuant to Article
3.1 of this Agreement.

 

  c) Notwithstanding anything to the contrary herein, CLIENT shall have no
obligation to pay any ROYALTY to DEI, and any ROYALTY previously paid shall be
refunded to CLIENT, if all of the DEI PATENTS, as applicable to such ROYALTY,
are adjudged through a final and non-appealable judgment, ruling or decision, as
applicable, of the United States Patent and Trademark Office, or any court,
arbitration or government authority having jurisdiction over the subject matter
thereof, to be invalid or unpatentable, or to be infringing on the INTELLECTUAL
PROPERTY RIGHTS of a third party.

 

8.3 Payment – invoicing.

 

  a) In its invoices, DEI shall designate the payer (aka CLIENT) as follows:

Hoku Materials, Inc.

One Hoku Way

Pocatello, Idaho 83204

Attn: Karl Taft

 

  b) DEI shall transmit the invoices to the following address:

 

  i) if it concerns royalties under Article 8.2:

Hoku Materials, Inc.

One Hoku Way

Pocatello, Idaho 83204

Attn: Karl Taft

 

  ii) if it concerns assistance and services under Article 8.1:

Hoku Materials, Inc.

One Hoku Way

Pocatello, Idaho 83204

Attn: Karl Taft

 

  c) All sums payable under this Agreement shall be paid in US Dollars, in the
USA, by bank transfer within 30 (thirty) days from invoice date at the bank
account specified

 

DEI Agreement Number: 0743.01   - 13/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

       on the invoice. All invoices shall include documentation of SERVICE FEES
in reasonable detail.

 

  d) [*] shall be due on any late payment.

 

  iii) [*],

 

  iv) [*]

 

  e) Such possible interest in arrears shall be invoiced by DEI following
CLIENT’s payment of the principal and DEI is hereby excused from giving any
prior specific notice.

 

  f) DEI shall not be obligated to deliver to CLIENT any additional Technical
Information, Improvements or to continue to provide technical assistance and
services if any portion of the SERVICE FEES or ROYALTY or other amounts due
hereunder from CLIENT are not paid on or before (and remain unpaid following)
the applicable due date for such payment.

 

  g) This provision cannot be deemed as being a waiver of any of DEI possible
rights to enforce any payment when payable.

 

  h) Except if DEI’s liability is involved as per Article 9.3 hereafter, any sum
received by DEI under this Agreement shall be definitively acquired by DEI.

 

  i) CLIENT agrees not to offset any sum owed to DEI against any sum DEI could
owe CLIENT on any ground whatsoever.

Article 9 Warranties and liabilities

 

9.1 Warranties. DEI warrants to CLIENT that:

 

  a) DEI will not, in the course of performing its services and obligations
under this Agreement, infringe or misappropriate, and none of the WORK PRODUCT
nor any element thereof will or does infringe or misappropriate, any
INTELLECTUAL PROPERTY RIGHT of any third party;

 

  b) neither the WORK PRODUCT nor any element thereof will be subject to any
restriction, mortgage, lien, claim, pledge, security interest, or encumbrance
when delivered by DEI to CLIENT;

 

  c) DEI has full right, power, and authority to enter into and perform this
Agreement without the consent of any third party, including the right to grant
all licenses granted by DEI in this Agreement;

 

  d) All individuals and entities that contribute to or participate in the
conception, creation, or development of the WORK PRODUCT will have
unconditionally and irrevocably assigned all of their right, title, and interest
in and to the WORK PRODUCT (and all INTELLECTUAL PROPERTY RIGHTS thereto) to DEI
(or

 

DEI Agreement Number: 0743.01   - 14/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

       directly to CLIENT) before being allowed to begin performing any of the
services under this Agreement;

 

  e) DEI will comply with all laws, regulations, and ordinances applicable to
DEI’s performance of its services under this Agreement and DEI’s other
obligations under this Agreement, including export control laws, and has
obtained (or before performing any services under this Agreement will obtain)
all governmental permits and licenses required for DEI to perform its services
under this Agreement and DEI’s other obligations under this Agreement;

 

  f) DEI has the requisite skills, experience and expertise necessary to perform
its obligations pursuant to this Agreement;

 

  g) DEI will take all necessary or reasonable precautions to prevent injury to
any person (including CLIENT’s employees) or damage to any property (including
CLIENT’s property) during the term of this Agreement; and

 

  h) Subject to Schedule 3, if the LICENSED UNIT is constructed and operated in
accordance with the PROCESS BOOK, the PERFORMANCE GUARANTEES specified in
Schedule 3 will be met.

 

  i) Except as stated in this Article (a) through above, DEI makes no other
warranties, express or implied, by operation of law or otherwise, with respect
to the licenses granted hereunder, including any other guarantees relating to
the catalysts, equipment or material to be used in the LICENSED UNIT or any
warranty of merchantability or fitness for any other use.

 

9.2 Each Party represents and warrants to the other Party that on the Effective
Date:

 

  a) it is an independent legal entity duly organized, validly existing in good
standing under the laws of the place of its establishment or incorporation;

 

  b) it has full authority to enter into this Agreement and to perform its
obligations hereunder;

 

  c) it has authorized its representative to sign this Agreement and from and
after the Effective Date the provisions of this Agreement shall be legally
binding upon it;

 

  d) its execution of this Agreement and its performance of its obligations
hereunder: (i) will not violate any provision of its business license, articles
of incorporation, articles of association or similar organizational documents;
(ii) will not violate any applicable laws or any governmental authorization or
approval; and (iii) will not violate or result in a default under any contract
to which it is a party or to which it is subject;

 

  e) no lawsuit, arbitration or other legal or governmental proceeding is
pending or, to its knowledge, threatened against it that would affect its
ability to perform its obligations under this Agreement; and

 

DEI Agreement Number: 0743.01   - 15/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  f) it has disclosed to the other Party all documents issued by any
governmental department that may have a material adverse effect on its ability
to fully perform its obligations under this Agreement.

 

9.3 Liabilities.

 

  a) In the event the performances of the PROCESS do not reach the PERFORMANCE
GUARANTEES, DEI shall promptly redesign, or engineer, at its sole cost, the
PROCESS, including the LICENSED UNIT and any non-conforming equipment, until the
PROCESS meets the PERFORMANCE GUARANTEES. Notwithstanding the foregoing, CLIENT
may terminate this AGREEMENT and be entitled to keep the RETAINAGE if DEI is
unable achieve the PERFORMANCE GUARANTEES within 52 weeks after the READY FOR
START-UP DATE (as defined in Schedule 3).

 

  b) In no event shall either Party be liable for or obligated in any manner for
special, consequential or indirect damages including, but not limited to, loss
of profit or loss of use. This Article shall apply whether the cause of actions
relates to this Agreement or arises out of the services performed by DEI under
this Agreement.

 

  c) Notwithstanding any provision in this agreement to the contrary, DEI’s
MAXIMUM LIABILITY (including the liability of its agents, employees, and
officers) for any DAMAGES shall not exceed in the aggregate [*]. The term
“DAMAGES” shall include any claims, costs, damages, attorney fees incurred by
CLIENT, losses, and expenses for which DEI is or may be legally liable, whether
arising from actual or alleged negligence or any other tort, breach of contract,
breach of representation or warranty, breach of performance guarantees,
indemnification under Article 10, and any other legal theory of liability. Said
[*] limit includes any DAMAGES arising from the death or personal injury to any
of CLIENT’s employees or agents or any third parties. The parties acknowledge
that the rates charged by DEI to CLIENT reflect the parties’ agreement that
DEI’s maximum exposure for any and all damages, individually and cumulatively,
arising under this Agreement or the performance of the Agreement shall not
exceed said [*] limit. CLIENT agrees to file no complaint (whether in a court of
competent jurisdiction or arbitration or otherwise) that seeks more than the
aggregate of [*] in DAMAGES (including attorney fees). CLIENT further agrees to
indemnify and hold DEI harmless from any DAMAGES (as defined above) in excess of
said [*] that arise out of this Agreement or DEI’s performance under this
Agreement (including claims that DEI acted negligently), whether the DAMAGES
arise from claims by CLIENT or any third party.

 

DEI Agreement Number: 0743.01   - 16/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

Article 10 Indemnification Obligations

 

10.1 Subject to Article 9.3 above, DEI will indemnify and hold harmless CLIENT
and its AFFILIATES, customers, CONTRACTORS, employees, and agents from and
against any and all liabilities, losses, damages, costs, and other expenses
(including reasonable attorneys’ and expert witnesses’ costs and fees) arising
from or relating to breach of any representation, warranty, covenant, or
obligation of DEI in this Agreement or intentional misconduct or negligence by
DEI or DEI’s agents or subcontractors in performing their services under this
Agreement.

 

10.2 CLIENT will indemnify and hold harmless DEI and its AFFILIATES, employees,
and agents from and against any and all liabilities, losses, damages, costs, and
other expenses (including attorneys’ and expert witnesses’ costs and fees)
arising from or relating to any breach of any representation, warranty,
covenant, or obligation of CLIENT in this Agreement or any intentional
misconduct or negligence by CLIENT or any of CLIENT’s agents or subcontractors
in performing their services under this Agreement. In the event of any
third-party claim, demand, suit, or action (a “Claim”) for which DEI (or any of
its AFFILAITES, employees, or agents) is or may be entitled to indemnification
hereunder, DEI may, at its option, require CLIENT to defend such Claim at
CLIENT’s sole expense.

 

10.3 The party claiming indemnification pursuant to Article 10.1 or 10.1 above,
as applicable (the “Indemnitee”) will promptly advise the other party (the
“Indemnitor) in writing of any Claim and of the commencement against it of any
suit made or brought against the Indemnitee.

 

10.4 Neither DEI nor CLIENT shall settle nor compromise any such suit without
the written consent of the other party if the settlement or compromise obliges
the other party to make any payment or part with any property or assume any
obligation or grant any licenses or other rights or be subject to any injunction
by reason of such settlement or compromise.

Article 11 Insurance

 

11.1 CONTRACTOR’S LIABILITY INSURANCE. DEI shall purchase and maintain such
insurance as will protect it from the claims set forth below which may arise out
of or result from DEI’s performance and furnishing of the Work Product under
this Agreement whether such operations be by DEI or by any of its subcontractors
or by anyone directly or indirectly employed by any of them, or by anyone for
whose acts any of them may be liable. Except for workers’ compensation,
employer’s liability, and professional liability, such policies shall name
CLIENT as an additional insured,

 

DEI Agreement Number: 0743.01   - 17/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  a) WORKMEN’S COMPENSATION. Claims under workers’ compensation, disability
benefit, and other similar employee benefit acts which are applicable to the
work to be performed pursuant to this Agreement.

 

  b) CLAIMS FOR EMPLOYEE INJURY. Claims for damages because of bodily injury,
occupational sickness or disease, or death of DEI’s employees under any
applicable employer’s liability law.

 

  c) CLAIMS FOR INJURY TO OTHERS. Claims for damages because of bodily injury or
death of any person other than DEI’s employees.

 

  d) OTHER CLAIMS. Claims for damages insured by customary personal injury
liability coverage which are sustained (1) by any person as a result of an
offense directly or indirectly related to the employment of such person by DEI
or (2) by any other person.

 

  e) DAMAGE TO PROPERTY. Claims for damages, other than to the LICENSED UNIT
itself, because of injury to or destruction of tangible property, including loss
of use therefrom.

 

  f) OPERATION OF MOTOR VEHICLE. Claims for damages because of bodily injury or
death of any person or property damage arising out of the ownership, maintenance
or use of any motor vehicle.

 

  g) CONTRACTUAL LIABILITY. Claims arising out of the indemnity obligation
assumed by DEI under this Agreement

 

  h) PROFESSIONAL LIABILITY. Claims for professional negligence arising out of
engineering services rendered by DEI.

 

11.2 INSURANCE LIMITS. DEI’s Comprehensive General Liability, Workers’
Compensation, Automobile Liability insurance, and Professional Liability
Insurance, as required by Article 11.1, shall be written for the limits of
liability or amounts of coverage set forth below. DEI insurance may be arranged
under a single policy for the full limits required or by a combination of
underlying policies with the balance provided by Excess or Umbrella Liability
policies.

 

  a) Commercial General Liability with limits of coverage of $5,000,000 general
aggregate, $5,000,000 products/completed operations aggregate, and $5,000,000
personal and advertising injury.

 

  b) Business Automobile Liability insurance covering all owned, hired, and
non-owned vehicles used in the operations of Contractor with limits of coverage
of a Combined Single Limit of $1,000,000 per accident for bodily injury and
property damage.

 

  c) Workers’ Compensation Insurance and/or Longshoremen’s and Harborworkers’
Compensation Insurance as required by law and regulations applicable to and
covering employees of Contractor engaged in the performance of the Services in
compliance with the laws of every state in which the Services is being
performed.

 

DEI Agreement Number: 0743.01   - 18/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

       Policy must be endorsed to provide Maritime Coverage, Voluntary Workers’
Compensation and Stop Gap Liability.

 

  d) Employers’ Liability Insurance (Coverage B) with limits of coverage of:
$1,000,000 per accident, bodily injury by accident; $1,000,000 Policy Limit,
bodily injury by disease; and $1,000,000 per employee, bodily injury by disease.

 

  e) Contractual Liability Insurance covering DEI’s indemnification obligations
hereunder, with coverage limits of $5,000,000.

 

  f) Professional Liability coverage of $5,000,000 for DEI’s errors and
omissions in performing its services under this AGREEMENT.

 

11.3 CANCELLATION OF INSURANCE. The foregoing policies shall contain a provision
that the coverages afforded under the policies will not be canceled, that
renewal will not be refused, and that the amount of coverage will not be reduced
below the limits specified above until at least thirty (30) days prior written
notice has been given to CLIENT. A Certificate of Insurance showing such
coverages to be in force shall be filed with CLIENT prior to commencement of the
work pursuant to this Agreement.

Article 12 Confidentiality

 

12.1 CLIENT and DEI shall use the CONFIDENTIAL INFORMATION only for the purposes
of performing their respective obligations under this Agreement, and in
accordance with the licenses granted herein. No other use is permitted without
the prior written consent of DEI or CLIENT, as the case may be.

 

12.2 All CONFIDENTIAL INFORMATION received hereunder shall be kept confidential
and shall not, without the prior written consent of the disclosing party, be
disclosed by the receiving party, in any manner whatsoever, in whole or in part.
Moreover, CLIENT and DEI shall each only disclose the CONFIDENTIAL INFORMATION
to its officers, directors and employees who need to know such CONFIDENTIAL
INFORMATION for the PURPOSE, who are informed by CLIENT or DEI, as applicable,
of the confidential nature of the CONFIDENTIAL INFORMATION and who shall be
bound to act in accordance with the terms and conditions of this Agreement.

 

12.3 CLIENT and DEI each hereby agree that, subject to CLIENT’s license rights
granted in this agreement, the CONFIDENTIAL INFORMATION disclosed hereunder is
and will remain the property of the disclosing party and that drawings or other
written, printed or electronic data included therein are not to be copied or
reproduced, mechanically or otherwise, without the express permission of the
disclosing party, except for such copies that the receiving party reasonably
requires for the PURPOSE.

DEI Agreement Number: 0743.01   - 19/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

12.4 The term “CONFIDENTIAL INFORMATION” shall not include such information
furnished hereunder that the receiving party can prove:

 

  a) was, at the time of disclosure, in the public domain or which subsequently
enters the public domain through no act or failure to act by the receiving
party; or

 

  b) was developed by or was in the possession of the receiving party prior to
being furnished to the receiving party by the disclosing party or on its behalf,
provided that the source of such CONFIDENTIAL INFORMATION was not known to the
receiving party to be prohibited from disclosing the CONFIDENTIAL INFORMATION to
CLIENT by a legal, contractual or fiduciary obligation to the disclosing party;
or

 

  c) was or became available to the receiving party on a non-confidential basis
from a third party that is not known to the receiving party to be prohibited
from disclosing the CONFIDENTIAL INFORMATION to the receiving party by a legal,
contractual or fiduciary obligation to the disclosing party.

 

     However, in situations a) through c) above (the “NON-CONFIDENTIAL
INFORMATION”), DEI and CLIENT each undertake not to disclose all such
NON-CONFIDENTIAL INFORMATION lawfully in its possession that implicates
CONFIDENTIAL INFORMATION.

 

12.5 Ownership of Instruments of Service – All reports, drawings,
specifications, computer files, field data, notes and other documents and
instruments prepared by DEI as instruments of service shall remain the property
of DEI.

 

12.6 The exceptions of Article 12.4 shall not apply to any information furnished
hereunder which:

 

  a) Is specific and, at the time of its disclosure hereunder, merely embraced
by general information within the exceptions, or

 

  b) Is a combination of features of the Confidential Information, unless the
combination itself, its principle of operation and method of use are within the
exceptions.

 

12.7 Despite the restrictions on disclosure contained in this Agreement, but
only to the extent necessary for the PURPOSE, the receiving party may disclose
part of the CONFIDENTIAL INFORMATION to the following third parties:

 

  a) a vendor of commodity equipment or materials or a supplier of construction
labor who will receive only a minor or non-critical portion of the Confidential
Information and who, prior to such disclosure, has signed an agreement with
CLIENT or DEI containing restrictions on use and disclosure at least equivalent
to those contained in this Agreement; or

 

  b) any other third party, including but not limited to, any CONTRACTOR,
manufacturer of specially-designed equipment, PROJECT lender or investor, or

DEI Agreement Number: 0743.01   - 20/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

     any of CLIENT’s customers, who, prior to such disclosure, has signed an
agreement with CLIENT or DEI containing appropriate restrictions on use and
disclosure.

 

12.8 In the event that CLIENT or DEI, as applicable, who is provided with the
CONFIDENTIAL INFORMATION pursuant to this Agreement becomes legally compelled
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any of the
CONFIDENTIAL INFORMATION to third parties other than those identified above, the
receiving party will provide to the disclosing party with prompt notice so that
such party may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Agreement. In any such event, the
receiving party will use its best efforts to ensure that the CONFIDENTIAL
INFORMATION will be accorded confidential treatment.

 

12.9 Should either party finally decide not to sign and/or perform this
Agreement, such party will promptly return to the other party or destroy, at the
disclosing party’s option, all of the CONFIDENTIAL INFORMATION in the receiving
party’s possession (including, all originals, and all copies and derivations
therefrom, in any medium); provided, however, that the receiving party may
retain one copy of the CONFIDENTIAL INFORMATION in a locked and limited access
file for the sole purpose of determining the receiving party’s compliance under
this Agreement. If requested by the disclosing party, an appropriate officer of
the receiving party will certify to the disclosing party that all such material
has been so returned or destroyed.

 

12.10 Upon expiration or termination of this agreement, each receiving party
will promptly return to each disclosing party or destroy, at each disclosing
party’s option, all of the CONFIDENTIAL INFORMATION in each receiving party’s
possession, except operating, maintenance and testing manuals (including, all
originals, and all copies and derivations therefrom, in any medium); provided,
however, that the receiving party may retain one copy of the CONFIDENTIAL
INFORMATION in a locked and limited access file for the sole purpose of
determining the receiving party’s compliance under this Agreement. If requested
by the disclosing party, an appropriate officer of the receiving party will
certify to the disclosing party that all such material has been so returned or
destroyed.

Article 13 Other agreements

 

13.1 This Agreement sets forth the entire understanding between the parties
relating to the use by CLIENT of the PROCESS in the LICENSED UNIT and replaces
and renders void all prior agreements between them concerning the subject matter
contained herein.

DEI Agreement Number: 0743.01   - 21/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

13.2 No amendment to this Agreement shall be effective unless in writing and
executed by the parties. No such amendment shall be effected by the
acknowledgment or acceptance of purchase orders, shipping instruction forms,
order confirmation forms, general terms of sale or of purchase or any other
documents between the parties containing terms or conditions at variance with
this Agreement.

Article 14 Assignment

 

14.1 This Agreement is not assignable in whole or in part by either party
without the previous written consent of the other party; provided, however, that
it may be assigned by either party without such consent to

 

  a) any Affiliate of the assigning party, or

 

  b) a successor of the assigning party in its business, or in the part of its
business concerned by this Agreement, provided that such successor is not a
competitor of the non-assigning party.

 

14.2 The assignment shall not be effective unless and until the assignee
undertakes in writing to take over all rights and obligations of the assignor
set forth in this Agreement.

 

14.3 Confidentiality obligations between the Parties under Article 12 above
shall survive any assignment of this Agreement.

 

14.4 Notwithstanding anything to the contrary in this Article 14 , DEI hereby
acknowledges and consents to CLIENT’s assignment, in connection with CLIENT’s
financing of the construction, development and operation of the PROJECT, as
collateral security for its obligations relating thereto, of all of CLIENT’s
rights, title and interest in, to and under this Agreement (the “Assigned
Interests”) to the financial institution named as Collateral Agent for the
Secured Parties (as defined below) (together with its successors, designees and
assigns in such capacity, the “Agent”) pursuant to a Security Agreement to be
made by CLIENT in connection with such financing in favor of the Agent for the
benefit of certain secured parties described therein (the “Secured Parties”) and
in that certain Collateral Agency and Intercreditor Agreement (as amended,
restated, supplemented or otherwise modified from time to time, the
“Intercreditor Agreement”) to be made in connection with such financing among
CLIENT, Hoku Materials Holdings, Inc., the Agent, and the other Secured Parties
party thereto.

 

14.5 Except as set forth below, DEI further consents to the transfer of CLIENT’s
interest under this Agreement to the Agent or any purchaser, successor, assignee
and/or designee (a “Subsequent Transferee”) of the Assigned Interests at a
foreclosure sale or by a conveyance by CLIENT in lieu of foreclosure and agrees
that,

DEI Agreement Number: 0743.01   - 22/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

     notwithstanding any provision hereof to the contrary, upon such
foreclosure, sale or conveyance, the Agent or such Subsequent Transferee shall
be substituted for CLIENT under this Agreement and DEI shall perform its
obligations hereunder in favor of the Agent or the Subsequent Transferee, as the
case may be. Notwithstanding the foregoing, in no event shall DEI be deemed to
have consented to any such transfer, unless the Subsequent Transferee agrees, in
writing, to be bound to the terms of this Agreement, including but not limited
to its confidentiality provisions, and until such written agreement is obtained,
any such transfer shall be null and void.

 

14.6 In furtherance of Articles 14.4 and 14.5, DEI agrees to sign and deliver to
the Agent a Consent and Agreement in substantially the form of Schedule 6
attached hereto (the “CONSENT”), subject to DEI’s opportunity to add language
that protects the CONFIDENTIAL INFORMATION, and subject to Agent’s review and
further modification.

Article 15 Miscellaneous

 

15.1 Nothing in this Agreement can be construed as granting or transferring any
proprietorship of whatsoever kind under any information and data furnished by
DEI hereunder.

 

15.2 Neither the failure nor any delay on the part of either party in the
exercise of any right, power or privilege under this Agreement or the documents
referred herein shall operate as a waiver of such right, power or privilege.

 

15.3 If any provisions of this Agreement or any document executed in connection
herewith is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement shall remain in full force
and effect.

 

15.4 Either Party shall have the right to make oral or written reference to the
subject matter of this Agreement but not to its provisions when dealing with
third parties, except to the extent required by governmental authority or court
of competent jurisdiction.

 

15.5 Remedies. CLIENT’S and DEI’S remedies for any breach of this Agreement by
the other Party will include damages, injunctive relief, specific performance,
and restitution. The Parties acknowledge that any breach of this Agreement would
cause irreparable injury to the other Party for which monetary damages would not
be an adequate remedy and, therefore, each Party agrees that the other Party
will be entitled to injunctive relief (including specific performance). The
rights and remedies provided to each Party in this Agreement are cumulative and
in addition to any other rights and remedies available to such Party at law or
in equity. Notwithstanding

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

     anything to the contrary in Article 17, CLIENT or DEI may immediately bring
an action for injunctive relief against the other Party in any state or federal
court located in the State of Idaho, in which case Idaho law shall govern such
dispute, without regard to Idaho’s laws concerning conflicts of law, and the
other Party agrees to submit to the jurisdiction of such court.

Article 16 Notices

 

16.1 Any notice hereunder must be in writing and will be deemed to have been
duly given when (a) delivered by hand (with written confirmation of receipt),
(b) sent by telecopy (with written confirmation of receipt), or (c) received by
the addressee, if sent by a recognized delivery service (receipt requested). All
notices shall be addressed as set forth below (or to such other addresses and
telecopy numbers as a party may designate by notice to the other party):

 

  a) if to DEI:

Dynamic Engineering, Inc.

215 Broadus St, Suite 100

Sturgis, MI, 49091, USA.

For the attention of the Director of Legal Affairs

 

  b) if to CLIENT:

HOKU MATERIALS, INC.

One Hoku Way

Pocatello, Idaho 83204

for the attention of Karl Taft

with a copy to:

HOKU SCIENTIFIC, INC.

1075 Opakapaka Street

Kapolei, Hawaii 96707

Attention: Dustin Shindo, CEO

 

16.2 Communications relative to transmittal of technical documentation shall be
forwarded to such individual as the considered Party may designate from time to
time.

Article 17 Conciliation, arbitration

 

17.1 DISPUTE RESOLUTION. If any controversy or Claim arises out of or relates to
this Agreement, or breach thereof, the parties agree to the following procedure:

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  a) DIRECT NEGOTIATION. The Parties shall initially attempt to resolve the
dispute by direct negotiation in an amicable manner.

 

  b) MEDIATION. If the Parties fail to reach agreement by direct negotiation
within thirty (30) days from the commencement of negotiation, the parties will
submit the dispute to non-binding mediation under the Rules of the American
Arbitration Association. The mediation shall be held in the county and state
where the Project is located, unless otherwise agreed to by the parties in
writing.

 

  c) ARBITRATION. If the Parties cannot settle the dispute by non-binding
mediation within 60 days from the commencement of mediation, the dispute shall
be settled by arbitration in accordance with the Arbitration Rules of the
American Arbitration Association then in effect unless the parties mutually
agree otherwise. In any such arbitration proceeding, either party may join any
third party who participated in the Project who is or may be necessary to
resolution of the dispute. Such arbitration proceeding shall be held in the
county and state where the Project is located, unless otherwise agreed to by the
parties in writing.

 

  d) DEMAND FOR ARBITRATION. Notice of the demand for arbitration shall be filed
in writing with the other Party to this Agreement and with the American
Arbitration Association within 60 days after the Parties fail to reach agreement
by non-binding mediation.

 

  e) DISCOVERY BEFORE ARBITRATION. Prior to any arbitration hearing, discovery
shall be limited to: interrogatories; requests for production of documents;
exchange of written reports prepared by expert witnesses retained by any party
to the proceeding; depositions of such expert witnesses; and depositions of no
more than ten (10) witnesses by each party, unless otherwise agreed to by the
parties in writing. The Parties shall be entitled to take such discovery from
third parties as agreed to or as ordered or approved by the arbitrator(s).

 

  f) JUDGMENT. Judgment upon the award rendered by the arbitrators shall be
final and may be entered in any court having lawful jurisdiction thereof.

 

  g) PERFORMANCE PENDING RESOLUTION OF DISPUTE. Unless otherwise agreed in
writing, DEI shall continue its services and maintain its progress during any
dispute resolution proceedings, and CLIENT shall continue to make payments to
DEI in accord with this Agreement.

The validity and effect of this Agreement shall be interpreted under the laws of
the State of Idaho of the United States, without regard to its rules governing
conflict of laws.

Article 18 Effective Date, termination

 

18.1 The terms and conditions herein set forth shall become binding upon the
Parties on the EFFECTIVE DATE.

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
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COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

18.2 This Agreement shall be in full force and effect as long as the LICENSED
UNIT shall operate and it may not be terminated except that, if one Party makes
a gross breach in performing an obligation under this Agreement, the other Party
may, after a 30 (thirty) days’ advance written notice, terminate this Agreement
if the defaulting Party has not taken proper measures to remedy its failure.

 

18.3 In addition to the foregoing, this Agreement may be terminated by CLIENT or
DEI if the other Party is adjudged bankrupt, or if the other party makes a
general assignment for the benefit of its creditors, or if a receiver is
appointed on account of the party’s insolvency, or if the other Party
persistently or repeatedly refuses or fails, except in cases for which an
extension of time is provided, to supply enough properly skilled workmen or
proper materials, or if the other Party fails to make proper payment under this
Agreement or to subcontractors or for materials or labor, or persistently
disregards laws, ordinances, rules, regulations or orders of any public
authority having jurisdiction, or otherwise is guilty of a substantial violation
of this Agreement. In such event, either CLIENT or DEI, as the case may be, may,
without prejudice to any right or remedy and after giving the other Party seven
(7) days written notice, during which period the other Party fails to cure the
violation, terminate this Agreement and pursue all remedies available to, as
applicable, CLIENT or DEI at law or in equity.

 

18.4 Upon seven days written notice to DEI, CLIENT may, without cause and
without prejudice to any other right or remedy of CLIENT, elect to terminate the
Agreement. In such case, DEI shall be paid for:

 

  a) Completed and accepted Work Product executed in accord with this Agreement
prior to the effective date of termination;

 

  b) Reasonable expenses sustained prior to the effective date of termination in
performing services and furnishing labor, materials, or equipment as required by
this Agreement in connection with uncompleted Work Product (the reasonable
expenses for labor shall be billed and paid in accordance with the rates set
forth on Schedule 5);

 

  c) Reasonable expenses incurred by DEI directly attributable to termination;
and

 

  d) Any royalty fees and costs due under Article 8 or reasonably expected to be
due if the CLIENT constructs a facility at JOBSITE to produce polysilicon.

 

18.5 If this Agreement is terminated because of breach by CLIENT of provisions
of Article 8 (failure to make a payment when due subject to any cure period) or
Article 12 (Confidentiality), CLIENT hereby undertakes that it will discontinue
the use of the PROCESS, the PROCESS BOOK, and any CONFIDENTIAL INFORMATION.

 

18.6 In any other case of termination, neither party shall have any further
right of obligations under this Agreement, except:

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  a) CLIENT shall remain liable under Article 8 for any ROYALTIES, SERVICE FEES,
and costs accrued before termination (as explained in Article 18.4 above).

 

  b) DEI and CLIENT rights and obligations under Article 15.4 (Reference) hereof
shall remain in effect and

 

  c) CLIENT’s rights under Article 3 (Grant of license) shall remain in effect
to the extent of any fully paid license(s) acquired by CLIENT.

 

18.7 In no event shall termination of this Agreement:

 

  a) relieve CLIENT or DEI of its restrictions on use, duplication and
disclosure of TECHNICAL INFORMATION under Article 12 (Confidentiality) hereof,
or

 

  b) affect DEI and CLIENT rights and obligations under Article 17
(Conciliation-Arbitration) hereof.

 

18.8 A Schedule of 41 pages is attached herewith forming a part of this
Agreement; however, if a term or provision of this Agreement is to conflict with
the content of the Schedule, this Agreement shall prevail.

 

18.9 Neither Party shall be deemed to be in default or otherwise responsible for
delays or failures in performance resulting from acts of God, acts of war or
civil disturbance, epidemics, governmental action or inaction, fires,
earthquakes, or other causes beyond the affected Party’s reasonable control.

 

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DEI Agreement Number: 0743.01   - 27/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

SCHEDULE 1 – PROCESS BOOK — DESIGN PACKAGE SPECIFICATION

INTRODUCTION

 

1. PROCESS SPECIFICATIONS SECTION

 

  1.1 Basis of design

 

  1.1.1 Duty of unit

 

  1.1.2 Feeds specification

 

  1.1.3 Products specification

 

  1.1.4 Battery limit conditions

 

  1.1.5 Utilities conditions and site information

 

  1.1.6 Operating conditions

 

  1.2 Unit description

The process flows, the major equipment items and their purpose or function, the
control loops are described based on the process flow diagrams.

 

  1.3 Material balances

Detailed material balances based on expected performances of the process,
including impurities, to show TCS product meeting product specification.

 

  1.4 Physical and thermal properties of main process streams

 

  1.5 Specifications of catalysts and chemicals

Nature of catalysts, main characteristics, quantities (initial load or
consumption).

 

  1.6 Utilities

Estimated figures developed from heat and material balances using assumed usual
efficiency figures for the equipment involved in the utility balance.

 

  1.7 Waste effluents

Composition, flow rate, type of treatment or disposal.

 

  1.8 Mandatory, recommended and potential suppliers

 

  1.9 Documents to be transmitted to DEI for comments or information

 

  1.10 Materials of construction

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

2. EQUIPMENT PROCESS SPECIFICATIONS SECTION

The Process specifications are given exclusive of any mechanical specification,
except for flange rating.

 

  2.1 Equipment list

 

  2.2 Vessels

The Process specifications include a sketch showing the inside dimensions,
nozzles size and location, internals arrangement, type of material and
recommended corrosion allowance, operating and design conditions, insulation
requirement, flange type and rating according to ANSI. Additional sketches
showing the process design of the internals are provided.

 

  2.2.1 Drums

 

  2.2.2 Columns

 

  2.2.3 Reactors

 

  2.3 Heat exchange equipment

The Process specifications include flow rate, applicable physical properties of
process streams, fouling factors, heat duty, type of material and recommended
corrosion allowance on process side, operating and design conditions,
recommended type.

Vaporization tables showing liquid and vapor rates and physical properties are
provided when applicable.

 

  2.3.1 Heat exchangers

 

  2.3.2 Air coolers

 

  2.3.3 Heaters

 

  2.4 Rotating machines

The Process specifications include operating and design flow rates, applicable
physical properties of process streams, operating conditions, available NPSH,
type of material on process side, recommended type. Driver recommended type,
estimated rated power and operating load are provided.

 

  2.4.1 Pumps

 

  2.4.2 Compressors

 

  2.5 Miscellaneous equipment

 

3. PIPING PROCESS SPECIFICATIONS SECTION

Process piping is concerned exclusive of utility piping.

 

DEI Agreement Number: 0743.01   - 29/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

Process specifications are given exclusive of any mechanical specification with
exception to flange rating according to ANSI.

 

  3.1 General notes

 

  3.1.1 Recommendations

 

  3.1.2 Process piping classes

(type of material corrosion allowance, flange type and rating)

 

  3.1.3 Piping identification system

 

  3.2 Piping process specifications

Flow rate, applicable physical properties of process streams, operating and
design conditions, process piping classes.

 

4. INSTRUMENTATION PROCESS SPECIFICATIONS SECTION

Process specifications are given exclusive of any mechanical specification.

 

  4.1 Instruments

Applicable operating conditions and physical properties of process streams, trip
and set points for alarms are provided.

 

  4.1.1 Flow

 

  4.1.2 Level

 

  4.1.3 Pressure

 

  4.1.4 Temperature

 

  4.1.5 Miscellaneous (when applicable)

 

  4.2 Valves

Applicable operating conditions and physical properties of process streams,
action of the measured variable, position in case of air failure are provided.

 

  4.2.1 Control

 

  4.2.2 On/off

 

  4.2.3 Miscellaneous

 

  4.3 Pressure safety valves

Flow rate, operating conditions, applicable physical properties of emergency
streams are provided in each emergency case.

 

  4.4 Alarms

Only on client request for separate alarm list.

 

DEI Agreement Number: 0743.01   - 30/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  4.5 Analysis point

List and types to be used.

 

  4.6 Analyzers (when applicable)

 

  4.7 Hand switch

 

  4.8 Shutdown logic and sequence logic (when applicable)

 

  4.9 Special loops description (when applicable)

 

5. DIAGRAMS SECTION

 

  5.1 Symbols and standards

Symbols and standards will be to standard professional engineering standards and
will be agreed to at the KICK OFF meeting.

 

  5.2 Process flow diagrams

The process flow diagrams show the major equipment with the identification
numbers, the main process streams with a number referring to the material
balances, the main control loops, the operating temperatures and pressures and
estimated duties for heat exchangers and furnaces.

 

  5.3 Piping and instrumentation diagrams

I.S.A standard is used for instrumentation symbols and identification. Process
piping exclusive of utilities piping is identified according to a code showing
the serial number, nominal size, type of material, corrosion allowance, flange
type and ANSI rating.

 

6. OPERATING INSTRUCTIONS SECTION

 

  6.1 Preface of section 6

 

  6.1.1 General

 

  6.1.2 Compulsory instructions and reference documents

 

  6.2 Purpose of the Process

 

  6.3 Chemical reactions and catalysts

 

  6.3.1 Introduction

 

  6.3.2 Chemical reactions

 

  6.3.3 Catalyst

 

  6.3.4 Process variables

 

DEI Agreement Number: 0743.01   - 31/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  6.4 Preparation for start-up

 

  6.4.1 Chronology of operations

 

  6.4.2 Equipment and unit inspection

 

  6.4.3 Preliminary operations

 

  6.4.4 Drying out of the unit (when applicable)

 

  6.4.5 Catalyst loading (when applicable)

 

  6.4.6 Special operations (when applicable)

 

  6.5 First start-up

 

  6.5.1 Status of the unit

 

  6.5.2 Chronology of start-up operations

 

  6.5.3 } Title and content of chapters to be defined according to the Process

 

  6.6 Operation of the Unit

 

  6.6.1 Summary of operating conditions

 

  6.6.2 Control philosophy of the Process

 

  6.6.3 Operating parameters

 

  6.6.4 Adjustment of operating conditions

 

  6.6.5 Putting the spare reactor into service (when applicable)

 

  6.6.6 Putting the spare column into service (when applicable)

 

  6.6.7 Troubleshooting (when applicable)

 

  6.7 Shutdown and restart of the Unit

 

  6.7.1 Normal shutdown

 

  6.7.2 Unit restart

 

  6.7.3 Emergency shutdown

 

  6.8 Adsorbent and Catalyst specifications and special procedures

 

  6.8.1 Manufacturer

 

  6.8.2 Adsorbent specifications (when applicable)

 

  6.8.3 Catalyst specifications (when applicable)

 

  6.8.4 Packaging, handling and storage

 

DEI Agreement Number: 0743.01   - 32/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  6.8.5 } Title and content of chapters to be defined according to the Process

 

  6.9 Hazardous and toxic materials

Information on hazardous and toxic substances.

 

  6.10 Analytical control

Analytical methods, reference number for standard methods (like ASTM) or full
description for specific methods. List of streams to be analysed, list of test
for each stream, frequency.

 

  6.10.1 Recommended methods and frequency

 

  6.10.2 Analytical methods

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DEI Agreement Number: 0743.01   - 33/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

SCHEDULE 2 – DETAILED ENGINEERING DOCUMENTS TO BE TRANSMITTED TO DEI

(as per Article 7.2).

 

3-a For comments (2 copies):

- [*]

- [*]

- [*]

[*]

- [*]

 

3-b For information (1 copy):

- [*]

- [*]

- [*]

- [*]

- [*]

- [*]

 

3-c Notwithstanding anything to the contrary herein, the foregoing detailed
engineering documents shall be limited to those documents related to the
PROCESS. CLIENT shall have no obligation to provide any other design documents
to DEI pursuant to this AGREEMENT.

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DEI Agreement Number: 0743.01   - 34/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

SCHEDULE 3 – PERFORMANCE GUARANTEES

A—DEFINITIONS

 

A-1 In addition to the definitions given in Article 1 here above:

 

  a) “ADSORBENT” means individually or collectively the adsorbent specified
hereafter, or any other one that may be timely recommended by DEI.

 

  b) “CATALYST” means individually or collectively the catalyst specified
hereafter, or any other one that may be timely recommended by DEI.

 

  c) “CHARGE” means, among the feed materials processable in the LICENSED UNIT,
the feed material which shall be charged to the LICENSED UNIT to perform the
PERFORMANCES TEST PERIOD (as defined hereafter), and which shall have the
characteristics specified hereafter.

 

  d) “PERIOD” means [*].

 

  e) “PRODUCT” means individually or collectively the effluent material from the
LICENSED UNIT having the characteristics given hereafter.

 

  f) “PERFORMANCES PROBE” means the comparison of the actual performances
measured during the PERFORMANCES TEST PERIOD with the PERFORMANCE GUARANTEES
herein set forth.

 

  g) “PERFORMANCES TEST PERIOD” means [*] of the LICENSED UNIT in accordance
with the PROCESS BOOK during which the LICENSED UNIT shall be under checking and
its actual performances measured.

 

  h) “MECHANICAL COMPLETION” means the successful completion of mechanical
construction of the LICENSED UNIT, in all material respects in accordance with
the engineering design specifications furnished by DEI and such detailed design
as furnished to or approved by DEI pursuant to Article 7.2 of the Agreement,
including but not limited to [*]

 

  i) “READY FOR START-UP DATE” means the date when, after [*].

 

  j) “START-UP DATE” means the date when, after [*].

 

DEI Agreement Number: 0743.01   - 35/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

B—CONDITIONS OF PERFORMANCE GUARANTIES

 

B-1 DEI guarantees that, subject to the terms and conditions hereafter, the
LICENSED UNIT shall meet the PERFORMANCE GUARANTEES shown in the Section I
hereafter.

 

B-2 DEI shall be discharged from any responsibility with regard to any guarantee
in the following situations provided that such situation directly affects the
performance of the LICENSED UNIT if:

 

  a) Detailed engineering, construction or operation of the LICENSED UNIT (i) is
not in accordance with DEI’s data and instructions or the LICENSED UNIT is
subsequently modified, (ii) employs, for those equipments and supplies
designated as qualified in the PROCESS BOOK, vendors (1) outside the list of
qualified vendors listed in the PROCESS BOOK or (2) that have not been mutually
agreed upon in writing by CLIENT and DEI, (iii) employs defective materials,
equipment or standards, or (iv) uses specifications or data that have not been
provided by DEI, or otherwise approved in writing by DEI.

 

  b) CLIENT declines to have the team of DEI advisors acting as specified in
Sections C-1 or D-1 hereafter.

 

  c) CLIENT declines to have the modifications to the LICENSED UNIT made as
requested by DEI under Section G-1 hereafter.

 

  d) The LICENSED UNIT is operated under conditions different from those either
specified by DEI or approved in writing by DEI.

 

B-3 DEI shall be considered to have fulfilled PERFORMANCE GUARANTEES in any of
the following events:

 

  a) CLIENT declines to have a PERIOD conducted;

 

  b) A PERFORMANCE PROBE has demonstrated that any of the PERFORMANCE GUARANTEES
have been equaled or exceeded during the corresponding PERIOD;

 

  c) Any of the PERFORMANCE GUARANTEES has not been reached but:

 

  - CLIENT is in material breach of any of the payment provisions set forth
herein, or

 

  - DEI has already spent its maximum financial liability as set forth in
Article 9.3.c of this Agreement, or

 

DEI Agreement Number: 0743.01   - 36/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  - CLIENT has refused to comply with DEI’s request to replace (or to regenerate
as the case may be) a CATALYST and/or ADSORBENT charge which has been damaged by
an operating trouble as contemplated in Section D-2-f hereafter.

 

  d) Whenever, without fault of DEI:

 

  - the first PERFORMANCES TEST PERIOD has not been started within [*] from the
READY FOR START-UP DATE, or

 

  - the PERFORMANCES TEST PERIOD has not been completed within [*] from same
date, or

 

  - CLIENT has materially failed to perform its obligations in the manner set
forth in Section D-2-a hereof.

 

  e) CLIENT doe not perform its obligations in accordance with SCHEDULE 3.

C—DEI’s ASSISTANCE—RULES OF CONDUCT OF DEI ADVISORS

 

C-1 Assistance during the initial stages of operation of the LICENSED UNIT

 

  a) CLIENT shall give DEI a 3 (three) months’ advance notice of the expected
MECHANICAL COMPLETION date.

 

  b) Prior to departure of DEI advisors, DEI will confirm to CLIENT and CLIENT
will approve in writing no later than 2 (two) weeks prior to the expected
MECHANICAL COMPLETION date, hotel accommodation, local transportation means,
possible luggage excess, final composition of the DEI team of advisors, arrival
schedule, work organization, on-site facilities, etc.

Two (2) DEI advisors shall be present during the following steps:

 

  - inspection established in Section D-1-a hereafter,

 

  - CATALYST and/or ADSORBENT loading operation, if any, referred to in Section
D-1-b hereafter,

DEI’s complete team (at least one advisor and a Chief Start-up Advisor) shall be
present during the following steps:

 

DEI Agreement Number: 0743.01   - 37/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  - start-up preparation referred to in section D-1-c hereafter,

 

  - CATALYST and/or ADSORBENT pre-treatment, if any, as described in Section
D-1-c hereafter,

 

  - LICENSED UNIT adjustment as described in Section D-1-d hereafter,

 

  - PERFORMANCES TEST PERIOD(s), until the end of the last PERFORMANCE PROBE
permitted hereunder.

 

  c) In case of replacement of one of its advisors, DEI undertakes that the new
designated advisor shall have the same ability as the replaced one to perform
its job under this Agreement.

 

C-2 Rules of conduct of DEI advisors

 

  a) CLIENT shall be solely in charge of the operations and operating personnel
and DEI personnel shall have no authority whatsoever to direct or cause CLIENT
or CLIENT personnel to act. All DEI personnel must comply with the regulations
then in force at the LICENSED UNIT (safety, secrecy, etc.). CLIENT shall give
DEI personnel full facilities and put at their disposal all reasonable means to
fulfil their duty.

 

  b) LICENSED UNIT operations must be substantially in accordance with the
Operating Instructions furnished to CLIENT by DEI or by DEI Chief Start-up
advisor from time to time at the job site. Upon request by CLIENT, DEI personnel
shall give full and clear explanation of any such advice and the basis thereof.

 

  c) If CLIENT disagrees with any advice given by DEI, it will state such
disagreement in writing with the basis hereof. In the event CLIENT and DEI fail
to reconcile their differences of opinion and CLIENT fails to follow the advice,
DEI Chief Start-up Advisor will so notify CLIENT in writing.

 

  d) During the Start-up and the initial operation of the LICENSED UNIT and
during the PERFORMANCES TEST PERIOD, DEI personnel shall have full discretion to
check at reasonable time all instrumentation, data, charts, test results,
records and operating logbooks and shall have free access to the control-labs
for the purpose of examining the analysis being undertaken.

 

DEI Agreement Number: 0743.01   - 38/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  e) Upon request of DEI Chief Start-up Advisor, CLIENT shall provide a sample
of any material treated or produced by the LICENSED UNIT or employed in it in
order that DEI may have such sample analyzed at its own expense.

 

  f) In the event that the analytical results obtained by the Parties conflict
with each other, a sample of the considered product shall be submitted to a
mutually agreed upon laboratory. The findings of this laboratory shall be
accepted as final and the fees and expenses of such laboratory shall be shared
by DEI and CLIENT.

D—START-UP AND TESTING

D-1 Inspection, CATALYST and/or ADSORBENT loading, and Start-up

All the PERFORMANCE GUARANTEES given herein shall be void if DEI representatives
are not present in the LICENSED UNIT continuously during the following steps;
provided, however, that DEI will exercise its best efforts to be present for
such steps when provided reasonable advance notice by CLIENT:

 

  a) Inspection. Prior to the MECHANICAL COMPLETION, DEI will inspect the
LICENSED UNIT including the vessels, the piping and the internal parts of the
critical equipment such as reactors, columns and the like to verify conformity
with process specifications and operation requirements and will establish a list
of requested modifications, if any.

 

  b) CATALYST AND/OR ADSORBENT loading. The CATALYST and/or ADSORBENT loading
(if any) shall be performed in the presence of DEI advisors after inspection of
the internals.

 

  c) Start-up preparation. Promptly after the satisfactory completion of the
inspection by DEI under D-1-a above, CLIENT will perform the preparation for
start-up according to DEI’s instructions. This includes tightness tests, drying,
warming and associated activities. Upon completion of Start-up preparation, DEI
shall issue a READY FOR START-UP Certificate according to DEI procedures (form
in Annex A), for CLIENT approval.

 

  d) Start-up. Promptly after READY FOR START-UP, CLIENT will perform CATALYST
and/or ADSORBENT activation if any and put the LICENSED UNIT on-stream according
to DEI’s instructions when CHARGE, raw materials, utilities and the like are
available in suitable quality and in quantities not less than the minimum
necessary for a proper operation of the PROCESS.

DEI Agreement Number: 0743.01   - 39/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

CLIENT shall then conduct such preliminary periods of operation as DEI may deem
necessary for adjustment of the LICENSED UNIT.

 

  e) Performance test procedure. Prior to the first PERFORMANCES TEST PERIOD,
DEI shall establish and CLIENT shall approve, the procedure for the PERFORMANCES
TEST PERIOD, including:

 

  - the program of testing, sampling, and analysis,

 

  - the analytical methods that shall actually be used and the accuracy of such
methods,

 

  - the data logging,

 

  - any specific calibration of measures or correction factors that may be used.

 

  f) Preparation for the PERFORMANCES TEST PERIOD. When CHARGE, raw materials,
utilities and the like can be continuously provided in the quantities and
qualities specified by DEI to run the LICENSED UNIT at the capacity for which
the PERFORMANCE GUARANTEES have been established, CLIENT will complete the
adjustments required by DEI up to the point where the LICENSED UNIT shall be in
a steady state of operation and ready for the PERFORMANCES TEST PERIOD.

 

  g) Miscellaneous- first steps of operation. During this start-up period,
CLIENT will have the LICENSED UNIT shutdown or operated under the various
operating conditions that DEI advisors may reasonably request. It is understood
that they will, as far as possible, take into account the local circumstances
and the commercial requirements of the LICENSED UNIT; especially any shut-down
shall be made at mutual convenience.

D-2 PERFORMANCES TEST PERIOD proceedings:

 

  a) As soon as the LICENSED UNIT is ready for the PERFORMANCES TEST PERIOD and
immediately upon the first reasonable request from DEI, CLIENT shall begin the
PERFORMANCE TEST PERIOD. DEI advisors made available under Section C-1-a hereof
shall be at all times in attendance prior to and during the PERFORMANCE TEST
PERIODS. Otherwise, Section E-1 shall apply.

 

  b) During this period, the LICENSED UNIT shall be operated and controlled in
accordance with the procedure set up beforehand as foreseen in Section D-1-e.

DEI Agreement Number: 0743.01   - 40/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  c) A portion of all the samples collected and all the records made during the
PERFORMANCES TEST PERIOD, shall be retained until all analysis and examinations
are completed and the PERFORMANCES PROBE made.

 

  d) All results shall be examined jointly by the Parties. DEI shall issue a
complete PERFORMANCE PROBE report setting forth those results and indicating
whether the PERFORMANCE GUARANTEES have been met, for approval by CLIENT.

 

       If the PERFORMANCE GUARANTEES have been met, CLIENT and DEI shall sign
the PERFORMANCES PROBE Certificate, substantially in the form specified in Annex
B hereof.

 

  e) The performances that shall be taken into account for comparison with the
PERFORMANCE GUARANTEES shall be the average of the data obtained during the
whole PERIOD under consideration.

 

  f) If DEI ascertains that certain damages have been caused to the CATALYST
and/or ADSORBENT charge, then DEI shall have the right to require CLIENT either
to replace or to regenerate it before commencing a PERIOD.

D-3 Substitute PERFORMANCE GUARANTEES

 

  a) At any time prior to completion of a PERIOD, CLIENT may request of DEI in
writing substitute PERFORMANCE GUARANTEES to those of Section I hereof on the
basis of CLIENT’s desire to process a different feed material that is not within
the specified parameters for CHARGE.

 

  b) If DEI believes, in its sole reasonable discretion, that such alternate
feed material can be processed in the LICENSED UNIT using the PROCESS and no
additional studies or pilot plant work is necessary, DEI will propose reasonable
substitute PERFORMANCE GUARANTEES to those of Section I hereof, based on the
alternate feed material.

 

  c) Within 30 (thirty) days from receipt of the substitute PERFORMANCE
GUARANTEES, CLIENT must elect in writing to either accept the substitute
PERFORMANCE GUARANTEES or retain the original PERFORMANCE GUARANTEES.

DEI Agreement Number: 0743.01   - 41/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

E—DELAYS AND INTERRUPTIONS

 

E-1 Should the PERFORMANCES TEST PERIOD have to be delayed, CLIENT shall bear
any and all DEI’s expenses so involved by the presence of DEI’s personnel except
in the event such delay is solely caused by DEI, provided that in any such
event, the periods set forth in Section B-3-d shall be extended for a time equal
to the duration of said delay.

 

E-2 If a PERIOD has been interrupted or disturbed for causes beyond DEI’s
control, and provided that the period established in Section B-3-d is not
terminated, a new PERIOD shall be conducted but, at DEI’s option, the testing
time before the interruption or disturbance may be included in this new PERIOD.

F—FAILURE TO MEET PERFORMANCE GUARANTEES

 

     If, for reasons substantially attributable to DEI the PERFORMANCE
GUARANTEES have not been obtained during a first PERIOD, DEI shall have the
right to request that up to [*] be conducted provided that:

 

  a) When additional [*] are concerned, none shall be allowed to be made after
[*] (excepting the time such PERIOD could not be conducted for reasons beyond
the control of DEI),

 

  b) In order to allow DEI to determine the cause of failure and to decide of
further adjustments, the provisions of Section D-1 shall apply.

 

  c) The test procedures of any additional PERIOD shall be those of the original
corresponding one.

G—MODIFICATIONS TO THE LICENSED UNIT

 

G-1 Until completion of the last PERIOD permitted hereunder, DEI may request
CLIENT in writing to have modifications or additions or replacements made to the
LICENSED UNIT in order to correct deficiencies in LICENSED UNIT performance,
provided that such amendments shall, as far as possible, take into account the
local circumstances and the commercial requirements of the LICENSED UNIT and not
result in an appreciable alteration of the cost or profitability of the LICENSED
UNIT.

 

G-2 At CLIENT’s request DEI shall advise CLIENT on the effect of such
modifications, additions or replacements.

 

G-3

When such amendments are required due to errors attributable to DEI, DEI shall
carry out, free of charge, the process-engineering studies necessary for making

DEI Agreement Number: 0743.01   - 42/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

 

those, as may be required to correct such error, within DEI’s aggregate
liability limitation under Article 9.3c of this Agreement.

H—[RESERVED]

I—PERFORMANCE GUARANTEES

 

I-1 “CHARGE” Specifications

 

     The PERFORMANCE GUARANTEES are based on the “CHARGE” with the following raw
materials compositions:

I-1.1. [*]

 

    Item   Parameter w/w  

[*]

  [*]

I-1.2. [*]

[*]

 

    Item3   Parameter v/v         [*]  

[*]

      [*]

I-1.3. [*]

[*]

 

    Item   Parameter v/v  

[*]

  [*]

 

     The impurities profiles for each raw material shall be finalized in writing
and signed by the CLIENT and DEI at the KICK-OFF DATE.

DEI Agreement Number: 0743.01   - 43/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

I-2 [*] Specifications

 

     The PERFORMANCE GUARANTEES are based on the [*] with the following
composition:

 

Item    [*] to
Purification
Parameter v/v

[*]

   TBD

[*]

   TBD

[*]

   TBD

[*]

   TBD

[*]

   TBD

Minor Impurities

   TBD

 

I-3 [Reserved]

 

I-4 PRODUCT Definition

 

     The PRODUCT is the Trichlorosilane material leaving the LICENSED UNIT
having the average properties listed below:

 

        Type    Bulk elements    Value    Unit        

Acceptors

   [*]    [*]    [*]        

Donors

   [*]    [*]    [*]        

[*]

   [*]    [*]    [*]        

[*]

   [*]    [*]    [*]        

[*]

   [*]    [*]    [*]        

[*]

   [*]    [*]    [*]

 

I-5 PERFORMANCES GUARANTEES—PURITY

When the LICENSED UNIT is fed with appropriate quantities of CHARGE and with all
necessary raw materials, as set forth in DEI Operating Instructions, when it is
operated under the conditions prescribed by DEI, then the LICENSED UNIT shall be
capable to process [*] of the quantity of CHARGE retained as design capacity in
DEI Process-Book,

 

DEI Agreement Number: 0743.01   - 44/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

a) the total [*] content (including trace [*] and [*] of less than [*] total) in
the PRODUCT shall not be less than [*], [*] being [*].

b) the total [*] content in the PRODUCT shall not be more than [*], [*] being
[*].

c) the total [*] content in the PRODUCT shall not be more than [*], [*].

d) the total [*] content in the PRODUCT shall not be more than [*], [*].

e) the total [*] content in the PRODUCT shall not be more than [*], [*] being
[*].

The foregoing purity guarantees I-5(a)-(e) shall be measured by a third party
laboratory that is reasonably acceptable to CLIENT and DEI.

 

I-6 PERFORMANCES GUARANTEES—PRODUCTION RATES AND RECOVERY

 

  1. The production rate is the amount of [*] produced by the UNIT. For a “2,500
tpa Polysilicon” plant, the UNIT produces a minimum of [*].

 

  2. Product Recovery is the guaranteed product recovery for [*] for the UNIT.
The UNIT recovers a minimum of [*] of the [*] as [*].

 

       The recovery for PERFORMANCE GUARANTEES purposes shall be computed as
follows:

Recovery = Amount of [*]

                      Amount of [*]

J – ROYALTY CALCULATION

 

       The Royalty amount shall be M1 and M2 and the greater of M3 and M4. The
aggregate value of royalty, including M1, M2 and the greater of M3 or M4, shall
not exceed the maximum royalty specified in Article a) of this Agreement.

 

J-1 PERFORMANCES ROYALTY CALCULATION – Production Rates and Recovery

 

  a) Capacity Flexibility. If, during the last [*] permitted under Section F,
the UNIT has processed C per cent of the design capacity of [*], instead of [*]
as shown in Section I-6 above, the following computation shall be made where M1,
is quoted in US$:

M1 = [*]

 

DEI Agreement Number: 0743.01   - 45/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

  b) If, during the last [*] permitted under Section F, the UNIT has recovered
R1 per cent of the [*] instead of [*] as shown in Section I-6 above, the
following computation shall be made where M2, is quoted in US$:

M2 = [*]

 

J-2 PERFORMANCES ROYALTY CALCULATION – Purity

If, during the last [*] permitted under Section F:

 

  a) the quantity of [*] in the PRODUCT has been S1 (as a percentage, including
less than [*] and [*] total) instead of [*], as shown in section I-5a) above,

 

       The following computation shall be made where (M3) is quoted in US$:

M3 = [*]

 

  b) the quantity of total [*] content in the PRODUCT has been S2 (in [*])
instead of [*], as shown in section I-5b) above,

 

       the quantity of total [*] content in the PRODUCT has been S3 (in [*])
instead of [*] as [*], as shown in section I-5c) above,

 

       the quantity of total [*] content in the PRODUCT has been S4 (in [*])
rather than [*] as [*], as shown in section I-5d) above,

 

       the quantity of total Metals content in the PRODUCT has been S5 (in [*])
rather than [*] as shown in section I-5e) above,

 

       The following computation shall be made where (M4) is quoted in US$:

M4 = [*]

 

  The aggregate value of royalty, including M1, M2, and the greater of M3 or M4,
shall not exceed the maximum royalty specified in Article a) of this Agreement.

 

--------------------------------------------------------------------------------

DEI Agreement Number: 0743.01   - 46/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

ANNEX A TO SCHEDULE 3

 

Time:     

Date:

 

Page:

  

49 /1

CERTIFICATE

READY-FOR-START-UP-DATE

 

Contractor:

 

Location – Country:

 

Agreement Number:

 

Date of Agreement :

 

Between DEI and :

Job references

 

DEI Reference Number:

 

Client:

 

Location:

 

Unit:

 

  •  

Ready-for-Start-Up-Date:

       Unit is considered as READY FOR START-UP on

 

Day    Month    Year            

The Ready-for-Start-up-Date corresponds to:

 

  - for catalytic units: the date when, after mechanical completion, the
catalysts have been loaded in the unit, the reaction section has been connected
with the rest of the unit, and the isolation devices removed or deactivated.

  - for adsorption units: the date when, after mechanical completion, the
adsorbents have been loaded in the unit,

  - for non catalytic units: the date when, after mechanical completion, the
feed has been injected in the unit for the first time.

 

  •  

Date of Performance Test:

       In accordance with the above-referenced Agreement, the PERFORMANCE TEST
shall be performed as soon as unit has been started, with operating conditions
adjusted, and within . days after this Ready-for-Start-up-Date.

 

For DEI

DEI Representative:

 

 

 

  For Date:   Date:

Copy:     Contractor, Client, DEI

 

DEI Agreement Number: 0743.01   - 47/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

ANNEX B TO SCHEDULE 3

FORM OF PERFORMANCES PROBE CERTIFICATE

 

Chrono:      Date:      Page:    50 /1

PERFORMANCES PROBE*

Contractor:

 

Location – Country:

 

Agreement Number:

 

Date of Agreement :

 

Between DEI and :

Job references

 

DEI Reference Number:

 

Client:

 

Location:

 

Unit:

In accordance with the above Agreement, a PERFORMANCES TEST PERIOD has been
performed at _____________% feed capacity, from __________________ to
__________________( ___________hours).

 

* PRODUCT PROBE in former agreement

 

CC: -Contractor

     -Client

     -DEI

 

DEI Agreement Number: 0743.01   - 48/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

Comparison between results and PERFORMANCE GUARANTEES is summarized here after:

 

     

Charge (Feed)

   TEST RESULTS

 

   DESIGN    Average Figures    / Range         

Feed Rate or % Capacity:

                    

Main Characteristics:

 

 

 

 

 

 

 

 

                    

Product specifications

             PERFORMANCE GUARANTEES                       

All PERFORMANCE GUARANTEES figures (Product specifications and Production) have
been satisfied.

 

For DEI

DEI Representative:

 

 

 

 

  For Date:   Date:

Copy:

DEI Agreement Number: 0743.01   - 49/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

ANNEX C TO SCHEDULE 3

CLIENT’s ANNUAL CAPACITY DECLARATION FOR THE YEAR             

 

Time: Date:

 

Contractor:

 

State – Town – Location:

 

Agreement Number:

 

Date of Agreement :

 

Between DEI and :

    Job references

 

DEI Job number:

 

Client:

 

Location:

 

LICENSED UNIT:

 

Quantity of charge         Quantity of product         Stream factor        
Royalty paid (cumulative)         Royalty due (cumulative)         Royalty due
(for this year)        

 

DEI Agreement Number: 0743.01   - 50/69 -     Tech Transfer Agreement    

--------------------------------------------------------------------------------

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

SCHEDULE 4 – DEI PATENTS

 

1. U.S. Patent Application Serial No. 60/968,703

Title: PROCESS FOR PRODUCING TRICHLOROSILANE

Process for preparing high purity Trichlorosilane from by-products of the
primary reaction utilizing Silicon and/or by-products of the improved Siemens
process

 

2. U.S. Patent Application Serial No. 60/968,679

Title: SILICON AND CATALYST MATERIAL PREPARATION IN A PROCESS FOR PRODUCING
TRICHLOROSILANE

Process for preparing trichlorosilane by reacting silicon with hydrogen chloride
and catalysts

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

SCHEDULE 5 – DEI’s SERVICE FEES

The SERVICE FEES to be paid by CLIENT to DEI shall include the following:

1. Compensation for providing the WORK PRODUCT shall be billed and paid by
CLIENT per the attached Job Classification and Compensation Schedule, which
shows the fully computed Base Rate, Payroll Burden, Overhead Costs, per hour
(each as defined below) for each direct labor hour worked by DEI’s personnel,
plus all fee and profit being charged by DEI.

2. Travel Expenses

Travel and living expenses incurred for personnel assignments will be billed at
actual costs. Per Diem may be used for long-term assignments. Mileage charges
for use of personal or company car will be at the current IRS allowable rate.

3. Expenses (In-house Reimbursables)

  a). All of the following expenses are included in a charge of [*] per billable
hour.

Dynamic Engineering, Inc. reproduction and prints

Communications (local & long distance telephone, fax, e-mail)

Office equipment, materials and consumables

CAD and Engineering Computers

 

  b). Certain higher-level third party computer programs used for simulation,
analysis and design shall be billed at a charge of [*] per hour of use. This
includes, but is not limited to, [*].

 

  c). The following expenses shall be billed at cost:

Courier service and overnight mail

On-site communications such as local cellular phone service

Electronic copies on media

 

  d). The following expenses shall be billed at cost [*]:

Outside reproduction and printing (including blueprinting)

Sub consultants, subcontracted, and special services

Equipment and materials purchased specifically to perform the work of the
project

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

Annex A to Schedule 5—Job Classification and Compensation Schedule

PROFESSIONAL, TECHNICAL AND PROJECT STAFF

Services performed by Dynamic Engineering, Inc. shall be compensated at the
following hourly billing rates:

 

Position*

  

Hourly Billing

Rate

   Position*   

Hourly Billing

Rate

Engineer/Specialist I/II

   [*]    Drafter I/II    [*]

Engineer/Specialist III

   [*]    Drafter III    [*]

Engineer/Specialist IV

   [*]    Drafter IV    [*]

Engineer/Specialist V

   [*]    Designer I    [*]

Engineer/Specialist VI

   [*]    Designer II    [*]

Engineer/Specialist VII

   [*]    Designer III    [*]

Principal in Charge

   [*]    Designer IV    [*]

Engineering Assistant

   [*]    TCS Engineering

Specialist III

   [*]

TCS Engineering

Specialist II

   [*]    TCS Engineering

Specialist I

   [*]

*Based on National Society of Professional Engineers (NSPE) position
descriptions as edited by Dynamic Engineering, Inc. Certain individuals with
special expertise may be charged out at a rate independent of the Rate Schedule.

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

Schedule 6

FORM OF CONSENT AND AGREEMENT

This CONSENT AND AGREEMENT, dated as of [            ], 2007 (as amended,
restated, supplemented or otherwise modified from time to time, this “Consent”),
is entered into by and among DYNAMIC ENGINEERING INC., a Michigan corporation
(together with its successors and assigns, the “Contracting Party”), HOKU
MATERIALS, INC., a Delaware corporation (together with its successors and
assigns, the “Borrower”), and [            ], in its capacity as Collateral
Agent for the Secured Parties (as defined below) (together with its successors,
designees and assigns in such capacity, the “Agent”) under the Intercreditor
Agreement (as defined below).

RECITALS

A. The Borrower has entered into a Credit Agreement, dated as of [            ],
2007 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), by and among the Borrower, the financial
institutions from time to time parties thereto as lenders, and [            ],
as administrative agent (the “Administrative Agent”).

B. The Contracting Party has entered into ENGINEERING SERVICES & TECHNOLOGY
TRANSFER AGREEMENT NUMBER: 0743.01, dated as of [            ], 2007, (as
amended, restated, supplemented or otherwise modified from time to time, the
“Contract”), with the Borrower.

C. The Borrower intends to finance certain costs in connection with the
development, construction, operation, maintenance and ownership of a polysilicon
producing processing plant with a nominal capacity of 2,000 metric tons per
year, located in Pocatello, Idaho (the “Project”), with funds borrowed by the
Borrower pursuant to the terms of the Credit Agreement.

E. As collateral security for all obligations of the Borrower to the Secured
Parties (as defined below), the Borrower has, inter alia, assigned all of its
rights, title and interest (the “Assigned Interests”) in, to and under the
Contract to the Agent pursuant to a Security Agreement, dated as of
[            ], 2007 (as amended, restated, supplemented or otherwise modified
from time to time, the “Security Agreement”), made by the Borrower in favor of
the Agent for the benefit of certain secured parties described therein (the
“Secured Parties”) and in that certain Collateral Agency and Intercreditor
Agreement, dated as of [            ], 2007 (as amended, restated, supplemented
or otherwise modified from time to time, the “Intercreditor Agreement”), among
the Borrower, Hoku Materials Holdings, Inc., the Agent, the Administrative
Agent, the Contracting Party and the other Secured Parties party thereto.

F. Pursuant to the terms of the Intercreditor Agreement, the Secured Parties
have appointed the Agent as collateral agent on their behalf and authorized the
Agent to take

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

certain actions and exercise such powers under the Secured Obligation Documents
(as defined in the Intercreditor Agreement) as are provided for therein.

G. The Borrower has requested that the Contracting Party and the other parties
hereto execute and deliver this Consent in fulfillment of certain obligations of
the Borrower under the Credit Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

1. Consent and Agreements.

(a) Subject to the terms and conditions of this Consent, the Contracting Party
acknowledges and consents to the assignment as collateral security to the Agent,
for the benefit of the Secured Parties, of the Assigned Interests. The
Contracting Party further acknowledges the right of Agent or any designee of
Agent, in exercise of Agent’s rights and remedies as a secured creditor of
Borrower, to make all demands, give all notices, take all actions and exercise
all rights of Borrower under the Contract.

(b) The Agent shall be entitled (but not obligated) to cure any defaults of the
Borrower under the Contract in accordance with the provisions hereof. Upon
receipt by the Contracting Party of written notice from the Agent, the
Contracting Party agrees to (i) accept such cure by the Agent and, subject to
the terms and conditions of the Contract and cure of such defaults, to render to
the Secured Parties all performance due by it under the Contract and this
Consent, and (ii) act solely on the instructions of the Agent, not the Borrower,
with respect to the exercise of the Borrower’s rights under the relevant
Contract. The Contracting Party agrees to make all payments to be made by it
under the Contract directly to the Agent for the benefit of the Secured Parties
upon receipt of the Agent’s written instructions to do so and any such payments
made to the Agent by the Contracting Party shall be deemed to have been made by
the Contracting Party in fulfillment of the Contracting Party’s obligations to
the Borrower under the Contract.

(c) In all cases except as provided in the Contract or required by law, and in
accordance with Section 1(e) hereof, the Contracting Party will not, without the
prior written consent of the Agent (such consent not to be unreasonably
withheld), (i) cancel or terminate the Contract or suspend performance of its
services thereunder, or consent to or accept any cancellation, termination or
suspension thereof by the Borrower, (ii) amend the Contract [NOTE: Exceptions
will be limited to Change Orders otherwise permitted under the Credit
Agreement], or (iii) sell, assign or otherwise dispose (by operation of law or
otherwise) of any part of its rights, title or interest in the Contract. The
Contracting Party agrees to deliver copies of all notices of default, notices of
the suspension of performance by

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

Contracting Party, notices of force majeure or requests for change orders
delivered by Contracting Party to Borrower under or pursuant to the Contract to
the Agent promptly upon delivery thereof.

(d) The Contracting Party will not terminate or suspend performance of the
Contract on account of any default or breach of the Borrower thereunder without
written notice to the Agent and first providing to the Agent (i) 30 days from
the date notice of default or breach is delivered to the Agent to cure such
default if such default is the failure to pay amounts to the Contracting Party
which are due and payable under the Contract, or (ii) a reasonable period, but
not fewer than 60 days, to cure such breach or default if the breach or default
cannot be cured by the payment of money to the Contracting Party so long as the
Agent, the Borrower or their respective designee shall have commenced to cure
the breach or default promptly following such notice and in any case within such
60-day period and thereafter diligently pursues such cure to completion (but in
any event within not more than 120 days) and during such cure period performs
all monetary obligations under the Contract and all other obligations under the
Contract are performed by the Borrower or the Agent or their respective
designees. For the avoidance of doubt and solely for the purposes of the
preceding sentence, amounts not paid and subject to a dispute in good faith by
the Borrower shall not be deemed to be a payment default. The Contracting Party
shall not hinder the Agent’s or its designees’ efforts, and shall provide
reasonable cooperation to the Agent and its designees, in effecting any cure of
any default or breach of the Borrower under the Contract. Except in the event of
a payment default under the Contract, if possession of the Project is necessary
to cure such breach or default, and the Agent or its designees or assignees
declares the Borrower in default under the Credit Agreement and within the
60-day period described above commences foreclosure proceedings, the Agent or
its designees or assignees shall be allowed a reasonable period to complete such
proceedings so long as (A) the Agent proceeds diligently and in good faith to do
so and during such period performs all monetary obligations under the Contract,
and (B) all other obligations under the relevant Contract are performed by the
Borrower or the Agent or their respective designees. If the Agent or its
designees or assignees are prohibited by any court order or bankruptcy or
insolvency proceedings from curing the default or from commencing or prosecuting
foreclosure proceedings, the foregoing time periods shall be extended by the
period of such prohibition so long as (1) the Agent proceeds diligently and in
good faith to address such impediments and during such period performs all
monetary obligations under the Contract, and (2) all other obligations under the
Contract are performed by the Borrower or the Agent or their respective
designees. The Contracting Party consents to the transfer of the Borrower’s
interest under each Contract to the Agent or any purchaser, successor, assignee
and/or designee (a “Subsequent Transferee”) of the Assigned Interests at a
foreclosure sale by judicial or nonjudicial foreclosure and sale or by a
conveyance by the Borrower in lieu of foreclosure and agrees that,
notwithstanding

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

any provision of the Contract to the contrary, upon such foreclosure, sale or
conveyance, the Agent or such Subsequent Transferee shall be substituted for the
Borrower under the Contract and the Contracting Party (a) shall recognize the
Agent or the Subsequent Transferee, as the case may be, as its counter-party
under the Contract, and (b) perform its obligations under the Contract in favor
of the Agent or the Subsequent Transferee, as the case may be; provided that the
Agent or such Subsequent Transferee (i) has elected to assume the rights and
obligations of the Borrower (including the obligation to cure any then existing
payment and performance defaults, but excluding any obligation to cure any then
existing performance defaults which by their nature are incapable of being cured
and which default that is incapable of being cured does not materially and
adversely affect the rights of the Contracting Party under the Contract) under
the Contract, and (ii) would reasonably be expected to have the capability to
perform the Borrower’s obligations under the Contract.

(e) Subject to payment of all amounts due and unpaid to the Contracting Party
and cure of all then existing payment and performance defaults, but excluding
any obligation to cure any then existing performance defaults which by their
nature are incapable of being cured and which default that is incapable of being
cured does not materially and adversely affect the rights of the Contracting
Party under the Contract, in the event the Contract is rejected or terminated by
a trustee or debtor in possession in any bankruptcy or insolvency proceeding, or
if the Contract is terminated for any reason other than a default which could
have been but was not cured by the Agent as provided in Section 1(e) hereof, and
if, within 45 days after such rejection or termination, the Agent shall so
request, the Contracting Party shall execute and deliver to the Agent a new
Contract having substantially identical terms to the Contract (subject to any
conforming changes necessitated by the substitution of parties and such changes
as may be necessary to compensate the Contracting Party for schedule and cost
adjustments resulting from the passage of time).

(f) In the event the Agent or its designees or assignees elect to perform the
Borrower’s obligations under a Contract or a new Contract is entered into as
provided above in Sections 1(e) or (f), respectively, the liability of the
Agent, or its designees or assignees, as the case may be, to the Contracting
Party for the performance of obligations under such Contract, and the sole
recourse of the Contracting Party in seeking the enforcement of such
obligations, shall be limited to such parties’ rights, title and interest in the
Project.

(g) Except as provided in Sections 1(e), (f) and (g) above, neither the Agent,
its designees or assignees shall have any obligation or liability under the
Contract, nor shall the Agent, its designees or assignees be obligated to
perform any of the obligations or duties of the Borrower under the Contract or
to take any action or collect or enforce any claim for payment or performance of
the Assigned Interests. Within 30 or 60 days, as the case may be pursuant to
Section 1(e), of

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

being notified by the Contracting Party that a Borrower default or breach has
occurred under the Contract, the Agent shall notify the Contracting Party of its
intent whether or not to cure any such Borrower default or breach. In the event
the Agent fails to notify the Contracting Party within the time period described
in the foregoing sentence that the Agent will cure such default or breach, the
Contracting Party shall be entitled to assume that the Agent has elected not to
cure such default or breach and the Contracting Party may then exercise all
rights that the Contracting Party would have under the Contract, without regard
to the provisions of this Consent. In the absence of such notice, no performance
by the Agent, its designees or assignees under or pursuant to this Consent or
otherwise (whether to cure a Borrower default or exercise rights under any
provision hereof or otherwise) shall be construed as an assumption by the Agent,
its designees or assignees of the obligations and duties of the Borrower under
the Contract, unless otherwise expressly agreed in writing by the Agent, its
assignees or designees, as the case may be. The Agent shall have the right to
assign all or a pro rata interest in a Contract or a new Contract entered into
pursuant to Section 1(f) to a person or entity to whom the Project is
transferred, provided such transferee (i) assumes the obligations of the
Borrower (or the Secured Parties) under such Contract and cure of any material
defaults under such Contract has been effected as provided herein, and
(ii) would reasonably be expected to have the capability to perform the
Borrower’s obligations under such Contract. Upon such assignment, the Agent and
the Secured Parties (including their agents and employees) shall be released
from any further liability thereunder to the extent of the interest assigned.

2. Borrower’s Acknowledgment. The Borrower acknowledges and agrees that the
Contracting Party is authorized to act in accordance with the Agent’s exercise
of the Borrower’s rights in accordance with this Consent, and the Contracting
Party may rely on any notice or instruction by the Agent in the purported
exercise of the Agent’s rights and remedies hereunder.

3. Legal Opinion. The Contracting Party hereby agrees to deliver to the Agent a
legal opinion (which may be from a senior in-house counsel), dated as of the
dated hereof, substantially in form attached hereto as Exhibit A.

4. Payment of Monies. The Contracting Party hereby agrees to make all payments
to be made by it to the Borrower under the Contract by wire transfer directly
to:

 

  (a) for all payments not covered by clause (b) hereof:

[            ]

ABA [            ]

[            ]

Account Number: [            ]

FFC: Account No. [            ]

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

REF: [Hoku Materials] Revenue Account; or

(b) for all payments of liquidated damages and insurance proceeds:

[                                    ]

ABA [                        ]

[                                    ]

Account Number: [            ]

FFC: Account No. [            ]

REF: [Hoku Materials] Loss Proceeds Account,

and any notices to [Depositary Bank] may be given to the following address:

[                                    ]

[                                    ]

[                                    ]

[                                    ]

Attn: [                                    ]

Telephone: [                            ]

Facsimile: [                            ]

Notwithstanding the foregoing, (i) if the Agent shall notify the Contracting
Party in writing that an Event of Default under the Credit Agreement has
occurred and is continuing, the Contracting Party shall make all payments to be
made by it to the Borrower under the Contract directly to the Agent, for the
benefit of the Secured Parties, to an account designated by the Agent in such
written notice, and (ii) if any person has elected to become a Subsequent
Transferee, then the Contracting Party shall make all payments to be made by it
to the Borrower under the Contract directly to such Subsequent Transferee. Any
payments made by the Contracting Party as provided under this Section 4 shall be
deemed to have been made by the Contracting Party in fulfillment of the
Contracting Party’s obligations under the Contract.

5. Representations and Warranties. The Contracting Party hereby represents and
warrants, for the benefit of the Agent and the Secured Parties, as of the date
hereof, that:

(a) it (i) is duly organized, validly existing and in good standing under the
laws of [                    ], and (ii) has all requisite organizational power
and authority necessary to execute, deliver and perform its obligations under
this Consent and the Contract;

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

(b) the execution, delivery and performance by the Contracting Party of the
Contract and this Consent have been duly authorized by all necessary corporate
action, and do not and will not require any further consents or approvals which
have not been obtained, or violate any provision of any law, regulation, order,
judgment, injunction or similar matters or breach any agreement presently in
effect with respect to or binding on the Contracting Party, except for such
breaches, defaults, or violations as will not, either individually or in the
aggregate, result in a material adverse effect on the ability of the Contracting
Party to perform its obligations under this Consent or the Contract;

(c) each of this Consent and the Contract constitutes legal, valid and binding
obligations of the Contracting Party, enforceable against the Contracting Party
in accordance with their respective terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors’
rights or by the effect of general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law);

(d) no authorizations, approvals or consents of any governmental or regulatory
authority or agency or any other person, and no filings or registrations with
any governmental authority or agency, are necessary for the execution, delivery
or performance by the Contracting Party of this Consent, or for the validity or
enforceability thereof, except for any authorizations, approvals, consents or
filings which (i) have been made or obtained prior to the date hereof and are in
full force and effect, or (ii) are obtainable in the ordinary course of business
and are set forth on Exhibit B to this Consent;

(e) except pursuant to this Consent and as expressly set forth in the Contract,
the Contracting Party has not consented to any pledge, assignment or other
transfer of any interest in the Contract;

(f) the Contract is in full force and effect and has not been amended,
supplemented or modified (except as otherwise disclosed in writing to the
Agent); and

(g) the Borrower has fulfilled all of its material obligations which are
currently due under the Contract, and there are no breaches or unsatisfied
conditions presently existing (or which would exist after the passage of time
and/or giving of notice) that would allow the Contracting Party to terminate the
Contract.

6. Limitation of Liability. The Contracting Party shall have no liability under
this Consent to the Borrower. With respect to any undertaking by the Contracting
Party which is susceptible to enforcement by specific enforcement as described
in Section 7, where the Agent would receive the full benefit of this Consent
through such specific performance, the Agent shall limit its remedy to specific
performance. With respect to any other undertaking, acknowledgment,
representation and warranty or other provision of this Consent, the Agent’s
remedies shall not be so limited, provided that the Agent and the

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

Borrower agree that the Contracting Party’s aggregate liability for monetary
damages under this Consent and the Contract shall be limited as provided in the
Contract. Under no circumstances shall the Contracting Party have any liability
for any punitive, exemplary, consequential, indirect, incidental, or special
damages (including by way of example, but not by way of limitation, loss of
profits, nonpayment of principal or interest on loans, and cost of capital under
the Credit Agreement).

7. Specific Performance. The Contracting Party acknowledges and agrees that the
Borrower, the Agent, the Secured Parties and any Subsequent Transferee may be
damaged irreparably in the event any of the provisions set forth in Sections 1
and 4 of this Consent (the “Applicable Provisions”) are not performed in
accordance with their specific terms or are otherwise breached. Accordingly, the
Contracting Party agrees that the Borrower, the Agent and/or any Subsequent
Transferee may seek to enforce specifically this Consent and the Applicable
Provisions in any action instituted in any court of the United States or any
state thereof having jurisdiction over the parties hereto and the matter hereof
(subject to the provisions set forth in Section 9), in addition to any other
remedy to which it may be entitled, at law or in equity.

8. Governing Law. This Consent shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York, United States
of America, excluding its conflicts of law provisions (other than Sections
5-1401 and 5-1402 of the General Obligations Law of the State of New York).

9. Submission to Jurisdiction. The parties hereto submit to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Consent or the
transactions contemplated hereby. Each of the parties hereto irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.

10. Counterparts. This Consent and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

11. Severability. In case any one or more of the provisions contained in this
Consent should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

12. Amendment, Waiver. Neither this Consent nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified except by an instrument in
writing signed by the Contracting Party, the Borrower and the Agent.

13. Notices. All notices required or permitted hereunder shall be in writing and
shall be effective (a) upon receipt if hand delivered, (b) upon receipt if sent
by facsimile and (c) if otherwise delivered, upon the receipt thereof. Any such
notices to the Contracting Party or the Borrower shall be delivered to their
respective addresses as specified in the Contract. Any such notices to the Agent
shall be addressed as follows:

[                                ]

[                                ]

[                                ]

Attn: [                                ]

Telephone No.: [                                ]

Telecopy No.: [                                ]

If any notice is tendered to an addressee and the delivery thereof is refused by
such addressee, such notice shall be effective upon such tender. Any party shall
have the right to change its address for notice hereunder to any other location
within the continental United States by providing 30 days’ notice to the other
parties in the manner set forth hereinabove.

14. Third Party Beneficiaries. This Consent and the representations, covenants
and agreements contained herein are and shall be held to be for the sole benefit
of the parties hereto and the Secured Parties, and their respective successors
and assigns.

15. Interpretation. All references in this Consent to any document, instrument
or agreement (a) shall include all exhibits, schedules and other attachments
thereto, and (b) shall include all documents, instruments or agreements issued
or executed in replacement thereof in accordance with the terms thereof.

[SIGNATURE PAGE FOLLOWS]

 

DEI Agreement Number: 0743.01   - 62/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized,
intending to be legally bound, have caused this Consent and Agreement to be duly
executed and delivered as of the date first above written.

 

HOKU MATERIALS, INC, By:   Name:   Title:  
[                                                                 ] By:   Name:
  Title:   [                                         ], as Agent for the Secured
Parties By:   Name:   Title:  

 

DEI Agreement Number: 0743.01   - 63/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

EXHIBIT A

FORM OF OPINION OF CONTRACTING PARTY’S COUNSEL

[Letterhead of                                     ]

[Date]

[Agent]

[                                ]

[                                ]

[                                ]

Ladies and Gentlemen:

[We/I] have acted as counsel for [                                ], a
[                                ] (the “Company”), in connection with that
certain [Contract and Consent] (collectively, the “Contracts”). Capitalized
terms used and not otherwise defined herein shall have the respective meanings
specified in the Consent.

This letter is being delivered to you in satisfaction of the condition set forth
in Section 3 of the Consent.

In this connection, [we/I] have examined such certificates of public officials,
certificates of officers of the Company and copies certified to [our/my]
satisfaction of corporate documents and records of the Company and of other
papers, and have made such other investigations, as [we/I] have deemed relevant
and necessary as a basis for [our/my] opinions hereinafter set forth. [We/I]
have relied upon such certificates of public officials and of officers of the
Company with respect to the accuracy of material factual matters contained
therein which were not independently established.

Based on the foregoing, it is [our/my] opinion that:

1. The Company is a corporation duly incorporated and validly existing in good
standing under the laws of [                        ].

2. The Contracts have been duly authorized by all requisite corporate action and
duly executed and delivered by authorized officers of the Company, and are valid
obligations of the Company, legally binding upon and enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by (a) bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors’ rights generally, and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

3. The execution and delivery of the Contracts, and fulfillment of and
compliance with the respective provisions of the Contracts, do not conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any

 

DEI Agreement Number: 0743.01   - 64/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

violation of, or result in the creation of any lien upon any of the properties
or assets of the Company pursuant to, or require any authorization, consent,
approval, exemption, or other action by or notice to or filing with any court,
administrative or governmental body or other person or entity pursuant to, the
charter or by-laws of the Company, any applicable law, statute, rule or
regulation or (insofar as is known to us after having made due inquiry with
respect thereto) any agreement, instrument, order, judgment or decree to which
the Company is a party or otherwise subject.

Very truly yours,

 

DEI Agreement Number: 0743.01   - 65/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

EXHIBIT B

AUTHORIZATIONS AND APPROVALS

[Contracting Party To Provide, If Any]

 

DEI Agreement Number: 0743.01   - 66/69 -     Tech Transfer Agreement    

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

CONFIDENTIAL

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their duly authorized representatives as of the day and year
last written below.

 

DYNAMIC ENGINEERING INC     HOKU MATERIALS, INC. By   /s/ W. Lee Kennedy     By
  /s/ Dustin M. Shindo Name printed   W. Lee Kennedy     Name printed   Dustin
M. Shindo Title   President     Title   Chief Executive Officer Date   10/6/07  
  Date   10/5/2007 By   /s/ Patricia S. Kennedy     By   /s/ Darryl S. Nakamoto
Name printed   Patricia S. Kennedy     Name printed   Darryl S. Nakamoto Title  
Treasurer     Title   Chief Financial Officer Date   10-6-07     Date  
10/5/2007

 

DEI Agreement Number: 0743.01   - 67/69 -     Tech Transfer Agreement