##### 



EXECUTION VERSION
 ASSET PURCHASE AGREEMENT
 BY AND BETWEEN
 KAWASAKI HEAVY INDUSTRIES, LTD.
 AND
 CATALYTICA ENERGY SYSTEMS, INC.
 June 30, 2006




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##### 



TABLE OF CONTENTS
 PageArticle 1 DEFINITIONS
    
    
    1Section 1.1 Defined Terms
    
    
    1Article 2 PURCHASE, SALE AND DELIVERY
    
    
    5Section 2.1 Acquisition Assets
    
    
    5Section 2.2 Excluded Assets
    
    
    6Section 2.3 Purchase Price
    
    
    6Section 2.4 Allocation Reporting
    
    
    6Section 2.5 Closing
    
    
    6Section 2.6 Closing Deliveries
    
    
    6Article 3 LIABILITIES AND OBLIGATIONS
    
    
    8Section 3.1 Limited Liabilities Assumed by the Purchaser
    
    
    8Article 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
    
    
    9Section 4.1 Organization and Qualification
    
    
    9Section 4.2 Authority; Consents; Binding Agreement
    
    
    9Section 4.3 Litigation
    
    
    10Section 4.4 Brokers and Finders
    
    
    10Article 5 REPRESENTATIONS AND WARRANTIES OF THE SELLER
    
    
    10Section 5.1 Organization and Qualification
    
    
    10Section 5.2 Authority; Non-Contravention; Consents and Approvals
    
    
    10Section 5.3 Litigation
    
    
    11Section 5.4 No Violation of Law; Compliance with Agreements
    
    
    11Section 5.5 Title to Assets
    
    
    12Section 5.6 Brokers and Finders
    
    
    12Section 5.7 Intellectual Property
    
    
    12Section 5.8 Assumed Agreements
    
    
    12Section 5.9 Condition of Assets
    
    
    13Article 6 CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
    
    
    13Section 6.1 Pre-Closing Covenants
    
    
    13
 i




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TABLE OF
CONTENTS
 PageSection 6.2 Woodward Agreement
    
    
    14Section 6.3 CEC Agreements
    
    
    14Section 6.4 Further Assurances
    
    
    14Section 6.5 Expenses and Fees
    
    
    15Section 6.6 Public Statements
    
    
    15Section 6.7 Tax Covenants
    
    
    15Section 6.8 Mutual Releases
    
    
    16Section 6.9 Non-competition
    
    
    16Section 6.10 Conduct of Business by Seller after Closing
    
    
    17Section 6.11 Specific Performance
    
    
    18Section 6.12 Intellectual Property
    
    
    18Section 6.13 Confidentiality
    
    
    18Article 7 CONDITIONS TO CLOSING; TERMINATION
    
    
    19Section 7.1 Conditions to Obligation of the Purchaser
    
    
    19Section 7.2 Conditions to Obligations of the Seller
    
    
    20Section 7.3 Other Agreements
    
    
    20Section 7.4 Termination
    
    
    21Section 7.5 Effect of Termination
    
    
    21Article 8 INDEMNIFICATION
    
    
    21Section 8.1 The Sellers Indemnity Obligations
    
    
    21Section 8.2 Purchasers Indemnity Obligations
    
    
    22Section 8.3 Indemnification Procedures
    
    
    23Section 8.4 Limitations on Defense to the Claims of the Purchaser
    
    
    24Section 8.5 Limitation of Liability
    
    
    24Section 8.6 Remedies Exclusive
    
    
    25Article 9 GENERAL PROVISIONS
    
    
    25Section 9.1 Survival
    
    
    25Section 9.2 Notices
    
    
    26Section 9.3 Interpretation
    
    
    26Section 9.4 Miscellaneous
    
    
    27
 ii




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TABLE OF
CONTENTS
 PageSection 9.5 Governing Law
    
    
    27Section 9.6 Process and Venue
    
    
    27Section 9.7 Disclosure Schedules
    
    
    27Section 9.8 Independent Obligations
    
    
    27Section 9.9 Attorneys Fees
    
    
    27Section 9.10 Amendment
    
    
    28Section 9.11 Counterparts
    
    
    28Section 9.12 Parties in Interest
    
    
    28Section 9.13 Validity
    
    
    28
 iii




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ASSET PURCHASE AGREEMENT
 Agreement Purchaser Seller KGT-A Section 6.8
 Party Parties
  Section 2.1
  ARTICLE 1
 DEFINITIONS
 Section 1.1 Defined Terms
 Section 2.1
  Section 2.1(b)
 Section 2.6(a)(iv)
 1




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Section 3.1
 Section 2.6(a)(ii)
    Section 8.3
 Section 2.5
 Section 2.5
  Section 6.9(b)
   Section 8.3
  Section 2.2
 Section 3.1
  2




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Section 8.1
 Section 8.3
 Section 8.3
 Section 8.3
 Section 5.7
   Section 2.6(a)(iii)
     3




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##### 



Section 2.3
 Section 8.1
  Section 8.2
 Section 5.7
    Section 6.7(b)
  Section 6.8
 4




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##### 



Section 6.9(b)
  Section 6.7(c)
   ARTICLE 2
 PURCHASE, SALE AND DELIVERY
 Section 2.1 Acquisition Assets
 Schedule
2.1(a)
 Schedule 2.1(b) Assigned Patents
   Section 2.2 Section 2.1 Assets
 5




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##### 



Section 2.2 Excluded Assets Excluded Assets
 Section 2.3 Purchase Price Purchase Price Section
4
 Section 2.4 Allocation Reporting Schedule 2.4 Schedule 2.4 Schedule 2.4
 Section 2.5 Closing Closing Closing Date
 Section 2.6 Closing Deliveries
  Section 4
 Exhibit A Bill of Sale
 6




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##### 



Exhibit B License Agreement
       Exhibit C
  Sections 7.1(a) (b) (c)
    7




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##### 



Section 2.3
    Exhibit D
 Sections 7.2(a) (b)
  ARTICLE 3
 LIABILITIES AND OBLIGATIONS
 Section 3.1 Limited Liabilities Assumed by the Purchaser Schedule 3.1 Assumed Liabilities Excluded Liabilities
     8




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Schedule 3.1
   ARTICLE 4
 REPRESENTATIONS AND
 WARRANTIES OF THE PURCHASER
  Section 4.1 Organization and Qualification
 Section 4.2 Authority; Consents; Binding Agreement
 9




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Section 4.3 Litigation
 Section 4.4 Brokers and Finders
 ARTICLE 5
 REPRESENTATIONS AND WARRANTIES
OF THE SELLER
 Disclosure Schedules
 Section 5.1 Organization and Qualification
 Section 5.2 Authority; Non-Contravention; Consents and Approvals
  10




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##### 



Section 5.3 Litigation
 Section 5.4 No Violation of Law; Compliance with Agreements
   11




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##### 



Section 5.5
Title to Assets Schedule 5.5
 Section 5.6 Brokers and Finders
 Section 5.7 Intellectual Property Section 6.8 Sellers Non-Infringement Representation Schedule 5.7 Schedule
5.7 Intellectual Property
 Section 5.8 Assumed Agreements. Schedule 5.8
 12




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Schedule 5.8
 Section 5.9 Condition of Assets Schedule 5.9 Section 2.1 Section 2.1 Section 5.9 Section 8.1
 ARTICLE 6
 CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
 Section 6.1 Pre-Closing Covenants.
 Conduct of Business. Closing
     Best Efforts.
 No Shop Acquisition Proposal
 13




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##### 



Section 6.1(c) Section 6.1(c)
 Section 6.2 Woodward Agreement
 Section 6.3 CEC Agreements.
 Section 6.4 Further Assurances provided, however Section 6.4
 14




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##### 



Section 6.5 Expenses and Fees
 Section 6.6 Public Statements Section 6.13
 Section 6.7 Tax Covenants
 Tax Returns
 Cooperation Tax
Disputes
 Certain Taxes and Fees
 15




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##### 



Transfer Taxes
 Section 6.8 Mutual Releases Section 6.13 TDTA Section 2.1(a)
 Section 6.9 Non-competition
  Covenant Period Territory Section 6.9
 16




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##### 



Section 6.9(c)
 Section 6.9
 Section 6.9
  Section 6.10 Conduct of Business by Seller after Closing Article 8
 17




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##### 



Section 8.3
 Section 8.3
 Section 6.11 Specific Performance Section 6.9 Section 6.9 Section 6.9 Section 6.9 Section 6.9
 Section 6.12 Intellectual Property. Section 6.4
 Section 6.13 Confidentiality
 18




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##### 



ARTICLE 7
 CONDITIONS TO CLOSING; TERMINATION
 Section 7.1 Conditions to Obligation of the Purchaser.
    Section 7.1(a)
  Section 2.6(a)
 Section 2.6(a)
 Section 2.6(a)
   19




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##### 



Section 7.2 Conditions to Obligations of the Seller
 Article 4
  Section 7.2(a)
  Section 2.6(a)
  Section 2.6(b)
  Section 2.6(b)
 Section 7.3 Other Agreements Section 2.6(a)
 20




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##### 



Section 7.4 Termination.
  Section 7.1
 Section 7.2
  Section 7.5 Effect of Termination. Section
6.13 Section 7.4
 ARTICLE 8
 INDEMNIFICATION
 Section 8.1 The Sellers Indemnity Obligations Purchaser Indemnified Party Indemnified Amounts
 21




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Section 8.2 Purchasers Indemnity Obligations Seller Indemnified Party
 22




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##### 



Section 8.3 Indemnification Procedures
 Indemnified Party Indemnifying Party Indemnity Claim Claim Notice
 Election Period
 Section 8.3(a) Section 8.3
  23




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##### 



Section 8.3
  Section 8.3
 Section 8.4 Limitations on Defense to the Claims of the Purchaser SECTION 8.1
 Section 8.5 Limitation of Liability
 Article 8 Section 8.1 8.2 Section 8.1
 24




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##### 



Section 5.9 Schedule 2.4 provided, however, Schedule 2.1 Schedule 2.4
 Section 8.1 Section
8.2 Section 8.5(a)
 Sections 2 3
 Section 8.6 Remedies Exclusive Article 8
 ARTICLE 9
 GENERAL PROVISIONS
 Section 9.1 Survival provided however provided further Sections 4.1 4.2 5.1 5.2 5.5
 25




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##### 



Section 3.1 Section 6.2 Section 6.3 Section 6.9 Section 6.13
 Section 9.2 Notices
 (a)
    
    If to the Purchaser, to:
Kawasaki Heavy Industries, Ltd. 1-1
Kawasaki-Cho Akashi City, 673-8666
Japan Attention: Shin-Ichiro Noumi
with a copy to (which shall not constitute notice):
Kawasaki Motors Corp., U.S.A.
9950 Jeronimo Road
Irvine, California 92618-2084
Attention: Donald J. Koprowski  General Counsel(b)
    
    If to the Seller, to:Catalytica Energy Systems, Inc. c/o
Wilson Sonsini Goodrich & Rosati 650 Page
Mill Road Palo Alto, California 94304
Attention: Larry Sonsiniwith a copy to (which shall not constitute notice):
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304-1018
Attention: Chuck Holland
 Section 9.3 Interpretation herein hereof hereunder
 26




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##### 



Section 9.4 Miscellaneous
 Section 9.5 Governing Law
 Section 9.6 Process and Venue Section 9.2
 Section 9.7 Disclosure Schedules
 Section 9.8 Independent Obligations
 Section 9.9 Attorneys Fees
 27




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##### 



Section 9.10 Amendment
 Section 9.11 Counterparts
 Section 9.12 Parties in Interest
 Section 9.13 Validity
 Remainder of Page Intentionally Left Blank
 28




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##### 



PURCHASER:KAWASAKI HEAVY INDUSTRIES, LTD.By:Name:Title:SELLER:CATALYTICA ENERGY SYSTEMS, INC.By:Name:Title:For purposes of Section 6.8 only:KAWASAKI GAS TURBINES  AMERICAS, a division of KAWASAKI MOTORS CORP., U.S.A.By:Name:Title:




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##### 



Schedule 2.1(a)
 Inventory
 1.
    
    6 Xonon Modules 1 of which is only partially manufactured;2.
    
    Approximately 650 pounds of aluminized H214 foil; and3.
    
    Approximately 1,050 pounds of non-aluminized H214 foil.




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##### 



Schedule 2.1(b)  Assigned Patents
 PATENT,PUBLICATION, ORAPPLICATIONTITLE
    
    COUNTRY
    
    NUMBERMultistage Process for Combusting Fuel
Mixtures
    
    DE
    
    EP0558669Multistage Process for Combusting Fuel
Mixtures
    
    FR
    
    EP0558669Multistage Process for Combusting Fuel
Mixtures
    
    GB
    
    EP0558669Multistage Process for Combusting Fuel
Mixtures
    
    IT
    
    EP0558669(*) Multistage Process for Combusting
Fuel Mixtures
    
    JP
    
    3364492Process for Burning Combustible Mixtures
    
    US
    
    5,425,632Multistage Process for Combusting Fuel
Mixtures
    
    US
    
    5,281,128Multistage Process for Combusting Fuel
Mixtures Using Oxide Catalysts in the Hot
Stage
    
    US
    
    5,232,357Two Stage Process for Combusting Fuel
Mixtures
    
    US
    
    5,183,401Cooled Support Structure for a Catalyst
    
    US
    
    5,461,864Improved Support Structures for a Catalyst
    
    DE
    
    EP1075628Improved Support Structures for a Catalyst
    
    DK1
    
    EP1075628Improved Support Structures for a Catalyst
    
    FR
    
    EP1075628Improved Support Structures for a Catalyst
    
    GB
    
    EP1075628Improved Support Structures for a Catalyst
    
    JP
    
    2002513132Improved Support Structures for a Catalyst
    
    US
    
    6,217,832Thermally Tolerant Support Structure for
a Catalytic Combustion Catalyst
    
    EP
    
    1336068Thermally Tolerant Support Structure for
a Catalytic Combustion Catalyst
    
    JP
    
    2004525327




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##### 



PATENT,PUBLICATION, ORAPPLICATIONTITLE
    
    COUNTRY
    
    NUMBERThermally Tolerant Support Structure for
a Catalytic Combustion Catalyst
    
    KR
    
    2003-7006485Thermal Tolerant Support Structure for a
Catalytic Combustion Catalyst
    
    US
    
    2002110501(***) Control Strategy for Flexible
Catalytic Combustion System
    
    EP
    
    1352196(***) Control Strategy for Flexible
Catalytic Combustion System
    
    JP
    
    2004525331(***) Control Strategy for Flexible
Catalytic Combustion System
    
    TW
    
    505764(***) General Control Strategy for a
Flexible Catalytic Control System
    
    US
    
    2004206090Process and Apparatus for Control of Nox
In Catalytic Combustion Systems
    
    US
    
    6,595,003Method of Thermal Nox Reduction in
Catalytic Combustion Systems
    
    EP
    
    1334307Method of Nox Reduction in Catalytic
Combustion Systems
    
    JP
    
    2004519651Method of Thermal Nox Reduction in
Catalytic Combustion Systems
    
    US
    
    6,718,772(***) Design and Control Strategy for
Catalytic Combustion System with a Wide
Operating System
    
    EP
    
    1427965(***) Design and Control Strategy for
Catalytic Combustion System with a Wide
Operating System
    
    JP
    
    2005502021(***) Design and Control Strategy for
Catalytic Combustion System with a Wide
Operating Range
    
    US
    
    6,796,129Fuel-Air Premixing System For a Catalytic
Combustor
    
    US
    
    2004021235(***) Dynamic Control System for
Catalytic Combustion Process and Gas
Turbine Engine Utilizing Same
    
    CA
    
    2344210(***) Dynamic Control System for
Catalytic Combustion Process and Gas
Turbine Engine utilizing Same (WGC)
    
    DE
    
    1114279(***) Dynamic Control System for
Catalytic Combustion Process and Gas
Turbine Engine utilizing Same (WGC)
    
    FR
    
    1114279




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##### 



PATENT,PUBLICATION, ORAPPLICATIONTITLE
    
    COUNTRY
    
    NUMBER(***) Dynamic Control System for Catalytic
Combustion Process and Gas Turbine Engine
utilizing Same (WGC)
    
    GB
    
    1114279(***) Dynamic Control System for Catalytic
Combustion Process and Gas Turbine Engine
utilizing Same (WGC)
    
    IT
    
    1114279(***) Dynamic Control System for Catalytic
Combustion Process and Gas Turbine Engine
utilizing Same
    
    JP
    
    2002525490(***) Dynamic Control System for Catalytic
Combustion Process and Gas Turbine Engine
Utilizing Same (WGC)
    
    US
    
    6095793Dynamic Control System and Method for
Multiple Combustor Catalytic Gas Turbine
Engine
    
    BR
    
    PI0406806-8Dynamic Control System and Method for
Multiple Combustor Catalytic Gas Turbine
Engine
    
    EP
    
    1592924Dynamic Control System and Method for
Multiple Combustor Catalytic Gas Turbine
Engine
    
    JP
    
    2006501010Dynamic Control System and Method for
Multiple Combustor Catalytic Gas Turbine
Engine
    
    US
    
    2004206091Catalyst Module Overheating Detection and
Methods of Response
    
    EP
    
    04782983.3Catalyst Module Overheating Detection and
Methods of Response
    
    US
    
    10/571,798Catalyst Module Overheating Detection and
Methods of Response
    
    US
    
    11/376,726(**) Bypass Air Injection Method and
Apparatus for Gas Turbines
    
    US
    
    6,568,188(**) Bypass Air Injection Method and
Apparatus for Gas Turbines
    
    US
    
    6,449,956




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##### 



1
    
    It is CESIs understanding that the noted patent has been abandoned due to nonpayment
of an annuity and CESI is transferring whatever rights, if any, in and to such patent, which may be
none.




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##### 



Schedule 2.4
 Allocation of Asset Values
 Schedule 2.1 (a),




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##### 



Schedule 3.1
 Assumed Liabilities




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##### 



Schedule 5.2(b)




---



##### 



Schedule 5.2(c)




---



##### 



Schedule 5.3




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##### 



Schedule 5.5
 Schedule 5.7 Schedule 5.2(b)
 Schedule 5.7




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##### 



Schedule 5.7
 Intellectual Property
  Schedule 2.1(b) Schedule 2.1(b)




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##### 



Schedule 5.8
 1.
    
    Control Patent Assignment and Cross-License Agreement dated 19 December 2001 between Woodward
Governor Company and Catalytica Energy Systems, Inc., as amended by the Settlement and Release
of Claims letter dated April 24, 2002 from John Holbrook of Woodward Governor Company to Craig
Kitchen of Seller.
 a.
    
    Payment records in respect of the Woodward Agreement.
 2.
    
    Royalty Agreement No. ROY-05-002 between Catalytica Energy Systems, Inc. and the California
Energy Commission for Contract No. 500-97-033.
 a.
    
    Payment records in respect of Royalty Agreement No. ROY-05-002.
 3.
    
    Royalty Agreement No. ROY-05-001 between Catalytica Energy Systems, Inc. and the California
Energy Commission for Contract No. 500-01-030.
 a.
    
    Payment records in respect of Royalty Agreement No. ROY-05-001.
 4.
    
    Approval is required from the CEC to assign the CEC Agreements to Purchaser.




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##### 



Schedule 5.9
 Xonon Module Exceptions
 
 Serial
    
    Start ofNumber
    
    MfgAA016
    
    Sep-03AA018
    
    Sep-04AA020
    
    Aug-05AA021
    
    Aug-05AA022
    
    Aug-05AA023
    
    Aug-05
 Foil ExceptionsFor the 2-mil thick Haynes 214 foil which is used in the outlet stage of the module, the usable
Aluminized H214 is spread out through 20 4 wide rolls of varying weights and usability. In
general, each roll has some portion of unusable foil at each end and some may have slits or burns
within the roll. The Seller estimates that approximately 75% of the foil (650 of 883 lbs) to be
usable. With respect to the un-aluminized H214 foil, there are 10 rolls of 12 wide foil of varying
weights. The Seller estimates that approximately 80% of the foil (1050 of 1346) to be usable.
The following is the specific information with respect to the foil:The following is the specific information with respect to the foil:
 Stock
    
    
    
    
    
    
    
    Core
    
    Gross
    
    NetNumber
    
    Foil Type
    
    Thickness
    
    Width (in)
    
    Weight (lbs)
    
    Weight (lbs)
    
    Weight (lbs)10676
    
    AL-H214
    
    2-mil
    
    4
    
    6.6
    
    65
    
    58.410853
    
    AL-H214
    
    2-mil
    
    4
    
    6.05
    
    24
    
    17.9510855
    
    AL-H214
    
    2-mil
    
    4
    
    6.1
    
    10.4
    
    4.310856
    
    AL-H214
    
    2-mil
    
    4
    
    6.05
    
    61
    
    54.9510858
    
    AL-H214
    
    2-mil
    
    4
    
    6.05
    
    29
    
    22.9510982
    
    AL-H214
    
    2-mil
    
    4
    
    6.14
    
    63
    
    56.8610984
    
    AL-H214
    
    2-mil
    
    4
    
    6.14
    
    16.3
    
    10.1610993
    
    AL-H214
    
    2-mil
    
    4
    
    6.6
    
    59
    
    52.410994
    
    AL-H214
    
    2-mil
    
    4
    
    6.6
    
    60
    
    53.411064
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    60
    
    54.0511065
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    52
    
    46.0511066
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    62
    
    56.0511067
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    62
    
    56.0511068
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    53
    
    47.0511069
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    10.3
    
    4.35




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##### 



Stock
    
    
    
    
    
    
    
    Core
    
    Gross
    
    NetNumber
    
    Foil Type
    
    Thickness
    
    Width (in)
    
    Weight (lbs)
    
    Weight (lbs)
    
    Weight (lbs)11070
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    60
    
    54.0511071
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    65
    
    59.0511072
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    66
    
    60.0511073
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    66
    
    60.0511074
    
    AL-H214
    
    2-mil
    
    4
    
    5.95
    
    61
    
    55.0520 4 wide, 2-mil thick Al-H214 Rolls
    
    Total
    
    883.22 lbs10670
    
    H214
    
    2-mil
    
    12
    
    11
    
    102
    
    9110671
    
    H214
    
    2-mil
    
    12
    
    11
    
    276
    
    26510674
    
    H214
    
    2-mil
    
    12
    
    11
    
    258
    
    24710678
    
    H214
    
    2-mil
    
    12
    
    12
    
    108
    
    9610680
    
    H214
    
    2-mil
    
    12
    
    11
    
    92
    
    8110682
    
    H214
    
    2-mil
    
    12
    
    11
    
    99.6
    
    88.610683
    
    H214
    
    2-mil
    
    12
    
    11
    
    131
    
    12010684
    
    H214
    
    2-mil
    
    12
    
    11
    
    142.4
    
    131.410686
    
    H214
    
    2-mil
    
    12
    
    14
    
    144
    
    13011035
    
    H214
    
    2-mil
    
    12
    
    11
    
    107
    
    9610 12 wide, 2-mil thick H214 Rolls
    
    Total
    
    1,346 lbs




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##### 



EXHIBIT A
 Form of Bill of Sale and Assignment
 Agreement   Assignor Assignee
 RECITALS
 Asset Purchase Agreement
    AGREEMENT
     A-1




---



##### 



[Signature Page Follows]
 A-2




---



##### 



ASSIGNORCATALYTICA ENERGY SYSTEMS, INC.By:Name:Title:ASSIGNEEKAWASAKI HEAVY INDUSTRIES, LTD.By:Name:Title:




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##### 



EXHIBIT B
 Form of License Agreement
 Agreement Effective Date CESI Kawasaki
 Asset Purchase Agreement
     Definitions
 Affiliate
 Assigned Patents
 Patents
 SGT Catalytic Module
 Small Gas Turbines
 B-1




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##### 



Technical Information
 License
 Multi-Use Patents Multi-Use Patents Licensed Patents Abandoned
Multi-Use Patents
 Licenses
 Patents
 Technical Materials
 New Technical Materials Multi-Use Technical Information Licensed Technical Materials
 B-2




---



##### 



Kawasaki Contractors
 Kawasaki Customers
  Authorized Users Authorized Users
 Exclusivity EXCLUSIVE
 Marking; Requests for Disclosure
 B-3




---



##### 



Sublicense Limitations
 No Implied Rights
 Xonon Trademark
 License. EXCLUSIVE CESI Trademarks
 Quality Control
   B-4




---



##### 



License Termination.
 Reservation of Rights
 B-5




---



##### 



Training
 Purchase
Price
 Disclaimer of Warranties
 Limitation of Liability
   Confidentiality
 Waiver
 B-6




---



##### 



Severability
 Governing Law
 Injunctive Relief
 Assignment
 Entire Agreement
 B-7




---



##### 



Kawasaki:
    
    
    
    CESI:Kawasaki Heavy Industries, Ltd.
    
    Catalytica Energy Systems, IncorporatedBy:
    
    
    
    
    
    By:Name:
    
    
    
    
    
    Name:Title:
    
    
    
    
    
    Title:
 B-8




---



##### 



EXHIBIT A
 MULTI-USE PATENTS
 PATENT, APPLICATION,OR PUBLICATIONTITLE
    
    COUNTRY
    
    NUMBERGraded Palladium Containing Partial
Combustion Catalyst and a Process for Using It
    
    US
    
    5,248,251Graded Palladium Containing Partial Combustion Catalyst
    
    US
    
    5,258,349(*) Catalyst Structure Having Integral Heat
Exchange
    
    CA
    
    2,096,950(*) Catalyst Structure Having Integral Heat
Exchange
    
    CH
    
    EP0559808(*) Catalyst Structure Having Integral Heat
Exchange
    
    DE
    
    EP0559808(*) Catalyst Structure Having Integral Heat
Exchange
    
    ES
    
    EP0559808(*) Catalyst Structure Having Integral Heat
Exchange
    
    FR
    
    EP0559808(*) Catalyst Structure Having Integral Heat
Exchange
    
    GB
    
    EP0559808(*) Catalyst Structure Having Integral Heat
Exchange
    
    IT
    
    EP0559808(*) Catalyst Structure Having Integral Heat
Exchange
    
    KR
    
    234887(*) Catalyst Structure Having Integral Heat
Exchange
    
    NL
    
    EP0559808(*) Catalyst Structure Having Integral Heat
Exchange
    
    RU
    
    2065766(*) Catalyst Structure Having Integral Heat
Exchange
    
    US
    
    5,250,489Palladium Partial Combustion Catalysts and a
Process for Using Them
    
    DE
    
    EP0559844Palladium Partial Combustion Catalysts and a
Process for Using Them
    
    FR
    
    EP0559844Palladium Partial Combustion Catalysts and a
Process for Using Them
    
    GB
    
    EP0559844Palladium Partial Combustion Catalysts and a
Process for Using Them
    
    IT
    
    EP0559844(*) Palladium Partial Combustion Catalysts
and a Process for Using Them
    
    JP
    
    3191013
 B-9




---



##### 



PATENT, APPLICATION,OR PUBLICATIONTITLE
    
    COUNTRY
    
    NUMBERPalladium Partial Combustion Catalysts and a
Process for Using Them
    
    KR
    
    261782Partial Combustion Process and a Structure for
Use in the Process
    
    US
    
    5,326,253Partial Combustion Process and a Structure for
Use in the Process
    
    US
    
    5,511,972(*) Partial Combustion of Palladium on a
Zirconia Support and a Process for Using it
    
    US
    
    5,259,754(*) Partial Combustion of Palladium on a
Zirconia Support and a Process for Using it
    
    US
    
    5,405,260Improved Process and Catalyst Structure
Employing Integral Heat Exchange With
Optional Downstream Flameholder
    
    DE
    
    EP0745180Improved Catalyst Structure Employing Integral Heat Exchange
    
    DE
    
    EP0746674Improved Process and Catalyst Structure
Employing Integral Heat Exchange With
Optional Downstream Flameholder
    
    FR
    
    EP0745180Improved Catalyst Structure Employing
Integral Heat Exchange
    
    FR
    
    EP0746674Improved Process and Catalyst Structure
Employing Integral Heat Exchange With
Optional Downstream Flameholder
    
    GB
    
    EP0745180Improved Catalyst Structure Employing
Integral Heat Exchange
    
    GB
    
    EP0746674Improved Process and Catalyst Structure
Employing Integral Heat Exchange With
Optional Downstream Flameholder
    
    IT
    
    EP0745180Improved Catalyst Structure Employing
Integral Heat Exchange
    
    IT
    
    EP0746674(*) Improved Catalyst Structure Employing
Integral Heat Exchange
    
    JP
    
    3705298(*) Improved Catalyst Structure Employing
Integral Heat Exchange
    
    JP
    
    3705299Improved Catalyst Structure Employing
Integral Heat Exchange
    
    KR
    
    373887Improved Catalyst Structure Employing
Integral Heat Exchange
    
    SE
    
    EP0746674Improved Catalyst Structure Employing
Integral Heat Exchange
    
    TW
    
    295551
 B-10




---



##### 



PATENT, APPLICATION,OR PUBLICATIONTITLE
    
    COUNTRY
    
    NUMBER(*) Process and Catalyst Structure for
Employing Integral Heat Exchange with
Optional Downstream Flameholder
    
    US
    
    5,512,250Process and Catalyst Structure for Employing
Integral Heat Exchange with Optional
Downstream Flameholder
    
    US
    
    5,518,697(**) Support Structure for a Catalyst
    
    US
    
    6,116,014Mixed Oxide Solid Solutions
    
    US
    
    6,521,566
 B-11




---



##### 



EXHIBIT B
 NEW TECHNICAL MATERIALS
 Media
    
    Rev
    
    TitleMaterialSpec-001
    
    C
    
    Kawasaki River Lite 20-5USR Foil
(BM-012) SpecificationMaterialSpec-002
    
    B
    
    RC-100P Zirconium Oxide Powder (BM-005) SpecificationMaterialSpe -003
    
    B
    
    Pt Diammine Nitrate Solution (BM-001) SpecificationMaterialSpec-004
    
    B
    
    Pd Dissolved in Nitrate Acid (BM-002) SpecificationMaterialSpec-005
    
    C
    
    Al Coated Haynes 214 Foil (BM-013) SpecificationMaterialSpec-006
    
    B
    
    Haynes 214 2B #3 Edge Foil (BM-014) SpecificationMaterialSpec -007
    
    new
    
    Tetraethyl Orthosilicate (BM-006) SpecificationMaterialSpec-008
    
    new
    
    Nitric Acid (BM-007) SpecificationMaterialSpec -010
    
    new
    
    Sulfuric Acid (BM-009) SpecificationMaterialSpec-011
    
    new
    
    0.25N Sulfuric Acid (BM-011) SpecificationMaterialSpec-012
    
    B
    
    Zirconium Oxide, grade DK-2 (BM-019) SpecificationMaterialSpec-013
    
    B
    
    Zirconium Acetate (BM-003) SpecificationMaterialSpec-017
    
    new
    
    Lattice SpecificationMfg-001
    
    C
    
    Corrugation Machine Operating ProcedureMfg-002
    
    B
    
    Foil Cleaning ProcedureMfg-003
    
    F
    
    Operation Procedure for Furnace #2Mfg-004
    
    B
    
    Coating Line 1 Operating ProcedureMfg-005
    
    B
    
    Rolling Machine Operation ProcedureMfg-006
    
    new
    
    Spot Welding ProcedureMfg-008
    
    E
    
    Operation Procedure for Furnace #1Mfg-010
    
    A
    
    Zirconia Sol Production ProcedureMfg-011
    
    C
    
    Prepared Sol ProcedureMfg-012
    
    A
    
    Mixed Metals Preparation ProcedureMfg-018
    
    new
    
    PIFT Powder ProcedureMfg-019
    
    new
    
    PIFT Base Sol Production ProcedureMfg-022
    
    new
    
    Coating Line Operating ProcedureQuality-001
    
    B
    
    Process and Manufactured Materials Acceptance CriteriaATP-001
    
    A
    
    Kawasaki M1A-13X Acceptance Test ProcedurePartSpec-0001
    
    A
    
    Thermally Free Axial (TFA) Support Part SpecPartSpec-0004
    
    B
    
    Kawasaki M1A-13X Module Foilpack DefinitionPartSpec-0007
    
    new
    
    Catalyst Rings and Seals Qualification ProcedureTest-001
    
    D
    
    Testing SQP ProcedureTest-002
    
    D
    
    Air Compressor Operating ProcedureTest-003
    
    D
    
    Auxillary Gas System Operating ProcedureTest-004
    
    D
    
    LEWA Pump Operating ProcedureTest-005
    
    D
    
    ISCO Pump Operating ProcedureTest-006
    
    D
    
    Low Pressure Reactor Operating ProcedureTest-007
    
    D
    
    Catalyst Rolling ProcedureTest-008
    
    D
    
    Gas Analyzer Operating ProcedureTest-009
    
    D
    
    High Pressure Reactor Operating Procedure
 B-12




---



##### 



Media
    
    Rev
    
    TitleTest-010
    
    D
    
    Testing Documentation ProcedureTest-011
    
    C
    
    Common Testing ProcedureTest-012
    
    C
    
    Flow Calibration ProcedureTest-013
    
    D
    
    Rig Calibration ProcedureTest-014
    
    D
    
    Catalyst Handling and Storage ProcedureTest-015
    
    B
    
    House Air Compressor Operating ProcedureProductSpec-0005
    
    A
    
    Kawasaki M1A-13X Product SpecificationOperSpec-0001
    
    A
    
    M1A-13X Fuel Composition SpecificationOperSpec-0002
    
    B
    
    M1A-13X Air Filtration SpecificationOperSpec-0003
    
    A
    
    M1A-13X Fuel Filtration SpecificationOperSpec-0005
    
    A
    
    Lubricating Oil Specification02100100-1
    
    D
    
    Catalyst Module Assy02100101-1
    
    F
    
    Interface ring assy, outlet22010030-1
    
    new
    
    Guide ring, seal assy, outlet02100102-1
    
    F
    
    Guide ring assy, outlet02100119-1
    
    B
    
    Spring seal, outer02100119-2
    
    B
    
    Spring seal, inner22010031-1
    
    new
    
    Guide ring, seal assy, inlet02100103-1
    
    F
    
    Guide ring assy, inlet22010032-1
    
    new
    
    Interface ring, seal assy, inlet02100104-1
    
    C
    
    Interface ring assy, inlet02100118-1
    
    B
    
    Hula seal, outer02100118-2
    
    B
    
    Hula seal, inner02100120-1
    
    C
    
    Axial supports02100115-1
    
    B
    
    Shaft assy, inner support02100116-1
    
    B
    
    Cap, inner support02100114
    
    B
    
    Spindle, 302100112
    
    B
    
    Spindle, 422010040-02
    
    A
    
    Assembly Operation Sheets22010044
    
    new
    
    Disassembly Operation Sheets08021000
    
    B
    
    Specification, NameplateEL22010016
    
    A
    
    Equipment List Catalyst Module Assembly22010017
    
    B
    
    Interface Control Definition, Catalyst ModuleT22010041
    
    A
    
    Lifting Assembly ToolT22010042
    
    new
    
    Spring Seal Check ToolT22010043
    
    new
    
    Spring Seal Wedge ToolMfg Programs
    
    new
    
    Coating Line Washcoat Loading Worksheet (excel)Mfg Programs
    
    new
    
    DataLogger Plot.xls (excel)Mfg Programs
    
    new
    
    CorrData 1.0 xls (excel)Mfg Programs
    
    new
    
    Simplified Corrugation 062601.vi (labview)Mfg Programs
    
    new
    
    Tracking.mdb (access)Mfg Programs
    
    new
    
    PM SprayCalcs CL2.xls (excel)Mfg Programs
    
    new
    
    Foil Pack Sizing Instructions.xls (excel)Design Tools
    
    new
    
    Catalyst Performance and Life Modeling (mathcad)Design Tools
    
    new
    
    Operating Window Analysis (excel)Design Tools
    
    new
    
    Fuel Assessment (excel)
 B-13




---



##### 



Media
    
    Rev
    
    TitleDesign Tools
    
    new
    
    Operational Tracking Guide (excel)Design Tools
    
    new
    
    Control Schedule Development (excel)Design Tools
    
    new
    
    Combustion System Cycle Analysis (excel)Design Tools
    
    new
    
    Adiabatic Combustion Temperature (Tad) calculation (excel)Design Tools
    
    new
    
    Catalyst Pressure Drop (excel)Design Tools
    
    new
    
    Burnout Zone Sizing (excel)Design Tools
    
    new
    
    Ignition Delay and CO Burnout (excel)Summaries
    
    n/a
    
    Design Tool summary sheetsBuild Records
    
    n/a
    
    Fielded and inventoried module mfg,
test and assembly recordsPart Records
    
    n/a
    
    Life tracking data for container hardware in useSpecification 
Sheet
    
    n/a
    
    ISOPAR E specification sheet
 B-14




---



##### 



EXHIBIT C
 CESI TRADEMARKS
 
 B-15




---



##### 



EXHIBIT D
 TRAINING SERVICES
  Topic
    
    Attending
    
    Location
    
    Daysa.
    
    Powder Prep, Stage 1 WC & Stage 2 WC (PIFT)
    
    KHI & TKK
    
    MV
    
    0.5b.
    
    Sol Prep, Stage 2 WC (PIFT)
    
    KHI & TKK
    
    G
    
    0.5c.
    
    Coating Operationo Settingso Spraying of WC, PM, DBL - Stage 1
    
    KHI & TKK
    
    G
    
    3o Spraying of WC, DBL - Stage 2d.
    
    Rolling Machine Operationo Utilize bare foil
    
    KHI & TKK
    
    G
    
    0.5o Tension, speed, alignment, etc.e.
    
    Assemble One Module, including shipping container
    
    KHI & TKK
    
    G
    
    1f.
    
    Al-H214 Development Review
    
    KHI & TKK
    
    G
    
    0.5
  Topic
    
    Attending
    
    Location
    
    Daysa.
    
    Introduction to Xonon Catalyst Technology with
respect to M1A-13X platformo Channel structureo IHE concept
    
    KHI & TKK
    
    MV
    
    
    2o Foil geometryo Catalyst materialo Operationb.
    
    Instruction for use of the following design tools withrespect to M1A-13X platform:- Performance and life modeling- Operating window analysis- Fuel assessment
    
    KHI
    
    MV
    
    
    2- Operational tracking guide- Control schedule developmento Use of toolso Inputs and outputsc.
    
    Description of current M1A-13X Catalyst Designo Design features and specificationso Production Acceptance (catalyst analytical)
    
    KHI
    
    MV
    
    
    1o Operational requirements
 B-16




---



##### 



Topic
    
    Attending
    
    Location
    
    Dayso Safety and performance limits
 d.
    
    Description of current M1A-13X Container Design
Critical Features  overview only, not structural
analysis information
    
    KHI
    
    MV
    
    
    0.5e.
    
    Q&A/Open Discussion of Control Logic
(KHI to provide a list of questions two weeks prior to
training, CESI to prepare materials and answers
within current resources and capabilities)
    
    KHI
    
    MV
    
    
    0.5f.
    
    Q&A/Open Discussion of Field Experience
(KHI to provide a list of questions two weeks prior to
training, CESI to prepare materials and answers
within current resources and capabilities)
    
    KHI
    
    MV
    
    
    0.5
 13X Training Schedule
 1
    
    2
    
    3
    
    4
    
    5
    
    6
    
    7
    
    8
    
    9
    
    10Jun 19
    
    Jun 20
    
    Jun 21
    
    Jun 22
    
    Jun 23
    
    Jun 26
    
    Jun 27
    
    Jun 28
    
    Jun 29
    
    Jun 30Monday
    
    Tuesday
    
    Wednesday
    
    Thursday
    
    Friday
    
    Monday
    
    Tuesday
    
    Wednesday
    
    Thursday
    
    FridayMVKHI
    
    B-a
    
    B-a
    
    B-b
    
    B-b
    
    B-c
    
    B-d,e
    
    B-fTKK
    
    B-a
    
    B-a
    
    A-aAZKHI
    
    
    
    
    
    Travel to AZ
    
    A-b / A-c
    
    A-c
    
    A-c
    
    Travel to AZ
    
    A-e
    
    A-fTKK
    
    
    
    
    
    Travel to AZ
    
    A-b / A-c
    
    A-c
    
    A-c
    
    A-c / A-d
    
    A-e
    
    A-fKHI
    
    MV
    
    MV
    
    MV / AZ
    
    MV / AZ
    
    MV / AZ
    
    MV / AZ
    
    MV / AZ
    
    AZ
    
    AZTKK
    
    MV
    
    MV
    
    MV / AZ
    
    AZ
    
    AZ
    
    AZ
    
    AZ
    
    AZ
    
    AZ
 B-17




---



##### 



EXHIBIT C
 Application for Income Tax Convention
  B-18




---



##### 



EXHIBIT D
 State of Arizona Transaction Privilege Tax Exemption Certificate
  B-19