Document:

exv10w49

 

Exhibit 10.49

OFFICE LEASE AGREEMENT

CATALYTICA ENERGY SYSTEMS, INC.

WARNER COURTYARDS

301 WEST WARNER RD.

Suite # 134

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE 1.
	 	SUMMARY AND DEFINITION OF CERTAIN LEASE PROVISIONS AND EXHIBITS	 	 	1	 
	ARTICLE 2.
	 	PREMISES/RIGHT TO USE COMMON AREAS	 	 	1	 
	ARTICLE 3.
	 	TERM	 	 	2	 
	ARTICLE 4.
	 	MINIMUM MONTHLY RENT	 	 	2	 
	ARTICLE 5.
	 	ADDITIONAL RENT/EXPENSE STOP	 	 	2	 
	ARTICLE 6.
	 	PARKING	 	 	2	 
	ARTICLE 7.
	 	RENT TAX AND PERSONAL PROPERTY TAXES	 	 	3	 
	ARTICLE 8.
	 	PAYMENT OF RENT/LATE CHARGES	 	 	3	 
	ARTICLE 9.
	 	SECURITY DEPOSIT	 	 	3	 
	ARTICLE 10.
	 	CONSTRUCTION OF THE PREMISES	 	 	3	 
	ARTICLE 11.
	 	ALTERATIONS	 	 	3	 
	ARTICLE 12.
	 	PERSONAL PROPERTY/SURRENDER OF PREMISES	 	 	3	 
	ARTICLE 13.
	 	LIENS	 	 	3	 
	ARTICLE 14.
	 	USE OF PREMISES/RULES AND REGULATIONS	 	 	3	 
	ARTICLE 15.
	 	RIGHTS RESERVED BY LANDLORD	 	 	4	 
	ARTICLE 16.
	 	QUIET ENJOYMENT	 	 	4	 
	ARTICLE 17.
	 	MAINTENANCE AND REPAIR	 	 	4	 
	ARTICLE 18.
	 	UTILITIES AND JANITORIAL SERVICES	 	 	4	 
	ARTICLE 19.
	 	ENTRY AM) INSPECTION	 	 	4	 
	ARTICLE 20.
	 	ACCEPTANCE OF THE PREMISES/LIABILITY INSURANCE	 	 	4	 
	ARTICLE 21.
	 	CASUALTY INSURANCE	 	 	5	 
	ARTICLE 22.
	 	DAMAGE AND DESTRUCTION OF PREMISES	 	 	5	 
	ARTICLE 23.
	 	EMINENT DOMAIN	 	 	5	 
	ARTICLE 24.
	 	ASSIGNMENT AND SUBLETTING	 	 	5	 
	ARTICLE 25.
	 	SALE OF PREMISES BY LANDLORD	 	 	5	 
	ARTICLE 26.
	 	SUBORDINATION/ATTORNMENT/MOD1FI CATION/ASSIGNMENT	 	 	5	 
	ARTICLE 27.
	 	LANDLORD’S DEFAULT AND RIGHT TO CURE	 	 	6	 
	ARTICLE 28.
	 	ESTOPPEL CERTIFICATES	 	 	6	 
	ARTICLE 29.
	 	TENANT’S DEFAULT AND LANDLORD’S REMEDIES	 	 	6	 
	ARTICLE 30.
	 	TENANT’S RECOURSE	 	 	6	 
	ARTICLE 31.
	 	HOLDING OVER	 	 	6	 
	ARTICLE 32.
	 	GENERAL PROVISIONS	 	 	6	 
	ARTICLE 33.
	 	NOTICES	 	 	7	 
	ARTICLE 34.
	 	BROKER’S COMMISSIONS	 	 	7	 
	ARTICLE 35.
	 	INDEMNIFICATION/WAIVER OF SUBROGATION	 	 	7	 
	ARTICLE 36.
	 	ADDENDUM	 	ADDENDUM-1	 

	 	 	 	 	 
	EXHIBITS:	 	 	 	 
	(A)

	 	PREMISES	 	 
	(B)

	 	RULES AND REGULATIONS	 	 
	(C)

	 	PARKING RULES AND REGULATIONS	 	 

 

OFFICE LEASE AGREEMENT

CATALYTICA ENERGY SYSTEMS, INC.

THIS OFFICE LEASE AGREEMENT, dated October 15, 2007 is made and entered into by WARNER COURTYARDS.
LLC, an Arizona Limited Liability Company, PARK 3020, LLC, an Arizona Limited Liability Company, PARK
3030, LLC, an Arizona Limited Liability Company, and METZGER WARNER COURTYARDS, LLC, a
Delaware Limited Liability Company, (Collectively the
“Landlord”) and CATALYTCA ENERGY SYSTEMS, INC.. a Delaware Corporation (the “Tenant”). In
consideration of the mutual promises and representations set forth in this Lease. Landlord and
Tenant agree as follows:

ARTICLE 1. SUMMARY AND DEFINITION OF CERTAIN LEASE PROVISIONS AND EXHIBITS

	1.1	 	The following terms and provisions of this Lease, as modified by other terms and
provisions hereof, are included in this  Section 1.1  for summary and definitional purposes
only. If there is any conflict or inconsistency between any term or provision in this
 Section 1.1  and any other term or provision of this Lease, the other term or provision of
this Lease shall control:

	 	 	 	 	 	 	 
	 

	 	(a)
	 	Landlord:
	 	Warner Courtyards, LLC
	 

	 	 	 	 	 	Park 3020, LLC
	 

	 	 	 	 	 	Park 3030, LLC
	 

	 	 	 	 	 	Metzger Warner Courtyards, LLC
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	Address of Landlord for Notices:
	 	c/o Hannay Investment Properties, Inc
	 

	 	 	 	 	 	2999 N.44th Street
	 

	 	 	 	 	 	Suite 400
	 

	 	 	 	 	 	Phoenix, Arizona 85018
	 
	 	 	 	 	 	 
	 

	 	(c)
	 	Tenant:
	 	Catalytica Energy Systems, Inc.
	 
	 	 	 	 	 	 
	 

	 	(d)
	 	Address of Tenant for Notices:
	 	Catalytica Energy Systems, Inc.
	 

	 	 	 	(Include Main/Hdq. Address)
	 	301 West Warner Rd. Suite # 132
	 

	 	 	 	 	 	Tempe, Arizona 85284
	 
	 	 	 	 	 	 
	 	 	(e)	 	Lease Term: October 15, 2007, through March 31, 2008, as further defined in
Article 3.
	 
	 	 	 	 	 	 
	 	 	(f)	 	Building: The office building known as WARNER COURTYARDS, located at 301 West
Wamer Rd., Tempe, Arizona 85284 (the “Building”).
	 
	 	 	 	 	 	 
	 	 	(g)	 	Premises: Suite 134 on the first floor of the Building, as shown on Exhibit A,
consisting of approximately 2,114 Rentable Square Feet.
	 
	 	 	 	 	 	 
	 	 	(h)	 	Minimum Monthly Rent: $2,568.62 plus applicable sales tax for October 15, 2007
through October 31, 2007. $4.976.71 plus applicable sales tax for each full calendar month
commencing on November 1, 2007 through March 31, 2008.
	 
	 	 	 	 	 	 
	 	 	(i)	 	Tenant’s Base Share: (see Article 5).
	 
	 	 	 	 	 	 
	 	 	(j)	 	Intentionally Deleted.
	 
	 	 	 	 	 	 
	 	 	(k)	 	Security Deposit: A Security Deposit of $5,000.00 is required at
the tame the Lease is signed by Tenant.
	 
	 	 	 	 	 	 
	 	 	(l)	 	Parkins: Uncovered,
unreserved spaces in the project shall be available at no charge. The overall
parking ratio of the project is six (6) spaces per 1000 square feet of rentable area.
	 
	 	 	 	 	 	 
	 	 	(m)	 	Building Hours: 7:00 am to 6:00 p.m. Monday through Friday; 7:00 am to 12:00 p.m.
Saturday. Closed Sundays and all legal holidays. Tenant shall have twenty-four (24)
hour, seven (7) day a week access to the Premises.

	1.2	 	The following exhibits (the “Exhibits”) and addenda are attached hereto and incorporated
herein by this reference:

	 	 	 	 	 	 	 
	 

	 	Exhibit A
	 	Premises	 	 
	 

	 	Exhibit B
	 	Building Rules and Regulations	 	 
	 

	 	Exhtbit C
	 	Parking Rules and Regulations	 	 
	 	 	Addendum to Office Lease Agreement (the “Addendum”), dated of even date herewith.
	 	 	The Office Lease Agreement, the Addendum, and the Exhibits arc collectively referred to herein
as the “Lease.”

ARTICLE 2. PREMISES/RIGHT TO USE COMMON AREAS

	2.1	 	Landlord leases to Tenant and Tenant leases from Landlord the Premises, for and subject to
the terms and provisions set forth in this
Lease. This Lease is subject to all liens, encumbrances, parking and access easements,
restrictions, covenants, and all other matters of
record, the Rules and Regulations described in Article 14 and the Parking Rules and
Regulations described in Article 6. Tenant and
Tenant’s agents, contractors, customers, directors, employees, invitees, officers, and patrons
(collectively, the “Tenant’s Permittees”) have a
non-exclusive privilege and license, during the Lease Term, to use the non-resiricted Common
Areas in common with all other authorized
users thereof.

 

 

	2.2	 	For purposes of this Lease, the following terms have the definitions set forth below:

	 	(a)	 	“Automobile Parking Areas” means all areas designated for automobile parking upon the
Land. Automobile Parking Areas are
Common Areas, but certain parking areas are restricted. (See Parking Rules & Regulations).
	 
	 	(b)	 	“Common Areas” means those areas within the Building and Land not leased to any
tenant and which are intended by Landlord to
	 
	 	 	 	be available for the use, benefit, and enjoyment of all occupants of the Building.
	 
	 	(c)	 	“Interior Common Facilities” means lobbies, corridors, hallways, elevator foyers,
restrooms, mail rooms, mechanical and electrical
rooms, janitor closets, and other similar facilities used by tenants or for the benefit of
tenants on a non-exclusive basis. Access to

certain Interior Common Facilities is restricted.
	 
	 	(d)	 	“Land,” means the parcel of land containing the Building;
	 
	 	(e)	 	“Load Factor” means the quotient of the Rentable Square Footage of the Building
divided by the aggregate Usable Square Footage of all premises and occupiable space in
the Building, and is subject to change from time to time.
	 
	 	(f)	 	“Rentable Square Footage” means (l) with respect to the Building, the sum of the
total area of all floors in the Building (including Interior Common Facilities but
excluding stairs, elevator shafts, vertical shafts, parking areas and exterior
balconies), computed by measuring to the exterior surface of permanent outside walls; and
(2) with respcet to the Premises, the Usable Square Footage of the Premises multiplied by
the Load Factor.
	 
	 	(g)	 	“Usable Square Footage” means the area of the Premises (or other space occupiable by
tenants as the case may be) computed by measuring to the exterior surface of permanent
outside walls, to the midpoint of corridor and demising walls and to the Tenant side of
permanent interior walls and Interior Common Facilities walls (other than corridor
walls).

ARTICLE 3. TERM

The term of this Lease shall be Five (5) months, plus the remainder of any partial calendar month
in which the Lease Term commences, commencing on October 15, 2007, the Commencement Date, and
expiring March 31, 2008.

ARTICLE 4. MINIMUM MONTHLY RENT

Tenant shall pay to Landlord, without deduction, setoff, prior notice, or demand, the Minimum
Monthly Rent, payable in advance on the first day of each calendar month during the Lease Term. If
the Lease Term commences on a date other than the first day of a calendar month, the Minimum
Monthly Rent for that month shall be prorated on a per diem basis and be paid to Landlord on or
before the Commencement Date.

ARTICLE 5. Intentionally Deleted.

ARTICLE 6. PARKING

Nothing contained herein shall be deemed to create liability upon Landlord for any damage to motor
vehicles of Tenant’s Permittees, or from loss of property from within such motor vehicles while
parked in the Automobile Parking Areas. Landlord has the right to establish and to enforce against
all users of the Automobile Parking Areas, reasonable rules and regulations (the “Parking Rules and
Regulations). Landlord shall assign and identify Reserved Parking Spaces. Landlord will not police
nor be responsible for any vehicle parked in Tenant’s reserved parking space.

- 2 -

 

ARTICLE 7. RENT TAX AND PERSONAL PROPERTY TAXES

Tenant shall pay to Landlord, in addition to, and simultaneously with, any other amounts payable
to Landlord under this Lease, a sum equal to the aggregate of any municipal, county, state, or
federal excise, sales, use, or transaction privilege taxes now or hereafter legally levied or
imposed against, or on account of, any amounts payable under this Lease by Tenant or the receipt
thereof by Landlord. Tenant shall pay, prior to delinquency, all taxes levied upon fixtures,
furnishings, equipment, and personal property placed on the Premises by Tenant.

ARTICLE 8. PAYMENT OF RENT/LATE CHARGES

Tenant shall pay the rent and all other charges spcified in this Lease to Landlord at the address
set forth on Section 1.l(b) of this Lease, or to another person and at another address as Landlord
from time to time designates in writing. Minimum Monthly Rent, additional rent, or other charges
payable by Tenant to Landlord under the terms of this Lease not received within ten (10) days after
the due date (the “Delinquency Date”) thereof shall automatically (and without notice) incur a late
charge of five percent (5%) of the delinquent amount.

ARTICLE 9. SECURITY DEPOSIT

Tenant shall, upon execution of this Lease, deposit with Landlord the Security Deposit, as
security for the performance of terms and provisions of this Lease by Tenant, which shall be
returned to Tenant at the termination of the Lease if it has discharged its obligations to
Landlord in full. The Security Deposit shall not be used to pay the last month’s lease payment.

ARTICLE 10. Intentionally Deleted.

ARTICLE 11. ALTERATIONS

Tenant shall not make or cause to be made any further additions to, or alterations of, the
Premises or any part thereof without the prior written consent of Landlord, which consent shall
not be unreasonably withheld. Tenant shall be allowed to install a card access or security system
in accordance with the Building Guidelines.

ARTICLE 12. PERSONAL PROPERTY/SURRENDER OF PREMISES

All personal property located in the Premises shall remain the property of Tenant and may be
removed by Tenant not later than the Expiration Date or the earlier termination of the Lease Term.
Tenant shall promptly repair, at its own expense, any damage resulting from such removal. All
cabinetry, built-in appliances, wall coverings, floor coverings, window coverings, electrical
fixtures, plumbing fixtures, conduits, lighting, and other special fixtures that may be placed
upon, installed in, or attached to the Premises by Tenant shall, at the termination of this Lease
be the property of landlord. At the Expiration Date or upon the earlier termination of the Lease
Term, Tenant shall surrender the Premises in good condition, reasonable wear and tear excepted,
and shall deliver all keys to landlord.

ARTICLE 13. LIENS

Tenant shall keep the Premises, Building, and the Land free from any liens arising out of work
performed, material furnished, or obligations incurred due to the actions of Tenant or Tenant’s
Permittees or the failure of Tenant to comply with any law. In the event any such lien does attach
against the Premises, Building, or Land, and Tenant does not discharge the lien or post bond
(which under law would prevent foreclosure or execution under the lien) within ten (10) days after
demand by Landlord, such event shall be a default by Tenant under this Lease and, in addition to
Landlord’s other rights and remedies, Landlord may take any action necessary to discharge the
lien.

ARTICLE 14. USE OF PREMISES/RULES AND REGULATIONS

	14.1	 	Without the prior approval of Landlord, Tenant shall not use the Premises for any use other than for general business office purposes and
Tenant agrees that it will use the Premises in such manner as to not interfere with or infringe
on the rights of other tenants in the Building.
Tenant agrees to comply with all applicable laws, ordinances and regulations in connection with
its use of the Premises, agrees to keep the
Premises in a clean and sanitary condition, and agrees not to perform any act in the Building
which would increase any insurance
premiums related to the Building or would cause the cancellation of any insurance policies related to the Building.
	 
	14.2	 	Tenant shall not use, generate, manufacture, store, or dispose of, in, under, or about the Premises, the Building, the Land, or the Project or
transport to or from the Premises, the Building, the Land, or the Project, any Hazardous
Materials. For purposes of this Lease, “Hazardous
Materials” includes, but is not limited to: (i) flammable, explosive, or radioactive
materials, hazardous wastes, toxic substances, or related
materials; (ii) all substances defined as “hazardous substances,” “hazardous materials,”
“toxic substances,” or “hazardous chemical
substances or mixtures” in the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, 42 U.S.C.
§ 9601, et seq., as amended by Superfund Amendments and Re-authorization Act of 1986; the
Hazardous Materials Transportation Act, 49
U.S.C. § 1901, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq.;
the Toxic Substances Control Act, 15
U.S.C. §2601, et seq.; (iii) those substances listed in the United States Department of
Transportation Table (49 CFR 172.10 and
amendments thereto) or by the Environmental Protection Agency (or any successor agent) as
hazardous substances (40 CFR Part 302 and
amendments thereto); (iv) any material, waste, or substance which is (A) petroleum, (B)
asbestos, (C) polychlorinated biphenyl’s, (D)
designated as a “hazardous substance” pursuant to § 311 of the Clean Water Act, 33 U.S.C. S
1251 

et seq. (33 U.S.C. § 1321) or listed
pursuant to the Clean Water Act (33 U.S.C. § 1317); (E) flammable explosives; or (F)
radioactive materials; and (v) all substances defined
as “hazardous wastes” in Arizona Revised Statutes § 36-3501 (16).

- 3 -

 

Notwithstanding the foregoing. Tenant may use and store reasonable amounts of substances normally
associated with general office duties (such as copier toner, cleaning supplies, glue and other
materials) which are specifically approved in advance by Landlord

ARTICLE 15. RIGHTS RESERVED BY LANDLORD

In addition to all other rights, Landlord has the following rights, exercisable without notice
to Tenant and without effecting an eviction, constructive or actual, and without giving right to
any claim for set off or abatement of rent: (a) to decorate and to make repairs, alterations,
additions, changes, or improvements in and about the Building during Building Hours (b) to
approve the weight, size, and location of heavy objects in and about the Premises and the
Building, and to require all such items to be moved into and out of the Building and Premises in
such manner as Landlord shall direct in writing; (c) to prohibit the placing of vending machines
in or about the Premises without the prior written consent of Landlord; (d) to take all such
reasonable measures for the security of the Building and its occupants; and (e) to temporarily
block off parking spaces for maintenance or construction purposes.

ARTICLE 16. QUIET ENJOYMENT

Landlord agrees that, provided a default by Tenant has not occurred, Landlord will do nothing
that will prevent Tenant from quietly enjoying and occupying the Premises during the Lease Term.
Tenant agrees this Lease is subordinate to the Rules and Regulations described in Article 14, and
the Parking Rules and Regulations described in Article 6.

ARTICLE 17. MAINTENANCE AND REPAIR

Landlord shall maintain the Premises and Building in good condition and repair, reasonable wear
and tear excepted. Tenant waives all rights to make repairs at the expense of Landlord. If
Landlord would be required to perform any maintenance or make any repairs because of: (a)
modifications to the roof, walls, foundation, and floor of the Building from that set forth in
Landlord’s plans and specifications which are required by Tenant’s design for improvements,
alterations and additions; (b) installation of Tenant’s improvements, fixtures, or equipment; (c)
a negligent or wrongful act of Tenant or Tenant’s Permittees; or, (d) Tenant’s failure to perform
any of Tenant’s obligations under this Lease, Landlord may perform the maintenance or repairs and
Tenant shall pay Landlord the cost thereof. Tenant agrees to: (a) Pay Landlord’s cost of
maintenance and repair, including additional janitorial costs of any Non-Building Standard
Improvements and Non-Building Standard materials and finishes and (b) Repair or replace all
ceiling and wall finishes (including painting) and floor or window coverings which require repair
or replacement during the Lease Term, at Tenant’s sole cost. Notwithstanding anything in this
Lease to the contrary, to the extent the terms and provisions of Article 22 conflict with, or are
inconsistent with, the terms and provisions of this Article 17, the terms and provisions of
Article 22 shall control. Tenant shall take all reasonable precautions to insure that the
Premises are not subjected to excessive wear and tear, i.e. chair pads should be utilized by
Tenant to protect carpeting. Tenant shall be responsible for touch-up painting in the Premises
throughout the Lease term.

ARTICLE 18. UTILITIES AND JANITORIAL SERVICES

Landlord agrees to furnish to the Premises during normal Building Hours as defined in Article 1.1
(m), (the “Building Hours”), and subject to the Rules and Regulations, electricity suitable for
the intended use of the Premises, heat and air conditioning required in Landlord’s judgment for
normal use and occupation of the Premises, and janitorial services for the Premises and Common
Areas. Landlord further agrees to furnish hot and cold water to those areas provided for general
use of all tenants in the Building. Landlord will use diligent efforts to provide continuous
elevator service for the Building. If Tenant shall require electric current, water, healing,
cooling, or air which will result in excess consumption of such utilities or services. Tenant
shall first obtain the written consent of Landlord to the use thereof. If, in Landlord’s
reasonable discretion, Tenant consumes any utilities or services in excess of the normal
consumption of such utilities and services for general office use, Tenant agrees to pay landlord
for the cost of such excess consumption of utilities or services, currently at the rate of $.0026
per square foot, per hour, upon receipt of a statement of such costs from Landlord at the same
time as payment of the Minimum Monthly Rent is made, landlord may install separate electrical
meters to, at Tenant’s expense, to measure excess consumption or establish another basis for
determining the amount of excess consumption of electrical current. Further, Landlord has
installed electronic HVAC over-time hour meters for Tenant’s convenience. These meters shall be
used, in part, by Landlord to determine Tenant’s excess HVAC consumption for purposes of billing
Tenant for such excess charges. Landlord shall not be liable for damages nor shall rent or other
charges abate in the event of any failure or interruption of any utility or service supplied to
the Premises or Building by a regulated utility or municipality, or any failure of a Building
system supplying any such service to the Premises (provided Landlord uses diligent efforts to
repair or restore the same) and no such failure or interruption shall entitle Tenant to abate rent
or terminate this Lease. Overtime HVAC charges shall be billed to Tenant at the rate of $.0026
per hour, per square foot.

ARTICLE 19. ENTRY AND INSPECTION

Landlord shall have the right to enter into the Premises at reasonable times for the purpose of
inspecting the Premises and reserves the right, during the last three months of the term of the
Lease, to show the Premises with reasonable prior notice at reasonable times to prospective
tenants. Landlord shall be permitted to take any action under this Article without causing any
abatement of rent or liability to Tenant for any loss of occupation or quiet enjoyment of the
Premises, nor shall such action by Landlord be deemed an actual or constructive eviction.

ARTICLE 20. ACCEPTANCE OF THE PREMISES/LIABILITY INSURANCE

	20.1	 	All personal property and fixtures belonging to Tenant shall be placed and remain on the
Premises at Tenant’s sole risk. Upon taking possession of the Premises and thereafter during
the Lease Term, the Tenant shall, at Tenant’s sole cost and expense, maintain insurance
coverage with limits not less than the following: (a) Worker’s Compensation Insurance,
minimum limit as defined by applicable laws; (b) Employer’s Liability Insurance, minimum
limit $1,000,000; (c) Commercial General Liability Insurance, Bodily Injury/Property, Damage

- 4 -

 

Insurance (including the following coverages: Premises/Operations, Independent Contractors,
Broad Form Contractual in support of the indemnification obligations of Tenant under this
Lease, and Bodily and Personal Injury Liability), minimum combined single limit $1,000,000;
(d) Automobile Liability Insurance, minimum limit $1,000,000. All such policies shall include
a waiver of subrogation in favor of Landlord and shall name Landlord and such other party or
parties as Landlord may require as additional insureds. Tenant’s insurance shall be primary,
with any insurance maintained by Landlord to be considered excess. Tenant’s insurance shall be
maintained with an insurance company qualified to do business in the State of Arizona and
having a current A.M. Best manual rating of at least A-X or better. Before entry into the
Premises and before expiration of any policy, evidence of these coverage’s represented by
Certificates of Insurance issued by the insurance carrier must he furnished to Landlord.
Certificates of Insurance should specify the additional insured status, the waiver of
subrogation, and that such insurance is primary, and any insurance by Landlord is excess. The
Certificate of insurance shall state that Landlord will be notified in writing thirty (30)
days before cancellation, material change, or renewal of insurance.

	20.2 	During the entire Lease Term, Landlord agrees to maintain public liability insurance in such forms and amounts as Landlord shall determine.

ARTICLE 21. CASUALTY INSURANCE

	21.1 	Tenant shall maintain fire and extended coverage insurance (full replacement value) with a business interruption and extra expense
endorsements, on personal property and trade fixtures owned or used by Tenant.
	 
	21.2 	Landlord shall maintain fire and full extended coverage insurance (“all risk”) including necessary endorsements throughout the Lease
Term on the Building (excluding Tenant’s trade fixtures and
personal property). At Landlord’s
option, the policy of insurance may include
a business interruption insurance endorsement for loss of rents. The cost of the insurance
obtained under this Section 21.2 shall be an
Operating Cost under Article 5 of this Lease.

ARTICLE 22. DAMAGE AND DESTRUCTION OF PREMISES

In the event of fire or other casualty damage to the Premises during the Lease Term which requires
repairs to the Premises, Landlord shall commence to make said repairs within ninety (90) days
after written notice by Tenant of the necessity therefor and diligently proceed therewith to
completion. The Minimum Monthly Rent shall be proportionately reduced while such repairs are being
made, based upon the extent to which the making of such repairs shall interfere with the business
carried on by Tenant in the Premises. Landlord shall have no obligation to repair, restore, or
replace Tenant’s trade fixtures or personal property and Tenant shall be solely responsible
therefor. Notwithstanding the above, if (a) during the last year of the Lease Term the Premises or
the Building is damaged as a result of fire or any other insured casualty, or (b) the Premises are
damaged to the extent of twenty-five percent (25%) or more of the replacement value of the
Premises, or (c) the Premises or the Building is damaged or destroyed as a result of a casualty
not insured against, or (d) the Building shall be damaged or destroyed by fire or other cause to
the extent of twenty percent (20%) or more of the Building’s replacement value, then Landlord
shall have the right, to be exercised by notice in writing to Tenant given within ninety (90) days
after said occurrence, to terminate this Lease. Tenant waives any statutory or other right Tenant
may have to cancel this Lease as a result of such destruction and no such destruction shall annul
or void this Lease. The provisions of this Article shall supersede the obligations of Landlord to
make repairs under Article 17 of the Lease. Notwithstanding the provisions of this
Article 22, if the Premises or any other portion of the Building are damaged by fire or
other casualty resulting from the negligent act or omission or willful misconduct of Tenant or
Tenant’s Permittees, Minimum Monthly Rent shall not be reduced during the repair of the damage,
and Tenant shall be liable to Landlord for the cost and expense of the repair and restoration of
the Premises or the Building caused thereby to the extent that cost and expense is not covered by
insurance proceeds.

ARTICLE 23. EMINENT DOMAIN

In the event any portion of the Premises is taken from Tenant under eminent domain proceedings,
Tenant shall have no right, title or interest in any award made for such taking, except for any
separate award for fixtures and improvements installed by Tenant.

ARTICLE 24. ASSIGNMENT AND SUBLETTING

Tenant agrees not to assign this Lease, and shall not sublet the Premises without Landlord’s prior
written consent, which consent shall not be unreasonably withheld as long as the use and density
does not change. Any assignment or subletting hereunder shall not release or discharge Tenant of
or from any liability under this Lease, and Tenant shall continue to he fully liable thereunder.
Consent by Landlord to one assignment, subletting, occupation, or use by another person shall not
be deemed to be consent to any subsequent assignment, subletting, occupation, or use by another
person. If Tenant is a corporation, an unincorporated association or a partnership, unless listed
on a national stock exchange, the transfer, assignment or hypothecation of any stock or interest
in such corporation, association or partnership in the aggregate in excess of fifty percent (50%)
shall be deemed an assignment of this Lease. Tenant agrees to immediately notify Landlord of any
change in its ownership.

ARTICLE 25. SALE OF PREMISES BY LANDLORD

In the event of any sale of the Building or the property upon which the Building is located or any
assignment of this Lease by Landlord (or a successor in title), if the assignee or purchaser
assumes the obligations of Landlord herein in writing, Landlord (or such successor) shall
automatically be entirely freed and relieved of all liability under any and all of Landlord’s
covenants and obligations contained in this Lease or arising out of any act, occurrence, or
omission occurring after such sale or assignment; and the assignee or purchaser shall be deemed,
without any further agreement between the parties, to have assumed and agreed to carry out any and
all of the covenants and obligations of Landlord under this Lease, and shall be substituted as
Landlord for all purposes from and after the sale or assignment.

ARTICLE 26. SUBORDINATION/ATTORNMENT/MODIFICATION/ASSIGNMENT

Tenant’s interest under this Lease is subordinate to all terms of and all liens and interests
arising under any ground lease, deed of trust, or

- 5 -

 

mortgage now or hereafter placed on the Landlord’s interest in the Premises, the Building, or the
Land. Tenant consents to an assignment of Landlord’s interest in this Lease to Landlord’s lender as
required under such financing. If the Premises or the Building is sold as a result of a default
under the mortgage, or pursuant to a transfer in lieu of foreclosure, Tenant shall, at the
mortgagee’s, purchaser’s or ground lessor’s sole election, attorn to the mortgagee or purchaser.
This Article is self-operative. However, Tenant agrees to execute and deliver, it Landlord, any
deed of trust holder, mortgagee, or purchaser should so request, such further instruments
necessary to subordinate this Lease to a lien of any mortgage or deed of trust, to acknowledge the
consent to assignment and to affirm the ATTORNMENT provisions set forth herein.

ARTICLE 27. LANDLORD’S DEFAULT AND RIGHT TO CURE

In the event of default hereunder by Landlord, Tenant agrees, before exercising any right or
remedy available to it, to give Landlord written notice of the claimed default. For the thirty
(30) days following such notice (or such longer period of time as may be reasonably required to
cure a matter which, due to its nature, cannot reasonably be remedied within thirty (30) days),
Landlord shall have the right to cure the default involved.

ARTICLE 28. ESTOPPEL CERTIFICATES

Tenant agrees at any time and from time to time upon request by Landlord, to execute, acknowledge,
and deliver to Landlord, within ten (10) calendar days after demand by Landlord, a statement in
writing certifying (a) that this Lease is unmodified and in full force and effect (or if there
have been modifications, that the same is in full force and effect as modified and stating such
modifications), (b) the dates to which the Minimum Monthly Rent and other rent and charges have
been paid in advance, if any, (c) Tenant’s acceptance and possession of the Premises, (d) the
commencement of the Lease Term, (e) the rent provided under the Lease, (f) that Landlord is not in
default under this Lease (or if Tenant claims such default, the nature thereof), (g) that Tenant
claims no offsets against the rent, and (h) such other information as may be requested with
respect to the provisions of this Lease or the tenancy created by this Lease. Tenant’s failure to
deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in
full force and effect, without modification except as may be represented by Landlord, (ii) that
there are no uncured defaults in Landlord’s performance, and (iii) that not more than one month’s
rent has been paid in advance.

ARTICLE 29. TENANT’S DEFAULT AND LANDLORD’S REMEDIES

In the event Tenant fails to keep and perform any of the terms or conditions of this Lease,
including the Rules and Regulations and the Parking Rules and Regulations (but excluding the
payment of rental), and such failure continues for thirty (30) days after written notice of
default from Landlord or in the event Tenant fails to pay any rental due hereunder, time being of
the essence, Landlord may resort to any and all legal remedies or combination of remedies which
Landlord may desire to assert including but not limited to one or more of the following: (l) lock
the doors to the Premises and exclude Tenant therefrom, (2) retain or take possession of any
property on the Premises pursuant to Landlord’s lien, (3) enter the Premises and remove all
persons and property therefrom, (4) declare the Lease canceled and terminated, (5) sue for the
rent due and to become due under the Lease, and for any damages sustained by Landlord and (6)
continue the Lease in effect and relet the Premises on such terms and conditions as Landlord may
deem advisable with Tenant remaining liable for the monthly rent plus the reasonable cost of
obtaining possession of the Premises and of reletting the Premises, and of any repairs and
alterations necessary to prepare the Premises for reletting, less the rentals received from such
reletting, if any. No action of Landlord shall be construed as an election to terminate the Lease
unless written notice of such intention be given to Tenant. Tenant agrees to pay as additional
rental all attorneys’ fees and other costs and expenses incurred by Landlord is enforcing any of
Tenant’s obligations under this Lease.

ARTICLE 30. TENANT’S RECOURSE

Anything in this Lease to the contrary notwithstanding, Tenant agrees to look solely to the estate
and property of Landlord in the Land and the Building, subject to prior rights of any ground
lessor, mortgagee, or deed of trust of the Land and Building or any part thereof, for the
collection of any judgment requiring the payment of money by Landlord in the event of any default
by Landlord under this Lease. Tenant agrees that it is prohibited from using any other procedures
for the satisfaction of Tenants’ remedies. Neither Landlord nor any of its respective officers,
directors, employees, heirs, successors, or assigns, shall have any personal liability of any kind
or nature, directly or indirectly, under or in connection with this Lease.

ARTICLE 31. HOLDING OVER

Subject to prior written consent by Landlord, if Tenant holds over after the Expiration Date, or
any extension thereof, Tenant shall be a tenant at sufferance, the Minimum Monthly Rent shall be
increased to 125% of the then current lease rate at the Building or the Tenant’s lease rale at the
time the Lease expired, whichever is higher, plus any amounts due under Article 5, which shall be
payable in advance on the first day of such holdover period and on the first day of each month
thereafter. Tenant will be considered to be on a month-to-month basis during any holdover period.

ARTICLE 32. GENERAL PROVISIONS

	32.1	 	This Lease is construed in accordance with the laws of the State of Arizona.
	 
	32.2	 	If Tenant is composed of more than one person or entity, then the obligations of such entities or parties are joint and several.
	 
	32.3	 	If any term, condition, covenant, or provision of this Lease is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, conditions, covenants, and provisions hereof shall
remain in full force and effect and shall in
no way be affected, impaired, or invalidated.
	 
	32.4	 	The various headings and numbers herein and the grouping of the provisions of this Lease into separate articles and sections are for the
purpose of convenience only and are not be considered a part hereof.

 - 6 -

 

	32.5	 	Time is of the essence of this Lease.
	 
	32.6	 	In the event either party initiates legal proceedings or retains an attorney to enforce any
right or obligation under this Lease or to obtain
relief for the breach of any covenant hereof, the party fltimately prevailing in such proceedings or the non-defaulting party shall be
entitled to recover all costs and reasonable attorneys’ lees.
	 
	32.7	 	This Lease. and any Exhibit or Addendum attached hereto, sets forth all the terms, conditions, covenants, provisions, promises,
agreements, and undertakings, either oral or written, between the Landlord and Tenant. No
subsequent alteration, amendment, change, or addition to this Lease is binding upon Landlord or Tenant unless reduced to writing and signed
by both parties.
	 
	32.8	 	Subject to Article 24, the covenants herein contained shall apply to and bind the heirs,
successors, executors, personal representatives,
legal representatives, administrators, and assigns of all the parties hereto.
	 
	32.9	 	No term, condition, covenant, or provision of this Lease shall be waived except by written waiver of Landlord, and the forbearance or
indulgence by Landlord in any regard whatsoever shall not constitute a waiver of the term,
condition, covenant, or provision to be
performed by Tenant to which the same shall apply, and until complete performance by Tenant of
such term, condition, covenant, or
provision, Landlord shall be entitled to invoke any remedy available under this Lease or by
law despite such forbearance or indulgence.
The waiver by Landlord of any breach or term, condition, covenant, or provision hereof shall
apply to and be limited to the specific
instance involved and shall not be deemed to apply to any other instance or to any subsequent
breach of the same or any other term,
condition, covenant, or provision hereof. Acceptance of rent by Landlord during a period in
which Tenant is in default in any respect
other than payment of rent shall not be deemed a waiver of the other default. Any payment made
in arrears shall be credited to the oldest
amount outstanding and no contrary application will waive this right.
	 
	32.10	 	The use of a singular term in this Lease shall include the plural and the use of the
masculine, feminine, or neuter genders shall include all
others.
	 
	32.11	 	Landlord’s submission of a copy of this Lease form to any person, including Tenant, shall not be deemed to be an offer to lease or the
creation of a lease unless and until this Lease has been fully signed and delivered by
Landlord.
	 
	32.12	 	Every term, condition, covenant, and provision of this Lease, having been negotiated in
detail and at arm’s length by both parties, shall be
construed simply according to its fair meaning and not strictly for or against Landlord or Tenant.
	 
	32.13	 	If the time for the performance of any obligation under this Lease expires on a Saturday, Sunday, or legal holiday, the time for
performance shall be extended to the next succeeding day which is not a Saturday, Sunday, or legal holiday.
	 
	32.14	 	If requested by Landlord, Tenant shall execute written documentation with signatures acknowledged by a notary public, to evidence
when and if Landlord or Tenant has met certain obligations under this Lease.

ARTICLE 33. NOTICES

Wherever in this Lease it is required or permitted that notice or demand be given or served by
either party to or on the other, such notice or demand shall be in writing and shall be given or
served and shall not be deemed to have been duly given or served unless (a) in writing; (b) either
(1) delivered personally, (2) deposited with the United States Postal Service, as registered or
certified mail, return receipt requested, bearing adequate postage, or (3) sent by overnight
express courier (including, without limitation, Federal Express, DHL Worldwide Express, Airborne
Express, United States Postal Service Express Mail) with a request that the addressee sign a
receipt evidencing delivery; and (c) addressed to the party at its address in Section 1.1. Either
party may change such address by written notice to the other. Service of any notice or demand
shall be deemed completed forty-eight (48) hours after deposit thereof, if deposited with the
United States Postal Service, or upon receipt if delivered by overnight courier or in person.

ARTICLE 34. BROKER’S COMMISSIONS

Tenant represents and warrants that there are no claims for brokerage commissions or finder’s fees
in connection with this Lease (excepting commissions or fees approved or authorized in writing by
Landlord) and further agrees that Tenant will be solely responsible for payment of any leasing
commissions related to brokers engaged by Tenant in regards to any extension or other modification
of this Lease. Landlord’s broker for this Lease is Mark Gustin, Trammell Crow Company, and
Landlord shall be solely responsible for paying Trammell Crow its’ lease commission.

ARTICLE 35. INDEMNIFICATION/WAIVER OF SUBROGATION

	35.1	 	Tenant shall indemnify, defend, and hold Landlord and any lender of Landlord harmless against
all Claims (as defined below) and costs
incurred by Landlord arising from: (a) any act or omission of Tenant or Tenant’s Permittees
which results in personal injury, loss of life,
or property damage sustained in and about the Premises, the Building, or the Land; (b)
attachment or discharge of a lien upon the
Premises, the Building, or the Land; (c) Tenant’s and Tenant’s Permittees’ use, generation,
storage, release, threatened release, discharge,
disposal, or presence of Hazardous Materials on, under, or about the Premises, the Building,
or the Land; (d) any default of Tenant under
this Lease; and (e) any claims for brokerage commissions or finder’s fees in connection with
this Lease (excepting commissions or fees
authorized in writing by Landlord). As used in this Lease, “Claims” means any claim, suit,
proceeding, action, cause of action,
responsibility, demand, judgment and execution, and attorneys’ fees and costs related thereto
or arising therefrom.
	 
	35.2	 	Tenant hereby releases, discharges, and waives any right of recovery from Landlord and
Landlord’s agents, directors, officers, and
employees, and Landlord hereby releases, discharges, and waives any right of recovery from
Tenant and Tenant’s Permittees, from all
Claims, liabilities, losses, damages, expenses, or attorneys’ fees and costs incurred arising
from or caused by any peril required to be
covered by insurance obtained by Landlord or Tenant under this Lease, or covered by insurance
in connection with (a) property on the
Premises, the Building, or the Land; (b) activities conducted on the Premises, the Building,
or the Land; and (c) obligations to

- 7 -

 

indemnify under this Lease, regardless of the cause of the damage or loss. Landlord and
Tenant shall give their respective insurance carriers notice of these waivers and shall secure
an endorsement from each carrier to the effect that the waivers given in this Article_35 shall
not adversely affect or impair the policies of insurance or prejudice the right of the named
insured on the policy to recover thereunder. These waivers apply only to the extent such
Claims, liabilities, losses, damages, expenses, or attorneys’ fees are covered by insurance
required pursuant to this Lease.

	35.3	 	Notwithstanding anything in this Lease to the contrary, Landlord shall not be responsible or liable
to Tenant for any Claims for loss or damage caused by the acts or omissions of any persons occupying any space
elsewhere in the Building.
	 
	 	 	IN WITNESS WHEREOF, the parties have duly executed this Lease as of the day and year first above written.

	 	 	 	 	 
	 

	 	LANDLORD
	 	TENANT
	 
	 	 	 	 
	 

	 	WARNER COURTYARDS, LLC
	 	CATALYTICA ENERGY SYSTEMS, INC.,
	 

	 	An Arizona Limited Liability Company
	 	a Delaware Corporation
	 

	 	   By Hannay Investment Properties, Inc.,	 	 
	 

	 	   An Arizona Corporation,	 	 
	 

	 	   Its Manager	 	 
	 
	 	 	 	 
	 

	 	/s/ R. Craig Hannay
	 	/s/ Rob Zack
	 

	 	 
	 	 
	 

	 	   By: R. Craig Hannay
	 	By: Rob Zack
	 

	 	   Its: President
	 	Its: Executive Vice President and CFO
	 
	 	 	 	 
	 

	 	PARK 3020, LLC	 	10/12/08
	 

	 	 	 	 
	 

	 	An Arizona Limited Liability Company
	 	Date
	 

	 	   By Hannay Investment Properties, Inc.,	 	 
	 

	 	   An Arizona Corporation,	 	 
	 

	 	   Its Manager	 	 
	 
	 	 	 	 
	 

	 	/s/ R. Craig Hannay	 	 
	 

	 	 	 	 
	 

	 	   By: R. Craig Hannay	 	 
	 

	 	   Its: President	 	 
	 
	 	 	 	 
	 

	 	PARK 3030, LLC	 	 
	 

	 	An Arizona Limited Liability Company	 	 
	 

	 	   By Hannay Investment Properties, Inc.,	 	 
	 

	 	   An Arizona Corporation, 	 	 
	 

	 	   Its Manager	 	 
	 
	 	 	 	 
	 

	 	/s/ R. Craig Hannay	 	 
	 

	 	 	 	 
	 

	 	   By: R. Craig Hannay	 	 
	 

	 	   Its: President	 	 
	 
	 	 	 	 
	 

	 	METZGER WARNER COURTYARDS, LLC 	 	 
	 

	 	A Delaware Limited Liability Company	 	 
	 

	 	   By Hannay Investment Properties, Inc.,	 	 
	 

	 	   An Arizona Corporation,	 	 
	 

	 	   Its Attorney in Fact	 	 
	 
	 	 	 	 
	 

	 	/s/ R. Craig Hannay	 	 
	 

	 	 	 	 
	 

	 	   By: R. Craig Hannay	 	 
	 

	 	   Its: President	 	 

 

EXHIBIT “B”

BUILDING RULES AND REGULATIONS

	1.	 	Tenant will refer all contractors, contractor’s representatives and installation technicians
rendering any service to Tenant, to Landlord for
Landlord’s supervision, approval and control before performance of any contractual service.  This provision shall apply to all work
performed in the Building including installations of telephones, telegraph equipment,
electrical devices and attachments, and installations
of any nature affecting doors, walls, woodwork, trim, windows, ceilings, equipment or any other
physical portion of Building.

	2.	 	No additional locks or bolts of any kind shall be placed upon any of the doors or windows by
any Tenant nor shall any changes be made in
existing locks or the mechanism thereof without consulting the Landlord.

	3.	 	Movement in or out of the Building of furniture or office equipment, or dispatch or receipt
by Tenant of any merchandise or materials
which require use of stairways, elevators or movement through Building entrance or lobby shall
be restricted to hours designated by
Landlord. All such movement shall be under supervision of Landlord and in the manner agreed
between Tenant and Landlord by pre-
arrangcment before performance. Such pre-arrangement initiated by tenant will include
determination by Landlord and subject to its
decision and control, as to the concerns which may prohibit any article, equipment or any other
item from being brought into the Building.
Tenant is to assume all risk as to damage to articles moved and injury to persons or public
engaged or not engaged in such movement,
including equipment, property, and personnel or Landlord if damaged or injured as a result of
acts in connection with carrying out this
service for Tenant’ from time of entering property to completion of work; and Landlord shall
not be liable for acts of any person engaged
in, or any damage or loss to any of said property or persons resulting from, any act in
connection with such service performed for Tenant.
Any hand trucks, carryalls or similar appliances used for the delivery or receipt of
merchandise or equipment shall be equipped with
rubber tires, side guards and such other safeguards as the Building shall reasonably require.

	4.	 	No signs, advertisements or notices shall be painted or affixed on or to any windows or
doors, or other parts of the Building, except of
such color, size and style and in such places, as shall be first approved in writing by
Landlord. Building standard suite entrance signs to
premises shall be placed thereon by a contractor designated by Landlord at Landlord’s expense.

	5.	 	Tenant shall not place, install or operate on the Premises or in part of the Building, any
engine, refrigerating (other than a home-type
kitchen refrigerator), heating or air conditioning apparatus, stove or machinery, or conduct
mechanical operations or cook thereon (other
than in a home-type microwave oven) or therein, or place in or about the Premises any
explosives, gasoline, kerosene, oil, acids, caustics
or any other inflammable, explosives, hazardous or odorous material without the prior written
consent of Landlord. No portion of the
Premises shall at any time be used for cooking, sleeping or lodging quarters. No Tenant shall
cause or permit any unusual or objectionable
odors to be produced upon or permeate from the leased Premises.

	6.	 	Landlord will not be responsible for lost or stolen personal property, equipment, money or
jewelry from the Building, the Premises, or any
other area on or about the Property, regardless of whether such loss occurs when these areas
were locked against entry or not.

	7.	 	No birds or animals shall be brought into or kept in or about the Building.

	8.	 	Employees of Landlord shall not receive or carry messages for or to Tenant or other person,
nor contract with or render free or paid
services to Tenant or Tenant’s agents, employees, or invitees.

	9.	 	Landlord will not permit entrance to Tenant’s offices by use of pass keys controlled by
Landlord to any person at any time without written
permission by Tenant, except employees, contractors, or service personnel directly supervised
by Landlord.

	10.	 	The entries, passages, doors, elevators and elevator doors (if provided), hallways or
stairways shall not be blocked or obstructed; no
rubbish, litter, trash, or material of any nature shall be placed, emptied or thrown into these
areas, and such areas shall not be used at any
time except for ingress or egress by Tenant, Tenant’s agents, employees or invitees to or from
the Premises.

	11.	 	Plumbing fixtures and appliances shall be used only for purposes for which constructed, and
no sweepings, rubbish, rags or other
unsuitable material shall be thrown or placed therein. Damage resulting to any such fixtures
or appliances from misuse by Tenant, its
employees, agents, visitors or licensees shall be paid by Tenant, and Landlord shall not in any
case be responsible therefor.

	12.	 	The Landlord desires to maintain the highest standards of environmental comfort and
convenience for all Tenants. It will be appreciated if
any undesirable conditions or lack of courtesy or attention are reported directly to the
management. Tenant shall give immediate notice to
the Building Manager in case of accidents in the Premises or in the common areas or of defects
therein or in any fixtures or equipment, or
of any known emergency in the Building.

	13.	 	No Tenant shall make, or permit to be made, any unseemly or disturbing noises, interfere with
occupants of this or neighboring buildings
or premises, or those having business with them, whether by the use of any device, musical
instrument, radio, unmusical noise, whistling,
singing, or in any other way interfering with others’ quiet enjoyment of the building.

	14.	 	Landlord shall have the right to make such other and further reasonable rules and regulations
as in the judgment of Landlord may from
time to time be needful for the safety, appearance, care and cleanliness of the Building and
for the preservation of good order therein.
Landlord shall not be responsible to Tenant for any violations of rules and regulations by
other Tenants.

	15.	 	All Tenants shall adhere to and obey all such parking control measures as may be placed into
effect by the Landlord through the use of
signs, identifying decals or other instructions. No bicycles or other vehicles of any kind
shall be brought into or kept on the Premises
except in designated areas specified for parking of such vehicles.

	16.	 	No safes or other objects, larger or heavier than the Building is limited to carry, shall be
brought into or installed on the Premises. The
Landlord shall have the power to prescribe the weight and position of such safes or other
objects which shall, if considered necessary by
the Landlord, be required to be supported by such additional materials placed on the floor as
the Landlord may direct, and at the expense
of the Tenant.

	17.	 	Landlord shall have no obligation to repair, re-stretch, or replace carpeting, but will
spot-clean and sweep carpeting as part of any janitorial
services required to be furnished by Landlord under the Lease.

	18.	 	Names to be replaced on or removed from directories should be furnished to the manager in
writing on Tenant’s letterhead. All
replacement directory strips will be at the expense of the Tenant. Landlord will determine
size and uniformity of strips.

	19.	 	All Tenants shall see that doors of their premises are closed and securely locked before
leaving the Building and must observe strict care
not to leave such doors open and exposed to the weather or other elements. Tenant shall
exercise extraordinary care and caution that all water faucets or water apparatus are entirely shut off before the Tenant or the Tenant’s
employees leave the Building, and that all
electricity, gas and air conditioning shall likewise be carefully shut off, so as to prevent
waste or damage, where controlled by Tenant.

B-1

 

 

	20.	 	Janitorial services shall be provided live days per week in and about the Premises, and
in no case shall such services be provided for Saturdays, Sundays and holidays (legal).
Tenants shall not cause unnecessary labor by reason of carelessness or indifference in the
preservation of good order and cleanliness. The work of the janitor or cleaning personnel
shall not be hindered by Tenant after 5:30 p.m., and such work may be done at any time when
the offices are vacant. The windows, doors and fixtures may be cleaned at any time without
interruption of purpose for which the Premises are let. Tenant shall provide adequate waste
and rubbish receptacles, cabinets, bookcases, map cases, etc. necessary to prevent
unreasonable hardship to Landlord in discharging its obligation regarding cleaning service.
Boxes should be broken down to fit into containers.

	21.	 	Canvassing, soliciting and peddling in the Building are prohibited. All Tenants shall
cooperate to prevent the same.
	 
	22.	 	All nail holes are to be patched and repaired in Tenant’s suite by Tenant upon vacating
Premises.
	 
	23.	 	All holiday decorations and other temporary or special decorations must be flame-retardant.
No live Christmas trees or candles are to be used throughout the Building. No decorations
should be hung on the exterior windows or on
exterior suite doors.
	 
	24.	 	There shall be no smoking permitted in the Building.

B-2                  

 

 

EXHIBIT “C”

PARKING RULES AND REGULATIONS

The parking rules & regulations are designed to assure our tenants and visitors safe use
and enjoyment of the facilities. Please remove or hide any personal items of value from
plain sight to avoid temptation leading to vandalism of vehicles. Please exercise added
caution when using parking lot at night. Please keep vehicle locked at all times. Please
report violations of these rules to the Property Manager immediately. Please report any
lights out or other possibly dangerous situations to the Property Manager as soon as
possible.

Types of Parking

Surface - Covered

–All surface-covered spaces are reserved and assigned to tenants. These spaces are available for
lease only. Parking spaces will be leased on a 90-day
prepaid basis. (Contact Property Manager for information).

Visitor Parking

–Visitor parking is for clients and visitors to the building. In some cases, a time limit will be
posted. Tenants and employees should not use these spaces.

Handicap Parking

–Only vehicles displaying handicap plates or official handicap placards may park in the spaces
designated as handicap parking.

Surface -  Uncovered

–All surface uncovered parking spaces, not marked handicap or reserved, are available for use by
tenants and employees.

Hours For Parking

7:00 a.m. to 6:00 p.m.      Same as building hours.

Restrictions

	•	 	Damage caused by vehicles is the responsibility of vehicle owner.
	 
	•	 	Landlord is not responsible for theft or damage to any vehicle.
	 
	•	 	Vehicles that leak excessive fluids will be required to protect parking surface.
	 
	•	 	Mechanical repairs to vehicles are not permitted on property.
	 
	•	 	Large or oversize vehicles such as motor homes, boats or trailers are not permitted.
	 
	•	 	No parking in (fire lanes, loading zones or any other areas not designated as a parking space.
	 
	•	 	Landlord, at Landlord’s sole discretion, may add or modify the parking rules.

Violations of rules & regulations may result in towing from the Property. Towing from
the Property can only be ordered by Landlord or Property Manager. Charges for towing are
to be paid by vehicle owner.exv10w50

 

Exhibit 10.50

EXECUTION VERSION

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

KAWASAKI HEAVY INDUSTRIES, LTD.

AND

CATALYTICA ENERGY SYSTEMS, INC.

June 30, 2006

 

 

TABLE OF CONTENTS

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

i

 

TABLE OF
CONTENTS
(cont’d.)

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

ii

 

TABLE OF
CONTENTS
(cont’d.)

	 	 	 	 	 
	 	 	Page
	Section 9.5 Governing Law
	 	 	27	 
	Section 9.6 Process and Venue
	 	 	27	 
	Section 9.7 Disclosure Schedules
	 	 	27	 
	Section 9.8 Independent Obligations
	 	 	27	 
	Section 9.9 Attorney’s Fees
	 	 	27	 
	Section 9.10 Amendment
	 	 	28	 
	Section 9.11 Counterparts
	 	 	28	 
	Section 9.12 Parties in Interest
	 	 	28	 
	Section 9.13 Validity
	 	 	28	 

iii

 

ASSET PURCHASE AGREEMENT

THIS ASSET
PURCHASE AGREEMENT, dated as of June 30, 2006 (this
“Agreement”), is by and among
KAWASAKI HEAVY INDUSTRIES, LTD., a Japanese corporation (the
“Purchaser”) and CATALYTICA ENERGY
SYSTEMS, INC., a Delaware corporation (the “Seller”). KAWASAKI GAS TURBINES – AMERICAS, a division
of KAWASAKI MOTORS CORP., U.S.A., a Delaware corporation
(“KGT-A”) joins this Agreement for
purposes of
Section 6.8 only.

The
Purchaser and the Seller are each a “Party” and, collectively, they are sometimes referred to
as the “Parties.”

W I T N E S S E T H:

WHEREAS, the Purchaser desires to purchase from the Seller, and the Seller desires to sell,
transfer, assign and deliver to the Purchaser, upon the terms and conditions set forth herein,
certain Acquisition Assets (as defined in Section 2.1) related to Seller’s small gas turbine
business.

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and
agreements stated herein, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, covenant and agree as follows:

ARTICLE 1

DEFINITIONS

     Section 1.1 Defined Terms. As used in this Agreement, certain capitalized words and terms have
the meanings ascribed to them as set forth below. Other capitalized terms have the meanings
ascribed to them elsewhere in this Agreement.

“Acquisition
Assets” is defined in Section 2.1.

“Affiliate(s)” means, with respect to any Person as hereinafter defined, any other Person which
directly or indirectly controls, is controlled by, or is under common control with, such Person. A
Person shall be regarded as in control of another Person if it owns, or directly or indirectly
controls, at least fifty percent (50%) of the voting stock or other ownership interest of the other
Person, or if it directly or indirectly possesses the power to direct or cause the direction of the
management and policies of the other Person by any means whatsoever. A Person shall be deemed to
be an Affiliate of another Person only for so long as the foregoing control relationship exists.

“Assigned
Patents” is defined in Section 2.1(b).

“Assignment
and Assumption Agreement” is defined in
Section 2.6(a)(iv).

1

 

“Assumed
Liabilities” is defined in Section 3.1.

“Bill of Sale” is defined in Section 2.6(a)(ii).

“Business” means the business of supplying NOx emission reduction technology and equipment designed
for use with Small Gas Turbines.

“CEC” means the California Energy Commission.

“CEC Agreements” means both Royalty Agreement ROY-05-0001, Contract # 500-01-030, and Royalty
Agreement ROY-05-0002, Contract # 500-97-033 between Seller and the CEC. In no event shall CEC
Agreements be construed to include any other agreements between Seller and the CEC, including
without limitation, Contract # 500-01-030 or Contract # 500-97-033, which underlie the CEC
Agreements.

“Claim Notice” is defined in Section 8.3.

“Closing” is defined in Section 2.5.

“Closing Date” is defined in Section 2.5.

“Code” means the Internal Revenue Code of 1986, as amended, or any amending or superseding tax laws
of the United States of America.

“Covenant Period” is defined in Section 6.9(b).

“DOE” means the U.S. Department of Energy.

“Disclosure Schedules” is defined in the preamble to Article 5.

“Election Period” is defined in Section 8.3.

“Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, deed of trust, security
interest, encumbrance, equity, trust, equitable interest, claim, easement, right-of-way, servitude,
right of possession, lease tenancy, license, encroachment, covenant, infringement, interference,
proxy, option, right of first refusal, community property interest, exception, condition,
restriction, reservation, limitation, impairment, imperfection of title, restriction on or
condition to the voting of any security, restriction on the transfer of any security or other
asset, restriction on the receipt of any income derived from any security or other asset, and
restriction on the possession, use, exercise or transfer of any other attribute of ownership,
whether based on or arising from common law, constitutional provision, statute or contract, other
than minor liens or encumbrances
that do not materially impair Purchaser’s use of the item in question.

“Excluded Assets” is defined in Section 2.2.

“Excluded Liabilities” is defined in Section 3.1.

“GAAP” means generally accepted accounting principles applied on a consistent basis.

2

 

“Governmental Authority” or “Governmental Authorities” means the U.S. government, any state or
political subdivision thereof and any agency or entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, the U.S. government.

“Governmental Authorization” means any permit, license, franchise, approval, certificate, consent,
ratification, permission, confirmation, endorsement, waiver, certification, registration,
qualification or other authorization issued, granted, given or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Legal Requirement.

“Indemnified Amounts” is defined in Section 8.1.

“Indemnified Party” is defined in Section 8.3 .

“Indemnifying Party” is defined in Section 8.3.

“Indemnity Claim” is defined in Section 8.3.

“Intellectual Property” is defined in Section 5.7.

“Legal Requirement” means any U.S. law, statute, ordinance, decree, requirement, Order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the foregoing) of, and
the terms of any authorization issued by, any Governmental Authority.

“Liability” or “Liabilities” means any debt, obligation, duty or liability of any nature (including
any unknown, undisclosed, unfixed, unliquidated, unsecured, unmatured, unaccrued, unasserted,
contingent, conditional, inchoate, implied, vicarious, joint, several or secondary liability or
STRICT LIABILITY), regardless of whether such debt, obligation, duty or liability would be required
to be disclosed on a balance sheet prepared in accordance with GAAP.

“License Agreement” is defined in Section 2.6(a)(iii).

“NOx” means nitrogen oxides.

“Order” means any order, judgment, injunction, edict, decree, ruling, pronouncement, determination,
decision, opinion, sentence, subpoena, writ or award issued, made, entered or rendered by any U.S.
court, administrative agency or other Governmental Authority or by any U.S. arbitrator.

“Organizational Documents” means (a) articles or certificate of incorporation and bylaws of a
corporation; (b) the limited partnership agreement and a certificate of limited partnership of a
limited partnership; (c) any charter or similar document adopted or filed in connection with the
creation, formation, or organization of any Person; and (d) any amendment to any of the foregoing.

“Person” means any individual, corporation, partnership, limited partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization, governmental authority or any other form of
entity not specifically listed herein.

3

 

“Proceeding” means any action, suit, litigation, arbitration, lawsuit, claim, proceeding (including
any civil, criminal, administrative, investigative or appellate proceeding and any informal
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination, investigation,
challenge, controversy or dispute commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Authority or any U.S. arbitrator.

“Purchase Price” is defined in Section 2.3.

“Purchaser Indemnified Party” is defined in Section 8.1.

“Seller” means Catalytica Energy Systems, Inc., a Delaware corporation.

“Seller Indemnified Party” is defined in Section 8.2.

“Seller’s Non-Infringement Representation” is defined in Section 5.7.

“Small Gas Turbines” means gas turbines of output up and including 25 megawatts nameplate rating
and designed for power generation or mechanical drives. In no event shall Small Gas Turbines be
construed to directly or indirectly include any gas turbines for use in connection with any mode of
power or emission control for vehicles or any application involving diesel fuel.

“Subsidiary” or “Subsidiaries” shall mean, when used with reference to an entity, any other entity
of which securities or other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions, or a majority of the
outstanding voting securities of which, are owned directly or indirectly by such entity.

“Taxes” shall mean any and all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross receipts, excise, real or personal property, sales, withholding,
social security, occupation, use, severance, environmental, license, net
worth, payroll, employment, franchise, transfer and recording taxes, fees and charges, imposed by
the IRS or any other taxing authority (whether domestic or foreign including, without limitation,
any state, county, local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest whether paid or received,
fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments.

“Tax Disputes” is defined in Section 6.7(b).

“Tax Return(s)” shall mean any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with respect
to Taxes, including, without limitation, information returns and documents (i) with respect to or
accompanying payments of estimated Taxes or (ii) with respect to or accompanying requests for the
extension of time in which to file any such report, return, document, declaration or other
information, including any schedule or attachment thereto and any amendment thereof.

“TDTA” is defined in Section 6.8.

4

 

“Territory” is defined in Section 6.9(b).

“TKK”
means Tanaka Kikinzoku Kogyo K.K.

“Transfer
Taxes” is defined in Section 6.7(c).

“Woodward Agreement” means the Control Patent and Cross License Agreement dated December 19, 2001
between Woodward Governor Company and the Seller.

“Xonon Module” means the Seller developed product designated by Seller as the XononTM Module which
consists of a catalyst container, which includes therein a catalyst structure and supporting
structure for fixing the catalyst structure in the container, as designed specifically for reducing
the emissions of NOx from the Kawasaki gas turbine Model 1.4 MW M1A-13X.

ARTICLE 2

PURCHASE, SALE AND DELIVERY

     Section 2.1 Acquisition Assets. Subject to the terms and conditions of this Agreement and the
License Agreement, and on the basis of the representations and warranties hereinafter set forth, at
the Closing (as hereinafter defined), the Seller hereby sells, transfers, conveys, assigns and
delivers to the Purchaser, and the Purchaser hereby acquires and purchases from the Seller, the
following assets, properties and rights of the
Seller:

               (i) all inventory of Xonon Modules and H214 foil, in each case as described on Schedule
2.1(a);

               (ii) the Patents listed on Schedule 2.1(b) (the “Assigned Patents”), together with all
Technical Information (as defined in the License Agreement) associated with the Assigned Patents
that is applicable solely to Small Gas Turbines and not applicable to other products or
technologies, the right to secure copyright, trademark, patent, or other forms of protection
therein, the right to continue the prosecution of any applications contained in the Assigned
Patents, the right to secure renewals, reissues and extensions of the Assigned Patents, and the
right to recover for infringement thereof;

               (iii) copies of all books, records and papers of whatever nature and wherever located that are
in the possession or control of the Seller, that relate to the inventory described in clause (a)
above and that are required or reasonably necessary for the Purchaser to continue the manufacturing
of the Xonon Modules from and after the Closing Date, as such manufacturing was conducted by Seller
in the U.S. in the ordinary course of business prior to the Closing Date;

               (iv) all rights under express or implied warranties from the suppliers of the Seller with
respect to the inventory described in clause (a) above, to the extent they are assignable.

Subject to Section 2.2 hereof, all of the assets referenced in this Section 2.1 are collectively
referred to as the “Acquisition Assets”.

5

 

          Section 2.2 Excluded Assets. Notwithstanding the foregoing, the Seller is not selling and the
Purchaser is not purchasing pursuant to this Agreement any assets of Seller other than the
Acquisition Assets, all of which shall be retained by the Seller (collectively, the
“Excluded Assets”).

          Section 2.3 Purchase Price. (a) Subject to the terms and conditions of this Agreement, and as
full consideration for the purchase of the Acquisition Assets and the representations, warranties,
covenants and agreements contemplated herein, the Purchaser shall pay to the Seller the aggregate
purchase price (the “Purchase Price”) of TWO MILLION ONE HUNDRED THOUSAND DOLLARS ($2,100,000.00),
which Purchase Price shall be paid by the Purchaser to the Seller as follows: (i) TWO MILLION
DOLLARS ($2,000,000.00) at the Closing in immediately available funds; and (ii) ONE HUNDRED
THOUSAND DOLLARS ($100,000.00) within five (5) days following the completion of the training
described in Section
4 of the License Agreement.

          Section 2.4 Allocation Reporting. Unless otherwise agreed in writing by the Purchaser and the
Seller, (i) Schedule 2.4 hereto sets forth the allocations established by the Purchaser and the
Seller of the Purchase Price (and any other items constituting consideration paid by the Purchaser
or received by the Seller in connection with the disposition of the Acquisition Assets) among the
Acquisition Assets; (ii) the allocations set forth on Schedule 2.4 hereto will be used by the
Purchaser and the Seller as the basis for reporting asset values and other items for purposes of
all required Tax Returns (including any Tax Returns required to be filed under Section 1060(b) of
the Code and the Treasury regulations thereunder); and (iii) the Purchaser and the Seller shall not
assert, in connection with any audit or other Proceeding with respect to Taxes, any asset values or
other items inconsistent with the allocations set forth on Schedule 2.4 hereto.

          Section 2.5 Closing. Subject to the terms and conditions of this Agreement, the purchase and
sale provided for herein (the “Closing”) shall take place at the offices of Morrison & Foerster
LLP, 755 Mill Road, Palo Alto, California 94304, on the second business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions the Parties will
take at the Closing itself) or at such other place and time as may be agreed by the Parties in
writing (the “Closing Date”).

          Section 2.6 Closing Deliveries.

          (a) At the Closing, the Seller shall deliver to the Purchaser:

               (i) the tangible Acquisition Assets, it being understood that certain of the Acquisition
Assets will be delivered to Purchaser in connection with the training described in Section 4 of the
License Agreement;

               (ii) an executed counterpart of a bill of sale, assignment and assumption agreement in the
form attached hereto as Exhibit A (the “Bill of Sale”), with respect to the CEC Agreements and the
Woodward Agreement, together with such other assignments and conveyances as the Purchaser may
reasonably require to assure the full and effective sale,

6

 

transfer, conveyance, assignment and delivery to the Purchaser of the Acquisition Assets free and
clear of any Encumbrances;

               (iii) an executed counterpart of a license agreement in the form attached hereto as Exhibit B
(the “License Agreement”);

               (iv) assignments, in recordable form, with respect to the
Assigned Patents, duly executed by the Seller and in form and substance reasonably
satisfactory to the Purchaser, together with the original letters patent with respect thereto, as
available;

               (v) a certified copy of resolutions duly adopted by the board of directors of the Seller
authorizing and approving the execution and delivery of this Agreement and the License Agreement,
including the exhibits and schedules hereto and thereto, and the consummation of the transactions
contemplated hereby and thereby;

               (vi) notification, if any, to the DOE of the terms and conditions of this Agreement and the
License Agreement in form and substance deemed necessary by the Seller in its sole discretion to
consummate this Agreement and the License Agreement;

               (vii) notification to Woodward of the assignment to and assumption by the Purchaser of the
Woodward Agreement in form and substance reasonably satisfactory to the Purchaser;

               (viii) a written consent of the CEC of the assignment to and assumption by the Purchaser of
the CEC Agreements in form and substance reasonably satisfactory to the Parties;

               (ix) U.S. Residency Certificate relating to Seller, issued by the U.S. Department of Treasury
(Internal Revenue Service);

               (x) a fully completed and executed Application Form for Income Tax Convention, in the form
attached hereto as Exhibit C;

               (xi) consent of TKK, to the extent required for consummation of the transactions contemplated
hereby and by the License Agreement, it being understood and agreed that the “Consent for
Assignment and License” executed by TKK on June 9, 2006 fully satisfied this delivery requirement
and all related closing conditions herein;

               (xii) a certificate, duly executed by or on behalf of Seller, as to whether each condition
specified in Sections 7.1(a), (b), and (c) has been satisfied;

               (xiii) evidence from the appropriate Governmental Authorities that the payments contemplated
under this Agreement are not subject to withholding taxes; and

               (xiv) such other documents, including certificates of the Seller, as may be required by this
Agreement or otherwise reasonably requested by the Purchaser.

          (b) At the Closing, the Purchaser shall deliver the following to the Seller:

7

 

               (i) the Purchase Price set forth in Section 2.3;

               (ii) an executed counterpart of the Bill of Sale;

               (iii) an executed counterpart of the License Agreement;

               (iv) evidence of approval by the governing body of the Purchaser of this Agreement and the
License Agreement, including the exhibits and schedules hereto and thereto, and the consummation of
the transactions contemplated hereby and thereby;

               (v) a State of Arizona transaction privilege tax exemption certificate from the Purchaser in
the form attached as Exhibit D;

               (vi) a certificate, duly executed by or on behalf of Purchaser, as to whether each condition
specified in Sections 7.2(a) and (b) has been satisfied; and

               (vii) such other documents, including certificates of the Purchaser, as may be required by
this Agreement or otherwise reasonably requested by the Seller.

ARTICLE 3

LIABILITIES AND OBLIGATIONS

     Section 3.1 Limited Liabilities Assumed by the Purchaser. Subject to the terms and conditions
of this Agreement, at the Closing, Seller shall assign, and Purchaser shall assume, the liabilities
specifically listed on Schedule 3.1 (the “Assumed Liabilities”). Except for the
Assumed Liabilities, the Purchaser does not assume or agree to pay, perform or discharge, and shall
not be responsible for, any commitments, contracts, agreements or Liabilities of the Seller
whatsoever, including without limitation, the following (collectively, the “Excluded Liabilities”):

          (a) any Taxes or charges, if any, which may become payable by reason of the sale and transfer
of the Acquisition Assets under any taxing authority (whether domestic or foreign, including,
without limitation, any state, county, local or foreign government or any subdivision or taxing
agency thereof), or may be imposed upon the Seller by reason of receipt of the Purchase Price or
relief from any Liability pursuant to this Agreement;

          (b) any of the costs and expenses incurred in connection with the future operations of the
Seller, and the costs and expenses of the Seller incurred in
negotiating, entering into and carrying out their obligations pursuant to this Agreement;

          (c) the trade accounts payable, accrued Liabilities and any other Liabilities of the Seller as
of the Closing Date and any indebtedness (whether short-term or long-term) for borrowed money,
together with all interest thereon;

          (d) any Liability attributable to, assessed or arising out of operations during any period
through and including the Closing Date for (i) any and all Taxes of the Seller, (ii) any and all
Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Seller
(or any predecessor of the foregoing) is or was a member, including pursuant to

8

 

Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law),
(iii) any and all Taxes of any Person as a transferee or successor, by contract or otherwise, which
relate to an event or transaction occurring before the Closing; and (iv) any and all ad valorem
Taxes and special assessments on the Acquisition Assets;

          (e) any prepayment penalties or other Liabilities related to retiring or extinguishing any
indebtedness of the Seller;

          (f) any Liabilities arising out of or in connection with periods or activity prior to the
Closing Date related to any other Governmental Authority, or any violation of any Legal
Requirement, and any unrecorded Liabilities or contingencies that are not expressly identified on
Schedule 3.1;

          (g) any Liability of the Seller arising out of any claim, litigation, or Proceeding threatened
or pending on or before the Closing Date or any claim, litigation, or Proceeding threatened or
initiated after the Closing Date to the extent based on an act or omission of the Seller or any
current or former officer, director, employee, agent or representative of the Seller or the
operation of the Acquisition Assets occurring before the Closing Date; and

          (h) any Liability under or in connection with or related to the Excluded Assets.

ARTICLE 4

REPRESENTATIONS AND

 WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Seller as follows:

     Section 4.1 Organization and Qualification. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of its country of incorporation and has the
requisite power and authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. The Purchaser is duly qualified to do business as a
foreign entity and is in good standing in each jurisdiction in which the properties owned, leased,
or operated by it or the nature of the business conducted by it makes such qualification necessary.

     Section 4.2 Authority; Consents; Binding Agreement. The Purchaser has full power and
authority to execute and deliver this Agreement and the other documents delivered by the Purchaser
at Closing and to consummate the transactions contemplated hereby. This Agreement has been duly
authorized by the Purchaser, and no additional approvals on the part of the board of directors of
the Purchaser are necessary to authorize the execution and delivery of this Agreement or the
consummation by the Purchaser of the transactions contemplated hereby. Except as otherwise
specifically provided for in this Agreement, no approvals, consents or waivers on the part of any
Governmental Authorities or other Persons are necessary for the Purchaser to execute and deliver
this Agreement and consummate the transactions contemplated hereby. Each of this Agreement and the
other documents delivered by the Purchaser at Closing

9

 

has been duly executed and delivered by the Purchaser and, assuming the due authorization,
execution and delivery hereof by the Seller, constitutes a valid and legally binding agreement of
the Purchaser and is enforceable against the Purchaser in accordance with its terms, except as such
enforcement may be subject to bankruptcy, insolvency, reorganization or other similar laws
affecting or relating to enforcement of creditors’ rights generally.

     Section 4.3 Litigation. There is no action to which the Purchaser is a party in which relief
is sought which would prevent, delay or make illegal the transactions contemplated by this
Agreement, and there is no litigation, action, suit, proceeding or governmental investigation
pending or threatened against the Purchaser (orally or in writing), involving, affecting or
relating to the transactions contemplated by this Agreement.

     Section 4.4 Brokers and Finders. The Purchaser has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of such Purchaser to
pay any finder’ s fees, brokerage or agent commissions or other like payments in connection with
the transactions contemplated hereby. There is no claim for payment by the Purchaser of any
investment banking fees, finder’s fees, brokerage or agent commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

OF THE SELLER

Except as set forth on the corresponding section or subsection of the disclosure schedules attached
hereto (the “Disclosure Schedules”), the Seller represents and warrants to the Purchaser as
follows:

     Section 5.1 Organization and Qualification. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware and has the requisite
power and authority to own, lease and operate its Acquisition Assets and to carry on its business
relating thereto as it is now being conducted. The Seller is duly qualified to do business as a
foreign entity and is in good standing in each jurisdiction in which the properties owned, leased,
or operated by it or the nature of the business conducted by it makes such qualification necessary.

     Section 5.2 Authority; Non-Contravention; Consents and Approvals.

          (a) The Seller has full power and authority to execute and deliver this Agreement and the
other documents delivered by the Seller at Closing and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized by the Seller, and no additional approvals on the
part of the board of directors of the Seller are necessary to authorize the execution and delivery
of this Agreement or the consummation by the Seller of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Seller, and, assuming the due authorization,
execution and delivery hereof by the Purchaser, constitutes a valid and legally binding agreement
of the Seller, enforceable against the Seller in

10

 

accordance with its terms, except as such enforcement may be subject to bankruptcy, insolvency,
reorganization or other similar laws affecting or relating to enforcement of creditors’ rights
generally.

          (b) The execution and delivery of this Agreement and the other documents delivered by the
Seller at Closing, and the consummation by the Seller of the transactions contemplated hereby and
thereby, do not and will not violate or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or except as described in Schedule 5.2(b) result in the
creation of any Encumbrance upon any of the Acquisition Assets under any of the terms, conditions
or provisions of (i) the Organizational Documents of the Seller, (ii) any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit or license of any court or
Governmental Authority applicable to the Seller, or any of the Acquisition
Assets, or (iii) any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument, obligation or agreement of any kind to
which the Seller is now a party or by which the Seller or any of Acquisition Assets may be bound.

          (c) Except as indicated in Schedule 5.2(c), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any Governmental Authority or any other Person
is necessary for the execution and delivery of this Agreement or the License Agreement by the
Seller or the consummation by the Seller of the transactions contemplated hereby or thereby.

     Section 5.3 Litigation. Except as indicated in Schedule 5.3, there is no action to which
Seller is a party in which relief is sought involving, affecting, or relating to the ownership,
operation, or use of the Acquisition Assets or the conduct of the business of Seller relating
thereto or which would prevent, delay, or make illegal the transactions contemplated by this
Agreement, and there is no litigation, action, suit, proceeding or governmental investigation
pending or threatened against Seller (orally or in writing), involving, affecting or relating to
the Acquisition Assets or the transactions contemplated by this Agreement.

     Section 5.4 No Violation of Law; Compliance with Agreements.

          (a) With respect to its ownership, operation or use of the Acquisition Assets, (i) the Seller
is not in violation of and has not been given notice or been charged with any violation of, any
Legal Requirement; and (ii) to the knowledge of Seller, no investigation or review by any
Governmental Authority is pending or threatened. There are no Governmental Authorizations that are
necessary to permit the Seller to own, operate, use, and maintain the Acquisition Assets in
compliance with all applicable Legal Requirements in all material respects.

          (b) The Seller is not in breach or violation of or in default in the performance or observance
of any term or provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a default under, (a) the Organizational Documents of the Seller or (b)
any contract, commitment, agreement, indenture, mortgage, loan agreement,

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note, lease, bond, license, approval or other instrument to which the Seller is a party or by which
it is bound relating to any of the Acquisition Assets.

     Section 5.5
Title to Assets. Except as indicated on Schedule 5.5, the Seller has good and
marketable title to the Acquisition Assets under all applicable Legal Requirements and Seller’s
title to the Acquisition Assets is free and clear of any and all Encumbrances.

     Section 5.6 Brokers and Finders. Except for Seller’s agreement with W.Y. Campbell & Company,
the Seller has not entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of the Seller to pay any finder’s fees, brokerage or agent
commissions or other like payments in connection with the transactions contemplated hereby. Except
pursuant to the agreement referenced in the preceding sentence, there is no claim for payment by
the Seller of any investment banking fees, finder’s fees, brokerage or agent commissions or other
like payments in connection with the negotiations leading to this Agreement or the consummation of
the transactions contemplated hereby.

     Section 5.7 Intellectual Property. The Assigned Patents and the Multi-Use Patents (as defined
in the License Agreement) constitute all of the patents owned by Seller that read on the
manufacture, use and sale of Xonon Modules as sold by the Seller to KHI pursuant to the Xonon
Module Supply Agreement referenced in clause (i) of Section 6.8 below. The Seller’s manufacture,
use and sale of Xonon Modules does not infringe or misappropriate, and Seller has no reason to
believe that it will receive any notice alleging any such infringement or misappropriation of, the
U.S. intellectual property rights of any Person (“Seller’s Non-Infringement Representation”).
Except as set forth on Schedule 5.7, the Seller solely owns or has the right to license all of the
Multi-Use Patents and New Technical Materials (as defined in the License Agreement), purported to
be licensed to the Purchaser pursuant to the License Agreement, without the grant of such license
causing any infringement or misappropriation of any U.S. intellectual property rights of any Person
or any breach of any contract to which the Seller is a party, and, except as set forth on Schedule
5.7, no consent of any Person is required in connection with the licenses contemplated thereunder.
The patents, copyrights and trade secrets (“Intellectual Property”) included in the Acquisition
Assets or otherwise assigned or licensed to Kawasaki under the License Agreement constitute all of
the Intellectual Property owned or licensed by the Seller necessary to continue the manufacture of
Xonon Modules, as such manufacturing was conducted by Seller in the U.S. in the ordinary course of
business prior to the Closing Date. To the knowledge of the Seller, no Person is infringing the
rights of the Seller in any Assigned Patents, Multi-Use Patents or New Technical Materials.

     Section 5.8 Assumed Agreements. Attached hereto as Schedule 5.8 are true, complete and
correct copies of the Woodward Agreement and the CEC Agreements, in each case as amended, together
with a detailed payment history therefor. Each of the Woodward Agreement and the CEC Agreements is
in full force and effect and each constitutes a legal, valid and binding agreement of Seller and of
each other party thereto, enforceable in accordance with its terms, and no term or condition
thereof has been amended from the form attached hereto. There are no defaults by Seller under any
of its obligations under the Woodward Agreement or any CEC Agreement and no events have occurred
that with the lapse of time or action or inaction by any party thereto would result in any
violations thereof or any defaults thereunder. There is no action to which Seller is a party in
which relief is sought involving, affecting or relating in

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any manner to the Woodward Agreement or any CEC Agreement and, to the knowledge of Seller, there is
no litigation, action, suit, proceeding or governmental investigation pending or threatened against
Seller (orally or in writing) involving, affecting or relating to the Woodward Agreement or any CEC
Agreement. Except as indicated in Schedule 5.8, none of Seller’s rights under the Woodward
Agreement or any CEC Agreement will be impaired by the consummation of the transactions
contemplated by this Agreement, and all such rights will inure to and be enforceable by Purchaser
after the Closing Date without any authorization, approval, permission or license of, or filing
with, any other Person.

     Section 5.9 Condition of Assets. Except as indicated on Schedule 5.9, the Acquisition Assets
described in clause (a) of Section 2.1 consist of a quality and quantity usable and salable in the
ordinary course of business. Notwithstanding anything herein to the contrary, Purchaser’s inability
to sell any of the Acquisition Assets described in clause (a) of Section 2.1 due to a breach of
Seller’s Non-Infringement Representation will be deemed a breach of this Section 5.9. For purposes
of Section 8.1 hereof, the preceding sentence shall survive the Closing for the same period as
Seller’s Non-Infringement Representation.

ARTICLE 6

CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES

     Section 6.1 Pre-Closing Covenants.

          (a) Conduct of Business. Until the Closing, Seller will continue to operate the Acquisition
Assets in a manner consistent with its past practice and good business practices. Without limiting
the generality of the foregoing:

               (i) Seller will not sell, transfer or assign any of the Acquisition
Assets;

               (ii) Seller will not impose or permit to be imposed any Encumbrances on any of the Acquisition
Assets;

               (iii) Seller will use commercially reasonable efforts to preserve and protect the Acquisition
Assets and to maintain the Acquisition Assets in good operating condition and repair; and

               (iv) Seller will inform Purchaser as promptly as practicable of the occurrence of any
destruction, material damage or loss of any Acquisition Asset, and will consult with the Purchaser
prior to performing any repairs to any Acquisition Asset.

          (b) Best Efforts. Each Party will use its reasonable best efforts to take all actions and to
do all things necessary, proper or advisable to consummate, make
effective and comply with all of the terms of this Agreement (including satisfaction, but not
waiver, of the closing conditions herein).

          (c) No Shop. Seller shall not, directly or indirectly, (i) solicit, initiate or encourage the
submission of inquiries, proposals or offers from any Person relating to any acquisition or
purchase of the Acquisition Assets (an “Acquisition Proposal”), (ii) participate in

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any discussions or negotiations regarding an Acquisition Proposal or furnish any Person any
information concerning the Acquisition Assets in connection with an Acquisition Proposal, (iii)
enter into or consummate any agreement or letter of intent regarding any Acquisition Proposal or
(iv) otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any
effort or attempt by any Person to do or seek any of the foregoing, in each case except in
connection with the transactions contemplated by this Agreement. Seller shall immediately provide
the Purchaser with written notice of any Acquisition Proposal, which notice shall include the terms
of any such Acquisition Proposal. Notwithstanding anything in this Section 6.1(c), the Purchaser
acknowledges and agrees that Seller may, without the consent of the Purchaser and without violating
this Section 6.1(c), offer for sale or sell (i) all or any portion of the common stock of Seller or
(ii) all or any portion of the assets of Seller other than the Acquisition Assets, provided that
any such sale of equity or assets shall be subject to the terms and conditions of this Agreement
and the License Agreement for as long as such agreements shall be outstanding.

     Section 6.2 Woodward Agreement. The Seller hereby assigns to the Purchaser the Woodward
Agreement and the Purchaser hereby accepts such assignment and agrees to fully and timely pay,
perform, discharge and satisfy all obligations of Seller thereunder following the Closing Date.

     Section 6.3 CEC Agreements. The Seller hereby assigns to the Purchaser the CEC Agreements, and
the Purchaser hereby accepts such assignment and agrees to fully and timely pay, perform, discharge
and satisfy all obligations of Seller thereunder following the Closing Date.

     Section 6.4 Further Assurances. The Seller and the Purchaser shall execute and deliver to the
other, after the Closing Date, any other instrument which may be reasonably requested by the other
and which is reasonably appropriate to perfect or evidence any of the sales, assignments, transfers
or conveyances contemplated by this Agreement or to obtain any consents reasonably necessary for
the Purchaser to manufacture the Xonon Modules, as such manufacturing was conducted by Seller in
the U.S. in the ordinary course of business prior to the Closing Date. Seller agrees to execute
any documents reasonably requested by Purchaser that might be helpful or necessary to perfect or
evidence the Purchaser’s ownership of the Assigned Patents and its associated Technical
Information. If the Purchaser notifies Seller in writing that the intellectual
property laws of a country require the consent of a joint owner of an Assigned Patent to
perfect the Purchaser’s ownership interest in such Assigned Patent, Seller shall be responsible for
acquiring the consent of such joint owner within a reasonable time thereafter; provided, however,
that nothing in this paragraph shall require Seller to seek the authorization of any non-U.S.
governmental entity unless requested in writing by the Purchaser at the Purchaser’s sole cost and
expense. If for any reason, Seller does not or is unable to execute such further documents within
ten (10) days of the Purchaser’s written request, the Seller hereby irrevocably appoints the
Purchaser as its attorney-in-fact (which appointment is coupled with an interest) to execute and
deliver any assignments, applications or other instruments to protect and vest title in the
Assigned Patents and its associated Technical Information fully in the Purchaser. Without the
consent of the Seller, which consent will not unreasonably be withheld, the obligations under this
Section 6.4 will expire two years from the Closing.

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     Section 6.5 Expenses and Fees. The Seller shall pay all costs and expenses incurred by the
Seller in connection with this Agreement and the transactions contemplated hereby, including,
without limitation, any and all broker’s commissions, employee bonuses and the fees and expenses of
the Seller’s attorneys and accountants, and will make all necessary arrangements so that the
Purchaser will not be charged with any such cost or expense. The Purchaser shall pay all costs and
expenses incurred by the Purchaser in connection with this Agreement and the transactions
contemplated hereby, including without limitation, any and all broker’s commissions, employee
bonuses and the fees and expenses of their attorneys and accountants.

     Section 6.6 Public Statements. Except as required by law or regulation in accordance with the
advice of their respective counsel and except as permitted in Section 6.13, the Parties shall
obtain the written consent of the other prior to issuing any press release or any written public
statement with respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or written public statement prior to such consent, which will not be
unreasonably withheld.

     Section 6.7 Tax Covenants.

          (a) Tax Returns. The Seller will be responsible for the preparation and filing of all Tax
Returns for the Seller for all periods as to which Tax Returns are due after the Closing Date
(including the consolidated, unitary, and combined Tax Returns for the Seller which include the
operations of the Acquisition Assets for any period ending on or before the Closing Date). The
Seller will make all payments required with respect to any such Tax Returns.

          (b) Cooperation. Following the Closing, the Parties shall use all reasonable efforts to
cooperate with each other and their respective representatives, in a prompt and timely manner, in
conjunction with any audit or other examination by any Tax authority or any Proceeding involving
any Tax Return (collectively, the “Tax
Disputes”) relating to the Acquisition Assets and relating to any Taxes (i) filed or required
to be filed by or for the Seller for any taxable period beginning before the Closing Date, or (ii)
filed or required to be filed by or for the Purchaser for any taxable period ending after the
Closing Date. Notwithstanding anything to the contrary herein, the Seller shall retain control of
any Tax Dispute to the extent such Tax Dispute arises out of or is related to events or
circumstances prior to the Closing, and the Purchaser shall retain control of any Tax Dispute to
the extent such Tax Dispute arises out of or is related to events or circumstances after the
Closing. Such cooperation shall include, but not be limited to making available to one another
during normal business hours, and within five (5) business days of any reasonable request
therefore, all books, records and information, and the assistance of all officers and employees,
reasonably required in connection with any Proceeding with regard to Taxes or any Tax Dispute. The
Parties hereto agree to conduct any investigation or examination hereunder without causing any
material interference or disruption of the operations of the business of any other Party hereto or
their Affiliates. The Seller will retain, until the expiration of the applicable statutes of
limitation (including any extensions thereof) copies of all Tax Returns, supporting work schedules
and other records relating to Taxes for all taxable years or periods (or portions thereof) ending
on or prior to the Closing Date.

          (c) Certain Taxes and Fees. All excise, sales, use, transfer (including real property
transfer or gains), stamp, documentary, filing, recordation and other similar taxes,

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together with any interest, additions or penalties with respect thereto and any interest in respect
of such additions or penalties, resulting directly from the transactions contemplated by this
Agreement (the “Transfer Taxes”), shall be paid by the Seller when due, and the Seller will, at its
own expense, file all necessary Tax Returns, and other documentation with respect to all such
Taxes, fees and charges, and, if required by applicable law, the Purchaser will, and will cause its
Affiliates to, join in the execution of any such Tax Returns and other documentation.

     Section 6.8 Mutual Releases. Subject only to the obligations of the Parties under this
Agreement, the License Agreement and the Confidentiality Agreement
referenced in Section 6.13,
effective as of the Closing Date, the Seller, on the one hand, and the Purchaser and KGT-A, on the
other, hereby release and forever discharge each other and the other’s respective heirs,
representatives, successors and assigns, officers, directors, employees, agents, stockholders,
controlling persons and Affiliates for, from and against any and all claims, present and future,
known and unknown, including without limitation under each of the following agreements, in each
case as amended: (i) that certain Xonon Module Supply Agreement by and among the Parties and KGT-A
dated December 13, 2000, as amended as of July 2, 2003; (ii) that certain Technology Development
and Transfer Agreement by and between the Parties dated as of December 13, 2000 (“TDTA”); and (iii)
that certain Amended and Restated Support Agreement by and between Seller and KGT-A dated as of
October 6, 2003. Without limiting the generality
of the foregoing, Seller is under no further obligation to deliver any products to Purchaser
or KGT-A, except for the delivery of the inventory described in Section 2.1(a) above, and all
warranties of the Seller to the Purchaser and KGT-A for the Xonon Modules shall be null and void.

     Section 6.9 Non-competition.

          (a) The Seller hereby acknowledges and agrees that (i) the Purchaser would not have entered
into this Agreement or the License Agreement if the Seller had not agreed to this non-competition
covenant; and (ii) Seller has had access to information that is confidential to the Purchaser,
which constitutes a valuable, special and unique asset of the Purchaser, and with respect to which
the Purchaser is entitled to the protections afforded by this Agreement and to the remedies for
enforcement of this Agreement provided by law or in equity (including, without limitation, those
remedies the availability of which may be within the discretion of the court or arbitrator that
presides over any action for enforcement of this Agreement is brought).

          (b) For a period of five (5) years following the Closing Date (the “Covenant Period”), the
Seller agrees that it will not, directly or indirectly (through any entity or other Person), and
shall cause each of its Subsidiaries not to, directly or indirectly, acting alone or as a member of
a partnership, as a holder or owner of any security, as an employee, agent, advisor, consultant to,
independent contractor to, representative, or in any other capacity within North America, South
America or Central America (collectively, the “Territory”), engage in the Business.
Notwithstanding anything else to the contrary in this Agreement, none of the restrictions or
limitations in this Section 6.9 shall be applicable to (i) any Person that acquires Seller, by
merger, consolidation, sale of all or substantially all of its assets, purchase or other
acquisition of a majority of Seller’s outstanding voting securities or otherwise, which Person was
not an Affiliate of Seller prior to such acquisition, or (ii) any Person that acquires any of
Seller’s

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assets, whether by purchase or by sale in connection with any reorganization or liquidation of
Seller, which Person was not an Affiliate of Seller prior to such acquisition.

          (c) Seller agrees that it will not (directly or indirectly through any entity or other
Person), and shall cause each of its Subsidiaries not to, directly or indirectly, acting alone or
as a member of a partnership, as a holder or owner of any security, as an employee, agent, advisor,
consultant to, representative, or in any other capacity (i) cause or attempt to cause to leave the
employment or service of the Purchaser or its Subsidiaries, any person who is then employed by the
Purchaser or its Subsidiaries in a business unit that engages in the Business, provided that the
foregoing shall not be deemed to prevent general employment solicitations by Seller, or (ii)
request that any such person, or any agent or independent contractor of the Purchaser or its
Subsidiaries curtail or cancel its business or refrain from doing business with the Purchaser or
its Subsidiaries. For purposes of this Section 6.9(c), “Subsidiaries” of Purchaser shall
include (i) those Subsidiaries of Purchase whose corporate name includes the name “Kawasaki,”
(ii) those Subsidiaries of Purchaser that Purchaser has informed Seller in writing are Subsidiaries
of Purchaser and (iii) those Subsidiaries of Purchaser that Seller is aware are Subsidiaries of
Purchaser.

          (d) Without
limiting the generality of the provisions of this Section 6.9, the Seller shall be
deemed to be carrying on or engaged in a particular business if it (whether alone or in association
with one or more other Persons) is a partner, owner, stockholder, independent contractor or joint
venturer of, or a consultant or lender to, or an investor in any manner in, any Person who or which
is directly engaged in the Business.

          (e) Notwithstanding
the foregoing provisions of this Section 6.9, the Seller may own, solely
as an investment, securities if the Seller (A) is not an Affiliate of the issuer of such securities
and (B) does not, directly or indirectly, beneficially own more than 5%, in the aggregate, of the
class of which securities are a part.

          (f) The Seller acknowledges and agrees that the limitations imposed by this non-competition
covenant as to time, geographical area, and scope of activity being restrained are reasonable and
do not impose a greater restraint than is necessary to protect the goodwill or other business
interest of the Purchaser. If any court of competent jurisdiction determines that any of such
covenants, provisions, or portions of the Agreement, or any part thereof, are unenforceable and
invalid, then (a) the validity and enforceability of any remaining covenants, provisions or
portions thereof shall not be affected by such determination, (b) those of such covenants,
provisions, or portions that are determined to be unenforceable because of the duration or scope
thereof shall be severed and/or reformed by the court to reduce there duration or scope so as to
render the same enforceable against Seller, and (c) all remaining covenants, provisions, portions
and terms of the Agreement shall be valid and enforceable to the fullest extent permitted by law.

     Section 6.10 Conduct of Business by Seller after Closing. Except upon the prior written
consent of the Purchaser (which shall not be unreasonably withheld) to the Seller’s provision of an
escrow of funds, irrevocable letter of credit or other arrangement acceptable to the Purchaser that
provides assurances that Seller’s indemnification obligations
under Article 8 will be satisfied,
after the Closing Date, Seller shall:

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               (i) maintain an amount of not less than $2,000,000 in immediately available funds with the
Seller until the later of (a) one (1) year following the Closing Date, or (b) the date that any
action commenced by a Purchaser Indemnified Party against the Seller
pursuant to Section 8.3 hereof
no later than one (1) year following the Closing Date has been resolved; and

               (ii) following the period covered by clause (a) above, maintain an amount of not less than
$1,900,000 in immediately available funds with the Seller
until the later of (a) two (2) years following the Closing Date, or (b) the date that any
action commenced by a Purchaser Indemnified Party against the Seller pursuant to Section 8.3 hereof
no later than two (2) years following the Closing Date has been resolved.

     Section 6.11 Specific Performance. The Purchaser and the Seller hereby agree that if the
Seller violates or threatens to violate any of the provisions of Section 6.9, it would be difficult
to determine the entire cost, damage or injury which the Purchaser would sustain. The Seller
acknowledges that if it violates or threatens to violate any of the provisions of Section 6.9 of
this Agreement, the Purchaser may have no adequate remedy at law. In that event, the Purchaser
shall have the right, in addition to any other rights that may be available to it, to seek in any
court of competent jurisdiction injunctive relief to restrain any violation or threatened violation
by the Seller of Section 6.9 this Agreement or to compel specific performance by the Seller of its
obligations under Section 6.9 of this Agreement. The seeking or obtaining by the Purchaser of such
injunctive relief shall not foreclose or in any way limit the right of the Purchaser to obtain a
money judgment against the Seller for any damage to the Purchaser that may result from any breach
by the Seller of any provision of Section 6.9 of this Agreement.

     Section 6.12 Intellectual Property. Whether the Assigned Patents shall be preserved and
maintained or registered in the U.S. or any foreign country shall be at the sole discretion of the
Purchaser. Subject to the terms and conditions of this Agreement, Seller agrees that it retains no
rights in the Assigned Patents or the associated Technical Information that is applicable solely to
Small Gas Turbines and not applicable to other products or technologies. Except as provided in
Section 6.4, Seller shall be responsible for procuring, prior to the Closing, any and all consents
necessary to permit the assignment of the Assigned Patents as contemplated by this Agreement.

     Section 6.13 Confidentiality. Each Party shall protect the confidentiality of the terms and
conditions of this Agreement using the same level of care that it uses to protect its own similar
confidential information, but in no event less than reasonable care. Further, the Parties agree
that the Confidentiality Agreement by and between the Parties dated November 2, 2005 shall continue
in full force and effect. The Parties understand that the Seller is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, and that a copy of this Agreement
and the License Agreement shall be filed by the Seller with the Securities and Exchange Commission
promptly following the execution and delivery of this Agreement.

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ARTICLE 7

CONDITIONS TO CLOSING; TERMINATION

     Section 7.1 Conditions to Obligation of the Purchaser. The obligation of the Purchaser to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction or waiver in writing of the following conditions:

          (a) the representations and warranties of the Seller set forth in Article 5 shall be true and
correct in all respects at and as of the Closing Date;

          (b) the Seller shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing;

          (c) since the date of this Agreement, there shall have been no changes that constitute, and no
event or events shall have occurred which have resulted in or constitute, or would reasonably be
expected to result in or constitute, a material adverse effect with respect to the Acquisition
Assets;

          (d) the Seller shall have delivered to the Purchaser a certificate to the effect that each of
the conditions specified above in Section 7.1(a) through (c) is satisfied in all respects;

          (e) no action, suit or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state or local jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of
the transactions contemplated by this Agreement to be rescinded following consummation or (iii)
affect adversely the right of the Purchaser to own and operate the Acquisition Assets (and no such
injunction, judgment, order, decree, ruling or charge shall be in effect);

          (f) the Seller shall have delivered, or be standing ready to deliver, to the Purchaser, the
documents required to be delivered by the Seller Parties pursuant to Section 2.6(a);

          (g) Seller shall have delivered to the Purchaser the documents described in clauses (ix) and
(x) of Section 2.6(a);

          (h) the consent of TKK referenced in clause (xi) of Section 2.6(a) shall not have been
revoked;

          (i) the CEC shall have delivered a consent to the assignment and assumption of the CEC
Agreements in form and substance satisfactory to the Purchaser; and

          (j) Seller shall have received evidence from the appropriate Japanese tax authority that the
payments contemplated under this Agreement are not subject to withholding taxes.

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     Section 7.2 Conditions to Obligations of the Seller. The obligation of the Seller to
consummate the transactions to be performed by it in connection with the Closing is subject to
satisfaction or waiver in writing of the following conditions:

          (a) the representations and warranties of the Purchaser set forth in Article 4 shall be true
and correct in all respects at and as of the Closing Date;

          (b) the Purchaser shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing;

          (c) the Purchaser shall have delivered to the Seller a certificate to the effect that each of
the conditions specified in Section 7.2(a) and (b) is satisfied in all respects;

          (d) no action, suit or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state or local jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement or (ii) cause any of
the transactions contemplated by this Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling or charge shall be in effect);

          (e) the consent of TKK referenced in clause (xi) of Section 2.6(a) shall not have been
revoked;

          (f) the CEC shall have delivered a consent to the assignment and assumption of the CEC
Agreements in form and substance satisfactory to the Seller;

          (g) the Purchaser shall have delivered the State of Arizona transaction privilege tax
exemption certificate provided for in clause (vi) of Section 2.6(b);

          (h) Seller shall have received evidence from the appropriate Japanese tax authority that the
payments contemplated under this Agreement are not subject to withholding taxes; and

          (i) the Purchaser shall have delivered, or be standing ready to deliver, to the Seller, the
items required to be delivered by the Purchaser pursuant to Section 2.6(b).

     Section 7.3 Other Agreements. The Purchaser agrees to submit the documents described in
clauses (ix) and (x) of Section 2.6(a) with the applicable Japanese tax authority as soon as
reasonably possible after receipt of same from Seller and thereafter to use its commercially
reasonable efforts to follow up with the applicable Japanese tax authority; the Purchaser further
agrees to notify Seller in writing promptly upon receipt of evidence from the applicable Japanese
tax authority that the payments contemplated hereunder are not subject to withholding taxes and, if
such evidence has not been
obtained within ten (10) days of the Purchaser’s submission of the application therefor, the
Purchaser shall use commercially reasonably efforts to obtain a status report thereon from the
applicable Japanese tax authority and shall promptly update Seller as to the status of the
application.

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     Section 7.4 Termination. The Parties may terminate this Agreement as provided below:

          (a) the Parties may terminate this Agreement by mutual written consent at any time prior to
the Closing;

          (b) the Purchaser may terminate this Agreement by giving written notice to the Seller at any
time prior to the Closing (i) in the event Seller has breached any representation, warranty or
covenant contained in this Agreement in any material respect, the Purchaser has notified the Seller
of the breach, and the breach has continued without cure for a period of five (5) days after the
notice of breach, or (ii) if the Closing shall not have occurred on or before August 31, 2006, by
reason of the failure of any condition precedent under Section 7.1 (unless the failure results
primarily from the Purchaser breaching any representation, warranty or covenant applicable to it
contained in this Agreement);

          (c) the Seller may terminate this Agreement by giving written notice to the Purchaser at any
time prior to the Closing (i) in the event the Purchaser has breached any representation, warranty
or covenant contained in this Agreement in any material respect, the Seller has notified the
Purchaser of the breach, and the breach has continued without cure for a period of five (5) days
after the notice of breach or (ii) if the Closing shall not have occurred on or before August 31,
2006, by reason of the failure of any condition precedent under Section 7.2 (unless the failure
results primarily from Seller breaching any representation, warranty or covenant applicable to it
contained in this Agreement); and

          (d) either Party may terminate this Agreement by giving written notice to the other Party at
any time prior to the Closing if the Closing shall not have occurred on or before September 30,
2006.

     Section 7.5 Effect of Termination. Except with respect to the obligations set forth in Section
6.13, if this Agreement is terminated by either Party in accordance with Section 7.4, this
Agreement shall forthwith become void and all other rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party.

ARTICLE 8

INDEMNIFICATION

     Section 8.1 The Seller’s Indemnity Obligations. The Seller shall indemnify, defend and hold
harmless the Purchaser and its officers, directors, stockholders, employees, agents,
representatives and Affiliates (each a “Purchaser Indemnified Party”) from and against any and all
claims, actions, causes of action, arbitrations, Proceedings, losses, damages, judgments, fines,
penalties and expenses (including, without limitation, reasonable attorneys’ fees) (collectively,
the “Indemnified Amounts”) paid, imposed on, required by statutory or other legal authority, or
incurred by a Purchaser Indemnified Party, directly or indirectly, relating to, resulting from or
arising out of (a) any breach or misrepresentation in any of the representations and warranties
made by the Seller in this Agreement or in any certificate, instrument or agreement delivered in
connection with this Agreement, including without limitation, the License Agreement, (b) any

21

 

violation or breach by Seller of, or default by Seller under, the terms of this Agreement or of any
certificate, instrument or agreement delivered in connection with this Agreement, including without
limitation, the License Agreement, (c) any act or omission by the Seller or any director, officer,
employee, agent or representative of the Seller occurring or commencing on or prior to the Closing
Date (including any claim by a third party, including employees and customers arising out of or
related to any act or omission by the Seller or any director, officer, employee, agent or
representative of the Seller occurring on or prior to the Closing Date), (d) any and all Taxes
(including, without limitation, the Seller’s pro rata portion of ad valorem Taxes and any and all
Taxes relating to the consummation of this Agreement and the transactions contemplated hereby)
involving, affecting, arising out of or relating to the ownership or operation of the Acquisition
Assets for periods ending on or prior to the Closing Date, (e) the Excluded Liabilities and (f) in
the event of an action by any third party against the Purchaser Indemnified Parties or Purchaser’s
sublicensees containing a claim that, if proven, would constitute a breach of Seller’s
Non-Infringement Representation, Seller shall defend, indemnify, and hold harmless the Purchaser
Indemnified Parties and the Purchaser’s sublicensees but only as to that claim. The foregoing
subsection (f) shall not apply to claims arising out of (i) modifications after the Effective Date
to the Xonon Modules, Technical Information associated therewith, Licensed Technical Materials (as
such terms are defined in the License Agreement) or other Acquisition Assets that without such
modifications would not constitute such a breach, or (ii) combinations after the Effective Date of
the Xonon Modules, Technical Information associated therewith, Licensed Technical Materials or
other Acquisition Assets with other products or technologies that without such combinations would
not constitute such a breach. Notwithstanding anything herein to the contrary, Seller shall be
entitled to control the defense and settlement of that portion of the action constituting a claim
described in this Section 8.1(f), provided that such a settlement would not result in an admission
of liability by any member of the aforementioned indemnitees. Any settlement that would restrict
the rights of such indemnitees in or to the Assigned Patents or Technical Information associated
therewith, Licensed Patents, or Licensed Technical Materials or result in a financial obligation by
any member of such indemnities shall require the prior written consent of the Purchaser,
which consent shall not be unreasonably withheld.

     Section 8.2 Purchaser’s Indemnity Obligations. The Purchaser shall indemnify, defend and hold
harmless the Seller and the Seller’s officers, directors, stockholders, employees, agents,
representatives and Affiliates (each a “Seller Indemnified Party”) from and against any and all
Indemnified Amounts paid, imposed on, required by statutory or other legal authority, or incurred
by a Seller Indemnified Party, directly or indirectly, relating to, resulting from or arising out
of (a) any breach or misrepresentation in any of the representations and warranties made by or on
behalf of the Purchaser in this Agreement or in any certificate or instrument delivered in
connection with this Agreement, , including without limitation, the License Agreement, (b) any
violation or breach by the Purchaser of, or default by the Purchaser under the terms of, this
Agreement or of any certificate or instrument delivered in connection with this Agreement, (c) any
act or omission by the Purchaser or any of its directors, officers, employees, agents or
representatives, occurring or commencing after the Closing Date, including any claim by a third
party, including employees and customers arising out of or related to any act or omission by the
Purchaser or any of its directors, officers, employees, agents or representatives occurring after
the Closing Date, and (d) the Assumed Liabilities.

22

 

     Section 8.3 Indemnification Procedures. All claims for indemnification under this Agreement
shall be asserted and resolved as follows:

          (a) Any of the Parties claiming indemnification under this Agreement (an “Indemnified Party”)
shall with reasonable promptness (i) notify the Party from whom indemnification is sought (the
“Indemnifying Party”) of the basis for the indemnity demand, including without limitation, any
Indemnity Claim or claims asserted against the Indemnified Party or statutory or regulatory basis
for supporting the demand for indemnification (“Indemnity Claim”) for which indemnification is
sought and (ii) transmit to the Indemnifying Party a copy of all papers served with respect to such
claim (if any) and a written notice (“Claim Notice”) containing a description in reasonable detail
of the nature of the Indemnity Claim, an estimate of the amount of damages attributable to the
Indemnity Claim to the extent feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the Indemnified Party’s request for indemnification under this
Agreement. It shall not be necessary for any Party to expend any sum of money or pursue any third
party to final judgment to enforce the indemnity provisions hereof.

Within 15 days after receipt of any Claim Notice (the “Election Period”), the Indemnifying Party
shall notify the Indemnified Party (i) whether the Indemnifying Party disputes its potential
Liability to the Indemnified Party with respect to such Indemnity Claim and (ii) whether the
Indemnifying Party desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Indemnity Claim.

If the Indemnifying Party notifies the Indemnified Party within the Election Period that the
Indemnifying Party elects to assume the defense of the Indemnity Claim, then the Indemnifying Party
shall have the right to defend, at its sole cost and expense, such Indemnity Claim by all
appropriate Proceedings, which Proceedings shall be prosecuted diligently by the Indemnifying Party
to a final conclusion or settled at the discretion of the Indemnifying Party in accordance with
this Section 8.3(a). The Indemnifying Party shall have full control of such defense and
Proceedings. To the extent the Indemnifying Party fails to defend the Indemnified Party, the
Indemnified Party is hereby authorized, at the sole cost and expense of the Indemnifying Party, to
file, within fifteen (15) days after expiration of the Election Period, any motion, answer or other
pleadings that the Indemnified Party shall reasonably deem necessary or appropriate to protect its
interests. If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with
the Indemnifying Party and its counsel in contesting any Indemnity Claim that the Indemnifying
Party elects to contest, including, without limitation, the making of any related counterclaim
against the person asserting the Indemnity Claim or any cross complaint against any person;
provided, however, that the Indemnifying Party shall be responsible for the costs of such
cooperation incurred by the Indemnified Party. Except as otherwise provided herein, the
Indemnified Party may participate in, but not control, any defense or settlement of any Indemnity
Claim controlled by the Indemnifying Party pursuant to this Section 8.3 and shall bear its own
costs and expenses with respect to such participation.

If the Indemnifying Party fails to notify the Indemnified Party within the Election Period that the
Indemnifying Party elects to defend the Indemnified Party pursuant to the preceding paragraph, or
if the Indemnifying Party elects to defend the Indemnified Party but fails to vigorously prosecute
or settle the Indemnity Claim as herein provided or if the Indemnified Party reasonably

23

 

objects to such election on the grounds that counsel for such Indemnifying Party cannot represent
both the Indemnified Party and the Indemnifying Parties because such representation would be
reasonably likely to result in a conflict of interest, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the Indemnifying Party, the Indemnity Claim by all
appropriate Proceedings, which Proceedings shall be promptly and vigorously prosecuted by the
Indemnified Party to a final conclusion or settled. In such a situation, the Indemnified Party
shall have full control of such defense and Proceedings and the Indemnifying Party may participate
in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this
Section 8.3, and the Indemnifying Party shall bear its own costs and expenses with respect to such
participation.

The Indemnifying Party shall not settle or compromise any Indemnity Claim unless (i) the terms of
such compromise or settlement require no more than the payment of money (i.e., such compromise or
settlement does not require the Indemnified Party to admit any wrongdoing or take or refrain from
taking any action), (ii) the full amount of such
monetary compromise or settlement will be paid by the Indemnifying Party, and (iii) the Indemnified
Party receives as part of such settlement a legal, binding and enforceable unconditional
satisfaction and/or release, in form and substance reasonably satisfactory to it, providing that
such Indemnity Claim and any claimed Liability of the Indemnified Party with respect thereto is
being fully satisfied by reason of such compromise or settlement and that the Indemnified Party is
being released from any and all obligations or liabilities it may have with respect thereto. The
Indemnified Party shall not settle or admit Liability to any Indemnity Claim without the prior
written consent of the Indemnifying Party unless (x) the Indemnifying Party has disputed its
potential Liability to the Indemnified Party, and such dispute either has not been resolved or has
been resolved in favor of the Indemnifying Party or (y) the Indemnifying Party has failed to
respond to the Indemnified Party’s Claim Notice.

          (b) Notwithstanding anything to the contrary within this Section 8.3 or Agreement, both the
Indemnifying Party and the Indemnified Party agree to reasonably cooperate in resolving any dispute
or claim that triggers this Indemnification provision.

     Section 8.4 Limitations on Defense to the Claims of the Purchaser. TO THE EXTENT THAT THE
PURCHASER MAKES ANY CLAIMS AGAINST THE SELLER UNDER THE PROVISIONS OF SECTION 8.1, THE SELLER MAY
NOT ASSERT AND HEREBY EXPRESSLY WAIVE AS A DEFENSE, COUNTERCLAIM, OR OTHERWISE THAT THE PURCHASER
HAS BEEN NEGLIGENT IN CONDUCTING ITS DUE DILIGENCE OF ANY ASPECT OF THE SELLER OR HAS FAILED TO
CONDUCT ITS DUE DILIGENCE IN A PROPER OR ADEQUATE MANNER.

     Section 8.5 Limitation of Liability.

          (a) Notwithstanding
anything to the contrary contained in Article 8, except as set forth in
clause (c) below, the aggregate liability of Seller or the Purchaser for all events or occurrences
giving rise to a right of indemnification under Section 8.1 or 8.2 of this Agreement or the License
Agreement shall be limited to the Purchase Price. In addition, the aggregate liability of
Seller for all events or occurrences giving rise to a right of indemnification under Section 8.1 of
this Agreement shall be limited as follows: (1) with respect to any breach of a

24

 

representation or warranty in Section 5.9, that portion of $400,000 attributable to the item of
inventory at issue, as determined by reference to Schedule 2.4; (2) with respect to any breach of
covenant by Seller in connection with the training services to be provided by Seller to the
Purchaser pursuant to the License Agreement, $100,000; and (3) for all other matters, $1,600,000;
provided, however, that the aggregate liability of Seller for any breach of Seller’s
Non-Infringement Representation with respect to Intellectual Property shall be $1,600,000 and with
respect to any item of inventory described on Schedule 2.1 shall be that portion of $400,000
attributable to such item, as determined by reference to
Schedule 2.4.

          (b) An indemnified party is entitled to indemnification pursuant to Section 8.1 or Section
8.2, as applicable, only to the extent that the Indemnified Amount, individually or in the
aggregate, exceeds $50,000, subject to the limitation set forth in Section 8.5(a).

          (c) Notwithstanding anything to the contrary contained in this Agreement, the foregoing cap in
clause (a) above shall not apply to (i) Excluded Liabilities; (ii) only with respect to liabilities
arising after the Closing Date, Assumed Liabilities; (iii) liabilities arising out of or in
connection with any breach by the Purchaser of Sections 2 (License) or 3 (Xonon Trademark) of the
License Agreement; or (iv) any Indemnified Amount arising from fraud or any knowing breach by
Seller or the Purchaser, provided that such party has (x) been notified in writing by the other
party of such breach and (y) has failed to remedy such breach within thirty (30) days after receipt
of such notice.

     Section 8.6 Remedies Exclusive. Except for (i) equitable remedies, including specific
performance (ii) cases of fraud and (iii) cases of knowing breach of a Party’s covenants or
obligations hereunder (including any failure to pay an amount required to be paid hereunder) in
cases where such party has (x) been notified in writing by the other party of such breach and (y)
has failed to remedy such breach within thirty (30) days after receipt of such notice, the remedies
provided for in this Article 8 shall constitute the sole and exclusive remedy for any post-Closing
claims made for breach of the representations and warranties contained in this Agreement or any of
the Schedules or Exhibits attached hereto or in any of the certificates or other instruments or
documents furnished by any Party pursuant to this Agreement.

ARTICLE 9

GENERAL PROVISIONS

     Section 9.1 Survival. The representations and warranties set forth in this Agreement and in
any certificate or instrument delivered in connection herewith shall be continuing and shall
survive the Closing for a period of one (1) year following the Closing Date; provided, however,
that there shall be no such termination with respect to any such representation or warranty as to
which a bona fide claim has been asserted by written notice of such claim delivered to the Party or
Parties making such representation or warranty prior to the expiration of the survival period;
provided, further, that the representations and warranties set forth in Sections 4.1 (Organization
and Qualification), 4.2 (Authority; Consents; Binding Agreement),
5.1 (Organization and Qualification), 5.2 (Authority; Non-Contravention; Consents and Approvals),
and 5.5 (Title to Assets) shall survive the Closing Date for the applicable statute of limitations
and Seller’s Non-Infringement Representation shall survive the Closing for a period

25

 

of two (2) years following the Closing Date. The covenants and agreements set forth in this
Agreement, including, without limitation, those reflected in Section 3.1 (Limited Liabilities
Assumed by Purchaser), Section 6.2 (Woodward Agreement), Section 6.3 (CEC Agreements), Section 6.9
(Non-competition) and Section 6.13 (Confidentiality), and the covenants and agreements in the
License Agreement, shall survive the Closing for so long as the obligations thereunder continue.

     Section 9.2 Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified mail (return
receipt requested) or sent via recognized overnight delivery service to the Parties at the
following addresses (or at such other address for a Party as shall be specified by like notice):

	 	(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 Sonsini
	 
	 	 	 	with 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. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the interpretation of this Agreement. In this
Agreement, unless a contrary intention is specifically set forth, (i) the words “herein”, “hereof”
and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any Article or Section means
such Article or Section hereof. No provision of this Agreement shall be

26

 

interpreted or construed against any Party solely because such Party or its legal representative
drafted such provision.

     Section 9.4 Miscellaneous. This Agreement (including the documents and instruments referred
to herein and the Disclosure Schedule and Exhibits attached hereto) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both written and oral,
among the Parties, or any of them, with respect to the subject matter hereof, and (b) shall not be
assigned by operation of law or otherwise except that (i) the Purchaser may assign this Agreement
to one or more of its Affiliates, but no such assignment shall relieve the Purchaser of its
obligations hereunder, and (ii) the Seller may assign this Agreement to any party that acquires all
or substantially all of the assets of the Seller or all or substantially all of the intellectual
property rights licensed to the Purchaser under the License Agreement, but no such assignment shall
relieve the Seller of its obligations hereunder.

     Section 9.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING
VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.

     Section 9.6 Process and Venue. Any process against the Purchaser or the Seller in, or in
connection with, any suit, action or Proceeding arising out of or relating to this Agreement or any
of the transactions contemplated by this Agreement may be served personally or by certified mail at
the address set forth in Section 9.2 with the same effect as though served on it personally. The
Purchaser and the Seller hereby irrevocably submit in any suit, action or Proceeding arising out of
or relating to this Agreement or any of the transactions contemplated by this Agreement to the
exclusive jurisdiction and venue of the United States District Court for the Northern District of
California and the jurisdiction and venue of any court of the State of California located in Santa
Clara County and waive any and all objections to jurisdiction and review or venue that it or he may
have under the laws of California or the United States.

     Section 9.7 Disclosure Schedules. The disclosures in the Disclosure Schedules, and those in
any supplement thereto, relate only to the representations and warranties in
the Section or paragraph of the Agreement to which they expressly relate and not to any other
representation or warranty in the Agreement, unless otherwise set forth therein. If there is any
inconsistency between the statements in the body of the Agreement and those in the Disclosure
Schedules, the statements in the Disclosure Schedules will control.

     Section 9.8 Independent Obligations. The Parties hereby expressly agree that their respective
obligations and covenants under this Agreement and the License Agreement, including without
limitation, covenants regarding non-competition, waivers and indemnification obligations, shall be
independent of each other and are made in addition to the obligations and covenants made in the
other.

     Section 9.9 Attorney’s Fees. In the event any Party hereto institutes a Proceeding against
any other Party hereto for a claim arising out of or to enforce this Agreement, the Parties agree
that the prevailing party shall be entitled to recovery of its reasonable attorney’s fees and
litigation expenses in connection with such Proceeding.

27

 

     Section 9.10 Amendment. This Agreement may not be amended except by an instrument in writing
signed on behalf of all of the Parties.

     Section 9.11 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute one and the same
agreement.

     Section 9.12 Parties in Interest. This Agreement shall be binding upon and inure solely to
the benefit of each Party hereto, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.

     Section 9.13 Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.

[Remainder of Page Intentionally Left Blank]

28

 

IN WITNESS WHEREOF, the Purchaser and the Seller have executed and delivered this Agreement
effective as of the date first written above.

	 	 	 	 	 
	 	 	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:	 	 
	 

	 	 	 	 

 

 

Schedule 2.1(a)

Inventory

	1.	 	6 Xonon Modules 1 of which is only partially manufactured;
	 
	2.	 	Approximately 650 pounds of aluminized H214 foil; and
	 
	3.	 	Approximately 1,050 pounds of non-aluminized H214 foil.

 

 

Schedule 2.1(b)

Assigned Patents

	 	 	 	 	 
	 	 	 	 	PATENT,
	 	 	 	 	PUBLICATION, OR
	 	 	 	 	APPLICATION
	TITLE	 	COUNTRY	 	NUMBER
	Multistage Process for Combusting Fuel
Mixtures
	 	DE	 	EP0558669
	 
	 	 	 	 
	Multistage Process for Combusting Fuel
Mixtures
	 	FR	 	EP0558669
	 
	 	 	 	 
	Multistage Process for Combusting Fuel
Mixtures
	 	GB	 	EP0558669
	 
	 	 	 	 
	Multistage Process for Combusting Fuel
Mixtures
	 	IT	 	EP0558669
	 
	 	 	 	 
	(*) Multistage Process for Combusting
Fuel Mixtures
	 	JP	 	3364492
	 
	 	 	 	 
	Process for Burning Combustible Mixtures
	 	US	 	5,425,632
	 
	 	 	 	 
	Multistage Process for Combusting Fuel
Mixtures
	 	US	 	5,281,128
	 
	 	 	 	 
	Multistage Process for Combusting Fuel
Mixtures Using Oxide Catalysts in the Hot
Stage
	 	US	 	5,232,357
	 
	 	 	 	 
	Two Stage Process for Combusting Fuel
Mixtures
	 	US	 	5,183,401
	 
	 	 	 	 
	Cooled Support Structure for a Catalyst
	 	US	 	5,461,864
	 
	 	 	 	 
	Improved Support Structures for a Catalyst
	 	DE	 	EP1075628
	 
	 	 	 	 
	Improved Support Structures for a Catalyst
	 	DK1	 	EP1075628
	 
	 	 	 	 
	Improved Support Structures for a Catalyst
	 	FR	 	EP1075628
	 
	 	 	 	 
	Improved Support Structures for a Catalyst
	 	GB	 	EP1075628
	 
	 	 	 	 
	Improved Support Structures for a Catalyst
	 	JP	 	2002513132
	 
	 	 	 	 
	Improved Support Structures for a Catalyst
	 	US	 	6,217,832
	 
	 	 	 	 
	Thermally Tolerant Support Structure for
a Catalytic Combustion Catalyst
	 	EP	 	1336068
	 
	 	 	 	 
	Thermally Tolerant Support Structure for
a Catalytic Combustion Catalyst
	 	JP	 	2004525327

 

 

	 	 	 	 	 
	 	 	 	 	PATENT,
	 	 	 	 	PUBLICATION, OR
	 	 	 	 	APPLICATION
	TITLE	 	COUNTRY	 	NUMBER
	Thermally Tolerant Support Structure for
a Catalytic Combustion Catalyst
	 	KR	 	2003-7006485
	 
	 	 	 	 
	Thermal 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	 	2004206090
	 
	 	 	 	 
	Process and Apparatus for Control of Nox
In Catalytic Combustion Systems
	 	US	 	6,595,003
	 
	 	 	 	 
	Method of Thermal Nox Reduction in
Catalytic Combustion Systems
	 	EP	 	1334307
	 
	 	 	 	 
	Method of Nox Reduction in Catalytic
Combustion Systems
	 	JP	 	2004519651
	 
	 	 	 	 
	Method 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	 	6,796,129
	 
	 	 	 	 
	Fuel-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

 

 

	 	 	 	 	 
	 	 	 	 	PATENT,
	 	 	 	 	PUBLICATION, OR
	 	 	 	 	APPLICATION
	TITLE	 	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	 	6095793
	 
	 	 	 	 
	Dynamic Control System and Method for
Multiple Combustor Catalytic Gas Turbine
Engine
	 	BR	 	PI0406806-8
	 
	 	 	 	 
	Dynamic Control System and Method for
Multiple Combustor Catalytic Gas Turbine
Engine
	 	EP	 	1592924
	 
	 	 	 	 
	Dynamic Control System and Method for
Multiple Combustor Catalytic Gas Turbine
Engine
	 	JP	 	2006501010
	 
	 	 	 	 
	Dynamic Control System and Method for
Multiple Combustor Catalytic Gas Turbine
Engine
	 	US	 	2004206091
	 
	 	 	 	 
	Catalyst Module Overheating Detection and
Methods of Response
	 	EP	 	04782983.3
	 
	 	 	 	 
	Catalyst Module Overheating Detection and
Methods of Response
	 	US	 	10/571,798
	 
	 	 	 	 
	Catalyst 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

 

 

 

			
	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.

 

 

Schedule 2.4 

Allocation of Asset Values

1. $400,000 allocated to the inventory set forth on Schedule 2.1 (a), $300,000 of which
shall be allocated to the Xonon Modules described therein and $100,000 of which shall be allocated
to the H214 foil described therein. Of the $300,000 allocated to the Xonon Modules, that amount
shall be allocated equally among the individual Xonon Modules.

2. $1,600,000 for the assignments and licenses granted by Seller to the Purchaser pursuant to the
License Agreement, allocated to such rights and obligations as follows:

(a) $1,300,000 for the Assigned Patents;

(b) $50,000 for the right to acquire Abandoned Multi-Use Patents as described in Section 2.1 of the
License Agreement;

(c) $240,000 for the license of Licensed Patents and Licensed Technical Materials as described in
Section 2.2 of the License Agreement; and

(d) $10,000 for the license of the CESI Trademarks as described in Section 4 of the License
Agreement.

3. $100,000 for the training services to be provided by Seller to the Purchaser pursuant to the
License Agreement.

Any capitalized terms above not otherwise defined in this Agreement shall have the meaning
ascribed to such terms in the License Agreement.

 

 

Schedule 3.1

Assumed Liabilities

The Purchaser shall assume all obligations of the Seller under the CEC Agreements and the Woodward
Agreement effective as of the Closing Date.

The Purchaser agrees to maintain accurate records for the purposes of tracking components of sales,
fees and royalties due pursuant to this Schedule.

 

 

Schedule 5.2(b)

Pursuant to Seller’s agreements with the California Energy Commission (“CEC”), the CEC may have
march-in rights with respect to the following patents/patent applications:

EP 1336068

JP 2004/525327

US 2002/110501

KR 2003/7006485

 

 

Schedule 5.2(c)

Approval is required from the CEC to assign the CEC Agreements to the Purchaser. Consent of TKK is
required for the transfer and license of certain patents issued under the laws of Japan in which
TKK has joint ownership with Seller.

 

 

Schedule 5.3

The Purchaser and KGT-A have threatened litigation against the Seller in connection with the Xonon
Module Supply Agreement by and among the Seller, the Purchaser and KGT-A dated December 13, 2000 as
amended as of July 2, 2003.

 

 

Schedule 5.5

In
addition to the exceptions listed on Schedule 5.7, certain portions of the Intellectual
Property may be subject to march-in rights as described in
Schedule 5.2(b).

Pursuant to Article 3 of the Woodward Agreement, Seller has granted Woodward Governor Company a
non-exclusive license to certain of the Assigned Patents, as described on Schedule 5.7.

 

 

Schedule 5.7

Intellectual Property

The licenses of the Multi-Use Patents marked with “(*)” in Exhibit A of the License Agreement are
subject to the prior consent of TKK, which consent has been delivered by TKK as of the date of this
Agreement. The Multi-Use Patents marked with “(**)” in Exhibit A of the License Agreement are
jointly owned by Seller and General Electric Company.

The Assigned Patents marked with “(*)” in Schedule 2.1(b) are jointly owned by Seller and TKK. The
Assigned Patents marked with “(**)” in Schedule 2.1(b) are jointly owned by Seller and General
Electric Company.

The Assigned Patents marked with “(***)” in Schedule 2.1(b) are those that currently correspond to
Exhibit D to the Woodward Agreement and Section 3.2 thereof. To the extent that any other Assigned
Patents fall within the definition of “CESI Patents” or “CESI Improvement Patents” in the Woodward
Agreement, those other Assigned Patents would also be licensed to the Woodward Governor Company
(“Woodward”) pursuant to Article 3 of the Woodward Agreement.

 

 

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.

 

 

Schedule 5.9

Xonon Module Exceptions

Two of the Xonon Modules have a significant shelf life, and there may be material degradation as a
result of the storage period. Xonon Module AA023 is partially
assembled.

Module Data

	 	 	 	 	 
	Serial	 	Start of
	Number	 	Mfg
	AA016
	 	Sep-03
	AA018
	 	Sep-04
	AA020
	 	Aug-05
	AA021
	 	Aug-05
	AA022
	 	Aug-05
	AA023
	 	Aug-05

	 
	Foil Exceptions

	 
	For 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	 	Net
	Number	 	Foil Type	 	Thickness	 	Width (in)	 	Weight (lbs)	 	Weight (lbs)	 	Weight (lbs)
	10676	 	AL-H214
	 	2-mil	 	4	 	6.6	 	65	 	58.4
	10853	 	AL-H214
	 	2-mil	 	4	 	6.05	 	24	 	17.95
	10855	 	AL-H214
	 	2-mil	 	4	 	6.1	 	10.4   	 	    4.3
	10856	 	AL-H214
	 	2-mil	 	4	 	6.05	 	61	 	54.95
	10858	 	AL-H214
	 	2-mil	 	4	 	6.05	 	29	 	22.95
	10982	 	AL-H214
	 	2-mil	 	4	 	6.14	 	63	 	56.86
	10984	 	AL-H214
	 	2-mil	 	4	 	6.14	 	16.3   	 	10.16
	10993	 	AL-H214
	 	2-mil	 	4	 	6.6	 	59	 	  52.4
	10994	 	AL-H214
	 	2-mil	 	4	 	6.6	 	60	 	  53.4
	11064	 	AL-H214
	 	2-mil	 	4	 	5.95	 	60	 	54.05
	11065	 	AL-H214
	 	2-mil	 	4	 	5.95	 	52	 	46.05
	11066	 	AL-H214
	 	2-mil	 	4	 	5.95	 	62	 	56.05
	11067	 	AL-H214
	 	2-mil	 	4	 	5.95	 	62	 	56.05
	11068	 	AL-H214
	 	2-mil	 	4	 	5.95	 	53	 	47.05
	11069	 	AL-H214
	 	2-mil	 	4	 	5.95	 	10.3   	 	  4.35

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock	 	 	 	 	 	 	 	Core	 	Gross	 	Net
	Number	 	Foil Type	 	Thickness	 	Width (in)	 	Weight (lbs)	 	Weight (lbs)	 	Weight (lbs)
	11070	 	AL-H214
	 	2-mil	 	4	 	5.95	 	60	 	54.05
	11071	 	AL-H214
	 	2-mil	 	4	 	5.95	 	65	 	59.05
	11072	 	AL-H214
	 	2-mil	 	4	 	5.95	 	66	 	60.05
	11073	 	AL-H214
	 	2-mil	 	4	 	5.95	 	66	 	60.05
	11074	 	AL-H214
	 	2-mil	 	4	 	5.95	 	61	 	55.05
	 
	20 4” wide, 2-mil thick Al-H214 Rolls
	 	Total	 	883.22 lbs
	 	 	 
	 	 	 	 	 	 	 	 	 	 
	10670	 	H214
	 	2-mil	 	12	 	11	 	102	 	  91
	10671	 	H214
	 	2-mil	 	12	 	11	 	276	 	265
	10674	 	H214
	 	2-mil	 	12	 	11	 	258	 	247
	10678	 	H214
	 	2-mil	 	12	 	12	 	108	 	  96
	10680	 	H214
	 	2-mil	 	12	 	11	 	  92	 	  81
	10682	 	H214
	 	2-mil	 	12	 	11	 	99.6	 	88.6
	10683	 	H214
	 	2-mil	 	12	 	11	 	  131	 	  120
	10684	 	H214
	 	2-mil	 	12	 	11	 	142.4   	 	131.4  
	10686	 	H214
	 	2-mil	 	12	 	14	 	144	 	  130
	11035	 	H214
	 	2-mil	 	12	 	11	 	107	 	   96
	 
	10 12” wide, 2-mil thick H214 Rolls
	 	Total	 	1,346 lbs

 

 

EXHIBIT A

Form of Bill of Sale and Assignment

     This Bill of Sale, Assignment and Assumption Agreement (this “Agreement”) is made and entered
into effective as of the
                    day of                     , 2006 by and between CATALYTICA ENERGY SYSTEMS,
INC., a Delaware corporation (the “Assignor”), and KAWASAKI HEAVY INDUSTRIES, LTD., Japanese
corporation (the “Assignee”).

RECITALS

     WHEREAS, the Assignor and the Assignee have executed that certain Asset Purchase Agreement
dated as of
                    , 2006 (the “Asset Purchase Agreement”);

     WHEREAS, the Assignor desires to sell to the Assignee, and the Assignee desires to purchase
from the Assignor the Acquisition Assets (as defined in the Asset Purchase Agreement);

     WHEREAS, the Assignee has agreed to assume from Assignor and agrees to pay, perform and
discharge all of the Assumed Liabilities as defined in the Asset Purchase Agreement; and

     WHEREAS, any capitalized term used herein or in the exhibits attached hereto and not otherwise
defined shall have the meaning ascribed to it in the Asset Purchase Agreement.

AGREEMENT

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Assignor sells, transfers, assigns, conveys and delivers unto the Assignee
and its successors and assigns all of the Assignor’s right, title and interest in and to the
Acquisition Assets, free and clear of all Encumbrances, except as described in the Asset Purchase
Agreement and other than with respect to the Assumed Liabilities. The Assignor also assigns,
conveys, transfers and sets over unto the Assignee and its successors and assigns, all right, title
and interest of the Assignor in and to each of the Assumed Liabilities.

     The Assignee accepts, assumes and agrees to pay, discharge or perform, as appropriate, the
Assumed Liabilities. Other than the Assumed Liabilities, the Assignee shall not assume or be
responsible for any claims against, or liabilities, commitments, contracts, agreements or
obligations whatsoever of the Assignor.

     This Agreement is subject and subordinate to all of the terms and provisions of the Asset
Purchase Agreement, and in the event of any conflict between any term or provision hereof and any
term or provision of the Asset Purchase Agreement, the latter shall control.

     Each party agrees to execute, acknowledge and deliver such further documents and instruments
and to take other actions as may be reasonably necessary to convey to and vest in

A-1

 

Assignee and protect its right, interest in and enjoyment of the Acquisition Assets and Assumed
Liabilities.

     Whenever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity, legality and
enforceability of the remaining provisions hereof shall not be affected or impaired thereby.

     This Agreement shall bind and inure to the benefit of the Assignee and the Assignor and their
respective successors and assigns.

     This Agreement may not be amended except by an instrument in writing signed on behalf of all
of the parties.

     THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND
EFFECT, BY THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED
WHOLLY WITHIN SUCH STATE.

     This Agreement may be executed in two or more counterparts, each of which shall be deemed to
be an original, but all of which shall constitute one and the same agreement.

[Signature Page Follows]

A-2

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.

	 	 	 	 	 
	 	 	ASSIGNOR 

	 
	 	 	 	 
	 	 	CATALYTICA ENERGY SYSTEMS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	ASSIGNEE 

	 
	 	 	 	 
	 	 	KAWASAKI HEAVY INDUSTRIES, LTD.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

A-3

 

 

EXHIBIT B

Form of License Agreement

THIS
LICENSE AGREEMENT (“Agreement”) is made effective as
of June ___, 2006 (“Effective Date”), by
and between Catalytica Energy Systems, Inc., a Delaware corporation
(“CESI”), and Kawasaki Heavy
Industries, Ltd., a Japanese corporation (“Kawasaki”).

WHEREAS, CESI and Kawasaki have entered into that certain Asset Purchase Agreement dated
simultaneously herewith (“Asset Purchase Agreement”);

WHEREAS, CESI has developed expertise and technology of a catalytic combustion system that
incorporates catalytic modules that are utilized to oxidize hydrocarbon fuels in the combustion
system of gas turbines;

WHEREAS, Kawasaki desires to obtain from CESI certain patents and technical materials associated
with such CESI catalytic combustion system that are necessary or useful in the manufacturing,
operation, distribution, sales, and support of such catalytic combustion systems for Small Gas
Turbines; and

WHEREAS, CESI desires to grant a license of such patents and technical materials to Kawasaki.

NOW, THEREFORE, in consideration of the covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:

     1. Definitions. Capitalized terms not otherwise defined herein shall have the meanings
specified in the Asset Purchase Agreement.

          1.1. “Affiliate” shall have the meaning set forth in the Asset Purchase Agreement.

          1.2. “Assigned Patents” shall have the meaning set forth in the Asset Purchase
Agreement.

          1.3. “Patents” means patents (including utility models, as well as divisions,
reissues, continuations, continuations-in-part, renewals and extensions of any of the foregoing)
and provisional and regular applications therefor, and patents which may be issued on such
applications.

          1.4. “SGT Catalytic Module” means a catalytic container module designed for use solely
with Small Gas Turbines to reduce the nitrous oxide emissions of such Small Gas Turbines.

          1.5. “Small Gas Turbines” shall have the meaning set forth in the Asset Purchase
Agreement and shall include the term “SGT.”

B-1

 

          1.6. “Technical Information” means all technical information, know-how, trade secrets,
manufacturing techniques, software and other copyrightable works, engineering and other data,
drawings, material and process specifications (whether patented or unpatented, whether in written,
printed, oral or other form) that are required or reasonably necessary for Kawasaki to continue the
manufacturing of SGT Catalytic Modules from and after the Closing Date.

     2. License.

          2.1. Multi-Use Patents. The parties acknowledge that the patents listed in Exhibit A
(“Multi-Use Patents” or “Licensed Patents”) are applicable to both Small Gas Turbines and to other
products and technologies, including, without limitation, gas turbines that are not Small Gas
Turbines. Kawasaki may request in writing from time to time that CESI identify which Multi-Use
Patents, if any, that it has decided to abandon, and CESI shall respond in writing to such
requests. Subject to the terms and conditions of this Agreement, with respect to any Multi-Use
Patents that CESI indicates in any such response that it has decided
to abandon (“Abandoned
Multi-Use Patents”), CESI shall, upon Kawasaki’s written request, and without additional
consideration, assign such Abandoned Multi-Use Patents to Kawasaki. Notwithstanding anything to the
contrary, the obligations of CESI under this Section 2.1 (a) shall not apply to any third parties,
including, without limitation, any successors or assigns of CESI or any acquirers or other
assignees of any Multi-Use Patents, and (b) shall terminate with respect to any Multi-Use Patent
upon the acquisition or other transfer of such Multi-Use Patent (including, without limitation, as
a result of a voluntary assignment of such Multi-Use Patent to a third party, an acquisition by a
third party of CESI assets that include such Multi-Use Patent, or a merger involving CESI).

          2.2. Licenses.

               (a) Patents. Subject to the terms and conditions of this Agreement, CESI hereby
grants to Kawasaki a perpetual, fully paid-up, royalty-free, worldwide, irrevocable license, under
the Multi-Use Patents, to make, have made, test, use, sell, offer to sell, import, export,
distribute, market, promote, sublicense, create improvements, and commercially exploit SGT
Catalytic Modules.

               (b) Technical Materials. Subject to the terms and conditions of this Agreement, CESI
hereby grants to Kawasaki a perpetual, fully paid-up, royalty-free, worldwide, irrevocable license
to:

               (i) use, modify, create derivative works of, and reproduce the technical materials listed in
Exhibit B (“New Technical Materials”), Technical Information associated with the Multi-Use
Patents (the “Multi-Use Technical Information”), and the Technical Information and Xonon
Control Algorithms (as such terms are defined in the TDTA) owned by CESI and previously delivered
by CESI to Kawasaki pursuant to the TDTA (the New Technical Materials, Multi-Use Technical
Information, and such Technical Information and Xonon Control Algorithms, collectively,
“Licensed Technical Materials”) as reasonably necessary to design, develop, manufacture,
have made, test, use, sell, offer to sell, import, export,

B-2

 

distribute, market, promote, sublicense, create improvements, and commercially exploit SGT
Catalytic Modules;

               (ii) distribute the Licensed Technical Materials to Kawasaki’s Affiliates, and sublicense to
such Affiliates the rights granted in subsection (i) above;

               (iii) distribute the Licensed Technical Materials to contractors and consultants of Kawasaki
and its Affiliates (collectively, “Kawasaki Contractors”), and sublicense to such
contractors and consultants the rights granted in subsection (i) above solely on behalf of Kawasaki
and its Affiliates; and

               (iv) distribute the Licensed Technical Materials to customers and potential customers of SGT
Catalytic Modules and associated Small Gas Turbines (collectively,
“Kawasaki Customers”) as
Kawasaki reasonably deems appropriate in the Small Gas Turbine market, and sublicense to such
customers and potential customers the right to use such Licensed Technical Materials in the
offering for sale, sale, service and repair of SGT Catalytic Modules and associated Small Gas
Turbines.

CESI shall use commercially reasonable efforts to deliver the New Technical Materials to Kawasaki
in both hardcopy and in electronic form.

               (c) Authorized Users. Kawasaki shall be responsible for compliance by its Affiliates,
Kawasaki Contractors and Kawasaki Customers (collectively,
“Authorized Users”) with the terms and
conditions of Sections 2.2 and 2.3 of this Agreement to the same extent as Kawasaki itself, and any
act or omission of any Authorized User shall constitute an act or omission of Kawasaki. Kawasaki
and the Authorized Users shall not use or disclose any Licensed Technical Information except as
permitted in Section 2.2.

               (d) Exclusivity. CESI agrees that Kawasaki’s licenses as to the Licensed Patents and
Licensed Technical Materials under Sections 2.2(a) and 2.2(b) shall be EXCLUSIVE to Kawasaki as to
SGT Catalytic Modules. CESI agrees that as of the Effective Date, CESI shall have no right to
manufacture, make, have made, license, sublicense, distribute, or otherwise commercially exploit
the Licensed Technical Materials in connection with any SGT Catalytic Modules without the prior
written consent of Kawasaki.

               (e) Marking; Requests for Disclosure. Kawasaki shall (and shall cause its Affiliates
and Kawasaki Contractors to) mark substantially permanently and legibly, and shall require the
permanent and legible marking of, all SGT Catalytic Modules and related documentation with such
patent notice as may be required under Title 35, United States Code or other applicable rules or
regulations in foreign jurisdictions. With respect to the Licensed Patents, Kawasaki shall respond
to any request for disclosure under 35 U.S.C. § 287(b)(4)(B) only by notifying CESI of the request
for disclosure.

B-3

 

          2.3. Sublicense Limitations. If Kawasaki grants any sublicense to the Licensed Patents
or the Licensed Technical Materials: (A) Kawasaki shall be responsible for compliance by the
sublicensee with the terms and conditions of Sections 2.2 and 2.3 of this Agreement to the same
extent as Kawasaki itself, (B) any act or omission of a sublicensee shall constitute an act or
omission of Kawasaki, and (C) each sublicensee shall agree in writing that it is subject to the
terms and conditions of Sections 2.2 and 2.3 of this Agreement (without the right to further
sublicense), and that CESI shall be third party beneficiary of each such sublicense as necessary to
enforce its rights in the Licensed Patents and Licensed Technical Materials. Notwithstanding
subsection (C) to the contrary, Kawasaki shall have the right to include in its specifications
sheets, product data sheets, support manuals and other marketing, sales and support materials for
SGT Catalytic Modules any Licensed Technical Materials that are customarily included in such
materials, without entering into any writing with the recipients of such materials.

          2.4. No Implied Rights. Each party hereby retains all rights not expressly granted by
this Agreement. Each party hereby disclaims any and all implied licenses, rights and obligations,
including any licenses, rights or obligations that may be deemed granted by this Agreement or the
activities of the parties hereunder.

     3. Xonon Trademark.

          3.1. License. During the term of this Agreement, subject to the terms and conditions
of this Agreement, CESI hereby grants to Kawasaki the EXCLUSIVE right to use the marks listed in
Exhibit C (the “CESI Trademarks”) on and in relation to its sale of the SGT Catalytic
Modules. Kawasaki shall have the right to sublicense the foregoing right to its Affiliates and
contractors; provided that (a) Kawasaki shall be responsible for compliance by its sublicensees
with the terms and conditions of Section 3 of this Agreement to the same extent as Kawasaki itself,
(b) any act or omission of any sublicensee shall constitute an act or omission of Kawasaki, and (c)
each sublicensee shall agree in writing that it is subject to the terms and conditions of Section 3
of this Agreement and that CESI shall have a right of action against the sublicensee as necessary
to enforce the terms and conditions of this Section 3. Nothing in this Agreement requires Kawasaki
to use any CESI Trademarks.

          3.2. Quality Control.

               (a) Kawasaki shall ensure that all use of the CESI Trademarks shall be in accordance with the
reasonable instructions and guidelines of CESI as provided to Kawasaki from time to time.

               (b) All SGT Catalytic Modules that are marked using a CESI Trademark and are manufactured by
Kawasaki or any of its sublicensees (“Marked Modules”) shall be of such quality as will, in CESI’s
reasonable judgment, protect and enhance the goodwill, image and reputation adhering to the CESI
Trademarks. Kawasaki shall cooperate reasonably with CESI in enabling CESI to ascertain that the
Marked Modules meet CESI’s quality standards. Such cooperation shall include, without limitation,
upon CESI’s written request, providing CESI with communications from third parties regarding the
quality of the Marked Modules, and upon at least ten (10) days prior written notice, providing CESI
with

B-4

 

access to the Marked Module packaging and distribution facilities during normal business hours for
reasonable inspection by CESI.

               (c) From time to time and upon CESI’s written request, Kawasaki shall submit to CESI samples
of all materials bearing any CESI Trademark, including, without limitation, any advertising,
packaging and other publicly disseminated materials. If CESI discovers any improper use of any CESI
Trademark on any such submission and delivers a writing describing in detail the improper use to
Kawasaki, Kawasaki shall promptly remedy the improper use.

          3.3. Protection of Mark.

               (a) Kawasaki shall conduct its business associated with Marked Modules in a manner that will
reflect positively on the CESI Trademarks.

               (b) Kawasaki shall use the CESI Trademarks in a manner that does not derogate CESI’s rights in
the CESI Trademarks or the value of the CESI Trademarks, and shall take no action that would
interfere with, diminish or tarnish those rights or value.

               (c) On each product, document, advertisement or other material on which Kawasaki uses a CESI
Trademark, Kawasaki shall mark the first prominent use of the CESI Trademark with a “TM” or “®”
trademark legend, as applicable, and include a trademark notice in a form reading, “[CESI
Trademark] is a trademark of Catalytica Energy Systems, Incorporated” at least once on such
document, advertisement or other material.

               (d) Kawasaki shall not use as its own any service mark, service name, trade name or trademark
confusingly similar to any CESI Trademark.

               (e) Kawasaki shall reasonably cooperate with CESI’s preparation and filing of any
applications, renewals or other documentation necessary or useful to protect CESI’s intellectual
property rights in the CESI Trademarks. Kawasaki shall not register any CESI Trademark without
CESI’s express prior written consent, and CESI shall retain the exclusive right to apply for and
obtain registrations for the CESI Trademarks throughout the world.

               (f) Kawasaki shall notify CESI promptly of any actual or threatened infringements, imitations
or unauthorized uses of any CESI Trademark of which Kawasaki becomes aware.

               (g) Kawasaki shall not challenge the validity of any CESI Trademark, CESI’s ownership of any
CESI Trademark, or the enforceability of CESI’s rights therein.

          3.4.
License Termination. CESI may terminate the license granted to Kawasaki in
Section 3.1, and all sublicenses granted thereunder, upon any breach of Section 3 by Kawasaki or
any of its sublicensees if such breach is not cured within thirty (30) days of CESI notifying
Kawasaki of such breach.

          3.5. Reservation of Rights. All rights of CESI in and to the CESI Trademarks not
expressly granted under Section 3.1 are reserved by CESI. Kawasaki shall not, and shall have

B-5

 

no right to, reproduce or use (or authorize the reproduction or use of) any CESI Trademark in any
manner whatsoever other than as expressly authorized by Section 3.1. All use of the CESI Trademarks
by Kawasaki and its sublicensees, and all goodwill associated with such use, shall inure to the
benefit of CESI.

     4. Training. In consideration of the Training Fee (defined below), CESI agrees to
provide the training services described on Exhibit D to Kawasaki, its Affiliates, and its and their
subcontractors or sublicensees (including, without limitation, Tanaka Kikinzoku Kogyo K.K.).

     5. Purchase
Price. As consideration of the assignment, license, and training described
in this Agreement, Kawasaki agrees to pay CESI, as part of the Purchase Price provided under the
Asset Purchase Agreement, a one time payment as allocated in the Asset Purchase Agreement.

     6. Disclaimer of Warranties. The Asset Purchase Agreement sets forth all of the
representations and warranties made by the parties in connection with this Agreement. Except as
otherwise set forth in the Asset Purchase Agreement, neither party makes any representations or
warranties in connection with the Assigned Patents, Multi-Use Patents, Licensed Technical Materials
or any other aspects of this Agreement, whether express or implied, including, without limitation,
any implied warranties of merchantability, fitness for a particular purpose, title or
non-infringement, or any warranties that may arise from course of performance, course of dealing or
usage of trade.

     7. Limitation of Liability.

7.1.
NOTWITHSTANDING ANYTHING HEREIN TO THE CO9NTRARY, EXCEPT FOR
LIABILITY FOR INFRINGEMENT, MISAPPROPRATION OR OTHER UNAUTHORIZED USE
OF THE OTHER PARTY’S INTELLECTUAL PROPERTY, NEITHER PARTY SHALL
HAVE ANY LIABILITY WHATSOEVER FOR ANY INCIDENTAL, INDIRECT,
CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES OF ANY KIND, OR ANY LOSS
OF REVENUE OR PROFITS, LOSS OF BUSINESS, OR LOSS OF DATA, ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, HOWEVER
CAUSED AND REGARDLESS OF THE THEORY OF LIABILITY (INCLUDING CONTRACT,
TORT, OR OTHERWISE), EVEN IF INFORMED IN ADVANCE OF THE POSSIBILITY
OF SUCH DAMAGES.

7.2. Each
party’s liability arising out of or in connection with this
Agreement shall be subject to the limits set forth in Section 8.5 of
the Asset Purchase Agreement.

     8. Confidentiality. The terms and conditions of Section 6.6 and 6.13 of the Asset
Purchase Agreement shall apply to this Agreement and the terms and conditions hereof.

     9. Waiver. The waiver by either party of a breach of any provision of this Agreement
by the other party will operate or be construed as a waiver of any other or subsequent breach by
the other party. No failure or delay by either party in exercising any right, remedy, power or
privilege hereunder, nor any single or partial exercise thereof, shall operate as a waiver of any
right, remedy, power or privilege hereunder.

B-6

 

     10. Severability. If any part of this Agreement is found invalid or unenforceable,
that part will be amended to achieve as nearly as possible the same economic effect as the original
provision and the remainder of this Agreement will remain in full force.

     11. Governing Law. This Agreement, and all the rights and duties of the parties
arising out of, in connection with, or relating in any way to the subject matter of this Agreement
or the transactions contemplated by it, shall be governed by, construed, and enforced in accordance
with the laws of the State of California (excluding its conflict of laws rules which would refer to
and apply the substantive laws of another jurisdiction). Any suit or proceeding hereunder shall be
brought exclusively in the United States District Court for the Northern District of California and
state courts located in Santa Clara County, California. Each party consents to the personal
jurisdiction of such courts and waives any objection that such courts are an inconvenient forum.

     12. Injunctive Relief. Each party acknowledges that a breach of its obligations under
this Agreement would cause the other party irreparable damage. Accordingly, each party agrees that
in the event of such breach or threatened breach by the other party, in addition to remedies at
law, the non-breaching party shall have the right to injunctive or other equitable relief to
prevent violations by the breaching party of the terms and conditions of this Agreement, without
the necessity of posting bond or other security.

     13. Assignment. Neither party shall, or shall have the right to, assign, delegate or
otherwise transfer (whether voluntarily, by operation of law, or otherwise) this Agreement, or any
of its rights or obligations hereunder, without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed. Any purported assignment, delegation or
other transfer made in contravention of this Section shall be null and void for all purposes.
Notwithstanding the foregoing, (a) either party may assign this Agreement to any Affiliate or third
party that acquires all or substantially all of such party’s assets, (b) CESI may assign this
Agreement to any Affiliate or third party that acquires all or substantially all of the
intellectual property rights licensed to Kawasaki under this Agreement, and (c) Kawasaki may assign
this Agreement to any Affiliate, or third party that acquires all or substantially all of its Small
Gas Turbine business and assets.

     14. Entire Agreement. This Agreement, together with the Asset Purchase Agreement,
including all Exhibits to any of the foregoing, constitutes the entire agreement between the
parties relating to this subject matter and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements, whether written or oral. This Agreement may be amended
or modified only with the written consent of both Kawasaki and CESI. No oral waiver, amendment or
modification will be effective under any circumstances whatsoever.

B-7

 

In WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective
duly authorized representatives.

	 	 	 	 	 	 	 	 	 
	Kawasaki:
	 	 	 	CESI:	 	 
	 
	 	 	 	 	 	 	 	 
	Kawasaki Heavy Industries, Ltd.	 	Catalytica Energy Systems, Incorporated
	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 	 	 

B-8

 

EXHIBIT A

MULTI-USE PATENTS

	 	 	 	 	 	 
	 	 	 	 	PATENT, APPLICATION,
	 	 	 	 	OR PUBLICATION
	TITLE	 	COUNTRY	 	NUMBER
	Graded Palladium Containing Partial
Combustion Catalyst and a Process for Using It

	 	US
	 	5,248,251	 
	 
	Graded 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
	 	5,250,489	 
	 
	 	 	 	 	 
	Palladium Partial Combustion Catalysts and a
Process for Using Them

	 	DE
	 	EP0559844

	 
	 	 	 	 	 
	Palladium Partial Combustion Catalysts and a
Process for Using Them

	 	FR
	 	EP0559844

	 
	 	 	 	 	 
	Palladium Partial Combustion Catalysts and a
Process for Using Them

	 	GB
	 	EP0559844

	 
	 	 	 	 	 
	Palladium 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 PUBLICATION
	TITLE	 	COUNTRY	 	NUMBER
	Palladium Partial Combustion Catalysts and a
Process for Using Them

	 	KR
	 	261782	 
	 
	 	 	 	 	 
	Partial Combustion Process and a Structure for
Use in the Process

	 	US
	 	5,326,253	 
	 
	 	 	 	 	 
	Partial 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
	 	5,405,260	 
	 
	 	 	 	 	 
	Improved Process and Catalyst Structure
Employing Integral Heat Exchange With
Optional Downstream Flameholder

	 	DE
	 	EP0745180

	 
	 	 	 	 	 
	Improved Catalyst Structure Employing Integral Heat Exchange

	 	DE
	 	EP0746674

	 
	 	 	 	 	 
	Improved Process and Catalyst Structure
Employing Integral Heat Exchange With
Optional Downstream Flameholder

	 	FR
	 	EP0745180

	 
	 	 	 	 	 
	Improved Catalyst Structure Employing
Integral Heat Exchange

	 	FR
	 	EP0746674

	 
	 	 	 	 	 
	Improved Process and Catalyst Structure
Employing Integral Heat Exchange With
Optional Downstream Flameholder

	 	GB
	 	EP0745180

	 
	 	 	 	 	 
	Improved Catalyst Structure Employing
Integral Heat Exchange

	 	GB
	 	EP0746674

	 
	 	 	 	 	 
	Improved Process and Catalyst Structure
Employing Integral Heat Exchange With
Optional Downstream Flameholder

	 	IT
	 	EP0745180

	 
	 	 	 	 	 
	Improved 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
	 	3705299	 
	 
	 	 	 	 	 
	Improved Catalyst Structure Employing
Integral Heat Exchange

	 	KR
	 	373887	 
	 
	 	 	 	 	 
	Improved Catalyst Structure Employing
Integral Heat Exchange

	 	SE
	 	EP0746674

	 
	 	 	 	 	 
	Improved Catalyst Structure Employing
Integral Heat Exchange

	 	TW
	 	295551	 

B-10

 

	 	 	 	 	 	 
	 	 	 	 	PATENT, APPLICATION,
	 	 	 	 	OR PUBLICATION
	TITLE	 	COUNTRY	 	NUMBER
	(*) Process and Catalyst Structure for
Employing Integral Heat Exchange with
Optional Downstream Flameholder

	 	US
	 	5,512,250	 
	 
	 	 	 	 	 
	Process and Catalyst Structure for Employing
Integral Heat Exchange with Optional
Downstream Flameholder

	 	US
	 	5,518,697	 
	 
	 	 	 	 	 
	(**) Support Structure for a Catalyst

	 	US
	 	6,116,014	 
	 
	 	 	 	 	 
	Mixed Oxide Solid Solutions

	 	US
	 	6,521,566	 

B-11

 

EXHIBIT B

NEW TECHNICAL MATERIALS

	 	 	 	 	 
	Media	 	Rev	 	Title
	MaterialSpec-001

	 	C
	 	Kawasaki River Lite 20-5USR Foil
(BM-012) Specification
	 
	 	 	 	 
	MaterialSpec-002

	 	B
	 	RC-100P Zirconium Oxide Powder (BM-005) Specification
	 
	 	 	 	 
	MaterialSpe -003

	 	B
	 	Pt Diammine Nitrate Solution (BM-001) Specification
	 
	 	 	 	 
	MaterialSpec-004

	 	B
	 	Pd Dissolved in Nitrate Acid (BM-002) Specification
	 
	 	 	 	 
	MaterialSpec-005

	 	C
	 	Al Coated Haynes 214 Foil (BM-013) Specification
	 
	 	 	 	 
	MaterialSpec-006

	 	B
	 	Haynes 214 2B #3 Edge Foil (BM-014) Specification
	 
	 	 	 	 
	MaterialSpec -007

	 	new
	 	Tetraethyl Orthosilicate (BM-006) Specification
	 
	 	 	 	 
	MaterialSpec-008

	 	new
	 	Nitric Acid (BM-007) Specification
	 
	 	 	 	 
	MaterialSpec -010

	 	new
	 	Sulfuric Acid (BM-009) Specification
	 
	 	 	 	 
	MaterialSpec-011

	 	new
	 	0.25N Sulfuric Acid (BM-011) Specification
	 
	 	 	 	 
	MaterialSpec-012

	 	B
	 	Zirconium Oxide, grade DK-2 (BM-019) Specification
	 
	 	 	 	 
	MaterialSpec-013

	 	B
	 	Zirconium Acetate (BM-003) Specification
	 
	 	 	 	 
	MaterialSpec-017

	 	new
	 	Lattice Specification
	 
	 	 	 	 
	Mfg-001

	 	C
	 	Corrugation Machine Operating Procedure
	 
	 	 	 	 
	Mfg-002

	 	B
	 	Foil Cleaning Procedure
	 
	 	 	 	 
	Mfg-003

	 	F
	 	Operation Procedure for Furnace #2
	 
	 	 	 	 
	Mfg-004

	 	B
	 	Coating Line 1 Operating Procedure
	 
	 	 	 	 
	Mfg-005

	 	B
	 	Rolling Machine Operation Procedure
	 
	 	 	 	 
	Mfg-006

	 	new
	 	Spot Welding Procedure
	 
	 	 	 	 
	Mfg-008

	 	E
	 	Operation Procedure for Furnace #1
	 
	 	 	 	 
	Mfg-010

	 	A
	 	Zirconia Sol Production Procedure
	 
	 	 	 	 
	Mfg-011

	 	C
	 	Prepared Sol Procedure
	 
	 	 	 	 
	Mfg-012

	 	A
	 	Mixed Metals Preparation Procedure
	 
	 	 	 	 
	Mfg-018

	 	new
	 	PIFT Powder Procedure
	 
	 	 	 	 
	Mfg-019

	 	new
	 	PIFT Base Sol Production Procedure
	 
	 	 	 	 
	Mfg-022

	 	new
	 	Coating Line Operating Procedure
	 
	 	 	 	 
	Quality-001

	 	B
	 	Process and Manufactured Materials Acceptance Criteria
	 
	 	 	 	 
	ATP-001

	 	A
	 	Kawasaki M1A-13X Acceptance Test Procedure
	 
	 	 	 	 
	PartSpec-0001

	 	A
	 	Thermally Free Axial (TFA) Support Part Spec
	 
	 	 	 	 
	PartSpec-0004

	 	B
	 	Kawasaki M1A-13X Module Foilpack Definition
	 
	 	 	 	 
	PartSpec-0007

	 	new
	 	Catalyst Rings and Seals Qualification Procedure
	 
	 	 	 	 
	Test-001

	 	D
	 	Testing SQP Procedure
	 
	 	 	 	 
	Test-002

	 	D
	 	Air Compressor Operating Procedure
	 
	 	 	 	 
	Test-003

	 	D
	 	Auxillary Gas System Operating Procedure
	 
	 	 	 	 
	Test-004

	 	D
	 	LEWA Pump Operating Procedure
	 
	 	 	 	 
	Test-005

	 	D
	 	ISCO Pump Operating Procedure
	 
	 	 	 	 
	Test-006

	 	D
	 	Low Pressure Reactor Operating Procedure
	 
	 	 	 	 
	Test-007

	 	D
	 	Catalyst Rolling Procedure
	 
	 	 	 	 
	Test-008

	 	D
	 	Gas Analyzer Operating Procedure
	 
	 	 	 	 
	Test-009

	 	D
	 	High Pressure Reactor Operating Procedure

B-12 

 

	 	 	 	 	 
	Media	 	Rev	 	Title
	Test-010

	 	D
	 	Testing Documentation Procedure
	 
	 	 	 	 
	Test-011

	 	C
	 	Common Testing Procedure
	 
	 	 	 	 
	Test-012

	 	C
	 	Flow Calibration Procedure
	 
	 	 	 	 
	Test-013

	 	D
	 	Rig Calibration Procedure
	 
	 	 	 	 
	Test-014

	 	D
	 	Catalyst Handling and Storage Procedure
	 
	 	 	 	 
	Test-015

	 	B
	 	House Air Compressor Operating Procedure
	 
	 	 	 	 
	ProductSpec-0005

	 	A
	 	Kawasaki M1A-13X Product Specification
	 
	 	 	 	 
	OperSpec-0001

	 	A
	 	M1A-13X Fuel Composition Specification
	 
	 	 	 	 
	OperSpec-0002

	 	B
	 	M1A-13X Air Filtration Specification
	 
	 	 	 	 
	OperSpec-0003

	 	A
	 	M1A-13X Fuel Filtration Specification
	 
	 	 	 	 
	OperSpec-0005

	 	A
	 	Lubricating Oil Specification
	 
	 	 	 	 
	02100100-1

	 	D
	 	Catalyst Module Assy
	 
	 	 	 	 
	02100101-1

	 	F
	 	Interface ring assy, outlet
	 
	 	 	 	 
	22010030-1

	 	new
	 	Guide ring, seal assy, outlet
	 
	 	 	 	 
	02100102-1

	 	F
	 	Guide ring assy, outlet
	 
	 	 	 	 
	02100119-1

	 	B
	 	Spring seal, outer
	 
	 	 	 	 
	02100119-2

	 	B
	 	Spring seal, inner
	 
	 	 	 	 
	22010031-1

	 	new
	 	Guide ring, seal assy, inlet
	 
	 	 	 	 
	02100103-1

	 	F
	 	Guide ring assy, inlet
	 
	 	 	 	 
	22010032-1

	 	new
	 	Interface ring, seal assy, inlet
	 
	 	 	 	 
	02100104-1

	 	C
	 	Interface ring assy, inlet
	 
	 	 	 	 
	02100118-1

	 	B
	 	Hula seal, outer
	 
	 	 	 	 
	02100118-2

	 	B
	 	Hula seal, inner
	 
	02100120-1

	 	C
	 	Axial supports
	 
	 	 	 	 
	02100115-1

	 	B
	 	Shaft assy, inner support
	 
	 	 	 	 
	02100116-1

	 	B
	 	Cap, inner support
	 
	 	 	 	 
	02100114

	 	B
	 	Spindle, 3”
	 
	 	 	 	 
	02100112

	 	B
	 	Spindle, 4”
	 
	 	 	 	 
	22010040-02

	 	A
	 	Assembly Operation Sheets
	 
	 	 	 	 
	22010044

	 	new
	 	Disassembly Operation Sheets
	 
	 	 	 	 
	08021000

	 	B
	 	Specification, Nameplate
	 
	 	 	 	 
	EL22010016

	 	A
	 	Equipment List Catalyst Module Assembly
	 
	 	 	 	 
	22010017

	 	B
	 	Interface Control Definition, Catalyst Module
	 
	 	 	 	 
	T22010041

	 	A
	 	Lifting Assembly Tool
	 
	 	 	 	 
	T22010042

	 	new
	 	Spring Seal Check Tool
	 
	 	 	 	 
	T22010043

	 	new
	 	Spring Seal Wedge Tool
	 
	 	 	 	 
	Mfg 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	 	Title
	Design 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 sheets
	 
	 	 	 	 
	Build Records

	 	n/a
	 	Fielded and inventoried module mfg,
test and assembly records
	 
	 	 	 	 
	Part Records

	 	n/a
	 	Life tracking data for container hardware in use
	 
	 	 	 	 
	Specification 

Sheet

	 	n/a
	 	ISOPAR E specification sheet

B-14 

 

EXHIBIT C

CESI TRADEMARKS

XONON

COOL COMBUSTION

XONON COOL COMBUSTION

B-15 

 

EXHIBIT D

TRAINING SERVICES

A M1A-13X Module Manufacturing

	 	 	 	 	 	 	 	 	 
	 	 	Topic	 	Attending	 	Location	 	Days
	a.
	 	Powder Prep, Stage 1 WC & Stage 2 WC (PIFT)	 	KHI & TKK	 	MV	 	0.5
	 
	 	 	 	 	 	 	 	 
	b.
	 	Sol Prep, Stage 2 WC (PIFT)	 	KHI & TKK	 	G	 	0.5
	 
	 	 	 	 	 	 	 	 
	c.
	 	Coating Operation	 	 	 	 	 	 
	 
	 	o Settings	 	 	 	 	 	 
	 
	 	o Spraying of WC, PM, DBL - Stage 1	 	KHI & TKK	 	G	 	3
	 
	 	o Spraying of WC, DBL - Stage 2	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	d.
	 	Rolling Machine Operation	 	 	 	 	 	 
	 
	 	o Utilize bare foil	 	KHI & TKK	 	G	 	0.5
	 
	 	o Tension, speed, alignment, etc.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	e.
	 	Assemble One Module, including shipping container	 	KHI & TKK	 	G	 	1
	 
	 	 	 	 	 	 	 	 
	f.
	 	Al-H214 Development Review	 	KHI & TKK	 	G	 	0.5

B. M1A-13X Design and Technology

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Topic	 	Attending	 	Location	 	Days
	a.

	 	Introduction to Xonon Catalyst Technology with
respect to M1A-13X platform	 	 	 	 	 	 	 	 
	 

	 	o Channel structure	 	 	 	 	 	 	 	 
	 

	 	o IHE concept
	 	KHI & TKK
	 	MV
	 	 	2	 
	 

	 	o Foil geometry	 	 	 	 	 	 	 	 
	 

	 	o Catalyst material	 	 	 	 	 	 	 	 
	 

	 	o Operation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	b.

	 	Instruction for use of the following design tools with	 	 	 	 	 	 	 	 
	 

	 	respect to M1A-13X platform:	 	 	 	 	 	 	 	 
	 

	 	- Performance and life modeling	 	 	 	 	 	 	 	 
	 

	 	- Operating window analysis	 	 	 	 	 	 	 	 
	 

	 	- Fuel assessment
	 	KHI
	 	MV
	 	 	2	 
	 

	 	- Operational tracking guide	 	 	 	 	 	 	 	 
	 

	 	- Control schedule development	 	 	 	 	 	 	 	 
	 

	 	o Use of tools	 	 	 	 	 	 	 	 
	 

	 	o Inputs and outputs	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	c.

	 	Description of current M1A-13X Catalyst Design	 	 	 	 	 	 	 	 
	 

	 	o Design features and specifications	 	 	 	 	 	 	 	 
	 

	 	o Production Acceptance (catalyst analytical)
	 	KHI
	 	MV
	 	 	1	 
	 

	 	o Operational requirements	 	 	 	 	 	 	 	 

B-16 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Topic	 	Attending	 	Location	 	Days
	 

	 	o Safety and performance limits	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	d.

	 	Description of current M1A-13X Container Design
Critical Features – overview only, not structural
analysis information
	 	KHI
	 	MV
	 	 	0.5	 
	 
	 	 	 	 	 	 	 	 	 	 
	e.

	 	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
	 	 	0.5	 
	 
	 	 	 	 	 	 	 	 	 	 
	f.

	 	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
	 	10
	 
	 	Jun 19
	 	Jun 20
	 	Jun 21
	 	Jun 22
	 	Jun 23
	 	Jun 26
	 	Jun 27
	 	Jun 28
	 	Jun 29
	 	Jun 30
	 
	 	Monday
	 	Tuesday
	 	Wednesday
	 	Thursday
	 	Friday
	 	Monday
	 	Tuesday
	 	Wednesday
	 	Thursday
	 	Friday
	MV	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	KHI
	 	B-a
	 	B-a
	 	B-b
	 	B-b
	 	B-c
	 	B-d,e
	 	B-f	 	 	 	 	 	 
	TKK
	 	B-a
	 	B-a
	 	A-a	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	AZ	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	KHI
	 	 	 	 	 	Travel to AZ
	 	A-b / A-c
	 	A-c
	 	A-c
	 	Travel to AZ
	 	A-e
	 	A-f	 	 
	TKK
	 	 	 	 	 	Travel to AZ
	 	A-b / A-c
	 	A-c
	 	A-c
	 	A-c / A-d
	 	A-e	 	A-f	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	KHI
	 	MV
	 	MV
	 	MV / AZ
	 	MV / AZ
	 	MV / AZ
	 	MV / AZ
	 	MV / AZ
	 	AZ	 	AZ	 	 
	TKK
	 	MV
	 	MV
	 	MV / AZ
	 	AZ
	 	AZ
	 	AZ
	 	AZ
	 	AZ	 	AZ	 	 

B-17 

 

EXHIBIT C

Application for Income Tax Convention

     To be attached.

B-18 

 

EXHIBIT D

State of Arizona Transaction Privilege Tax Exemption Certificate

     To be attached.

B-19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}]]