Document:

Common Stock Purchase Warrant

 Exhibit 10.5 
 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS
RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR
(iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT. 
 CEREPLAST, INC. 

WARRANT TO PURCHASE 225,000 SHARES 
 OF COMMON STOCK 
 THIS CERTIFIES THAT, for value received, HORIZON CREDIT I LLC,
as successor in interest to COMPASS HORIZON FUNDING COMPANY LLC and its assignees are entitled to subscribe for and purchase 225,000 shares of the fully paid and nonassessable Common Stock (as adjusted pursuant to Section 4 hereof, the
“Shares”) of CEREPLAST, INC., a Nevada corporation (the “Company”), at a price of $0.01 per share (such price and such other price as shall result, from time to time, from the adjustments specified in Section 4 hereof is
herein referred to as the “Warrant Price”), subject to the provisions and upon the terms and conditions hereinafter set forth. As used herein, (a) the term “Date of Grant” shall mean June 22, 2012, and (b) the term
“Other Warrants” shall mean any other warrants issued by the Company in connection with the transaction with respect to which this Warrant was issued, and any warrant issued upon transfer or partial exercise of or in lieu of this Warrant.
The term “Warrant” as used herein shall be deemed to include Other Warrants unless the context clearly requires otherwise. 
 1. Term. The purchase right represented by this Warrant is exercisable, in whole or in part, at any time and from time to time from the Date of Grant through seven (7) years after the Date of
Grant (the “Term”). 
 2. Method of Exercise; Payment; Issuance of New Warrant. Subject to Section 1
hereof, the purchase right represented by this Warrant may be exercised by the holder hereof, in whole or in part and from time to time, at the election of the holder hereof, by (a) the surrender of this Warrant (with the notice of exercise
substantially in the form attached hereto as Exhibit A-1 duly completed and executed) at the principal office of the Company and by the payment to the Company, by certified or bank check, or by wire transfer to an account designated by the
Company (a “Wire Transfer”) of an amount equal to the then applicable Warrant Price multiplied by the number of Shares then being purchased; (b) if in connection with a registered public offering of the Company’s securities
pursuant to which the Shares are being registered, the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A-2 duly completed and executed) at the principal office of the Company together with notice of
arrangements reasonably satisfactory to the Company for payment to the Company either by certified or bank check or by Wire Transfer from the proceeds of the sale of shares to be sold by the holder in such public offering of an amount equal to the
then applicable Warrant Price per share multiplied by the number of Shares then being purchased; or (c) exercise of the “net issuance” right provided for in Section 10.2 hereof. The person or persons in whose name(s) any
certificate(s) representing the Shares shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all 

 
purposes as the record holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon
which this Warrant is exercised. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of stock so purchased shall be delivered to the holder hereof as soon as possible and in any event within thirty
(30) days after such exercise and, unless this Warrant has been fully exercised or expired, a new Warrant representing the portion of the Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued
to the holder hereof as soon as possible and in any event within such thirty-day period; provided, however, at such time as the Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, if requested by
the holder of this Warrant, the Company shall cause its transfer agent to deliver the certificate representing Shares issued upon exercise of this Warrant to a broker or other person (as directed by the holder exercising this Warrant) within the
time period required to settle any trade made by the holder after exercise of this Warrant. 
 3. Stock Fully Paid;
Reservation of Shares. All Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and conditions herein, be fully paid and nonassessable, and free from all preemptive
rights and taxes, liens and charges with respect to the issue thereof. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue
upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. 

4. Adjustment of Warrant Price and Number of Shares. The number and kind of securities purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: 
 (a) Reclassification or Merger. In case of any reclassification or change of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is the
acquiring and the surviving corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company,
the Company, or such successor or purchasing corporation, as the case may be, shall duly execute and deliver to the holder of this Warrant a new Warrant (in form and substance satisfactory to the holder of this Warrant), so that the holder of this
Warrant shall have the right to receive upon exercise of this Warrant, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Common Stock theretofore issuable
upon exercise of this Warrant, (i) the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change, merger or sale by a holder of the number of shares of Common Stock then purchasable
under this Warrant, or (ii) in the case of such a merger or sale in which the consideration paid consists all or in part of assets other than securities of the successor or purchasing corporation, at the option of the holder of this Warrant,
the securities of the successor or purchasing corporation having a value at the time of the transaction equivalent to the value of the Common Stock purchasable upon exercise of this Warrant at the time of the transaction. Any new Warrant shall
provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4. The provisions of this Section 4(a) shall similarly apply to successive reclassifications, changes, mergers
and sales. 

  
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 (b) Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of Common Stock, the Warrant Price shall be proportionately decreased and the number of Shares issuable hereunder shall be proportionately increased in the
case of a subdivision and the Warrant Price shall be proportionately increased and the number of Shares issuable hereunder shall be proportionately decreased in the case of a combination. 

(c) Stock Dividends and Other Distributions. If the Company at any time while this Warrant is outstanding and unexpired shall
(i) pay a dividend with respect to its Common Stock payable in Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Common Stock (except any
distribution specifically provided for in Sections 4(a) and 4(b)), then, in each such case, provision shall be made by the Company such that the holder of this Warrant shall receive upon exercise of this Warrant a proportionate share of any
such dividend or distribution as though it were the holder of the Shares as of the record date fixed for the determination of the shareholders of the Company entitled to receive such dividend or distribution. 

(d) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price, the number of Shares purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying the number of Shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately
prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter. 
 5. Notice of
Adjustments. Whenever the Warrant Price or the number of Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price and the number of Shares purchasable hereunder after giving effect to such adjustment, and shall
cause copies of such certificate to be mailed (without regard to Section 13 hereof, by first class mail, postage prepaid) to the holder of this Warrant. 
 6. Fractional Shares. No fractional shares of Common Stock will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment
therefor based on the fair market value of the Common Stock on the date of exercise as reasonably determined in good faith by the Company’s Board of Directors. 
 7. Compliance with Securities Act; Disposition of Warrant or Shares of Common Stock. 
 (a) Compliance with Securities Act. The holder of this Warrant, by acceptance hereof, agrees that this Warrant, and the Shares to be issued upon exercise hereof are being acquired for investment
and that such holder will not offer, sell or otherwise dispose of this Warrant, or any Shares except under circumstances which will not result in a violation of the Securities Act of 1933, as amended (the “Act”) or any applicable state
securities laws. Upon exercise of this Warrant, unless 

  
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the Shares being acquired are registered under the Act and any applicable state securities laws or an exemption from such registration is available, the holder hereof shall confirm in writing
that the Shares so purchased are being acquired for investment and not with a view toward distribution or resale in violation of the Act and shall confirm such other matters related thereto as may be reasonably requested by the Company. This Warrant
and all Shares issued upon exercise of this Warrant (unless registered under the Act and any applicable state securities laws) shall be stamped or imprinted with a legend in substantially the following form: 

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED,
(iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY.”

 Said legend shall be removed by the Company, upon the request of a holder, at such time as the restrictions on the transfer
of the applicable security shall have terminated. In addition, in connection with the issuance of this Warrant, the holder specifically represents to the Company by acceptance of this Warrant as follows: 

(1) The holder is aware of the Company’s business affairs and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this Warrant. The holder is acquiring this Warrant for its own account for investment purposes only and not with a view to, or for the resale in connection with, any
“distribution” thereof in violation of the Act. 
 (2) The holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the holder’s investment intent as expressed herein. 

(3) The holder further understands that this Warrant must be held indefinitely unless subsequently registered under the Act and
qualified under any applicable state securities laws, or unless exemptions from registration and qualification are otherwise available. The holder is aware of the provisions of Rule 144, promulgated under the Act. 

(4) The holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the
Act. 
 (b) Disposition of Warrant or Shares. With respect to any offer, sale or other disposition of this Warrant or any
Shares acquired pursuant to the exercise of this Warrant prior to registration of such Warrant or Shares, the holder hereof agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written
opinion of such holder’s counsel, or other evidence, if reasonably satisfactory to the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or
any federal or state securities law then in effect) of this Warrant or the Shares and indicating whether or not under the Act certificates for this Warrant or the Shares to be sold or 

  
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otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with such law. Upon receiving such written notice and
reasonably satisfactory opinion or other evidence, the Company, as promptly as practicable but no later than fifteen (15) days after receipt of the written notice, shall notify such holder that such holder may sell or otherwise dispose of this
Warrant or such Shares, all in accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this Section 7(b) that the opinion of counsel for the holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the holder promptly with details thereof after such determination has been made. Notwithstanding the foregoing, this Warrant or such Shares may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 or 144A under the Act, provided that the Company shall have been furnished with such information as the Company may reasonably request to provide a reasonable assurance that the provisions of
Rule 144 or 144A have been satisfied. Each certificate representing this Warrant or the Shares thus transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with such laws, unless in the aforesaid opinion of counsel for the holder, such legend is not required in order to ensure compliance with such laws. The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. 
 (c) Applicability of Restrictions. Neither any restrictions of any legend described
in this Warrant nor the requirements of Section 7(b) above shall apply to any transfer of, or grant of a security interest in, this Warrant (or the Common Stock obtainable upon exercise thereof) or any part hereof (i) to a partner of the
holder if the holder is a partnership or to a member of the holder if the holder is a limited liability company, (ii) to a partnership of which the holder is a partner or to a limited liability company of which the holder is a member,
(iii) to any affiliate of the holder if the holder is a corporation, (iv) notwithstanding the foregoing, to any corporation, company, limited liability company, limited partnership, partnership, or other person managed or sponsored by
Horizon Technology Finance Corporation (“HRZN”) or in which HRZN has an interest, (v) or to a lender to the holder or any of the foregoing; provided, however, in any such transfer, if applicable, the transferee shall on
the Company’s request agree in writing to be bound by the terms of this Warrant as if an original holder hereof. 
 8.
Rights as Shareholders; Information. No holder of this Warrant, as such, shall be entitled to vote or receive dividends or be deemed the holder of Common Stock which may at any time be issuable upon the exercise hereof for any purpose, nor
shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as
provided herein. Notwithstanding the foregoing, the Company will transmit to the holder of this Warrant such information, documents and reports as are generally distributed to the holders of any class or series of the securities of the Company
concurrently with the distribution thereof to the shareholders. 
 9. Registration Rights. For the period starting from
the Date of Grant through the initial date that the holder of this Warrant is permitted to offer, sell or dispose of the Warrant or Shares pursuant to Rule 144 under the Act, the Company grants registration rights to the holder of this Warrant for
any Shares obtained upon exercise of this Warrant as follows: 

  
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 (a) At any time after the date hereof, if the Company shall determine to register for its
account or for the account of others any of its equity securities, the Company shall give notice to the Lender at least 10 days prior to filing a registration statement, and shall include in such registration statement the Shares, provided,
however, that the Company may reduce the number of Shares to be registered or not register the Shares in view of market conditions or other conditions as determined in writing by the lead underwriter, if such registration statement is for an
underwritten offering, or by the Company’s investment banker, which written determination the Company will share with the Lender. The Company may not reduce the number of Shares included in such registration statement by a greater percentage
than any other person exercising piggyback registration rights.; and 
 (b) The registration rights are assignable by the holder
of this Warrant in connection with a permitted transfer of this Warrant or the Shares. 
 10. Additional Rights.

 10.1 Acquisition Transactions. The Company shall provide the holder of this Warrant with at least twenty
(20) days’ written notice prior to closing thereof of the terms and conditions of any of the following transactions (to the extent the Company has notice thereof): (i) the sale, lease, exchange, conveyance or other disposition of all
or substantially all of the Company’s property or business, or (ii) its merger into or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company), or any transaction (including a merger or other
reorganization) or series of related transactions, in which more than 50% of the voting power of the Company is disposed of. 

10.2 Right to Convert Warrant into Stock: Net Issuance. 
 (a) Right to Convert. In addition to and without limiting the rights of the holder under the terms of this Warrant, the holder shall have the right to convert this Warrant or any portion thereof
(the “Conversion Right”) into shares of Common Stock as provided in this Section 10.2 at any time or from time to time during the term of this Warrant. Upon exercise of the Conversion Right with respect to a particular number of
shares subject to this Warrant (the “Converted Warrant Shares”), the Company shall deliver to the holder (without payment by the holder of any exercise price or any cash or other consideration) that number of shares of fully paid and
nonassessable Common Stock as is determined according to the following formula: 
  

					
	 
  
	X = B - A

     Y
	  
   
	  	
		
	 	Where: X =	  	  	the number of shares of Common Stock that shall be issued to holder
		
	 	Y =	  	  	the fair market value of one share of Common Stock
		
	 	A =	  	  	the aggregate Warrant Price of the specified number of Converted Warrant Shares immediately prior to the exercise of the Conversion Right (i.e., the number of Converted
Warrant Shares multiplied by the Warrant Price)

  
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	 	        B =	  	  	the aggregate fair market value of the specified number of Converted Warrant Shares (i.e., the number of Converted Warrant Shares multiplied by the fair market value
of one Converted Warrant Share)

 No fractional shares shall be issuable upon exercise of the Conversion Right, and, if the number of
shares to be issued determined in accordance with the foregoing formula is other than a whole number, the Company shall pay to the holder an amount in cash equal to the fair market value of the resulting fractional share on the Conversion Date (as
hereinafter defined). For purposes of Section 10 of this Warrant, shares issued pursuant to the Conversion Right shall be treated as if they were issued upon the exercise of this Warrant. 

(b) Method of Exercise. The Conversion Right may be exercised by the holder by the surrender of this Warrant at the principal
office of the Company together with a written statement (which may be in the form of Exhibit A-1 or Exhibit A-2 hereto) specifying that the holder thereby intends to exercise the Conversion Right and indicating the number of shares subject
to this Warrant which are being surrendered (referred to in Section 10.2(a) hereof as the Converted Warrant Shares) in exercise of the Conversion Right. Such conversion shall be effective upon receipt by the Company of this Warrant together
with the aforesaid written statement, or on such later date as is specified therein (the “Conversion Date”), and, at the election of the holder hereof, may be made contingent upon the closing of the sale of the Company’s Common Stock
to the public in a public offering pursuant to a Registration Statement under the Act (a “Public Offering”). Certificates for the shares issuable upon exercise of the Conversion Right and, if applicable, a new warrant evidencing the
balance of the shares remaining subject to this Warrant, shall be issued as of the Conversion Date and shall be delivered to the holder within thirty (30) days following the Conversion Date. 

(c) Determination of Fair Market Value. For purposes of this Section 10.2, “fair market value” of a share of Common
Stock as of a particular date (the “Determination Date”) shall mean: 
 (i) If the Conversion Right is exercised in
connection with and contingent upon a Public Offering, and if the Company’s Registration Statement relating to such Public Offering (“Registration Statement”) has been declared effective by the Securities and Exchange Commission, then
the initial “Price to Public” specified in the final prospectus with respect to such offering. 
 (ii) If the
Conversion Right is not exercised in connection with and contingent upon a Public Offering, then as follows: 
 (A) If traded on
a securities exchange, the fair market value of the Common Stock shall be deemed to be the average of the closing prices of the Common Stock on such exchange over the five trading days immediately prior to the Determination Date; 

(B) If traded on the NASDAQ Stock Market or other over-the-counter system, the fair market value of the Common Stock shall be deemed to
be the average of the closing prices of the Common Stock over the five trading days immediately prior to the Determination Date; and 
 (C) If there is no public market for the Common Stock, then fair market value shall be determined by mutual agreement of the holder of this Warrant and the Company. 

  
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 If closing prices or closing bid prices are no longer reported by a securities exchange or other trading
system, the closing price or closing bid price shall be that which is reported by such securities exchange or other trading system at 4:00 p.m. New York City time on the applicable trading day. 

10.3 Exercise Prior to Expiration. To the extent this Warrant is not previously exercised as to all of the Shares subject hereto,
and if the fair market value of one share of the Common Stock is greater than the Warrant Price then in effect, this Warrant shall be deemed automatically exercised pursuant to Section 10.2 above (even if not surrendered) immediately before its
expiration. For purposes of such automatic exercise, the fair market value of one share of the Common Stock upon such expiration shall be determined pursuant to Section 10.2(c). To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 10.3, the Company agrees to promptly notify the holder hereof of the number of Shares, if any, the holder hereof is to receive by reason of such automatic exercise. 

11. Representations and Warranties. The Company represents and warrants to the holder of this Warrant as follows: 

(a) This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and the rules of law or principles at equity governing specific performance, injunctive relief and other equitable
remedies. 
 (b) The Shares have been duly authorized and reserved for issuance by the Company and, when issued in accordance
with the terms hereof, will be validly issued, fully paid and nonassessable and free from preemptive rights. 
 (c) A true and
correct copy of the Company’s Articles of Incorporation, as amended through the Date of Grant has been provided to Holder (the “Charter”). The rights, preferences, privileges and restrictions granted to or imposed upon the classes and
series of the Company’s capital stock and the holders thereof are as set forth in the Charter. 
 (d) The execution and
delivery of this Warrant are not, and the issuance of the Shares upon exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the Company’s Charter or by-laws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the
Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any Federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby. 
 (e) There are no actions, suits, audits, investigations or proceedings pending or, to the knowledge of the Company, threatened against the Company in any court or before any governmental commission, board
or authority which, if adversely determined, could have a material adverse effect on the ability of the Company to perform its obligations under this Warrant. 

  
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 12. Modification and Waiver. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 
 13. Notices. Any notice, request, communication or other document required or permitted to be given or delivered to the holder hereof or the Company shall be delivered, or shall be sent by
certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant. 

14. Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s assets, and all of the obligations of the Company relating to the Shares issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion
and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the holder hereof. 
 15. Lost Warrants or Stock Certificates. The Company covenants to the holder hereof that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 

16. Descriptive Headings. The descriptive headings of the various Sections of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. The language in this Warrant shall be construed as to its fair meaning without regard to which party drafted this Warrant. 
 17. Governing Law. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California. 

18. Survival of Representations, Warranties and Agreements. All representations and warranties of the Company and the holder
hereof contained herein shall survive the Date of Grant, the exercise or conversion of this Warrant (or any part hereof) or the termination or expiration of rights hereunder. All agreements of the Company and the holder hereof contained herein shall
survive indefinitely until, by their respective terms, they are no longer operative. 
 19. Remedies. In case any one or
more of the covenants and agreements contained in this Warrant shall have been breached, the holders hereof (in the case of a breach by the Company), or the Company (in the case of a breach by a holder), may proceed to protect and enforce their or
its rights either by suit in equity and/or by action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Warrant.

 20. No Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against impairment. 

  
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 21. Severability. The invalidity or unenforceability of any provision of this Warrant
in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and effect. 

22. Recovery of Litigation Costs. If any legal action or other proceeding is brought for the enforcement of this Warrant, or
because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Warrant, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. 
 23. Entire
Agreement; Modification. This Warrant constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and undertakings of the
parties, whether oral or written, with respect to such subject matter. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

  
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 The Company has caused this Warrant to be duly executed and delivered as of the Date of
Grant specified above. 
  

			
	CEREPLAST, INC.
		
	By:	 	 /s/ Frederic Scheer

	Name: Frederic Scheer
	Title: Chief Executive Officer

  

			
	 Address:
	 	 300 North Continental Blvd.

		 	 El Segundo, CA 90245

  
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 EXHIBIT A-1 
 NOTICE OF EXERCISE 
 To: CEREPLAST, INC. (the “Company”) 

1. The undersigned hereby: 
  

	 	 ̈	elects to purchase            shares of Common Stock of the Company pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in full, or 

  

	 	 ̈	elects to exercise its net issuance rights pursuant to Section 10.2 of the attached Warrant with respect
to            shares of Common Stock. 

 2. Please
issue a certificate or certificates representing             shares in the name of the undersigned or in such other name or names as are specified below: 

 

					
	  	 	  	 	  
		 	  

(Name)
	 	
			
		 	  
	 	
			
		 	  
	 	
		 	(Address)	 	

 3. The undersigned represents that the aforesaid shares are being acquired for the account of the
undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, all except as in compliance with applicable
securities laws. 
  

	
	  

	(Signature)

  

			
	  
	 	
	(Date)	 	

 EXHIBIT A-2 
 NOTICE OF EXERCISE 
 To: CEREPLAST, INC. (the “Company”) 

1. Contingent upon and effective immediately prior to the closing (the “Closing”) of the Company’s public offering
contemplated by the Registration Statement on Form S            , filed            , 200    , the
undersigned hereby: 
  ̈ elects to
purchase            shares of Common Stock of the Company (or such lesser number of shares as may be sold on behalf of the undersigned at the Closing) pursuant to the terms of the attached
Warrant, or 
  ̈ elects to exercise its net issuance rights pursuant to
Section 10.2 of the attached Warrant with respect to            shares of Common Stock. 
 2. Please deliver to the custodian for the selling shareholders a stock certificate representing such            shares. 

3. The undersigned has instructed the custodian for the selling shareholders to deliver to the Company
$            or, if less, the net proceeds due the undersigned from the sale of shares in the aforesaid public offering. If such net proceeds are less than the purchase price for such
shares, the undersigned agrees to deliver the difference to the Company prior to the Closing. 
  

	
	  

	(Signature)

  

			
	  
	 	
	(Date)Converted by EDGARwiz

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Exhibit 10.20

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT (INDICATED

BY ASTERISKS HAS BEEN OMITTED AND FILED SEPERATELY WITH THE SECURITIES

AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT

COOPERATION  AGREEMENT  MADE  BY  AND  BETWEEN  PETRÓLEO  BRASILEIRO  S.A.

AND  MESOCOAT  INC     TO  CARRY  OUT  QUALIFICATION  TESTS  AND  DEVELOPMENT

FOR   APPLICATION   TECHNOLOGY   OF   CLADDING   MATERIALS   ON   INTERNAL   AND

EXTERNAL SURFACES OF PIPES.

PETRÓLEO BRASILEIRO S.A. - PETROBRAS, a Brazilian government-controlled company,

with  headquarters  in  the  city  of  Rio  de  Janeiro,  state  of  Rio  de  Janeiro,  at  Avenida  República

do  Chile,  65,  Brazil,  registered  with  the  Brazilian  Register  of  Legal  Entities  of  the  Ministry  of

Finance  (CNPJ/MF)  under  no.  33.000.167/0001-01,  hereinafter  referred  to  as  PETROBRAS,

herein   represented   by   the   Manager   of   ENGENHARIA/IETEG/ETEG,   Mr.   Paulo   Renato

Almeida  Cellular,  and  MESOCOAT  INC.,  at  24112  Rockwell  Drive  Euclid,  Ohio  44117,  USA,

hereinafter  referred  to  as  MESOCOAT,  herein  represented  by  its  Chief  Executive  Officer,  Mr.

Andrew   J.   Sherman,   PETROBRAS   and   MESOCOAT   also   herein   jointly   referred   to   as

PARTIES, or individually referred to as PARTY, execute this COOPERATION AGREEMENT,

WHEREAS

The  PARTIES  signed  a  Confidentiality  Agreement,  as  of  August  3rd,  2010,  with  the  object  of

further  development  and  transition  to  commercialization  of  advanced  cladding  materials  and

respective application techniques;

The  PARTIES  intend  to  develop  and  qualify  a  process  for  application  of  CRA  (corrosion

resistant alloys) on internal and external surfaces of pipes using plasma arc lamp;

PETROBRAS   does   not   ensure   future   demands   and/or   purchases   arising   out   of   this

COOPERATION AGREEMENT.

ARTICLE ONE - OBJECT

1.1.

The  object  of  this  COOPERATION  AGREEMENT  is  the  concerted  effort  of  the

Parties  to  develop  the  technology,  which  will  be  approved  after  lab  and  field  tests,  in  order  to

meet the technical specifications established in the Work Plan of Annex 1.

1.2.

The   technologic   development   of   this   COOPERATION   AGREEMENT   covers   a

process for application of CRA (corrosion resistant alloys) on internal and external surfaces of

pipes using plasma arc lamp, in compliance with the Work Plan established in Annex 1.

ARTICLE TWO - DUTIES OF THE PARTIES

2.1    Act  cooperatively  to  exchange  the  information  necessary  for  the  fulfillment  of  the  object

of the COOPERATION AGREEMENT.

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2.2.   Whenever  possible  and/or  authorized  by  third  Parties,  grant  full  access  of  the  other

PARTY, by means of their duly accredited technicians, to the information produced and to the

facilities where the activities related to this COOPERATION AGREEMENT will be performed.

2.3.   Attend,  on  the  dates  and  at  the  locations  which  shall  be  agreed  by  the  PARTIES,  the

meetings  for  assessments  and  clarifications  of  any  problem  related  to  this  COOPERATION

AGREEMENT, by means of their duly registered representatives.

2.4.   Comply,  including  outsourced  staff,  with  HSE  rules,  and  Occupational  Medicine,  in  the

locations where the activities related to this COOPERATION AGREEMENT will be developed.

2.5    Be   in   charge   of   the   supervision   and   technical   and   administrative   management   of

manpower necessary for the performance of this COOPERATION AGREEMENT.

2.6.   Not disclose any data or information on this COOPERATION AGREEMENT, unless with

the  previous  authorization  of  the  other  PARTY,  exception  for  the  mere  communication  of  its

existence.

2.7.   Be  full  responsible  for  the  compliance  with  this  COOPERATION  AGREEMENT,  given

this  responsibility may  not  be  in  any  way diminished  or  shared  by the  possible  participation  of

third parties hired by the PARTIES.

2.8.   Respect  the  intellectual  property  rights  of  the  other  PARTY  or  of  third  parties  already

existing   before   the   execution   of   this   Cooperation   Agreement.   Respect   the   industrial   or

intellectual  property  rights  of  the  other  party  or  of  third  parties;  given  that  the  intellectual

property  rights  related  to  any  invention  generated  under  the  terms  of  this  agreement,  except

for  the  joint  and  equal  Brazilian  rights  specifically established  in  item 8.1.,  shall  be  property of

the  company  whose  employee  conceived  such  invention.  If  such  invention  is  based  on

Confidential  Information  (as  defined  on  the  Confidentiality  Agreement  existing  between  the

parties  –  Annex  2)  of  the  other  party,  the  other  party  shall  receive  joint  and  equal  Brazilian

ownership interest in such invention.

ARTICLE THREE – DUTIES OF MESOCOAT

3.1.

Provide  PETROBRAS,  in  any  development  stage,  access  to  the  information  directly

connected   to   the   object   and   necessary   for   the   development   of   this   COOPERATION

AGREEMENT,  which  are  of  their  ownership,  of  their  subsidiary  or  controlled  companies,

established  in  Brazil  or  abroad,  or  which  belong  to  third  parties  which  do  not  oppose  to  the

disclosure of such information.

3.2.

Perform   again,   at   their   expenses,   the   works   related   to   the   object   of   this

COOPERATION  AGREEMENT  which  were  performed  in  noncompliance  with  the  applicable

technical documents and standards.

3.3.

Perform   the   analysis   and   risk   management   related   to   Health,   Safety   and

Environment.

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3.4.

Abide by the schedule of activities and terms established under this COOPERATION

AGREEMENT,  documenting  all  stages,  by  means  of  partial  and  final  Reports,  in  accordance

with the provisions set forth in the Work Plan (Annex 1).

3.5.  Hold  PETROBRAS  harmless  against  any  claims,  in  or  out-of-court  lawsuits,  being  fully

responsible  for  the  infringement  of  industrial  property,  trademark  and  patent  rights,  as  well  as

trade secrets and other third party rights related to this COOPERATION AGREEMENT.

3.6 - Appoint personnel, suppliers and other manpower to work in the activities of the project.

3.7.

Develop  a  Check  Matrix  related  to  the  equipment  where  the  technology  will  be

applied. This Matrix shall be implemented for the clients of PETROBRAS which intend to have

it  implemented.  The  cost  of  this  Engineering  Service  is  not  included  in  this  Cooperation

Agreement,  and  it  shall  be  the  object  of  a  direct  agreement  between  MESOCOAT  and  the

Client.

3.8  -  Assume  full  responsibility  for  the  infringement  of  industrial  property,  patent,  trademark

and  trade  secret  rights  and  other  rights  of  third  parties  and  be  liable  in  the  event  of  possible

future infringement of these rights connected to the technology

ARTICLE FOUR – DUTIES OF PETROBRAS

4.1.

Provide data and information necessary for the development of the technology object

of  this  COOPERATION  AGREEMENT,  as  well  as  appoint  personnel,  employees  and  other

manpower to work in the activities of this project.

4.2.  Under  the  conditions  established  in  this  COOPERATION  AGREEMENT,  transfer  to

MESOCOAT  the  financial  resources  established  in  the  Article  Six  of  this  COOPERATION

AGREEMENT.

4.3

Work  in  concert  with  MESOCOAT  to  arrange  the  field  test  conditions  which  are

representative of the operational scenarios.

4.4

Supervise,  inspect  and  audit,  at  any  time,  the  works  performed  by  MESOCOAT,  in

order to contribute for the development of the technology.

4.5  –  The  meetings  shall  be  held  at  the  MESOCOAT  facilities  as  a  first  option,  as  they  shall

be scheduled for the assessment of performance data and the conduction of laboratory tests.

ARTICLE FIVE – STAGES AND MANNER OF PERFORMANCE AND MONITORING

5.1-  The  activities  and  goals  of  this  project  shall  be  divided  in  2  stages,  as  defined  in  Annex

1, where all stages will be detailed.

5.2-   The   performance   and   schedule   of   the   activities   object   of   this   COOPERATION

AGREEMENT are described in Annex 1, which is an integral part of this instrument.

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5.3.

The  development  may  be  supervised,  inspected  and  audited  by  PETROBRAS  or  by

any  third  party  contracted  by  PETROBRAS  for  this  purpose,  at  any  time,  before,  during  and

up to 20 (twenty) business   days after the development. In the event PETROBRAS  intends to

supervise, inspect or audit the Project, PETROBRAS shall communicate with MESOCOAT 20

(twenty) business days in advance, at least, as of the date of the event.

5.4.

For  performing  any  and  all  step  of  the  inspection  or  audit  of  the  development  of  this

COOPERATION  AGREEMENT,  MESOCOAT  shall  present  PETROBRAS,  or  a  third  party

contracted by PETROBRAS, the necessary drawings and documents.

5.5.

The  approval  of  drawings  and  documents,  performed  by  PETROBRAS  or  a  third

party  contracted  by  PETROBRAS  for  this  purpose,  does  not  exempt  MESOCOAT  from  the

responsibility of acting in compliance with the requirements specified herein.

5.6.

PETROBRAS  reserves  the  right  to  reject  items  or  stages,  in  whole  or  in  part,

whenever they are noncompliant with the COOPERATION AGREEMENT and its Annexes.

5.7.

MESOCOAT  shall  communicate  with  PETROBRAS  20  (twenty)  business  days  in

advance,  at  least,  as  of  the  date  in  which  the  specimens  will  be  available  for  the  performance

of  the  short  duration  tests  in  laboratory.  The  beginning  of  the  tests  shall  occur  on  the  day

following to the arrival of PETROBRAS inspector(s) at the location of tests.

5.7.1.      In  the  cases  in  which  the  inspection  does  not  occur  due  to  a  fact  attributable  to

MESOCOAT,   this   shall   reimburse   PETROBRAS   all   costs   resulting   from   the   inspector’s

attendance at its facilities.

5.7.2.      The  costs  resulting  from  any  new  inspection,  due  to  the  rejected  item  or  step  in

noncompliance  with  the  provisions  in  the  COOPERATION  AGREEMENT,  shall  be  charged

from MESOCOAT.

5.7.3.      If  PETROBRAS’  inspector(s)  does(do)  not  arrive  on  the  date  scheduled  for  the

performance  of  the  tests,  MESOCOAT  will  be  free  to  conduct  the  tests  as  per  the  schedule

previously approved in the communication set forth in the item 5.7. above.

ARTICLE SIX - FINANCIAL DISBURSEMENT AND TRANSFER

6.1  -  PETROBRAS  shall  make  a  financial  disbursement  amounting  to  ***  for  the  fulfillment  of

the object of this COOPERATION AGREEMENT.

6.2 - The financial disbursement shall be transferred to MESOCOAT, subject to the following:

6.2.1.  In  the  event  of  the  execution  of  this  instrument,  the  first  transfer  of  30%  of  the  value

described in item 6.1 shall be made;

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Certain information on this page has been omitted and filed separately with the

Securities and Exchange Commission. Confidential treatment has been requested with

respect to the omitted portions.

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6.2.2.      The  Second  transfer  shall  be  made  after  the  approval  of  the  Report  of  Stage  I,

amounting to 20 % of the value of item 6.1;

6.2.3.  The  third  transfer  shall  be  made  after  four  months  as  of  the  approval  of  the  Report  of

Stage I, amounting to 30% of the value mentioned in item 6.1;

6.2.4  The  fourth  and  last  transfer  shall  be  made  after  the  approval  of  the  Final  Report,

amounting to 20% of the value of item 6.1;

6.3  Each  transfer  shall  be  the  object  of  an  exclusive  receipt,  and  supplemental  transfers  are

hereby   void,   except   when   an   adjustment   is   applicable,   whereupon   the   corresponding

supplemental transfer shall be made, under the terms established in the Adjustment Article.

6.4  The  supporting  documents  of  the  events   shall  always  set  forth  the  number  of  this

COOPERATION AGREEMENT.

6.5.  The  transfers  shall  be  made  by  means  of  deposit  to  a  specific  current  account  for  the

project,  namely:  current  account  no.  ................,  of  Bank  ......................   (code  ......),  Branch

............ (code ......). The bank deposit voucher shall be valid as settlement of the due amount.

(REQUEST THE BANK DATA TO MESOCOAT)

6.6.

Each  transfer  owed  under  this  COOPERATION  AGREEMENT  shall  be  made  by

PETROBRAS  to  MESOCOAT  in  US  dollars,  within  the  term  of  30  (thirty)  calendar  days  (or

the  first  business  day  after  that),  counted  as  of  the  closing  and  approval  of  the  corresponding

activity, indicated in item 6.2. and its sub-items.

6.7  MESOCOAT  shall  indicate,  up  to  eight  days  after  the  end  of  such  activity,  the  receipt

corresponding to the transfer value, followed, as the case may be, by the indexes used for the

ascertainment   of   such   value,   with   the   statement   of   calculations,   as   well   as   all   the

documentation requested for the transfer.

6.8

In  the  cases  in  which  the  field  qualification  tests  are  closed  due  to  unsatisfying

results,   PETROBRAS   is   exempt   from   the   obligation   of   making   the   transfers   of   the

installments following to such tests, as established in item 6.2.

6.9

Should  MESOCOAT  hand  in  the  supporting  documents  of  the  events  after  the

established  term,  the  transfer  shall  be  postponed in  as  many  days  as  the  ones  corresponding

to the delay in the delivery of such documentation.

6.10  -  MESOCOAT  shall  render  accounts  of  the  previous  transfers  in  order  to  receive  the

subsequent  one,  including  proceeds  obtained  with  financial  investments  of  the  resources

transferred and temporarily not applied in the object of this Agreement.

6.11  –  The  transfers  shall  be  released  in  strict  compliance  with  item  6.2  above,  except  in  the

cases  described  as  follows,  event  in  which  they  shall  be  retained  up  to  the  settlement  of  the

irregularities found:

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6.11.1 – whenever there is no proof of proper and regular application of the previous transfer;

6.11.2 – whenever a deviation of the purpose in the application of the transfer is found;

6.11.3  –  whenever  there  are  unjustified  delays  in  the  fulfillment  of  stages  or  phases  of  the

Work Plan (ANNEX no. 1);

6.11.4   –   whenever   there   is   default   of   MESOCOAT   related   to   other   articles   of   this

COOPERATION AGREEMENT;

6.11.5 – whenever MESOCOAT fails to adopt the remedies pointed out by PETROBRAS.

ARTICLE SEVEN – ADJUSTMENT

7.1 -

The transfers are fixed and may not be adjusted.

ARTICLE EIGHT – INTELLECTUAL PROPERTY, LICENSE AND ROYALTIES

8.1–  The  intellectual  property  resulting  from  this  COOPERATION  AGREEMENT  shall  be  the

joint  property,  divided  in  equal  proportions  between  both  Parties  in  Brazil,  as  well  as  in

abidance  by  the  intellectual  property  rights  of  ownership  of  each  one  of  the  Parties  or  of  third

parties before the execution of this COOPERATION AGREEMENT.

8.1.1

The  intellectual  property  rights  owned  by  MESOCOAT  before  the  execution  of  this

COOPERATION AGREEMENT are attached hereto as Annex 3 and, in any case, shall not be

object of co-ownership between the Parties.

8.1.2

MESOCOAT    represents    that    it    has    an    exclusive    license    of    US    patent

nos.US6174388  and  US7220936  (which  cover  the  high  density  infrared  process  using  a

plasma  arc  lamp)  in  the  field  of  use  of  wear  and  corrosion  resistance  and  is  the  owner  of

the  design  for  the  Plasma  Arc  lamp  commissioned  for  this  project;  and  that  no  other

parties  have  rights  to  exploit  this  intellectual  property  in  the  field  of  use  of  wear  and  corrosion

resistance.

8.1.3    MESOCOAT    accepts    full    responsibility    for    the    use    of    the    Plasma    Arc

Lamp technology, in particular, to the rights of the intellectual property.

8.2.

For  the  purposes  of  this  COOPERATION  AGREEMENT,  the  patent  applications

relating  to  improvements  or  inventions  co-owned  by  the  Parties  (as  provided  for  in  item  2.8.

above),  will  be  filed  in  Brazil  in  the  names  of  the  co-owners  and  will  be  filed  abroad  in  the

name  of  MESOCOAT  alone.  PETROBRAS  undertakes  to  sign  and  execute  any  documents,

assignments   and   waivers   required   for   MESOCOAT   to   file   patent   applications   in   any

jurisdictions other than Brazil.

8.2.1–   Regarding   the   Brazilian   co-owned   patent,   PETROBRAS   and   MESOCOAT   shall

ensure  one  another  an  irrevocable  and  unrestricted  license,  free  of  charge,  as  well  as  the

respective   enjoyment   of   the   intellectual   property   resulting   from   this   COOPERATION

AGREEMENT.

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8.2.2  –  The  license  mentioned  in  the  item  above  includes  the  option  of  use,  directly  by  the

Party  and  by  its  subsidiary  and  controlled  companies.  In  addition  to  this,  the  use  by  third

parties  contracted  by  the  Party  shall  be  permitted,  provided  that  the  result  of  the  intellectual

property is applied in the industrial activities of the Party.

8.3 – Considering the joint property patent described in item 8.1, MESOCOAT, its subsidiaries

and  assignees,  shall  receive  a  full  non-exclusive  license  for  practicing,  having  practiced  and

for   trading   the   products   incorporating   such   patent,   including   for   local   and   international

competitors  of  PETROBRAS,  subject  to  the  terms  of  trade  described  in  items  8.4  and  8.7

below.

8.4  –  A  ***,  whenever  orders  are  placed,  shall  be  given  to  PETROBRAS,  which  shall  also

cover  the  relevant  projects  of  PETROBRAS  in  other  countries  my  means  of  MESOCOAT  or

authorized manufacturer, in accordance with the following progression:

a)   *** in the first *** years of production;

b)   *** during *** years, after the *** year;

c)   ***, thereafter up to the patent term expiration.

8.4.1

Orders  placed  by  PETROBRAS  shall,  whenever  possible  and  wherever  they  take

place,  have  preference  over  orders  placed  by  other  clients  subject  to  any  financial  assistance

that  may  have  been  received  to  build  the  production  facility  and  the  terms  under  which  that

financing has been made.

8.4.2

In  the  event  MESOCOAT  receive  an  offer  by  any  third  party  to  finance  a

production  facility  outside  of  Brazil,  PETROBRAS  shall  have  20  (twenty)  business

days  to  exercise  the  right  of  first  refusal  to  accept  the  same  terms  of  financing  or

assistance.

8.5  –  It  is  hereby  established  that  the  Parties  may  grant  non-exclusive  licenses,  in  Brazil,  for

third  parties  to  use  the  technology  object  of  this  COOPERATION  AGREEMENT  by  means  of

an  express  and  previous  authorization  of  the  other  holder  of  the  patent  and  the  respective

compensation  of  the  Royalties  owed,  according  to  item  8.8,  and  with  the  exception  of  the

assumption described in article 8.6.

8.6  –  With  respect  to  the  right  of  granting  licenses  for  third  parties  in  Brazil  made  by

MESOCOAT,  PETROBRAS  may  use  the  veto  right  for  such  requests  for  licensing  ,  up  to  the

final  term  of  validity  of  the  Patent.  Due  to  the  exercise  of  the  veto  right  by  PETROBRAS,

MESOCOAT  shall  be  entitled  to  one  single  compensation  for  the  first  veto,  at  the  value

equivalent  to  100%  of  the  corresponding  amount  of  the  hindered  business,  provided  that  the

assumption considered is proven. On other vetoes, there shall be no room for compensation.

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Securities and Exchange Commission. Confidential treatment has been requested with

respect to the omitted portions.

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8.7  –  MESOCOAT  shall  take  reasonable  and  prudent  actions  to  promote  the  commercial

availability  of  the  product  and  technology  in  Brazil,  with  a  price  compatible  to  the  market.

Should  this  not  occur  in  reasonable  time  of  at  least  three  years,  PETROBRAS  may  freely

license, with no need of previous authorization from MESOCOAT, third parties to produce the

material,  using  the  technology  in  issue,  in  order  to  promote  the  development  of  suppliers  in

Brazil.

8.8    The  Parties  agree  to  stipulate  the  value  of  royalties  at  ***%  for  the  net  value  of

licensing,   to   third   parties,   of   the   technology   resulting   from   this   Cooperation

Agreement.

8.9     In  the  event  of  the  assignment  of  the  ownership  of  the  patent  rights,  resulting  from  this

COOPERATION AGREEMENT, preference shall be given to  the other Party for the  purchase

of  property  portion  of  ownership,  in  equal  conditions,  applying  the  same  rules  for  licensing,

including veto, set forth in item 8.6 above.

8.9.1. The Parties have the right of first refusal to acquire the portion of ownership of the other

Party  on  equal  terms  and  price  conditions  to  those  offered  to  third  parties.  Such  right  of  first

refusal  shall  be  exercised  by  the  Party  within  thirty  (30)  days  after  the  receipt  of  a  written

notice  by  the  other  Party,  which  shall  include  the  name  of  the  third  party  and  the  value  and

conditions of the transaction..

8.10  -  In  all  protection  request  forwarded  to  the  proper  authorities  the  names  of  the  claimants

of both Interest Parties shall be mentioned, observing item 8.2 above.

8.11  –  The  Interest  Parties  shall  be  responsible  for  the  application  for  registry  of  patentable

results, for the follow-up of the registry concession procedure, as well as of its maintenance in

effect, observing item 8.2 above.

8.11.1  -  The  expenses  of  legal  protection  of  the  results  shall  be  divided  at  the  proportion  of

ownership established in item 8.1 above, observing item 8.2 above.

8.12

The  PARTIES  shall  divide,  at  the  proportion  of  ownership  of  the  intellectual  property

established  in  item  8.1,  the  fees  related  to  any  claim  or  claiming  of  rights  of  intellectual

property in Brazil, answering, at the same proportion, for the burden that may be supported in

consequence of such demands or claims.

ARTICLE NINE - ASSIGNMENT AND TRANSFERENCE

9.1.

The   assignment   or   transference   of   duties   established   in   this   instrument   is   not

permitted,  including  rights  to  due  transfers  or  payable  in  the  future,  without  prior  consent  of

the Parties.

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ARTICLE TEN - ANNEXES

10.1.

The annexes of this COOPERATION AGREEMENT are:

Annex 1 – Work Plan***

Annex 2 – Confidentiality Agreement

Annex 3 – Exclusive Intellectual Property

ARTICLE ELEVEN – RESPONSIBILITIES

11.1  PETROBRAS  and  MESOCOAT’s  responsibility  for  damages  shall  be  limited  to  direct

damages,  in  accordance  with  the  Brazilian  Civil  Code  and  applicable  legislation,  excluded

losses  of  profits  and  consequential  losses,  direct  damages  limited  to  100%  (one  hundred

percent) of the total adjusted value of this COOPERATION AGREEMENT.

11.2.

Each  one  of  the  Parties  shall  be  fully  liable  for   damages  it  causes  to  third  parties,

secured  the  right  of  redress,  as  required  by  law,  including  third-part  practice,  in  order  to

undertake right of defense.

11.2.1  –  It  shall  be  object  of  recourse  what  the  third  party  effectively  may  acquire  in  or  out  of

court,  plus  all  incurred  expenses,  such  as  legal  costs,  attorney's  fees,  out-of-court  expenses,

among others.

ARTICLE TWELVE - CONFIDENTIALITY

12.1-

The  parties  have  executed  a  previous  Confidentiality  Agreement,  as  of  August  3rd,

2010,  which  now  is  part  of  this  COOPERATION  AGREEMENT  in  all  of  its  articles,  and  binds

both  parties  equally.  The  Confidentiality  Agreement  is  in  the  Annex  2  of  this  COOPERATION

AGREEMENT.

12.2  -   The  Parties  are  bound  on  keeping  under  confidentiality,  for  the  term  of  20  (twenty)

years, all information that is disclosed to each other, aiming at the execution of the agreement

purpose.

12.2.1 -   The   Parties,   for   purposes   of  confidentiality,  is   bound  by  its  board  of   directors,

employees, committed parties and representatives in every way.

12.2.2 -   All  information  obtained  by  the  Parties  during  the  execution  of  this  COOPERATION

AGREEMENT,  at  their  facilities  or  originated  from  the  Parties,  even  if  not  directly  related  to

the execution of this COOPERATION AGREEMENT, shall be kept under confidentiality under

the terms and conditions of this Article.

_________________

***

Certain information on this page has been omitted and filed separately with the

Securities and Exchange Commission. Confidential treatment has been requested with

respect to the omitted portions.

9

CONFIDENCIAL

N.o________________

12.3– The Parties acknowledges that the technical specifications, for purposes of execution of

this  COOPERATION  AGREEMENT,  are  not  liable  of  appropriation,  being  property  of  each  of

them.

12.4 - The non-compliance with the confidentiality commitment shall result in:

a) denounce of this COOPERATION AGREEMENT, if in force;

b) under any hypothesis, in responsibility for damages;

12.5   –   Only   the   following   hypothesis   shall   stand   as   exception   for   the   confidentiality

commitment:

a) information proven as known before the negotiations;

b)  upon  prior  and  express  consent  from  PETROBRAS  regarding  the  release  of  confidentiality

commitment,  manifested  as  an  authorization  of  highest  authority  of  the  body  responsible  for

the COOPERATION AGREEMENT;

c)  the  information  has  been  proven  as  knows  by  another  source,  legally  and  legitimately,

regardless of this COOPERATION AGREEMENT;

d)  legal  and/or  government  determination  for  knowledge  of  information,  as  long  as  notified

forthwith  to  PETROBRAS,  beforehand  to  the  release,  and  being  the  defendant  required

justice secret in its legal  and/or administrative tract.

12.6-  The  Parties  agree  that  the  disclosure  of  any  issue  arising  out  of  the  implementation  of

the  object  of  this  agreement,  by  means  of  publications,  reports,  meetings  and  other  notices

demands prior approval from both parties.

12.7 - The Party shall be consulted in thirty calendar days as of the request receipt, to provide

a judgment on the requested disclosure.

12.8  –  The  consulted  Party  may,  in  a  justified  form,  authorize  the  disclosure  partially,  or  even

totally, under the condition that a new wording is adopted by the Parties.

12.9  -  A  MESOCOAT  request  shall  be  handed  to  PETROBRAS  by  MESOCOAT’s  Technical

Coordinator, specially designated by the Cooperation Agreements.

12.10  –  Upon  request  from  PETROBRAS,  a  MESOCOAT  technician  responsible  for  the

monitoring of services shall be sent forthwith to the Manager, at PETROBRAS sole expenses.

12.11 - The publications, notices or announcements of any type related to the development of

services  and  other  activities  related  to  this  COOPERATION  AGREEMENT  shall  mention,

explicitly,  PETROBRAS  and  MESOCOAT’s  interest  as  entities  that  promote  such  activities,

with the optional use of their logos.

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CONFIDENCIAL

N.o________________

12.12  -   Should  the  Parties  logos  be  attached  for  the  purpose  above,  its  internal  rules  of  use

shall  be  observed.  The  logo  standards  of  each  of  the  Parties  shall  be  sent  by  electronic

means and must be observed by the Parties.

ARTICLE THIRTEEN – TERMINATION AND DENOUNCE

13.1  -  This  COOPERATION  AGREEMET  shall  be  terminated  by  operation  of  law  after  its

duration  is  elapsed  should  there  be  no  extension,  as  well  as  when  the  fulfillment  of  its  object

becomes  impossible,  or  due  to  mutual  consent  of  the  parties,  without  any  compensation,

except  for  the  right  of  rendering  of  accounts  for  the  values  transferred  and  whose  use  is  not

duly proven upon termination of this COOPERATION AGREEMENT.

13.2  –  Both  parties  may,  at  any  time,  denounce  this  COOPERATION  AGREEMENT,  upon

prior  notification,  whose  effects  shall  be  produced  within  the  deadline  of  30  (thirty)  days  as  of

its receipt.

13.3  –  Under  any  hypothesis,  the  confidentiality  and  intellectual  property  articles  are  safe,  as

well as the financial obligations already assumed.

13.4 - In case of termination of this COOPERATION AGREEMENT, MESOCOAT:

13.4.1  –  shall  render  accounts  and  refund  the  values  whose  usage  is  not  proven,  under  pain

of legitimating the passing party and demand them in court;

13.4.2  –  shall  refund  the  sums  of  financial  contributions  in  their  possession,  including  the

revenues obtained due  to stipulation in item 6.1  and that, although transferred, have  not been

used or have been used improperly.

13.5.

Upon  denounce  of  the  COOPERATION  AGREEMENT  by  initiative  of   MESOCOAT,

he  or  she  shall  be  obliged  to  refund  all  transfers  performed  by  PETROBRAS,  regardless  of

proven   usage,   with   monetary   restatement,   besides   the   materials   possibly   provided   by

PETROBRAS or the corresponding value.

13.6.

In   case   of   a   breach   of   any   article   of   this   COOPERATION   AGREEMENT   by

MESOCOAT,  PETROBRAS,  before  using   its  right  to  denounce  this  agreement,  shall,  within

30 (thirty) days of becoming aware of the breach:

a)  stop  payment  orders  of  the  transfers,  until  MESOCOAT  fulfills  completely  the  article  or

condition infringed;

b)  fix  compatible  deadline,  at  its  discretion,  with  the  arrangements  that  should  be  adopted,  in

which MESOCOAT shall be obliged to solve the breach.

13.7  There  shall  be  deemed  grounds  for  termination  of  this  COOPERATION  AGREEMENT

the alteration of the corporate purposes or of MESOCOAT’s company structure which may, at

the   discretion   of   PETROBRAS,   affect   adversely   the   execution   of   the   COOPERATION

AGREEMENT.

11

CONFIDENCIAL

N.o________________

13.8.

In  the  event  of  termination  of  this  COOPERATION  AGREEMENT  motivated  by

MESOCOAT,  he  or  she  shall  be  obliged  to  repay  the  value  of  the  transfers  already  made  by

PETROBRAS,  duly  adjusted  according  to  description  of  Article  Eight,  besides  the  materials

possible provided by PETROBRAS or the corresponding value.

13.9.

This   COOPERATION   AGREEMENT   may,   further   to   13.2   be   terminated   by

PETROBRAS,  in  which  event  the  values  corresponding  to  the  part  of  the  activities  already

performed by MESOCOAT shall be transferred to MESOCOAT.

ARTICLE FOURTEEN - EFFECTIVENESS

14.1.

The  period  of  effectiveness  of  this  COOPERATION  AGREEMENT  shall  be  of  18

(eighteen)   months,   as   of   its   signature,   and   it   may   be   extended,   by   means   of   additive

solemnized by the PARTIES.

ARTICLE FIFTEEN – AMENDMENTS TO THE COOPERATION AGREEMENT

15.1.

The  PARTIES  may  mutually  agree  to  amend  the  COOPERATION  AGREEMENT

upon execution of an Addendum.

ARTICLE SIXTEEN – PREVAILING LANGUAGE

16.1   –   The   PARTIES   elect   as   prevailing   language   the   English   language   in   cases   of

divergences  between  bilingual  contract  instruments  –  in  Portuguese/English  languages  –

prevailing the Cooperation Agreement written in English.

ARTICLE SEVENTEEN - VENUE

17.1  –  Any  controversy,  conflict  or  claim  arising  out  or  of  any  other  form  related  to  this

COOPERATION AGREEMENT shall be firstly negotiated amicably and in good faith between

the PARTIES, aiming at the delivery of a binding agreement formalization for the Parties.

17.2  -  Should  the  negotiations  referred  to  in  item  17.1  be  frustrated,  completely  or  partially,

the  Parties  undertake  to  submit  to  arbitrage  any  disputes  originated  from  the  execution  or

interpretation  of  the  terms  of  this  COOPERATION  AGREEMENT,  expressly  renouncing  to

any legal means for the solution of possible existing disputes.

17.2.1  -  The  Parties  may  only  appeal  to  Judiciary  Courts  for  purposes  of  acquisition  of

preliminary  injunctions,  preventive  procedures  or  preliminary  matters,  once  there  is  imminent

injury to right.

17.3  –  The  application  and  interpretation  of  this  COOPERATION  AGREEMENT  shall  be

governed  by  the  Brazilian  legislation  and  its  principles,  excluding  any  other  laws,  by-laws,

regulations,  orders  or  precedents  of  judicial  decisions  that  would  demand  or  would  have  to

give preference for the application of another venue laws.

12

CONFIDENCIAL

N.o________________

17.3.1  –  The  arbitrary  judgment  based  on  decision  of  equity  is  authorized.  (should  there  be

interest  in  the  permission  of  trial  without  properly  legal  fundaments,  due  to  common  practice

and usual market practices).

17.4  -  The  arbitrage  shall  be  conducted  by  the  Court  of  International  Arbitration  in  London,

England,  (United  Kingdom),  under  the  procedure  Rules  of  the  London  Court  of  International

Arbitration (LCIA) in force at the time the arbitrage starts.

17.4.1  –  Any  issues  not  considered  in  this  article  or  in  the  procedure  rulings  of  the  Court  of

Arbitration elected in item 17.4 shall be solved based on the Brazilian law of arbitrage in force.

17.5.  -  PETROBRAS  shall  name  an  arbitrator  and  MESOCOAT  shall  indicate  another  one,

and both arbitrators thus designated shall indicate a third one to act as Chairman.

17.6.  –  The  official  language  of  arbitrage  shall  be  English  and  all  arbitrators  shall  be  fluent  in

such language.

17.7.  –The  arbitrator’s  judgment  shall  be  whole,  conclusive  and  binding for  all  Parties,  and  he

or  she  may  determine  attorney’s  fees  and  costs,  including  those  related  to  the  performance

and procedure of arbitrage and compensation of the arbitrators, attributing them exclusively to

one or, under any proportion, to both parties.

17.8.  -  The  Judgment  may  be  executed  by  the  party  in  any  country,  answering  to  its  internal

standards regarding the executive matter.

In  witness  whereof,  the  PARTIES  sign  this  instrument  in  two  counterparts  of  equal  content

and form, jointly with the two witnesses below.

Rio de Janeiro, .....................................

/s/ Paulo Renato Almeida Cellular

PETROLEO BRASILIERO S.A.- PETROBRAS

Paulo Renato Almeida Cellular

Engineering Manager of Transportion the Pipeline and Gas

ENGENHARIA/IETEG/ETEG

/s/ Andrew Sherman

MESOCOAT Inc.

Andrew J. Sherman

CEO

WITNESSES:

Witness 1: /s/ Jorge Fernando Pereira Coelho

Name:  Jorge Fernando Pereira Coelho

Witness 2:  /s/ Robert H. Miller

Name:  Robert H. Miller

13

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT

(INDICATED BY ASTERISKS HAS BEEN OMITTED AND FILED SEPERATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT

ANNEX I

COOPERATION AGREEMENT N.° 0802.0064302.10.9

CONFIDENTIAL

MESO COAT

Work Plan

CermaClad - Plasma Arc Lamp Fused Alloy Cladding for Inner Pipe Surfaces

Amended 2011/01/05

1-  Company Data

1.1 Name: MesoCoat, Inc.

Address: 24112 Rockwell Dr.

Euclid, OH USA 44117

Tel: 00 +1 216 453 0866

Fax: 00 +1 216 404 0054

E-Mail:  asherman@mesocoat.com

Internet: www.mesocoat.com

Main Activity: Cermet and metallurgical coating material, equipment and application development

1.2 Coordinators:

Name: ***

Profession: ***

Address: Same as above

Tel: 00 +1 216 453 0866 X: ***

E-mail: ***

Name: ***

Profession: ***

Address: ***

Tel: ***

Email: ***

2-  Project Data:

2.1 Title: CermaClad Focused Energy Metal Fusion Cladding and Coating

2.2 Program: Material and process characterization, and qualification for production application of plasma arc lamp

fused metal cladding to plate and pipe interior surfaces.

2.3 Project Duration: 18 months.

2.4 Research Objectives

Identify  and  characterize  the  material,  equipment,  and  installation  process  for  the  production  application  of  ***  thick

plasma  arc  lamp  fuseable  ***  metallurgically  bonded  cladding  to  plate  and  pipe  interior  surfaces.  The  project  will

consist of 3 phases. Each phase will be based upon completion milestones as described herein.

_________________

***

Certain information on this page has been omitted and filed separately with the

Securities and Exchange Commission. Confidential treatment has been requested

with respect to the omitted portions.

ANNEX I

COOPERATION AGREEMENT N.° 0802.0064302.10.9

CONFIDENTIAL

MESO COAT

2.5 Benefits

The  number  of  projects  experiencing  temperatures,  pressures,  abrasion,  and/or  chemistries  beyond  the  performance

capability  of  thermoset  and  thermoplastic  coating  systems  is  growing  rapidly.  The  alternative  is  special  alloy  steel.

CermaClad   employs   a   fusion   process   that   minimally   impacts   the   properties   of   the   base   metal.   Designed   for

application  at  the  coating  plant  or  mill  level,  this  rapid  fusion  process  is  suitable  for  application  to  interior  and  exterior

of pipe as well as plate prior to rolling.

Overall, development of the CermaClad process will produce a reliable and highly cost competitive method of

applying a functional metal alloy to a common steel surface in the form of a cladding or coating.

2.6 Location

Primary development through Phase 2 will be preformed and/or managed at the Mesocoat facility in Euclid, Ohio

USA. Phase 3 is anticipated to be conducted at an agreed upon location in Brazil.

Material  and  system  testing  through  Phase  2  will  be  concluded,  depending  upon  purpose,  at  three  locations.

Screening  tests  of  preliminary/prototype  samples  will  be  performed  at  the  Mesocoat  facility  for  the  purpose  of  risk

reduction  and to provide  an  improved understanding  of  the  materials  and  system.  Qualification testing,  based upon  a

set  of  determined  test  protocols,  will  be  performed  by  an  outside  facility  such  as  ***  under  the  direction  of  ***  or  as

mutually  agreed  upon  by  all  project  partners.  A  prototype  pipe  section  will  be  delivered  to  Petrobras  for  testing  at  a

facility of their choice using parameters as directed by Petrobras and identified through the research effort/program.

2.7 Deliverables:

The  primary  effort  of  identification  and  characterization  of  the  material,  equipment,  and  installation  process  will  be

performed  in  two  phases  based  upon  an  established  set  of  completion  milestones,  culminating  in  the  delivery  of  a

completed  prototype  pipe  section  to  Petrobras  for  evaluation  and  testing.  Upon  successful  completion  of  Phases  1

and  2,  funding  for  a  third  project  phase  is  anticipated  for  the  design  and  installation  of  a  pilot  level  internal  pipe

cladding facility at a mutually agreeable location.

The  scheduled  duration  of  Phase  I  is  8  months  with  the  objective  of  characterizing  and  qualifying  the  material  and

process.  Phase  1  will  also  include  the  design  and  placement  of  an  order  for  a  plasma  arc  lamp  head  suitable  for

operating  inside  a  pipe  section.  The  Phase  II  period  of  performance  will  be  10  months  with  the  objective  to  complete

material  and  process  development  including  designing  and  manufacturing  a  prototype  facility  for  cladding  the  inner

surface of a 10 inch pipe.

Deliverables for each of the project phases will be tied to particular project milestones as listed below. The following

assumptions have been made:

•  Phase I testing and qualification coupons will be produced in-house at MesoCoat’s facilities in Euclid, OH.

      •  Phase II testing and qualification pipe sections will be produced at the *** facility in Cleveland, OH.

      •  Petrobras will provide pipe sections for coating application, fusion process development and screening and

qualification testing.

•  Payment schedule based upon the totals listed in Section 2.11shall be:

30% up to *** working days after Cooperation Agreement Signature;

20% on completion and approval of ***;

30% after conclusion of steps *** and ***;

20% upon completion and approval of ***.

_________________

***

Certain information on this page has been omitted and filed separately with the

Securities and Exchange Commission. Confidential treatment has been requested

with respect to the omitted portions.

ANNEX I

COOPERATION AGREEMENT N.° 0802.0064302.10.9

CONFIDENTIAL

MESO COAT

Phase I: Materials and Process Qualification and Lamp Head Configuration

Duration: 8 months

Cost:

***

M1.   ***

M2.   ***

M3.   ***

M4.    ***

M5.    ***

M6.    ***

M7.    ***

Phase II: Scale-up of process and equipment capability using *** facility in order to demonstrate, verify, and identify

design requirements to construct a prototype facility for coating the inner surface of a *** diameter pipe

Duration: 10 months

Cost:

***

M8.     ***

M9.     ***

M10.    ***

M11.    ***

M12.    ***

M13.    ***

M14.    ***

M15.    ***

Phase III: Finalize the design and construct a pilot plant coating facility in Brazil with the capacity for producing

cladding on the interior diameter of pipes and tubes with section lengths of at least ***.

The Funding Mechanism and Milestone Schedule for Phase Ill is not part of the Plan. To be determined and finalized

during the Phase II work effort.

2.8 Control Mechanism:

Submittal of bi-monthly progress reports according to the Milestone Schedule and technical review, including follow-

on funding requests and status of funds reports.

_________________

***

Certain information on this page has been omitted and filed separately with the

Securities and Exchange Commission. Confidential treatment has been requested

with respect to the omitted portions.

ANNEX I

COOPERATION AGREEMENT N. ° 0802.0064302.10.9

CONFIDENTIAL

MESO COAT

2.9 Team:

2.9.1 — Technical Team

Name

Title

Specialization

Company

***

***

Coating process and equipment

MesoCoat, Inc.

***

***

Project Oversight

MesoCoat,Inc.

***

***

Quality Control and

MesoCoat, Inc.

A

***

***

Equipment design and integration      MesoCoat,Inc.

Cladding and Application

***

***

Specialist

MesaCoat, Inc.

***

***

Metallography, Coating Analysis

MesoCoat, Inc.

***

***

Application and Processing

MesoCoat,Inc.

***

***

Project Management

***

2.9.2

Supporting Team (Administrative, Financing, etc.)

Name

Title

Specialization

Company

***

***

Application Analysis

MesoCoat, Inc

Financial

***

***

administration

MesoCoat, Inc.

and analysis

_________________

***

Certain information on this page has been omitted and filed separately with the

Securities and Exchange Commission. Confidential treatment has been requested

with respect to the omitted portions.

ANNEX I

COOPERATION AGREEMENT N.° 0802.0064302.10.9

MESO COAT

CONFIDENTIAL

2.10 Schedule:

Month

Phase 1 Activity

1

2

3

4

5

6

7

8

M1

X

M2

X

M3

X

M4

X

M5

X

M6

X

M7

X

Month

Phase 2 Activity

9

10      11      12      13      14      15      16      17      18

M8

X

M9

X

M10

X

M11

X

M12

X

M13

X

M14

X

M15

X

ANNEX I

COOPERATION AGREEMENT N.° 0802.0064302.10.9

MESO COAT

CONFIDENTIAL

2.11 Budget:

Personnel

Position

Hours

Rate

Total

Chief Engineering Officer

***

$***

$***

Chief Technical Officer

***

$***

$***

Coatings General Manager

***

$***

$***

Coatings Quality Manager

***

$***

$***

Systems Engineer

***

$***

$***

Coatings Technician

***

$***

$***

Metallographer

***

$***

$***

Business Manager

***

$***

$***

Administrative Manager

***

$***

$***

Labor Sub-Total

$***

Equipment

Description

QTY

Cost

Total

PAL Head

***

$***

$***

Translation System

***

$***

$***

Manipulation System

***

$***

$***

Position Controller

***

$***

$***

Alignment and Leveling

***

$***

$***

Gas Generator

***

$***

$***

Equipment Sub-Total

$***

Other Direct Costs

Materials and Supplies-Sub Total

$***

Subcontracts

Company

Description

Cost

***

Project Management

$***

***

Plasma Arc Lamp coating development

$***

(***)

Outside Testing

Perform qualification testing at neutral

$***

laboratory

Equipment Design

Design and oversee prototype unit

$***

manufacture and systems integration

Subcontractors Sub-Total

$***

Project Total

$***

_________________

***  Certain  information  on  this  page  has  been  omitted  and  filed  separately  with  the

Securities  and  Exchange  Commission.  Confidential  treatment  has  been  requested

with respect to the omitted portions.

PETROLEO BRASILEIRO S.A.

CONFIDENTIAL

PETROBRAS

ANNEX II

COOPERATION AGREEMENT N.° 0802.0064302.10.9

CONFIDENTIALITY AGREEMENT

THIS      CONFIDENTIALITY      AGREEMENT      ( h e re ina f te r

r efe r r ed

t o

a s

t he

( " A g r ee me n t ")   i s   ma d e   t hi s   3 t h   d a y   o f   j ul y   of   2 01 0  ("Effective  Date"),  by  and

between   PETROLEO   BRASILEIRO   SA.   -   PETROBRAS,   a   public   and   private   joint   stock

company,  organized  and  existing  under  the  laws  of  the  Federative  Republic  of  Brazil,  enrolled

as  a  corporate  taxpayer  (C.N.P.J.)  under  number  33.000167/0001-01,  with  main  office  at  Av.

Republica  do  Chile,  65,  Rio  de  Janeiro,  RJ,  Brazil,  (hereinafter  referred  to  as  PETROBRAS")

herein  represented  by  the  Manager  of  ENGENHARIA/IETEG/ETEG/DTEC,Mr.  Paulo  Marcelo

de  Figueiredo  Montes,  and  MESOCOAT  Advanced  Coating  Technologies  with  main  office  at

24112  Rockwell  Drive  Euclid,  Ohio  44117,  USA,  herein  represented  by  The  Chief  Executive

Officer Mr. Andrew J. Sherman.

PETROBRAS and MESOCOAT Advanced Coating Technologies are herein jointly

referred to as "PARTIES" and individually as "PARTY".

WHEREAS

•     Each  PARTY  is  interested  in  disclosing  certain  of  its  confidential  and  proprietary

information    related    to    that    PARTY's    "TECHNOLOGY"    as    defined    herein

(hereinafter  referred  to  as  "CONFIDENTIAL  INFORMATION"  as  defined  herein);

and  each  PARTY  desires  to  keep  secret  and  proprietary  to  itself  the  content  of

such disclosure;

•     Each    PARTY    desires    to    receive    the    other    PARTY's    CONFIDENTIAL

INFORMATION  to  further  development  and  transition  to  commercialization  of

plasma arc lamp fused CRA cladding (hereinafter referred to as "PURPOSE").

Now, therefore and in consideration of the mutual promises set forth herein below, the PARTIES

hereto agree as follows:

ARTICLE 1— DEFINITIONS

1.1 "CONFIDENTIAL   INFORMATION"   means   all   information   as   well   as   all   or   part   of   the

information  contained  therein,  disclosed  by  the  DISCLOSING  PARTY  to  the  RECEIVING

PARTY,  orally and/or  in  writing  on  any support  or  media  related  to  the  PURPOSE,  identified

as confidential at the time of disclosure or within thirty (30) days of its disclosure.

1.2 "DISCLOSING   PARTY”   -   means   the   PARTY   which   discloses   its   CONFIDENTIAL

INFORMATION to the RECEIVING PARTY

PETROLEO BRASILEIRO S.A.

CONFIDENTIAL

PETROBRAS

ANNEX II

COOPERATION AGREEMENT N.° 0802.0064302.10.9

2/7

1.3    "RECEIVING    PARTY"    -    means    the    PARTY    which    receive    the    other    PARTY's

CONFIDENTIAL INFORMATION.

1.4   "TECHNOLOGY"  -  as  to  MESOCOAT  means  equipment,  materials,  processes  related  to

cladding;  as  to  PETROBRAS  means  metallurgy,  application  and  testing  of  metallurgical

products, and, field data.

ARTICLE 2— CONFIDENTIAL INFORMATION

2.1      The  RECEIVING  PARTY  shall  treat  the  CONFIDENTIAL  INFORMATION  in  the  same

manner  as  it  treats  its  own  CONFIDENTIAL  INFORMATION  and  shall  not,  without  any

prior    written    consent    of    the    DISCLOSING    PARTY,    use    the    CONFIDENTIAL

INFORMATION for any other purpose than the PURPOSE.

2.2     The  RECEIVING  PARTY  agrees  that  the  CONFIDENTIAL  INFORMATION  shall  be  kept

strictly  confidential  for  a  period  of  20  (twenty)  years  from  the  Effective  Date  and  shall  not

be  sold,  traded,  published  or  otherwise  disclosed  to  anyone  in  any  manner  whatsoever,

including   by   means   of   photocopy,   reproduction   or   electronic   media,   without   the

DISCLOSING  PARTY'S  prior  written  consent,  except  as  provided  in  this  Agreement.  The

disclosure  period  shall  extend  for  a  period  of  36  (thirty  six)  months  from  the  Effective

Date.

2.3     The  RECEIVING  PARTY  may  disclose  the  CONFIDENTIAL  INFORMATION  without  the

DISCLOSING PARTY'S prior written consent only to the extent such information:

(a)  is already known to the RECEIVING PARTY as of the date of disclosure hereunder;

(b) is  already  in  possession  of  the  public  or  becomes  available  to  the  public  other  than

through  the  act  or  omission  of  the  RECEIVING  PARTY  or  of  any  other  person  to  whom

CONFIDENTIAL INFORMATION is disclosed pursuant to this Agreement;

(c)  is  required  to  be  disclosed  under  applicable  law,  stock  exchange  regulations  or  by  a

governmental  order,  decree,  regulation  or  rule  (provided  that  the  RECEIVING  PARTY

shall  make  all  reasonable  efforts  to  give  prompt  written  notice  to  the  DISCLOSING

PARTY prior to such disclosure);

(d) is  acquired  independently  from  a  third  party  that  represents  that  it  has  the  right  to

disseminate such information at the time it is acquired by the RECEIVING PARTY; or

(e) is   developed   by   the   RECEIVING   PARTY   independently   of   the   CONFIDENTIAL

INFORMATION received from the DISCLOSING PARTY.

(f)   is  required  to  be  disclosed  due  to  legal  and/or  government  order,  provided  that  such

order  is  promptly  notified  to  the  DISCLOSING  PARTY  before  the  release,  requiring

secrecy regarding its legal/administration handling.

PETROLEO BRASILEIRO S.A.

CONFIDENTIAL

PETROBRAS

ANNEX II

COOPERATION AGREEMENT N.° 0802.0064302.10.9

3/7

2.4

CONFIDENTIAL   INFORMATION   shall   not   be   deemed   to   be   within   the   foregoing

exceptions merely because it is:

(1)  embraced  by  more  general  information  in  the  public  domain  or  in  the  RECEIVING

PARTY'S possession or;

(2)  a   combination   that   can   be   pieced   together   to   reconstruct   the   CONFIDENTIAL

INFORMATION  from  multiple  sources,  none  of  which  shows  the  whole  combination,

its principle of operation and method of use.

2.5     The  RECEIVING  PARTY  shall  be  responsible  for  ensuring  that  all  persons  to  whom  the

CONFIDENTIAL  INFORMATION  is  disclosed  under  this  Agreement  shall  keep  such

information  confidential  and  shall  not  disclose  or  divulge  the  same  to  any  unauthorized

person.

2.6

The  RECEIVING  PARTY  shall  only  disclose  the  CONFIDENTIAL  INFORMATION  to

those  of  its  employees  who  have  a  need  to  know  it  for  the  PURPOSE,  who  have  been

informed  of  the  obligations  of  confidence  and  nonuse  under  this  Agreement  and  who  are

bound to the RECEIVING PARTY by obligations of non-use and secrecy no less stringent

than those contained in this Agreement.

2.7     The   RECEIVING   PARTY,   for   the   purpose   of   confidentiality,   binds   their   managers,

employees, agents and representatives

2.8

If  the  RECEIVING  PARTY  is  authorized  to  disclose  the  CONFIDENTIAL  INFORMATION

to  either  in  whole  or  in  part,  it  shall  be  a  condition  of  such  disclosure  that  prior  to  any

disclosure,  the  third  party  enter  into  an  appropriate  agreement  with  the  RECEIVING

PARTY,  whereby  the  terms  of  the  present  Agreement  shall  be  respected  and  agreed

upon by said third party.

ARTICLE 3— LIABILITIES

3.1    The  RECEIVING  PARTY  hereby  acknowledges  that  the  practice  of  disclosure  other  than

under  the  exceptions  covered  herein  shall  represent  a  violation  which  shall  entitle  the

DISCLOSING PARTY  to  seek injunctive  relief  to prevent  breaches  of this  Agreement  and

to  specifically enforce  the  terms  and  provisions  hereof,  in  addition  to  any other  remedy to

which the DISCLOSING PARTY may be entitled, at law or in equity.

3.2     Neither  PARTY  shall  be  liable  in  an  action  initiated  by  one  against  the  other  for  special,

indirect   or   consequential   damages   resulting   from   or   arising   out   of   this   Agreement,

including, without limitation, loss of profit or business interruptions, however same may be

caused.

PETROLEO BRASILEIRO S.A.

CONFIDENTIAL

PETROBRAS

ANNEX II

COOPERATION AGREEMENT N.° 0802.0064302.10.9

4/7

3.3    The DISCLOSING  PARTY  hereby represents  and  warrants  that it  has  the  right authority to

disclose    the    CONFIDENTIAL    INFORMATION    to    RECEIVING    PARTY    (or    its

representatives).   The   DISCLOSING   PARTY,   however,   makes   no   representations   or

warranties,  express  or  implied,  as  to  the  quality,  accuracy  and  completeness  of  the

CONFIDENTIAL  INFORMATION  disclosed  hereunder.  The  RECEIVING  PARTYagrees

that the DISCLOSING PARTY shall have no liability whatsoever with respect to the use of

or reliance upon the CONFIDENTIAL INFORMATION by the RECEIVING PARTY

ARTICLE 4— TERMINATION

4.1     Subject  to  the  provisions  of  this  Agreement  either  PARTY  may,  on  the  giving  one  (1)

month's written notice, terminate this Agreement.

4.2    The  confidentiality  obligations  set  forth  in  this  Agreement  shall  survive  the  termination  of

this Agreement howsoever caused.

ARTICLE 5— AGENCY

5.1     No agency, partnership, fiduciary relationship, joint venture or other joint elation is created

between  the  PARTIES  by  this  Agreement.  Neither  PARTY  has  the  authority  to  bind  the

other  PARTY  or  to  incur  any  obligation  on  its  behalf.  Specially,  this  Agreement  shall  not

be construed in any manner to be an obligation to enter into a contract.

ARTICLE 6 — RETURN OF CONFIDENTIAL INFORMATION

6.1    The DISCLOSING PARTY may demand the return of the CONFIDENTIAL INFORMATION

at any time upon giving written notice.

6.2     Within thirty (30) days of receipt of such notice, the RECEIVING PARTY shall return- all of

the original CONFIDENTIAL INFORMATION and shall destroy or caused to be destroyed

all  copies  and  reproductions  in  whatever  form,  in  its  possession  and  in  the  possession  of

persons  to  whom  it  was  disclosed  to  pursuant  to  this  Agreement.   The  RECEIVNG

PARTY  agrees  to  provide  the  DISCLOSING  PARTY  with  an  affidavit  attesting  to  the

destruction  of  the  portion  of  the  CONFIDENTIAL  INFORMATION  described  above  within

10 (ten) days after its destruction is complete.

ARTICLE 7— ENTIRE AGREEMENT

7.1      This  Agreement  constitutes  the  entire  agreement  of  the  PARTIES  with  respect  to  the

disclosure  of  the  CONFIDENTIAL  INFORMATION  and  supersedes  and  cancels  all  prior

communications,   understandings   and   agreements   between   the   PARTIES,   whether

written or oral, expressed or implied, with respect thereto.

7.2

If any provision of this Agreement is found unenforceable, the remainder shall

be enforced as fully as possible and the unenforceable provision shall be

deemed modified to the limited extent required to permit its enforcement in a

manner most closely representing the intention of the PARTIES as expressed herein.

PETROLEO BRASILEIRO S.A.

CONFIDENTIAL

PETROBRAS

ANNEX II

COOPERATION AGREEMENT N.° 0802.0064302.10.9

5/7

ARTICLE 8 - AMENDMENTS AND ASSIGNMENT

8.1    No  amendments,  changes  or  modifications  to  this  Agreement  shall  be  valid  except  if  the

same  are  in  writing  and  signed  by  a  duly  authorized  representative  of  each  of  the

PARTIES herein.

8.2     Neither  PARTY  shall  assign  any  of  its  rights  or  obligations  hereunder,  without  the  prior

written consent of the other PARTY."

ARTICLE 9- NOTICES

9.1

All notices, statements and other communications to be given, submitted or to

be made hereunder by either PARTY to the other shall be sufficiently given if

sent by facsimile or electronic mail and confirmed within one business day of

being sent, to the respective addresses of the PARTIES as specified below:

PETROLE0 BRASILEIRO S.A. - PETROBRAS

ENGENHARIA/ETEG/ETEG

Av. Republica do Chile, 65, Rio de Janeiro, RJ, Brazil

Attn.: Mr. Jorge Fernando Pereira Coelho

RJ, Brazil - CEP: 20031-004

Telephone: (55) (21) 3229-7845

Facsimile: (55) (21) 3229-2913

e-mail: jfcoelho@petrobras.com.br

MESOCOAT Advanced Coating Technologies

24112 Rockwell Drive Euclid, Ohio 44117, USA

Attn.: Mr. Andrew Sherman

Telephone: (1) - (216) - 453-0866

Facsimile: (1) - (216) - 404-0054

e-mail: ajsherman@mesocoat.com

ARTICLE 10 - WAIVER

10.1   No failure to exercise and no delay in exercising any rights, power or remedy

under this Agreement will operate as a waiver. Nor will any single or partial

exercise of any right, power or remedy preclude any other or further exercise of

that or any other right, power or remedy.

AFTICLE 11 - GOVERNING LAW/DISPUTES

11.1   This  Agreement  shall  be  governed  and  construed  in  accordance  with  the  Brazilian  laws,

excluding  any  choice  of  law  or  conflict  of  law  principles  and  any  other  laws,  statutes,

regulations,  orders  or  case  law  that  would  require  or  tend  to  give  preference  to  the

application of the laws of and other jurisdiction.

11.2  Any controversy, dispute or claim arising out of or in any way relating to this

Agreement shall be first negotiate in good faith between the PARTIES.

PETROLEO BRASILEIRO S.A.

CONFIDENTIAL

PETROBRAS

ANNEX II

COOPERATION AGREEMENT N.° 0802.0064302.10.9

6/7

11.3    If  the  PARTIES  cannot  agree  on  all  or  part  of  the  matters  subject  to  controversy,  or  if

all  outstanding  issues  in  dispute  are  not  fully  and  finally  resolved  through  negotiation,

then  the  PARTIES  agree  that  all  remaining  disputes  shall  be  settled  by  binding

arbitration.

11.4     The  arbitration  shall  take  place  in  London,  England,  (UK)  under  the  Arbitration  Rules

of   London   Court   of   International   Arbitration   (LCIA)   in   effect   at   the   time   of   the

arbitration  is  initiated.  PETROBRAS  shall  appoint  one  arbitrator  and  MESOCOAT

shall  indicate  another,  and  both  arbitrators  so  designated  shall  indicate  a  third  one  to

act  as  Chairman.  The  governing  language  of  the  arbitration  shall  be  English  and  all

arbitrators shall be fluent in the governing language.

11.5   The  arbitrators  shall  render  a  full  complete,  conclusive  and  binding  resolution  of  the

dispute.  The  arbitration  award  may  assess  reasonable  attorney's  fees  and  costs,

including  the  costs  of  the  arbitration  and  the  arbitrators'  compensation,  against  one  or

more   PARTIES.   Enforcement   of   the   award   may   be   entered   in   any   court   having

jurisdiction  thereof.  This  Agreement  to  arbitrate  shall  constitute  an  irrevocable  waiver

of each PARTY's right to a trial by courts jury.

ARTICLE 12— GENERAL CLAUSES

12.1  This  Agreement  does  not  obligate  the  PARTIES  to  enter  into  negotiations  or  any

subsequent agreement.

12.2    Neither  the  disclosure  of  CONFIDENTIAL  INFORMATION  by  the  DISCLOSING  PARTY

nor   the   use   thereof   by   the   RECEIVING   PARTY   shall   be   deemed   to   grant   the

RECEIVING  PARTY  any  license,  express  or  implied,  or  any  right,  title  or  interest  in

respect of the CONFIDENTIAL INFORMATION.

12.3    In  the  event  that  the  RECEIVING  PARTY  is  required  by  judicial  or  administrative

process  to  disclose  any  part  of  the  CONFIDENTIAL  INFORMATION,  the  RECEIVING

PARTY  shall  promptly  notify  the  DISCLOSING  PARTY  of  such  requirement  in  order  to

allow the DICLOSING PARTY a reasonable time to oppose such process.

12.4   In  case  of  a  judicial  or  administrative  demand,  the  PARTIES  hereby  undertake  to  treat

the matter under confidentiality by court and/or administrative authorities.

PETROLEO BRASILEIRO S.A.

CONFIDENTIAL

PETROBRAS

ANNEX II

COOPERATION AGREEMENT N.° 0802.0064302.10.9

7/7

IN WITNESS WHEREOF, the PARTIES have caused this Agreement to be signed by their duly

authorized officers in two (2) original counterparts.

Rio de Janeiro 3th August of 2010.

PETROLEO BRASILEIRO S.A. – PETROBRAS

/s/ Paulo Marcelo de Figueiredo Montes

Paulo Marcelo de Figueiredo Montes

Manager of

ENGENHARIA/IETEG/ETEG/DTEC

MESOCOAT Advanced Casting Technologies

/s/ Andrew J. Sherman

Andrew J. Sherman

CEO

WITNESSES:

1.

Name:

ID:

2.

Name:

ID:

MesoCoat

Advanced Coating Technologies

CONFIDENTIAL

ANNEX III

COOPERATION AGREEMENT N.° 0802.0064302.10.9

Date: 19th  August 2010

Tatiana Souza

Petrobras,

Rio de Janeiro,

Brazil.

Re: MesoCoat Exclusive license Agreement

Dear Tatiana,

As  per  you  request  regarding  declaration  of  Exclusivity  related  to  the  use  and  operation  of

'High  Energy  Density  Fusion  Cladding  System';  please  find  mentioned  below  the  summary  of

the exclusivity related to the technology.

“MesoCoat  has  an  exclusive  license  from  Battelle/Oak  Ridge  National  Laboratory  to  practice

U.S.  Patent  #6,174,388  (Patent  #1)  and  U.S.  Patent  #7,220,936  (Patent  #2)  within  the  field  of

wear  and  corrosion  resistant  coatings  and  claddings.  MesoCoat  has  also  filed  additional

patents (pending, PCT, US) on this technology.”

Please feel free to contact us if you need any further clarification.

Sincerely,

/s/ Andrew Sherman

Andrew Sherman

CEO, MesoCoat Inc.

Phone: (216) 453-0866, Ext 103

Email: asherman@mesocoat.com

Private & Confidential

MesoCoat Inc - 24112 Rockwell Drive, Euclid, OH, 44117

www.mesocoat.com, (216) 453 - 0866

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TEST PLAN

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT

(INDICATED BY ASTERISKS HAS BEEN OMITTED AND FILED SEPERATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST

FOR CONFIDENTIAL TREATMENT

TEST PLAN

***

PETROBRAS – MESOCOAT COOPERATION AGREEMENT

A

B

8/10/10      ISSUED FOR INTERNAL REVIEW

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TEST PLAN

Table of Contents

1.      QUALIFICATION OF CERMACLAD PROCEDURE ON SAMPLES............................................................. 6

2.

QUALIFICATION OF CERMACLAD PROCEDURE ON PIPE PHASE II..................................................... 8

3.      WELDING PERFORMANCE QUALIFICATION ....................................................................................... 10

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TEST PLAN

SYNOPSIS

This Test Plan *** concerns the cladding by MesoCoat of carbon steel flat samples & pipe material ***.

In all cases, the carbon steel flat samples & pipe that will be clad by CermaClad technology according to

this Manufacturing Procedure Specification will undergo mechanical testing prior to cladding in order to

ensure that carbon steel base material fully complies with the required mechanical properties in

accordance with standard *** and ***.

In addition, qualification testing of cladding will be undertaken with chemical, corrosion and mechanical

testing performed as outlined in this Manufacturing Procedure Specification and conforming to *** and

***.

_________________

***

Certain information on this page has been omitted and filed separately with the

Securities and Exchange Commission. Confidential treatment has been

requested with respect to the omitted portions.

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TEST PLAN

REVISION LOG

Rev

Date

Initials     Details of Revision

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TEST PLAN

PHASE I

Testing of flat samples

Test Activity

***

***

/

***

***

***

***

***

***

***

***

***

***

PHASE II

Testing of pipe samples

Test Activity

***

***

***

/

***

***

/

***

***

/

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/

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_________________

***

Certain information on this page has been omitted and filed separately with the

Securities and Exchange Commission. Confidential treatment has been

requested with respect to the omitted portions.

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MANUFACTURING SPECIFICATION PROCEDURE

11414

ITEM NO

DESCRIPTION

ACCEPTANCE CRITERIA

# TESTS

1.

QUALIFICATION The following tests shall be performed for the     Shall be in accordance with *** and shall meet

OF CERMACLAD  qualification of the CermaClad  procedure:

the following testing requirements:

PROCEDURE

ON SAMPLES

PHASE I

1.

***

1.    ***

***

2.

***

2.    ***

***

***

***

3.

***

3.    ***

***

It shall be the receiver’s responsibility to identify and control superseded documents.

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MANUFACTURING SPECIFICATION PROCEDURE

11414

ITEM NO

DESCRIPTION

ACCEPTANCE CRITERIA

# TESTS

4.

***

4.    ***

***.

***

5.

***

5.    ***

***.

***

***

6.

***

6.    ***

***

It shall be the receiver’s responsibility to identify and control superseded documents.

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MANUFACTURING SPECIFICATION PROCEDURE

11414

ITEM NO

DESCRIPTION

ACCEPTANCE CRITERIA

# TESTS

2.

QUALIFICATION The following tests shall be performed for the     Shall be in accordance *** and shall meet the

OF CERMACLAD  qualification of the CermaClad  procedure:

following testing requirements:

PROCEDURE

ON PIPE PHASE

II

1.

***

1.    ***

***.

***.

2.

***

2.    ***

***

3.

***

3.    ***

***

***

4.

***

4.    ***

***

***

***

It shall be the receiver’s responsibility to identify and control superseded documents.

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MANUFACTURING SPECIFICATION PROCEDURE

11414

ITEM NO

DESCRIPTION

ACCEPTANCE CRITERIA

# TESTS

5.

***

5.    ***

***

6.

***

6.    ***

***

***.

7.

***

7.    ***

***

8.

***

8.    ***

***

9.

***

9.    ***

***

It shall be the receiver’s responsibility to identify and control superseded documents.

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MANUFACTURING SPECIFICATION PROCEDURE

11414

ITEM NO

DESCRIPTION

ACCEPTANCE CRITERIA

# TESTS

10.     ***

10.  ***

***

***

11.     ***

11.  *** Acceptance Criteria

(a) Pipe Internal Surface

(a) Pipe Internal Surface

1.

***

1.

***

2.

***

2.

***

(b) Pipe Body

(b) Pipe Body

1.

***

1.

***

2.

***

2.

***

***

12.     ***

12.  ***

***

3.

WELDING

1.    ***

1.    ***

PERFORMANCE

QUALIFICATION

***

(OPTIONAL)

2.    ***

2.    ***

_________________

***

Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

It shall be the receiver’s responsibility to identify and control superseded documents.

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