Document:

exv10w9

Exhibit 10.9

MEMORANDUM OF UNDERSTANDING

     This Memorandum of Understanding (the “MOU”) is entered into as of the 14th day of April, 2011
by and among:

     Lowndes County, Mississippi (the “County”), the Lowndes County Port Authority (the “Port”),
the City of Columbus, Mississippi (the “City”), the Columbus Light & Water Department (the “CLW”),
KiOR Columbus, LLC (“KiOR Columbus”) and KiOR, Inc.(“KiOR”);

     Each of the foregoing parties to this MOU is referred to hereinafter as a “Party” and,
collectively as “Parties”. The County, the Port, the City are referred to collectively as the
“Public Parties”.

     The Parties acknowledge adequate consideration has been exchanged and received and exists to
sufficiently underlie this MOU and to serve as a foundational element to bind the Parties within
this MOU.

     I. Background

     The MOU reflects ongoing efforts by the County, the City, the Port and CLW to attract more
manufacturing investment and employment through the location of a new production facility at the
Port in Lowndes County, Mississippi. This MOU serves as a pre-contractual recitation of the
overarching deal terms to be implemented into a definitive agreement or agreements (the “Definitive
Agreement”) between the County, City, Port, CLW, KiOR Columbus and KiOR; provided, however, that it
is understood that this MOU will serve as a deal blueprint. The terms of the Definitive Agreement,
if any, shall govern the obligations between the parties with respect to the matters set forth
herein.

     II. KiOR Program

     1. General

     (a) KiOR is actively engaged in the development of a series of biomass conversion units
(“BCC”) production facilities in Mississippi, and KiOR intends to locate one of those facilities,
as well as other supporting operations such as wood receiving and processing functions (the
“Project”), at the Port in Columbus, Mississippi.

     (b) It is currently expected that the Project will require an investment in excess of
$100,000,000.00 and once fully operational will employ not less than 30 persons. It is estimated
that the annual payroll of all persons employed at the Project will be approximately $1,000,000
once the Project is fully operational.

     (c) (c) The County, Port, City and CLW have determined that the proposed KiOR Project will
benefit the residents of Lowndes County and the City of Columbus by increasing both employment and
tax revenues, improving the standard of living for the residents of

 

 

Columbus and Lowndes County, and the residents will further benefit through the creation of
jobs and the increased employment opportunities. This understanding and project predicate has
encouraged the Public Parties to present a number of inducements to KiOR.

     (d) Therefore, the County, the Port, the City and CLW agree that, in consideration of KiOR
locating one of its BCC facilities in Lowndes County, with its employment opportunities, capital
investment and tax revenues, will provide the respective inducements set forth herein to KiOR or
any KiOR designated and qualifying or eligible entity. KiOR intends to use such inducements to
enable KiOR Columbus’ location of the BCC in the County on property currently owned by the Port.

     2. The Undertakings of Lowndes County and the City of Columbus:

     (a) Provided the project qualifies, the County and the City agree to enter into a Fee In Lieu
agreement with KiOR Columbus on terms satisfactory to the parties and in accordance with applicable
law.

     (b) As detailed in this agreement, the Public Parties agree to provide incentives and
improvements to upgrade and improve the Industrial Park Access Road and provide water and sewer and
to make other infrastructure improvements to facilitate KiOR Columbus’ operations, which upgrading
and improvements shall be completed no later than October 1, 2011.

     (c) Since all undertakings under this Section 2 fall in some manner under the auspices of the
Public Parties and may under law require final approval as a condition precedent, such approval of
all intended undertakings listed herein is both understood and agreed to as in itself an incentive
for KiOR Columbus to locate the Project in Lowndes County at the Port.

     3. Port’s Undertakings:

     In consideration of the Operation fees and other fees to be paid by the City and County, and
the ownership of the dock, and other valuable consideration, the Port agrees to provide
approximately 29.78 acres of land, as indicated on the attached Exhibit A (the “Site”), consisting
of 22.35 acres (Tract I) presently owned by the Port and County and 7.43 acres (Tract II) presently
under lease from the US Army Corps of Engineers, under terms and conditions to be agreed upon
between the Port and KiOR Columbus, which at a minimum, will contain the following:

     (a) The satisfaction of any and all conditions required by the applicable law and any
permitting requirement of the U S Army Corps of Engineers or other governing body, with the Port to
diligently pursue the acquisition of the 7.43 acres from the U S Army Corp of engineers;

     (b) After execution of this MOU, and the deposit of the $50,000 in escrowed funds as provided
below, the Port and County shall execute a document granting KiOR Columbus the use of the Site, in
a form agreeable to the parties, so that it, and its contractor, may begin preliminary site
preparation work. The grant shall include the terms set forth in paragraph 3(i) below and shall be
conditioned upon the satisfaction of the terms of this MOU and the preparation and development of
the Definitive Agreement. On execution of the Definitive Agreement, and in exchange for the
consideration described in the Definitive Agreement, the Port and County shall

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convey and lease, as applicable, the Site to KiOR Columbus at no additional cost to KiOR
Columbus based on KiOR Columbus’s representation that KiOR Columbus will invest at least
$100,000,000 in the Project no later than December 31, 2011. To secure its obligation to make such
$100,000,000 investment, upon execution by all parties of this MOU, KiOR Columbus will deposit
$50,000 (the “Escrowed Funds”) into an interest bearing account at an institution selected by the
Port. The Escrowed Funds shall be forfeited to the Port should KiOR Columbus fail to timely make
such $100,000,000 investment and perform its obligations under the Definitive Agreement or, if no
Definitive Agreement is executed, then upon KiOR Columbus’s failure to perform its obligations
under this MOU. In addition, ownership of the Site shall revert to the Port and KiOR Columbus shall
be responsible for returning the Site to its condition prior to the work it performs on the Site.
Alternatively, KiOR Columbus shall have the option to retain ownership of the Site by paying an
additional $500,000 to the Port. If the Escrowed Funds are not forfeited to the Port, then such
funds will be used to offset the Operations Fee referenced in Subsection (h), below.

     (c) The Port shall apply for a loan for up to $367,450 in funds for the improvement of
Industrial Park Access Road. The Port shall agree to provide acreage reasonably necessary for the
improvement of the roadway leading to the Site and the County, City and Port shall bear equally the
cost of amortizing the loan over a 10 year period.

     (d) In the event KiOR Columbus elects, within 5 years of the execution of the Definitive
Agreement, to procure rail access to its Site, the Port will make the right of way available, at no
cost, at a location agreeable to the Port and KiOR Columbus and consistent with the efficient
operation of the Port.

     (e) KiOR Columbus shall meet certain specified milestones in its goal of constructing the
Project to be mutually agreeable to the Port and to KiOR Columbus. In the event KiOR Columbus fails
to materially meet these milestones, the Definitive Agreement shall terminate after 1 year and the
Escrowed Funds shall be retained by the Port. The Port shall endeavor to negotiate, in good faith,
for the extension of any interim milestones. The milestones (all of which are subject to the
understandings set out in Section 5), beginning with the execution of this MOU, are:

          i. application for all necessary permits within 45 days, and grant of such permits within 120
days;

          ii. Completion of a site specific plan within 60 days;

          iii. Design completion within 270 days;

          iv. Begin substantial construction within 1 year of the execution of this MOU.

     (f) In the event the Project is idle on a continuous full time basis for at least 2 years,
ownership of the Site shall revert to the Port, and KiOR Columbus shall be responsible for the cost
of restoring the Site to the condition existing prior to the time of the KiOR development of the
Site and curing any environmental violations that might arise out of KiOR Columbus’s ownership and
operation of the site.

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     (g) The Port shall have the right of approval of any lease by KiOR Columbus to a non-KiOR
Columbus affiliated or associated occupant/owner or lessee of the Project to ensure that the
proposed new use of the Project is compatible with Port operations, such approval to not be
unreasonably withheld;

     (h) Operations Fee. KiOR Columbus shall pay an operations fee related to the use of the Site
at such time as the Project becomes fully operational. Provided the Project qualifies for fee in
lieu treatment, then the annual Port operations fee, for the initial 10 years of the operation,
shall be $25,000, payable in equal monthly installments, with credit given, after the initial 2
years of operation, for the Escrowed Funds. During the second 10 years of the operation, and
thereafter, the annual Port operations fee shall be equivalent to $50,000, which shall be adjusted,
beginning in year 11 and annually thereafter, measured by the increase in the Producers Price
Index, based upon the then previous 12 months. In the event the Project does not qualify for
fee-in-lieu treatment, then the annual Port operation fee shall be $50,000 for the initial 10 years
of the operation, and adjusted, beginning in year 11 and annually thereafter, measured by the
Producers Price Index, based upon the then previous 12 months.

     (i) The Port and KiOR Columbus shall move, as expeditiously as practical, to negotiate a
mutually acceptable Definitive Agreement which shall include other customary provisions regarding
access to the Site, mutual indemnification, maintenance of the Plant, maintenance of the Port and
river access, mutual covenants and indemnity against environmental violations, restrictions on
assignability to protect the integrity of the Port’s public function, but which shall not
unreasonably restrict KiOR Columbus’s ability to assign such rights without the prior approval of
the Port, and the like, which shall survive the transfer of the Site.

     4. CLW Undertakings:

     (a) CLW shall, at no cost to KiOR Columbus, install the necessary facilities to provide
electrical power to the Project sufficient for KiOR Columbus’s intended use of the Project in
accordance with CLW Electric Service Policy, such installation to be completed as soon as
reasonably possible. The Project will be billed in accordance with TVA’s rate schedule for
determined customer class.

     (b) CLW shall incur the cost, up to $50,000, in improvements consisting of labor, materials
and equipment to extend sewer and water onto the Site sufficient for KiOR Columbus’s intended use
of the Project as soon as reasonably possible, over public right of way or over easements granted
to CLW for that purpose.

     (c) The
location of the existing water and sewer service is shown on exhibit A and the
proposed substation as shown on exhibit B.

     5. KiOR Undertakings:

     (a) KiOR Columbus understands that the inducements for the Public Parties in this MOU are
being made in expectation of KiOR Columbus achieving the investment, employment numbers and payroll
in Section II(1)(b) of this MOU. The Parties understand that the referenced projected investments
by KiOR Columbus and the employment and payroll numbers are merely

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estimates which may in reality be higher or lower due to factors including but not limited to
construction costs, contract requirements tooling amounts and operational efficiencies.

     (b) KiOR Columbus shall use commercially reasonably efforts to comply with all relevant and
known rules and regulations necessary to achieve successful receipt of any and all of the
inducements offered in this MOU.

     (c) KiOR Columbus agrees to reasonably cooperate with the County, the Port, the City and any
other Party or participant to the extent reasonably necessary to receive the inducements set out in
this MOU.

     6. Natural Gas. It is understood between the Parties that Atmos Energy has agreed to
facilitate, on terms agreeable to Atmos and KiOR Columbus, the service of natural gas to the Site.
It is understood that the Public Parties will not participate in the funding of any natural gas
service.

     7. Amendments. Any amendments to this MOU shall be in writing and signed by all Parties who
are affected by such amendment or their respective successors and assigns.

     8. Applicable Law and Venue Selection. This MOU shall be governed by the laws of the State of
Mississippi without regard to conflicts of laws provisions.

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

     10. Successors and Assignment. With the written consent of the Port, which shall not be
unreasonably withheld, KiOR Columbus shall have the right to assign all of its rights, interests
and obligations in this MOU in whole or in part to one or more affiliates, corporate partners or
teammates, provided however, that such assignment shall not relieve KiOR Columbus or KiOR from its
obligations under this MOU. The binding provisions of this MOU (which are set forth in Sections 10
and 14) shall be binding upon and for the benefit of the respective successors and assigns of the
Parties hereto, to the same extent as if each successor and assign were in each case named as a
Party to this MOU.

     11. Notices. All communications and notices expressly provided for herein shall be sent by
registered and first class mail, postage prepaid, by a nationally recognized overnight courier for
delivery on the following business day or by telex or telecopy (with such telex or telecopy to be
confirmed promptly in writing sent by mail or overnight courier as aforesaid), as follows:

	 	 	 

	LOWNDES COUNTY, MISSISSIPPI

	 	President

Lowndes County Board of Supervisors

Box 1384

Lowndes County Courthouse

Columbus, MS 39701

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	LOWNDES COUNTY PORT
AUTHORITY:

	 	Executive Director

Lowndes County Port Authority

P.O. Box 663

Columbus, MS 39703
	 
	 	 
	CITY OF COLUMBUS

	 	Mayor

City of Columbus, Mississippi

Box 1408

Columbus, MS 39703
	 
	 	 
	COLUMBUS LIGHT & WATER

	 	Manager

Columbus Light & Water Department

PO Box 949

Columbus, MS 39703
	 
	 	 
	KiOR COLUMBUS, LLC

	 	Fred Cannon

CEO & President

KiOR Columbus, LLC

13001 Bay Park Road

Pasadena, TX 77507
	 
	 	 
	KiOR, INC.

	 	Fred Cannon

CEO & President

KiOR, Inc.

13001 Bay Park Road

Pasadena, TX 77507

or to such other address as the receiving Party shall have most recently forwarded to the sending
party.

     12. Term. The term of this MOU shall be effective April 14, 2011, and continue in effect until
the execution by the Parties of the Definitive Agreements setting forth the principles herein.

     13. Costs and Expenses. Except as otherwise provided herein each Party agrees to pay its own
costs and expenses incurred in connection with this MOU.

     14. Confidentiality and Press Releases. Each of the Parties agrees to maintain the
confidentiality of this MOU and of the details concerning the transactions contemplated hereby and,
unless otherwise required by law, will not disclose such information to third parties without the
prior written consent of the other Parties. The Parties shall coordinate any announcements, press
releases or publications concerning the MOU or the project contemplated by this MOU and each Party
shall have the opportunity to have its representative actively participate in any function related
to the release of any information related to the project.

     15. Binding Effect. The terms and conditions set forth in this MOU are intended, subject to (i)
the availability of a $367,500 loan sought by the City, County and Port (ii) the

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satisfaction of
KiOR Columbus with the Corps lease and the Port’s authority to sublease to KiOR Columbus, (iii) the
satisfaction of KiOR Columbus with the terms of the sublease from the Port, and (iv) the
satisfaction of KiOR Columbus with the terms of the document referenced in 3(b) to constitute the
legal and binding obligations of the Parties and to express their intent to go forward. It is the
intent of the Parties hereto that these terms will be supplanted by the terms of the Definitive
Agreement.

     16. Guaranty. By its execution of this agreement, KiOR unconditionally guarantees the
performance by KiOR Columbus of its obligations under this agreement.

[Signature Pages Follow]

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     IN WITNESS WHEREOF, the Parties have executed this MOU on the dates set forth opposite their
respective names.

	 	 	 	 	 
	 	LOWNDES COUNTY PORT AUTHORITY

 	 
	Date: 4/13/2011 	BY:  	/s/ John B. Hardy
 	 
	 	 	JOHN B. HARDY, JR., DIRECTOR 	 
	 
	 	LOWNDES COUNTY, MISSISSIPPI

 	 
	Date: 4/13/2011 	BY:  	/s/ Harry Sanders
 	 
	 	 	HARRY SANDERS, PRESIDENT 	 
	 
	 	CITY OF COLUMBUS, MISSISSIPPI

 	 
	Date: 4/14/2011 	BY:  	/s/ Robert Smith
 	 
	 	 	ROBERT SMITH, MAYOR 	 
	 
	 	KiOR COLUMBUS, LLC

 	 
	Date: 4/18/2011 	BY:  	/s/ Fred Cannon
 	 
	 	 	FRED CANNON 

CEO & President 	 
	 
	 	KiOR, Inc.

 	 
	Date: 4/18/2011 	BY:  	/s/ Fred Cannon
 	 
	 	 	FRED CANNON 

CEO & President 	 
	 

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Tract I

A TRACT OF LAND CONTAINING 22.35 ACRES, MORE OR LESS, BEING SITUATED IN FRACTIONAL SECTION 32,
TOWNSHIP 19 NORTH, RANGE 18 EAST, LOWNDES COUNTY, MISSISSIPPI, AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

Commencing at a found rebar at the Northwest corner of Section 32, Township 19 North, Range 18
East, thence run South for a distance of 2,652.19 feet to a point, thence run East for a distance
of 2,366.91 feet to a found U.S. Army Corps of Engineers (USACE) monument (unstamped), and being
the Point of Beginning; thence run S 030 18’ 48” W for a distance of 272.63 feet to a USACE
monument stamped “802-2”, thence run S
23°57’40” E for a distance of 492.42 feet to a USACE
monument stamped “802-3”, thence run S 37° 51’17” W for a distance of 570.19 feet to a USACE
monument stamped “802-4”, thence run S 32° 45’
20” E for a distance of 281.80 feet to a USACE
monument stamped “802-5”, thence S 89° 57’
11” E for a distance of 475 feet more or less to point
on the right bank of the Tombigbee River, thence run Northeasterly along said right bank of the
river for a distance of 1485 feet more or less to a set iron pin; thence leaving said right bank of
the river, run S 8 line of a paved county road known as Industrial Park Road; thence run along
9°24’15” W for a distance of 625.71 feet to a found iron pin on the East right-of-way said
right-of-way line and being along a curve to the left having a radius of 100.0 feet with a chord
bearing and distance of N 36°42’22” W, 109.05 feet and a arc length of 115.28 feet to a concrete
right-of -way marker; thence, leaving said right-of-way line, run S 80°18’21” W for a distance of
100.0 feet to a set iron pin on the West right-of-way line of said Industrial Park Road; thence
along said right-of-way line, run N 09°41’39” W for a distance of 62.92 feet to a set iron pin;
thence leaving said right-of-way line, run along a curve to the right having a radius of 105.47
feet with a chord bearing and distance of S 82°32’08” W, 85.15 feet and a arc length of 87.66 feet
to a set iron pin; thence run S 74°40’19” W for a distance of 203.18 feet to a set iron pin; thence
run N 08°32’01” W for a distance of 118.16 feet to a set iron pin; thence run West for a distance
of 53.17 feet to the Point of Beginning.

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Tract II

A TRACT OF LAND CONTAINING 7.43 ACRES, MORE OR LESS, BEING SITUATED IN FRACTIONAL SECTION 32,
TOWNSHIP 19 NORTH, RANGE 18 EAST, LOWNDES COUNTY, MISSISSIPPI, AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

Commencing at a found rebar at the Northwest corner of Section 32, Township 19 North, Range 18
East, thence South a distance of 2,652.19 feet to a point, thence East a distance of 2,236.58 feet
to a set iron pin and being the Point of Beginning; thence run S 00°13’12” E for a distance of
129.31 feet to a set iron pin; thence run S 21°21’O6” W for a distance of 129.31 feet to a set iron
pin; thence run S 61°23’59” E for a distance of 103.72 feet to a set iron pin; thence run S
41°27’45” E for a distance of 147.15 feet to a set iron pin; thence run S 24°19’13” E for a
distance of 172.50 feet to a set iron pin; thence run S 02°59’42” W for a distance of 65.26 feet to
a set iron pin; thence run S 29°12’30” W for a distance of 209.55 feet to a set iron pin; thence
run S 47°14’21” W for a distance of 167.07 feet to a set iron pin; thence run S 65°05’45” W for a
distance of 132.71 feet to a set iron pin; thence run S 32°00’28” W for a distance of 72.44 feet to
a set iron pin; thence run S 01°16’22” E for a distance of 128.88 feet to a set iron pin; thence
run S 37°44’27” E for a distance of 616.88 feet to a set iron pin; thence run S 62°31’04” E for a
distance of 138.97 feet to a set iron pin; thence run S 89°57’ 11” E for a distance of 260.76 feet
to a set iron on the right bank of the Tombigbee River; thence run along said right bank for the
following calls and distances, N 10°20’03” E for a distance of 142.83, N 02°36’S3” E for a distance
of 115.40 feet, N 07°58’05” E for a distance of 61.71 feet; thence leaving said right bank run N
89°57’ 11” W for a distance 512.68 feet to a U.S. Army Corps of Engineers (USACE) monument stamped
“802-5”; thence run N 32°45’20” W for a distance of 281.80 feet to a USACE monument stamped
“802-4”; thence run N 37°51’17” E for a distance of 570.19 feet to a USACE monument stamped
“802-3”; thence run N 23°57’40” W for a distance of 492.42 feet to a USACE monument stamped
“802-2”; thence run N 03°18’48” E for a distance of 272.63 feet to a USACE monument (not stamped);
Thence run West for a distance of 130.33 feet to the Point of Beginning.

10exv10w10

Exhibit 10.10

HYDROGEN ON-SITE SUPPLY AGREEMENT

This Hydrogen On-Site supply Agreement (“Agreement”) is entered into as of the 10th day
of December, 2010 (the “Effective Date”) by and between Matheson Tri-Gas, Inc. (“Seller”) and KIOR,
Inc. (“Buyer”).

RECITALS

WHEREAS, Buyer has requirements for gaseous hydrogen meeting specifications herein provided
(“Product”) at its facility located on Industrial Park Access Road in Columbus, Mississippi
(“Buyer’s Facility”) and desires to purchase such requirements of Product from Seller;

WHEREAS, in order for Buyer to receive such Product requirements from Seller, it will be necessary
for Seller to install a hydrogen producing plant (“Seller’s Facility”) located on the Buyer’s
Facility with Buyer’s connection point located at the Buyer’s Facility and within Buyer’s property
limits;

WHEREAS, Seller and Buyer have agreed that Seller will pay the cost of installation, operation and
maintenance of Seller’s Facility; and

WHEREAS, Seller is willing to furnish delivered Product to Buyer from Seller’s Facility for the
purposes aforesaid, and Buyer is willing to purchase such Product from Seller.

NOW THEREFORE, for and in consideration of the mutual covenants and premises contained herein, and
other good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), and intending to be legally bound hereby, Buyer and Seller agree as follows:

DEFINITIONS:

In all interpretations of this agreement, the following definitions shall govern:

“HYDROGEN” means GASEOUS HYDROGEN.

“SCF” means standard cubic feet of a gas at a temperature of 70 degrees Fahrenheit and a pressure
of 14.7 PSIA (defined below).

“SCFH” means standard cubic feet per hour of a gas at temperature of 70° Fahrenheit and a pressure
of 14.7 PSIA (defined below).

“MMSCFD” means million standard cubic feet per day of a gas at temperature of 70° Fahrenheit and a
pressure of 14.7 PSIA (defined below).

“PSIA” means pounds per square inch absolute.

“PSIG” means pounds per square inch gauge.

“SELLER’S PLANT SITE” means a parcel of land and equipment foundations located on the Buyer’s
Facility (defined below), designated by the Buyer and accepted by the seller. The Seller’s Plant
Site shall be occupied exclusively by the Seller for the installation, operation and maintenance of
the Seller’s Facility (defined below) without cost for such occupancy until the Seller’s Facility
is removed in accordance with terms hereinafter provided.

Page 1 of 18

 

“SELLER’S FACILITY” means a Product (defined below) producing plant and related facilities having
the production capabilities or capacities stated in Appendix A attached hereto and made a part
hereof, which shall be leased, maintained and operated by Seller on the Seller’s Plant Site.

“PRODUCT” means a gas conforming to the product specifications set forth in Appendix C.

“BUYER’S FACILITY” means Buyer’s facility in Columbus, Mississippi or any location to which the
operations may subsequently be moved during the term of this Agreement, on which is located BUYER’S
manufacturing facilities.

“POINT OF CONNECTION” means a point at which Seller’s facility connects with the Buyer’s Product
pipeline and utility supplies as set forth in Appendix B.

“COMMENCEMENT DATE” shall be the date of successful completion of the Performance Test except as
otherwise provided for in Section 2(a) of this Agreement.

“CONTRACT PERIOD” shall mean the period beginning on the date of commercial operation of Seller’s
Facility and continuing for a period of fifteen (15) years (the “Initial Term”),

TERMS AND CONDITIONS

	1.	 	Sellers Facility
	 
	(a)	 	So long as Buyer is not in breach of this Agreement, seller will proceed with and perform, in
a commercially reasonable manner, all work reasonably necessary to have fabricated and
installed, at Seller’s expense, the Seller’s Facility, including interconnecting piping up to
the Point of Connection. The Seller’s Facility shall be constructed in conformity with
applicable industry construction standards.
	 
	(b)	 	The Buyer shall make available to the Seller, by the date specified in Appendix A, the
Seller’s Plant Site. The Buyer shall provide notice to the Seller when the Seller’s Plant Site
is available. The Seller shall have the right to inspect the Seller’s Plant site within ten
(10) days of said notice. The Buyer shall advise the Seller of any unsuitable conditions in
existence at the time of the inspection within three (3) days, otherwise the Seller shall be
deemed to have waived its objections to such conditions.
	 
	(c)	 	If the Seller’s Plant Site is or becomes unsuitable or unavailable upon the date set forth
herein, or the construction of the Seller’s Facility is halted or unreasonably delayed, Buyer
shall act as expeditiously as possible to alleviate or remediate the condition or, in the
alternative, to select and secure an alternate site that is suitable for the construction and
operation of the Seller’s Facility. Buyer shall bear all reasonable and incremental costs
incurred by the Seller as a result of such alleviation, remediation or change in location,
including by not limited to the costs of any essential redesign of the Seller’s Facility,
additional supplies, equipment, pipelines, utilities or land improvements. Seller shall
cooperate with the Buyer and shall consult with the Buyer in advance regarding any such
additional and incremental costs.
	 
	(d)	 	The Buyer will ensure, at its sole cost, that the Seller’s Plant Site is be in compliance
with applicable laws, rules and regulations, including but not limited to environmental laws.
In no event shall the Seller be responsible for any environmental condition existing at the
Seller’s Plant Site at the time the Seller takes occupancy thereof, nor any contamination
occurring thereafter unless such contamination can be shown to be caused by the Seller’s
operations. The site shall be level and cleared, have a minimum soil load bearing capacity of
2,500 pounds per square foot, and be free of all overhead and underground obstructions whether
natural or otherwise. Buyer shall provide all licenses, permits and site drawings required in
connection with the installation and operation of the Seller’s Facility at its sole cost.

Page 2 of 18

 

	(e)	 	The Buyer shall provide all equipment foundations in accordance with the Seller’s
specifications and shall maintain all of the foregoing in good repair and safe operating
condition. Buyer shall provide, at its sole cost, all underground and surface testing and
analysis of the Seller’s Plant Site and other site preparation work, including but not limited
to fill material, site drainage and final grading necessary for the construction and
installation of the equipment foundations. Buyer shall provide notice to Seller when such site
preparation work and installation of foundations has been completed.
	 
	(f)	 	The Buyer shall provide, at its sole expense, all permits and licenses required by law for
the installation and operation of the seller’s Facility. The Seller shall provide data and
assistance as required by the Buyer to obtain said permits and licenses upon request.
	 
	(g)	 	The Buyer shall, without cost to Seller, provide at the Seller’s Plant Site sufficient
quantities of the items stated in Appendix C as maybe required for the construction and
operation of the Seller’s Facility.
	 
	(h)	 	The Buyer will ensure the Seller has unimpeded access to the Seller’s Plant Site, including
its designated subcontractors and any associated equipment required for the installation,
repair, operation and maintenance of the Seller’s Facility. Seller shall ensure that its
employees, agents and subcontractors comply with all relevant and reasonable Buyer policies
provided to Seller regarding safety, conduct and use while on Buyer’s premises.
	 
	(i)	 	The Seller shall proceed to construct, install and commission the Seller’s Facility on the
Seller’s Plant Site. Seller shall make every commercially reasonable effort to complete the
installation by the date specified in Appendix A. Seller’s obligations to perform hereunder
shall be subject to the Buyer’s performance in full of its obligations hereunder, including
but not limited to provision of the Seller’s Plant site by the date set forth in Section 1(b).
	 
	(j)	 	The Seller’s Facility is not intended to be or to become a fixture of or otherwise part of
the Seller’s Plant Site or of any other property owned by the Buyer or by any third party
notwithstanding the manner in which the facilities, or any part thereof, are installed or
affixed, but said facilities are intended to remain the property of the Seller at all times.
	 
	(k)	 	The Seller shall be entitled to subcontract any or all of the installation of the Seller’s
Facility as it deems appropriate.
	 
	(l)	 	Seller shall comply with all applicable laws, including all notice and record-keeping
requirements, and during construction and maintenance of the Seller’s Facility and shall take
such other reasonable actions for the safety and the protection of persons and property.
Seller shall immediately notify Buyer of any injury or damage to persons or property, which
may occur on Buyer’s property during Seller’s construction, operation or maintenance of the
Seller’s Facility.
	 
	(m)	 	Buyer will own foundations and underground installations throughout the Contract Period. The
Seller’s Facility (excluding foundations and underground installations) will remain the
property of the Seller during the Contract Period. Seller shall be allowed to keep the
Seller’s Facility in place at Buyer’s Facility until Buyer requires the Seller’s Facility to
be removed or if the Seller has a use for the Seller’s Facility at another location. Seller
shall have not less than twelve (12) months after any notice of expiration or termination of
this Agreement to remove the Seller’s Facility from the Seller’s Plant Site. Seller shall have
no obligation to remove any foundations or other underground installations and upon the said
removal any such underground installations shall become the property of the Buyer. If the
Seller fails to remove the Seller’s Facility within twelve (12) months after termination of
this Agreement, then the Buyer may, at its sole option, either (i) remove the Seller’s
Facility at the Seller’s expense or (ii) the Seller’s Facility shall become the property of
the Buyer without further compensation to the Seller.

Page 3 of 18

 

	(n)	 	Seller shall own, operate, maintain and repair the Seller’s Facility up to the Point of
Connection, at seller’s sole risk and expense, in good condition and repair and in accordance
with its best operating practices.
	 
	(o)	 	Seller shall have available for sale and supply hereunder a supply of Product from Seller’s
Facility in accordance with the provisions of Section 1(p) to meet Buyer’s requirements for
Product at Buyer’s Facility for the prices provided in Appendix D herein.
	 
	(p)	 	Seller shall guarantee 340 days “On-Stream Availability” directly from the Seller’s Facility
during each Contract Year. “On-Stream Availability” shall mean the availability of Product
through the pipeline at the Hydrogen Gas Delivery Rate. The remaining 25 days shall cover
periods in which Seller performs maintenance or repairs to the Seller’s Facility and related
equipment (“Permitted Downtime”). The calculation of the above On-Stream Availability
guarantee shall not include any period in which the Product availability from Seller’s
Facility is limited or affected by Buyer’s act(s) or omission(s) (including, without
limitation, Buyer’s temporary shut-down of the Buyer’s Facility, failure of any of Buyer’s
equipment) or by any Force Majeure Event. This guarantee of product availability from Seller’s
Facility shall be limited to requiring Seller to deliver Product through the Pipeline as
provided in Section 6(a). Seller shall provide Buyer with at least two (2) weeks notice of
scheduled shutdowns or turnarounds to allow the Buyer to make production adjustments or obtain
alternate supplies of Product as necessary.
	 
	(q)	 	In the event of any interruption in delivery of Hydrogen by Buyer from Seller which
interruption is caused by events or circumstances set forth in Section 14 below (Force
Majeure), the Initial Term of this Agreement shall be extended for a period of time equal to
the duration of such interruption.
	 
	(r)	 	In the event that the pressure, flow rate or composition of the natural gas feedstock does
not meet the specifications set forth in 

Appendix C, and in the reasonable opinion of the
Seller the operation of the Seller’s Facility may be damaged or Seller’s ability to meet the
Product specifications may be impaired as a result of such condition, Seller shall promptly
notify Buyer. Buyer shall, either (i) correct the condition or (ii) agree to reimburse Seller
for the reasonable cost of additions of modifications to the Seller’s Facility which Seller
deems reasonably necessary to compensate for the condition.
	 
	2.	 	Contract Period
	 
	(a)	 	When the Seller’s Facility is ready for commercial operation, Seller shall so notify Buyer in
writing. Performance of the Seller’s Facility shall be demonstrated within ten (10) days of
the notice by means of a test (“Performance Test”). The Performance Test shall be of
twenty-four (24) hours duration from an organized start. The arithmetic mean of measurements
taken during the test, including tolerances and Product variations as described in Appendix C,
shall be regarded as the achieved performance of the Seller’s Facility. The Performance Test
shall be uninterrupted for the specified duration unless Seller or Buyer order it to be
stopped because either (i) Buyer is satisfied that performance has been demonstrated in a
shorter period of time or (ii) its continuance would endanger personnel or cause damage to
equipment. Buyer shall provide all utilities and consumables for the Performance Test as set
forth in Appendix C. In the event that the Performance Test is successfully completed prior to
December 31, 2011 and the Buyer elects to postpone the commercial delivery of Product, the
parties agree that the Commencement Date shall be postponed until the earlier of December 31,
2011 or the first date of commercial delivery.
	 
	(b)	 	As used herein, the term “Contract Period” shall mean the period beginning on the
Commencement Date and continuing for a period of fifteen
(15) years (the “Initial Term”),
unless terminated earlier as provided in this Agreement.
	 
	(c)	 	This Agreement shall be renewed each year for additional periods of one (1) year (each an
“Additional Term”) following the completion of the Initial Term unless either party notifies
the other of its intention not to renew at least one (1) year prior to the expiration of the
Initial Term or then-

Page 4 of 18

 

	 	 	current Additional Term, as applicable, or unless terminated earlier as provided in this
Agreement.
	 
	(d)	 	The Initial Term and any Additional Term(s) are hereinafter referred to as the “Contract
Period”. As used herein, the term “Contract Year” shall mean each twelve month period
beginning with the Commencement Date and each anniversary thereof during the Contract Period,
including the period, if any, between the end of a Contract Year and the end of the Contract
Period.
	 
	3.	 	Delivery
	 
	(a)	 	Seller shall deliver Product to Buyer at the Point of Connection as stated in Appendix B.
	 
	(b)	 	Title and risk of loss regarding the Product shall pass to Buyer upon delivery to Buyer’s
Point of Connection.
	 
	4.	 	Specification
	 
	(a)	 	All Product delivered by Seller shall substantially conform in all material respects to the
specifications in Appendix C.
	 
	5.	 	Measurement
	 
	(a)	 	Seller shall install, operate and maintain, at Seller’s expense, such metering as may be
necessary hereunder. Buyer shall have access to and be permitted to observe such measuring
equipment (the “Equipment”) at all reasonable times; however, reading, calibrations, and
adjustments thereof shall be performed by Seller. Seller shall make periodic tests as
recommended by the manufacturer of the meters not less often than annually. Seller shall give
Buyer reasonable advance notice of such metering tests and Buyer shall have the right to be
present and to witness such tests. Buyer shall have the right to challenge the accuracy of
such Equipment and, when challenged, the Equipment shall be tested for accuracy by a third
party in the presence of Buyer’s representatives. Costs of all such third party tests shall be
borne by the party requesting the test except when any item of Equipment is found to be
inaccurate by more than two percent (2%), in which case such costs shall be borne by Seller.
The records of readings and tests for the Equipment shall remain the property of Seller.
Within a reasonable time following the request of Buyer, Seller shall permit Buyer to review
such records, together with calculations therefrom, for Buyer’s inspection and verification,
as well as reproduction of such records at Buyer’s expense if Buyer so desires, subject to
return of the original records to Seller within thirty (30) days from receipt thereof. Seller
shall keep original records on file for a period of five (5) years from the date of their
origination.
	 
	6.	 	Quantity
	 
	(a)	 	Seller shall supply Product at reasonably uniform rates of flow in accordance with the
requirement established in Appendix C.
	 
	(b)	 	If Buyer has a requirement or increases its requirement for Product in excess of the Hydrogen
Gas Delivery Rate, Seller will sell and deliver such additional requirement or part thereof if
available from Seller’s Facility.
	 
	7.	 	Price
	 
	(a)	 	For each month of the Supply Period, Seller shall invoice Buyer and Buyer shall pay Seller in
accordance with the pricing schedule set forth in Appendix D. This price shall be subject to
the adjustment as provided for in Section 9(a) below.

Page 5 of 18

 

	8.	 	Terms of Payment
	 
	(a)	 	All payments due Seller hereunder shall be made to Seller at the location indicated on
Seller’s invoice. Subsequent to the delivery of Product for the period reflected in the
invoice, Seller’s invoices shall be payable by Buyer within fifteen (15) days from the date of
the invoice. Seller reserves the right to add a monthly service charge at a rate of three (3%)
percent higher than the prime rate published in the Wall Street Journal that month, or the
maximum rate permitted by law, whichever is greater, for invoices or portions thereof which
are past due and for each month thereafter until paid in full. In addition to all other
rights, in the event of a delinquent balance for services rendered, Seller shall have the
right to take appropriate legal action.
	 
	9.	 	Price Adjustment
	 
	(a)	 	The Monthly Facility Charge set forth in Appendix D may be adjusted semi-annually as follows:

                    MFCnew = MFCbase * ( PPInew / PPlbase)

Where:

MFCnew = New Monthly Facility Charge.

MFCbase = Base Monthly Facility Charge = $172,758

PPInew = rolling average of the latest available twelve months of data reported by the
U.S. Department of Labor’s Bureau of Labor Statistics for the Producer Price Index— Commodities
“Finished goods less food and energy” (Series ID: WPUSOP3500)

PPIbase = Year 2011 annual average for the Producer Price Index — Commodities “Finished
goods less food and energy” (Series ID: WPUSOP3500).

	(b)	 	Bureau of Labor Statistics data used herein will not be seasonally adjusted. No preliminary
data will be used in these calculations, only the latest available adjusted indices. In the
event any index is discontinued during the term of this Agreement, the successor index will be
substituted. If a successor index is not available, the next available higher level series
index will be substituted.
	 
	10.	 	Indemnity
	 
	(a)	 	Subject to the limitations contained in Section 11 and 12 hereof and in Appendix D, each
party agrees to indemnify the other and hold it harmless from and against any and all claims,
orders, demands, causes of action, actions by government authorities, costs, expenses, losses,
damages, and liabilities of any kind (including expert witness and reasonable attorney fees)
to the extent caused by the negligence or willful misconduct of that party or any of its
servants, agents, employees or subcontractors. Buyer shall hold Seller harmless from and
against all claims and liens on or affecting the Seller’s Facility or any part thereof,
connected with their being located on the Seller’s Plant Site, except to the extent that the
same were created by Seller or result primarily from any act on the part of the Seller.
	 
	11.	 	Warranties
	 
	(a)	 	Seller warrants that the Product delivered to Buyer shall comply with the applicable
Compressed Gas Association standards in addition to the specifications set forth in Section 4.
If any Product shall not be as warranted, Buyer’s sole and exclusive remedy shall be to reject
the nonconforming Product and require Seller to replace said Product at no cost to Buyer.
Failure of Buyer to give notice to Seller of a claim based on the Product delivered hereunder
within fifteen (15) days from receipt of the Product in question shall constitute a waiver by
Buyer of all claims with respect to such Product. OTHER THAN THE
WARRANTIES SET FORTH ABOVE,
SELLER MAKES NO OTHER WARRANTY OF ANY KIND, EXPRESSED OR IMPLIED, INCLUDING BUT

Page 6 of 18

 

	 	 	NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
	 
	12.	 	Limitations Of Liability
	 
	(a)	 	Buyer acknowledges that it understands that there are hazards associated with the nature of
the Product, Seller’s Facility, use, and storage of the Product and that Buyer will warn,
protect, and train, as appropriate, all persons who come to or are located at Buyer’s Facility
who may become exposed to those hazards. Upon delivery by Seller of the Product to the Point
of Connection, Buyer assumes all liability for loss, damage, or injury to persons or to
property of Buyer or others arising out of the presence or use of the Product at Buyer’s
Facility or in Buyer’s operations, whether used singly or in combination with other
substances; provided that, subject to the limitations contained in the following paragraph,
Seller shall be responsible for injury to persons to the extent solely and directly caused by
the gross negligence or willful misconduct of Seller, its agents, employees and
subcontractors.
	 
	(b)	 	Buyer also acknowledges that Seller has provided Buyer with all relevant Material Safety Data
Sheet(s). Seller will provide additional Material Safety Data Sheets upon request. Buyer is
aware that OSHA regulations may require Buyer to develop and implement a written chemical
hazard communications program for Buyer’s employees with respect to the Product. Buyer
understands that the Product(s) must not be used without first consulting the Material Safety
Data Sheet(s). Buyer shall insure that all employees, customers, and persons who might become
exposed to the Product receive copies of the Material Safety Data Sheet(s).
	 
	(c)	 	Neither party shall be liable to the other for special, indirect, punitive or consequential
damages however relating to or arising out this Agreement, which shall include but not be
limited to any such liability flowing from an action in tort contract or strict liability even
if the party was made aware of the possibility of any such damages occurring. Seller shall not
be liable to Buyer for any loss or damage to the Buyer’s property which may occur because of
the performance of this Agreement, regardless of which party may be negligent.
	 
	(d)	 	Without in any way limiting Seller’s liability hereunder, Seller shall procure and maintain
the following insurance coverage, and with form and underwriters satisfactory to Buyer. Seller
provide an original insurance certificate , confirming the required coverage , and containing
the additional insured and waiver of subrogation endorsements set forth below, prior to
commencing any construction and operation hereunder:

	 	(I)	 	Workers’ Compensation Insurance as prescribed by applicable law.
	 
	 	(II)	 	Employer’s General Liability Insurance. The limits of liability as prescribed
by applicable law or if not prescribed by applicable law not less than $1,000,000 per
occurrence.
	 
	 	(III)	 	Comprehensive General Liability (Bodily Injury and property damage), Insurance
including the following supplementary coverage: (i) Contractual Liability to cover
liability assumed in this agreement, (ii) Product and Completed Operations Liability
Insurance, (iii) Broad Form Property Damage Liability Insurance, and (iv) explosion,
collapse, and underground hazards. The limit of liability for such insurance shall not
be less than $1,000,000 per occurance for Bodily Injury and $1,000,000 per occurance
for Property Damage. If a combined Single Limit is provided total coverage shall not be
less than $2,000,000.
	 
	 	(IV)	 	Automobile Bodily Injury and Property Damage Liability Insurance. Such
insurance shall extend to owned, non-owned, and hired automobiles used in the
performance of this Agreement. The limits of liability of such insurance shall be not
less than 

$1,000,000 per

Page 7 of 18

 

	 	 	 	occurance for Bodily injury and $1,000,000 per occurance for Property Damage. If a
Combined Single Limit is provided, total coverage shall be not less than $2,000,000.

The above insurance shall include a requirement that the insurer provide Buyer with thirty (30)
days written notice prior to the effective date of any cancellation or material change of the
insurance. The insurance specified in (1) above shall (1) name Buyer and Buyer lndemnitiees as
additional insured’s to the extent required to provide coverage for the obligations entered into
herein, (2) contain waivers of subrogation in favor of Buyer and Buyer Indemnities, and (3) an
assignment of statutory lien to Buyer, if applicable. The insurance specified in (II), (111), (IV)
above shall (i) contain waivers of subrogation in favor of Buyer and Buyer Indemnities; and (ii)
provide that insurance is primary coverage with respect to Seller’s operation there under.

	13.	 	Taxes
	 
	(a)	 	Seller shall bear and pay all Federal, state and local taxes based upon or measured by its
net income, and all franchise taxes based upon its corporate existence or its general
corporate right to transact business.
	 
	(b)	 	Any other tax, howsoever denominated and measured, imposed upon the sale, use or consumption
of Product or any ad valorem taxes imposed upon the real property, equipment or machinery of
the Seller’s Facility shall be paid directly by Seller, and invoiced to Buyer as a separate
item and paid by Buyer to Seller.
	 
	(c)	 	At Buyer’s expense, Buyer reserves the right to seek any exemption from taxes with any
governmental authority that so imposes the taxes and Seller will, at Buyer’s sole expense,
assist Buyer in its effort to obtain relief from such taxes.
	 
	14.	 	Force Majeure
	 
	(a)	 	Except with regard to the duty to pay money under this Agreement, neither party hereto shall
be considered in default in the performance of its respective obligations hereunder, nor be
liable in damages or otherwise for any failure or delay in performance which is due to general
strike, lockout, concerted act of workers or other industrial disturbance, extraordinary
breakdown in machinery or equipment (unless caused by the failure to operate or maintain the
Seller’s Facility in accordance with generally accepted industry procedures given the normal
operating history of plants of a similar size and type), fire, windstorm, explosion, flood or
other natural catastrophe, civil disturbance, riot or armed conflict, whether declared or
undeclared, failure to be supplied, curtailment, shortage, rationing, allocation or failure of
normal sources of supply of labor, materials, transportation, energy, feedstock or utilities,
accident, Act of God, sufferance of or voluntary compliance with act of government and
government regulation (whether or not valid), embargo, or due to any other cause or categories
of causes described above and which is beyond the reasonable control of the party affected
(each a “Force Majeure Event”). Buyer may purchase all or any portion of its requirements from
another supplier during any period in which Seller is unable to supply Product.
	 
	(b)	 	Neither party hereto shall be required to make any concession or grant any demand or request
to bring to an end any strike or other concerted act of workmen.
	 
	(c)	 	The party affected by a Force Majeure Event described in Section 14(a) shall, promptly upon
learning of such event and ascertaining that it has affected or will affect its performance
hereunder, give notice to the other party stating the nature of the event, its anticipated
duration and any action being taken to avoid or minimize its effect.

Page 8 of 18

 

	(d)	 	The affected party shall use all commercially reasonable efforts to alleviate the event
promptly. Within fifteen (15) days of having knowledge of cessation of the Force Majeure
Event, the party asserting it shall notify the other of cessation of the same.
	 
	15.	 	Termination
	 
	(a)	 	This Agreement may be terminated, subject to the provisions of Appendix D, by either party,
during the Contract Period, on account of any material default of the other party in carrying
out the terms hereof; provided, that if the party so in default shall, within thirty (30) days
after receipt of written notice thereof from the other party, cure such default, or if the
cure will take longer than (30) days, the party in default shall begin to cure and diligently
complete the cure within sixty (60) days after receipt of written notice, then the right of
termination shall be nullified and of no effect. Such termination shall be effective as of the
date stated in such notice, which date shall not be less than thirty (30) days nor more than
two (2) months from the date of such notice.
	 
	(b)	 	Should Seller default in carrying out the material terms of this Agreement (subject to the
provisions for cure provided in Section 15(a) hereof) or should a petition be brought by or
against Seller under any present or future bankruptcy or insolvency laws seeking any
reorganization, arrangement or similar relief with respect to Seller and such is not disposed
of within ninety (90) days from the filing thereof, or if Seller shall make any assignment for
the benefit for creditors, or if a receiver is appointed for Seller and not dismissed within
ninety (90) days from appointment, then at Buyer’s option, which must be exercised by written
notice, the provisions in this Agreement pertaining to the supply and purchase of, and payment
for Product shall be suspended and this Agreement may be terminated subject to the provisions
of Appendix D.
	 
	(c)	 	The expiration, termination or cancellation of this Agreement shall not relieve either party
to this Agreement from any obligation or liability incurred by such party prior to the
expiration, termination or cancellation of this Agreement. The obligations assumed under
Sections 10, 11, 12, and 13 shall survive termination of this Agreement.
	 
	16.	 	Assignment
	 
	(a)	 	This Agreement may be assigned to a wholly owned subsidiary or to a successor as a result of
consolidation or merger or to a purchaser of substantially all of the business and assets of
either of the parties, but this Agreement shall not otherwise be assignable or transferable by
either Buyer or Seller without the written consent of the other (each such consent not to be
unreasonable withheld or delayed) and any attempted assignment or transfer without such
consent shall be void. All covenants and provisions of this Agreement by and for the benefit
of the parties hereto shall bind and inure to the benefit of their respective successors and
assigns as permitted by the provisions of this Section.
	 
	17.	 	Compliance with Laws
	 
	(a)	 	Seller shall substantially comply with the applicable requirements of all Federal, state and
local laws, rules and regulations regarding its production and delivery of the Product. Buyer
shall substantially comply with the applicable requirements of all Federal, state and local
laws, rules and regulations regarding its use of the Product.
	 
	18.	 	Confidential Information
	 
	(a)	 	Seller shall keep confidential any technical, process, or economic information derived from
drawings, specification and other data furnished by Buyer in connection with this Agreement
(including, without limitation, in connection with the negotiation and preparation hereof) and
shall not divulge, export, or use, directly or indirectly, such Buyer’s Confidential
Information for the benefit of any other party without obtaining Buyer’s prior written
consent, which consent may be

Page 9 of 18

 

	 	 	unreasonably withheld or delayed. Buyer’s Confidential Information shall only include
information which is designated, in writing, by Buyer as Confidential Information at the
time of its delivery by Buyer to Seller and shall not include any information that: (i) is
in the public domain or generally available to the public; (ii) is independently developed
or created by Seller; (iii) is obtained by Seller from a third party which/who has the right
to disclose any Buyer’s Confidential Information; or (iv) pursuant to a Court order or other
action or ruling by a governmental agency.
	 
	(b)	 	Seller shall only be required to use such measures to maintain the confidentiality of Buyer’s
Confidential Information delivered to Seller by Buyer as those measures taken by Seller to
protect its own confidential information of a similar kind and nature. Except as required for
the efficient performance of this Agreement, Seller shall not use such Buyer’s Confidential
Information or make copies, or permit copies to be made, of such drawings, specifications, or
other data without the prior written consent of Buyer. If any reproduction is made with prior
consent, notice shall be provided thereof.
	 
	(c)	 	Upon expiration or termination of this Agreement, Seller shall promptly return to Buyer all
materials incorporating any such information and any copies thereof, except for one record
copy.
	 
	(d)	 	Buyer agrees to all of this Section 18 pari passu with respect to its relationship with the
Seller’s confidential information.
	 
	19.	 	Controlling Law
	 
	(a)	 	This Agreement shall be governed by and construed in accordance with the laws of the State of
Texas without giving effect to the conflict of laws principles thereof. If any part of this
Agreement is held invalid under the laws of any state in which this Agreement is in effect,
such part shall be waived and the balance of the Agreement shall continue in full force and
effect.
	 
	20.	 	Notices
	 
	(a)	 	Any notice or request given under this Agreement shall,

	 	 	if given to Seller, be addressed to:
	 
	 	 	Matheson Tri-Gas, Inc.

150 AlIen Road— Suite 302

Basking Ridge, NJ 07920

Attn: General Counsel
	 
	 	 	and, if given to Buyer, it shall be addressed to:
	 
	 	 	KIOR, Inc.

13001 Bay Park Road

Pasadena, Texas 77507

Attn: General Counsel
	 
	(b)	 	All notices shall be sent by registered or certified mail. Either party may give written
notice of its change of address, in which event notices shall thereafter be given to it at
such changed address.
	 
	(c)	 	Except as otherwise provided herein, the date of mailing shall be deemed to be the date on
which notice is given and the postal receipt shall be conclusive evidence between the parties
as to the fact and time of delivery.

Page 10 of 18

 

	21.	 	General Provisions
	 
	(a)	 	This Agreement constitutes the entire agreement between the parties hereto, supersedes all
previous agreements and understandings, whether oral or written, relating to the subject
matter hereof, and shall not be changed or modified orally.
	 
	(b)	 	The headings contained herein are included for convenience of reference only, are not
intended to be full or accurate descriptions of the content thereof, are not to be utilized in
construing the meaning of any provision herein and shall not be considered to be part of this
Agreement.
	 
	(c)	 	This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original, and all of which taken together shall constitute one agreement.
	 
	(d)	 	This Agreement shall not be binding until accepted by a duly authorized representative from
each party.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective duly authorized officers effective as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 

	Matheson Tri-Gas, Inc.	 	 	 	KIOR, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ T. Scott Kallman
 

Signature
	 	 	 	By:
	 	/s/ Fred Cannon
 

Signature
	 	 
	 

	 	T. Scott Kailman
	 	 	 	 	 	Fred Cannon	 	 
	Title:

	 	President and Chief Operating Officer
	 	 	 	Title:
	 	President	 	 
	 
	Date: 1/4/11	 	 	 	Date: 12/22/10	 	 

Page 11 of 18

 

APPENDIX A

Seller’s Facility

	1.	 	Seller’s Plant Site shall be made available to the Seller by the Buyer no later than:
April 1, 2011.
	 
	2.	 	Seller shall proceed to construct, install and commission the Seller’s Facility by:
October 7, 2011 (“Commission Date”).
	 
	3.	 	Seller’s Facility will be a steam methane reformer hydrogen gas plant with a production
capacity of not less than. four (4) million standard cubic feet per day.

Page 12 of 18

 

APPENDIX B

Point of Connection

	1.	 	The Buyer shall provide connections for the natural gas feedstock and other utilities at a
point designated by the Seller on the Seller’s Plant Site.
	 
	2.	 	The Seller shall provide a flange for connection of the Seller’s Facility to the Buyer’s
pipeline at a paint designated by the seller on the Seller’s Plant Site.

Page 13 of 18

 

APPENDIX C

Scope of Supply

	1.	 	Specifications for the Hydrogen product/Seller’s Facility are as follows:

	 	 	 

	Instantaneous Flow Rate

	 	£ 166,667 scfh
	Pressure

	 	3 200 psig
	Hydrogen Purity

	 	3 99.99%
	Carbon Oxides

	 	£ 50 ppmv
	Natural Gas Feedstock

	 	£ 85,674 scfh

	2.	 	The following items will be supplied by the respective party during the installation phase of
the project and/or the term of this Agreement:

	 	 	 	 	 	 	 
	SCOPE ITEM	 	MATHESON	 	KIOR	 	REMARKS
	Equipment Supply

	 	X
	 	 	 	generator and all associated
equipment
	Feedstock supply

	 	 	 	X
	 	natural gas
	Electrical power
	 	 	 	 	 	 
	Plot plan

	 	X	 	 	 	 
	Foundation Designs

	 	X	 	 	 	 
	Piping Designs

	 	X	 	 	 	 
	Civil work

	 	 	 	X	 	 
	Foundations

	 	 	 	X	 	 
	Electrical Grounding

	 	 	 	 	 	For grounding MATHESON’s
equipment
	Instrument air

	 	 	 	X	 	 
	Site Access

	 	 	 	X
	 	Adequate space to deliver
all components in a
horizontal configuration on
flat-bed trailers, including
adequate access for cranes
and the erecting process,
delivery & service trucks
and a construction lay down
area.
	Firewater

	 	 	 	X
	 	Access per local regulations.
	Cooling water supply
and blow down drain

	 	 	 	X	 	 
	Make up boiler water

	 	 	 	X	 	 
	Security fencing

	 	 	 	X
	 	Including gate access for
Seller’s Facility
	Area lighting

	 	 	 	X
	 	Adequate according to area
codes for nighttime
maintenance and operation
	Electrical feeder

	 	 	 	X
	 	Power source to terminals on
Seller’s Facility
	Four direct access
analog telephone
lines and service

	 	 	 	X
	 	Enables communications with
Human Machine Interface for
remote monitoring and alarms
	Permits and fees

	 	 	 	X
	 	for structures,
construction, environmental,
operations or other

Page 14 of 18

 

	 	 	 	 	 	 	 
	SCOPE ITEM	 	MATHESON	 	KIOR	 	REMARKS
	Taxes

	 	 	 	X	 	 
	Construction utilities

	 	 	 	X
	 	Power & water
	Construction lay down

	 	 	 	X
	 	Within 100’ of the site
	Sanitary facilities

	 	 	 	X
	 	Provide for Matheson
operators, installation crew
and subcontractors as
necessary
	Freight, delivery,
off loading

	 	X	 	 	 	 
	Erection of equipment

	 	X
	 	 	 	including final leveling,
anchoring & grouting within
the pad boundary
	Field piping, wiring
and connections

	 	X
	 	 	 	within the pad boundary
	Piping outside the
Seller’s Facility

	 	 	 	X
	 	includes connection to KIOR
pipelines
	Start up and
commissioning

	 	X	 	 	 	 
	Operation and 24 hour
monitoring

	 	X	 	 	 	 
	Maintenance and repair

	 	X	 	 	 	 
	Spares

	 	X
	 	 	 	Spares package will include: reformer, induced draft fan,
forced draft fan,
regulators, instrumentation
(mechanical, electrical,
electronic, pneumatic,
control valve), switches
(pressure, level,
temperature), thermocouples,
valves (burner solenoid,
control) boiler feed water
pump, et al.

	3.	 	Quantities of utilities to be provided by the Buyer:

	 	 	 	 	 
	 	 	Quantity	 	Units
	Boiler Make Up Water

	 	3 5,541
	 	pounds per hour
	Instrument Air

	 	3 1,560
	 	scfh
	Cooling Water

	 	3 1,245
	 	gallons per minute
	Cooling Water

	 	£ 85
	 	°F
	Purge Nitrogen

	 	as required
	 	scfh
	Electrical Power

	 	3 140
	 	kW

	4.	 	Specification for natural gas feedstock to be provided by the Buyer:

	 	 	 	 	 

	Pressure

	 	3 120 psig

	Heating Value

	 	3 903 Btu per scf

	Temperature

	 	3 58°F

	Purity:

	 	less than

	N2

	 	0.364%
	02

	 	.010%, max 0.05%

	CO2

	 	0.728%, max 2.0%

Page 15 of 18

 

	 	 	 	 	 

	CH4

	 	98.514%
	C2H6

	 	0.253%
	C3H8

	 	0.061%
	C4H10

	 	0.040%
	C5H12

	 	0.030%
	Total Sulphur

	 	Max 5 grains/100 scf

	Hydrogen sulfide

	 	Max. 0.25 grains/100 scf

	Mercaptan sulfur

	 	Max 1 grain/100 scf

	Water

	 	Max 7 lbs/MMscf

	Total non-hydrocarbons

	 	Max 4%

	Hydrocarbon dew point

	 	point Max +40°F at 162-200 psig

	5.	 	Typical flue gas to atmosphere composition:

	 	 	 	 	 	 	 	 	 

	Plant Capacity
	 	 	 	166,667 SCFH	 	166,667 SCFH
	Compound
	 	Symbol	 	1bmol/hr	 	1b/h	 
	Nitrogen
	 	N2	 	960.00	 	26,880.05	 
	Oxygen
	 	02	 	23.33	 	746.67	 
	Argon
	 	Ar	 	12.04	 	481.06	 
	Carbon Dioxide
	 	CO2	 	254.00	 	11,176.02	 
	Water
	 	H2O	 	309.33	 	5,568.01	 
	Sulfur Dioxide
	 	SO2 (ppmv)	 	 	 	 	 	 
	 
	 	SO2	 	0.00007	 	0.00422	 
	N2, Oxides, max
	 	NO2(ppmv)	 	50	 	50	 
	 
	 	NO2	 	0.0220	 	1.0101	 
	Carbon Monoxide
	 	CO (ppmv)	 	34.00	 	34.00	 
	 
	 	CO	 	0.0149	 	0.4181	 

	6.	 	Boiler water specification to be provided by the Buyer:

	 	 	 	 	 

	Dissolved Oxygen

	 	0.05 ppm w/w
	 	(max)
	lron

	 	0.2 ppm w/w
	 	(max)
	Dissolved Solids

	 	38 ppm w/w
	 	(max)
	pH

	 	8.5 @ 25°C
	 	(max)
	Silica

	 	2 ppm w/w
	 	(max)
	Chlorides

	 	4 ppm w/w
	 	(max)
	Conductivity

	 	43 ohm/cm
	 	(max)
	Pressure

	 	50 psig
	 	(min)
	Temperature

	 	82°F
	 	(min)

Page 16 of 18

 

APPENDIX D

Commercial Terms

	1.	 	Price Schedule
	 
	 	 	Buyer shall pay seller a Monthly Facility Charge of $172,758 except as otherwise provided
for in this Agreement.
	 
	2.	 	Hydrogen Gas Delivery Rate
	 
	 	 	The Seller shall make Product available to the Buyer for withdrawal from the Seller’s
Facility at rates up to 166,667 scfh (4 MMSCFD).
	 
	3.	 	Relocation of the Buyer’s Product consuming operations
	 
	 	 	In the event of a change in location of substantially all of the Product consuming
operations from the Buyer’s Facility to a new site after Contract Year 5, Seller shall have
the right to relocate the Seller’s Facility to the new site, at its sole expense. The
Initial Term of this Agreement shall begin anew from the first date of commercial operation
of the Seller’s Facility at the new site.
	 
	4.	 	Termination and buyout charges
	 
	(a)	 	Buyer shall have the right to terminate this Agreement at any time after Contract Year 5
if the Buyer ceases operations. The Buyer shall provide not less than twelve (12) months
prior written notice of such termination and pay Seller the Termination Charge set forth in
the Table below, as a termination charge.
	 
	(b)	 	Buyer shall have the right at any time to terminate this Agreement and purchase Seller’s
Facility by paying Seller the applicable charge set forth in the Table below, as a purchase
charge, on account of: (1) any material default by Seller which Seller fails to cure per
Section 15(a), or (2) any event which would trigger payment by Seller of Production
Performance Liquidated Damages of $400,000 set out in Paragraph 6 of Appendix D.
	 
	(c)	 	Subject to sixty (60) days prior written notice, Buyer shall have the right at any time
to terminate this Agreement and purchase Seller’s Facility by paying Seller the applicable
charge set forth in the Table below plus $4,000,000, as a purchase charge.
	 
	(d)	 	In the event that the Buyer exercises its right to terminate or buy out the Agreement,
Buyer shall pay any amounts then unpaid and any additional amounts due to the Seller under
the Agreement in conjunction with the termination or purchase charge.

	 	 	 	 	 	 	 	 	 	 	 

	Contract Year 1
	 	$8,790,000
	 	Contract Year 6
	 	$6,073,000
	 	Contract Year 11
	 	$3,309,000
	Contract Year 2
	 	$8,284,000
	 	Contract Year 7
	 	$5,520,000
	 	Contract Year 12
	 	$2,757,000
	Contract Year 3
	 	$7,731,000
	 	Contract Year 8
	 	$4,967,000
	 	Contract Year 13
	 	$2,204,000
	Contract Year 4
	 	$7,179,004
	 	Contract Year 9
	 	$4,415,000
	 	Contract Year 14
	 	$1,697,000
	Contract Year 5
	 	$6,626,000
	 	Contract Year 10
	 	$3,862,000
	 	Contract Year 15
	 	$1,099,000

	5.	 	Liquidated damages for Product not available by the Commission Date
	 
	 	 	In the event that sufficient Product is not available to the Buyer from the Seller’s
Facility by the Commission Date, for reasons other than Force Majeure or acts or omissions
attributable to the Buyer, and the Buyer suffers loss thereby, then seller shall provide
Buyer a credit amounting to

Page 17 of 18

 

	 	 	$15,000 per day of delay past October 24, 2011, such credit to
be divided and applied equally
over the first twelve (12) Monthly Facility Charge payments to be make by Buyer (“Product
Delay Liquidated Damages”). Such Product Delay Liquidated Damages shall be capped at
$400,000. Payment by the Seller of these Product Delay Liquidated Damages (through crediting
Buyer’s Monthly Facility Charge payments) shall constitute full and final settlement of all
Buyer’s claims for deficiencies in delivery performance.
	 
	6.	 	Liquidated damages for deficiencies in performance
	 
	 	 	Subject to Sections 1(p), 1(r) and/or 14 of the Agreement, in the event that the Seller’s
Facility does not produce Product in the quantities stated in Appendix D, Section 2 above
and Appendix C, and Seller is unable to remedy within seven (7) days of the beginning of
such failure, then Buyer shall be entitled to liquidated damages (“Production Performance
Liquidated Damages”) provided Buyer proves that it required more than the actual quantity of
Product produced by Seller’s Facility during the period of deficiency. Such Production
Performance Liquidated Damages shall be calculated according to the following method: the
Monthly Facility Charge shall be reduced by 1% for each full 1% of the production deficiency
which Buyer can prove it required above the actual quantity of Product produced by Seller’s
Facility during the period of deficiency. The Production Performance Liquidated Damages
shall only be applicable for deficiencies in production performance following the date the
Seller’s Facility is in full production.
	 
	 	 	The total Production Performance Liquidated Damage payable for deficiencies due to
production performance shall not exceed $400,000 per the life of the Agreement. Payment by
Seller of these liquidated damages shall constitute full and final settlement of all Buyer’s
claims for deficiencies in production performance.
	 
	7.	 	Cap on cumulative total of liquidated damages
	 
	 	 	Seller’s cumulative total payments for Production Performance Liquidated Damages and Product
Delay Liquidated Damages shall not exceed $400,000 per the life of the Agreement. Payment by
Seller of these liquidated damages shall constitute full and final settlement of all Buyer’s
claims for deficiencies in production performance.

Page 18 of 18

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