Document:

Exhibit
10.1

RED
ROBIN GOURMET BURGERS, INC.

RESTRICTED STOCK GRANT AGREEMENT

This Restricted
Stock Grant Agreement (this “Agreement”) between RED ROBIN GOURMET
BURGERS, INC. (the “Company”) and DENNIS B. MULLEN (the “Executive”)
is dated effective February 27, 2007 (the “Effective Date”).

RECITALS

A.            In consideration for Executive’s
service to the Company, the Company has agreed to grant to Executive shares of
restricted stock under its 2004 Performance Incentive Plan (the “Plan”)
on the terms and conditions set forth herein.

AGREEMENT

1.             Grant
of Restricted Stock.

(a)           Stock.  Pursuant to the Plan, Executive is hereby
awarded 22,000 shares of the Company’s common stock (the “Common Stock”),
subject to the conditions of the Plan and this Agreement (the “Restricted
Stock”).

(b)           Plan Incorporated.  Executive acknowledges receipt of a copy of
the Plan, and agrees that, except as contemplated by Section 9 below, this
award of Restricted Stock shall be subject to all of the terms and conditions
set forth in the Plan, including future amendments thereto, if any, pursuant to
the terms thereof, which Plan is incorporated herein by reference as a part of
this Agreement.  Except as defined
herein, capitalized terms shall have the same meanings ascribed to them under
the Plan.

2.             Terms
of Restricted Stock.  Executive
hereby accepts the Restricted Stock and agrees with respect thereto as follows:

(a)           Vesting.  The Restricted Stock shall vest in full, and
no longer be subject to the Forfeiture Restrictions (as defined below) on
December 31, 2007.  Notwithstanding the
foregoing, the Restricted Stock shall immediately vest and no longer be subject
to the Forfeiture Restrictions (as defined below) upon (i) the occurrence
of a Change in Control Event, (ii) the date Executive’s employment is
terminated by reason of death or Total Disability, (iii) the termination of
Executive’s employment by the Company without Cause (as defined in Executive’s
Employment Agreement dated September 7, 2005), or (iv) Executive’s voluntary
resignation with the consent or at the request of a majority of the Company’s
Board of Directors (the “Board”).

(b)           Forfeiture of Restricted Stock.  In the event of a termination of Executive’s
employment (i) due to Executive’s voluntary resignation other than with the
consent or at the request of a majority of the Board, or (ii) for Cause,
Executive shall, for no consideration, forfeit all Restricted Stock to the
extent such Restricted Stock is then subject to the Forfeiture Restrictions.  The obligation to forfeit and surrender
Restricted Stock to the Company upon 

 

termination of Executive’s employment or service and
the prohibition against transfer in Paragraph 2(f) below are herein referred to
as “Forfeiture Restrictions.”

(c)           For purposes of this Agreement, “Change
in Control Event” shall have the following definition (and not the
definition stated in the Plan):

(i)            The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act (a “Person”)) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of more than 30% or more of
either (1) the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (2) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that, for purposes of this definition, the following
acquisitions shall not constitute a Change in Control Event; (A) any
acquisition directly from the Company, (B) any acquisition by the Company, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any affiliate of the Company or a successor, or
(D) any acquisition by any entity pursuant to a transaction that complies with
subsections (iii)(A), (B) and (C) below;

(ii)           In the event the Board is a
classified board, a majority of the individuals who serve in the same class of
directors that, as of the Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of that
class of directors, or in the event the Board is not a classified board,
members of the Incumbent Board cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least
two-thirds of the directors then comprising the Incumbent Board (including for
these purposes, the new members whose election or nomination was so approved,
without counting the member and his predecessor twice) shall be considered as
though such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;

(iii)          Consummation of a reorganization,
merger, statutory share exchange or consolidation or similar corporate
transaction involving the Company or any of its Subsidiaries, a sale or other
disposition of all or substantially all of the assets of the Company, or the
acquisition of assets or stock of another entity by the Company or any of its
Subsidiaries (each, a “Business Combination”), in each case unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities that were the beneficial owners of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity that, as a result of such transaction, owns the Company or all or
substantially all of the Company’s assets directly or through one or more subsidiaries
(a “Parent”)) in substantially the same proportions as 

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their ownership
immediately prior to such Business Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any entity resulting from such Business Combination or
a Parent or any employee benefit plan (or related trust) of the Company or such
entity resulting from such Business Combination or Parent) beneficially owns,
directly or indirectly, more than 30% of, respectively, the then-outstanding
shares of common stock of the entity resulting from such Business Combination
or the combined voting power of the then-outstanding voting securities of such
entity, except to the extent that the ownership in excess of more than 30%
existed prior to the Business Combination, and (C) at least a majority of the
members of the board of directors or trustees of the entity resulting from such
Business Combination or a Parent were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or

(iv)          Approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company;

provided, however, that any
of the foregoing events shall constitute a Change in Control Event only
if Executive’s employment with the Company as Chairman of the Board or as Chief
Executive Officer is involuntarily terminated for a reason other than Cause or
Executive voluntary terminates for Good Reason within one (1) year following
such Change of Control Event.

(d)           “Good Reason” means the
occurrence of any of the following after the applicable Change in Control
Event: (i) a reduction in Executive’s compensation; (ii) a relocation of the Company’s
headquarters to a location more than twenty (20) miles from the location of the
Company’s pre-Change of Control Event headquarters; or (iii) a significant
reduction in the then-effective responsibilities of Executive as Chairman of
the Board or Chief Executive Officer without Executive’s prior written consent.

(e)           “Total Disability” means a “permanent
and total disability” within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended, or as otherwise determined by the Administrator.

(f)            Assignment
of Award.  The Restricted Stock may
not be sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of to the extent then subject to the
Forfeiture Restrictions; provided, however, Executive may
transfer the Restricted Stock to any trust or similar entity all of the
beneficiaries of which, or a corporation, partnership or limited liability
company all of the stockholders and other equity holders, limited and general
partners or members of which include any of Executive, one or more of his
descendants or his estate; and provided  further that any such
transferee agrees in writing to be subject to the terms of this Agreement.

(g)           Certificates.  A certificate evidencing the Restricted Stock
shall be issued by the Company in Executive’s name, or at the option of the
Company, in the name of a nominee of the Company, pursuant to which Executive
shall have voting rights and shall be entitled to receive currently all
dividends until the Restricted Stock are forfeited pursuant to the provisions
of this Agreement.  The certificate shall
bear a legend evidencing the nature of the Restricted Stock, and 

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the Company may cause the certificate to be delivered
upon issuance to the Secretary of the Company or to such other depository as
may be designated by the Company as a depository for safekeeping until the
forfeiture occurs or the Forfeiture Restrictions lapse pursuant to the terms of
the Plan and this Agreement.  Upon
request of the Administrator, Executive shall deliver to the Company a stock
power, endorsed in blank, relating to the Restricted Stock then subject to the
Forfeiture Restrictions.  Upon the lapse
of the Forfeiture Restrictions without forfeiture, the Company shall cause a
new certificate or certificates to be issued without legend in the name of
Executive for the shares upon which Forfeiture Restrictions lapsed.  Notwithstanding any other provisions of this
Agreement, the issuance or delivery of any shares of Stock (whether subject to
restrictions or unrestricted) may be postponed for such period as may be
required to comply with applicable requirements of any national securities
exchange or any requirements under any law or regulation applicable to the
issuance or delivery of such shares.  The
Company shall not be obligated to issue or deliver any shares of Stock if the
issuance or delivery thereof shall constitute a violation of any provision of
any law or of any regulation of any governmental authority or any national
securities exchange.

3.             Income Tax Matters.

(a)           Except as otherwise provided in
Section 13, and to the extent specifically provided in Section 12, Executive
shall be solely liable for Executive’s tax consequences of compensation and
benefits payable under this Agreement, including any consequences of the
application of Section 409A of the Code.

(b)           In order to comply with all
applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to ensure that all applicable federal
or state payroll, withholding, income or other taxes, which are the sole and
absolute responsibility of Executive, are withheld or collected from Executive.

(c)           In accordance with the terms of the
Plan, and such rules as may be adopted by the Administrator under the Plan,
Executive may elect to satisfy Executive’s federal and state tax withholding
obligations arising from the receipt of, or the lapse of restrictions relating
to, the Restricted Stock, by (i) delivering cash, check (bank check,
certified check or personal check) or money order payable to the Company,
(ii) having the Company withhold a portion of the Restricted Stock
otherwise to be delivered having a Fair Market Value equal to the amount of
such taxes, or (iii) delivering to the Company shares of Common Stock
already owned by Executive having a Fair Market Value equal to the amount of
such tax withholding.  The delivery of
any shares under the preceding subsection (iii) must have been owned by
Executive for no less than six months prior to the date delivered to the
Company if such shares were acquired upon the exercise of an option or upon the
vesting of restricted stock units or other restricted stock.  The Company will not deliver any fractional
shares of Common Stock but will pay, in lieu thereof, the Fair Market Value of
such fractional shares of Common Stock. 
Executive’s election must be made on or before the date that the amount
of tax to be withheld is determined, or else the Company shall be entitled to
elect the method in which Executive’s federal and state withholding obligations
shall be satisfied.

4.             Status
of Stock.  Executive agrees that the
Restricted Stock will not be sold or otherwise disposed of in any manner that
would constitute a violation of any applicable federal or state 

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securities laws. 
Executive also agrees (i) that the certificates representing the
Restricted Stock may bear such legend or legends as the Company deems
appropriate in order to assure compliance with applicable securities laws,
(ii) that the Company may refuse to register the transfer of the
Restricted Stock on the stock transfer records of the Company if such proposed
transfer would be in the opinion of counsel satisfactory to the Company
constitute a violation of any applicable securities law and (iii) that the
Company may give related instructions to its transfer agent, if any, to stop
registration of the transfer of the Restricted Stock.

5.             Binding
Effect.  This Agreement shall bind
Executive and the Company and their beneficiaries, survivors, executors,
administrators and transferees.

6.             No
Guarantee of Continued Position. 
This Agreement is not a contract for employment and nothing herein shall
supersede or amend the terms of any employment agreement between the Company
and Executive or imply that Executive has a right to continued employment with
the Company.

7.             Applicable
Law.  This Agreement and all rights
hereunder shall be governed by the laws of Colorado, except to the extent the
laws of the United States of America otherwise require.

8.             Notice.  Any notice required or permitted to be given
under this Agreement shall be in writing, signed by the party giving the
same.  If such notice is mailed to
Executive, it may be sent by United States certified mail, postage prepaid,
addressed to Executive’s last known address as shown on the Company’s records.

9.             Conflicts and
Interpretation.  In the event of any
conflict between this Agreement and the Plan, this Agreement shall
control.  In the event of any ambiguity
in this Agreement, or any matters as to which this Agreement is silent, the
Plan shall govern including, without limitation, the provisions thereof
pursuant to which the Administrator has the power, among others, to
(i) interpret the Plan, (ii) prescribe, amend and rescind rules and
regulations relating to the Plan and (iii) make all other determinations
deemed necessary or advisable for the administration of the Plan.

10.           Amendment.  The Company may modify, amend or waive the
terms of the Restricted Stock Unit award, prospectively or retroactively, but
no such modification, amendment or waiver shall impair the rights of Executive
without his or her consent, except as required by applicable law, NASDAQ or
stock exchange rules, tax rules or accounting rules.  Prior to the effectiveness of any modification,
amendment or waiver required by tax or accounting rules, the Company will
provide notice to Executive and the opportunity for Executive to consult with
the Company regarding such modification, amendment or waiver.  The waiver by either party of compliance with
any provision of this Agreement shall not operate or be construed as a waiver
of any other provision of this Agreement, or of any subsequent breach by such
party of a provision of this Agreement.

11.           Tax Election.  The Company has advised Executive to seek
Executive’s own tax and financial advice with regard to the federal and state
tax considerations resulting from Executive’s receipt of Restricted Stock
pursuant to this Agreement.  Executive is
making Executive’s own determination as to the advisability of making a
Section 83(b) election with respect to the 

 5
 

 

Restricted Stock. 
Executive understands that the Company will report to appropriate taxing
authorities the payment to Executive of compensation income either
(i) upon the vesting of he Restricted Stock or (ii) if Executive
makes a timely Section 83(b) election, as of the Effective Date of this
Agreement.  Executive understands that he
is solely responsible for the payment of all federal and state taxes resulting
from this Restricted Stock Grant.  With
respect to tax withholding amounts, the Company has all of the rights specified
in Section 3 of this Agreement and has no obligations to Executive except
as expressly stated in Section 3 of this Agreement.

12.           Section 409A Savings Clause.  It is the intention of the parties that
compensation or benefits payable under this Agreement not be subject to the
additional tax imposed pursuant to Section 409A of the Code.  To the extent such potential payments or benefits
could become subject to such Section, the parties shall cooperate to amend this
Agreement with the goal of giving Executive the economic benefits described
herein in a manner that does not result in such tax being imposed.

13.           Gross-Up
Payments.

(a)           Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall
be determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Agreement) (a “Payment”) would be subject to the excise tax imposed by
Code Section 4999 or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the “Excise Tax”),
then the Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all
taxes imposed upon the Gross-Up Payment (including any interest or penalties
imposed with respect to such taxes but excluding any taxes or interest imposed
by Section 409A of the Code), the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.  This provision is intended to override the
cut-back provisions of Section 7.7 of the Plan. 
Notwithstanding the foregoing provisions of this Section 13, if it is
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed by $25,000 the greatest amount that could be paid to the
Executive such that the receipt of Payments would not give rise to any excise
tax (the “Reduced Amount”), then no Gross-Up Payment shall be made to
the Executive and the Payments, in the aggregate, shall be reduced to the
Reduced Amount.

(b)           Subject to the provisions of
Section 13(c) below, all determinations required to be made under this
Section 13, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made a certified public accounting firm
designated by the Board (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and the Executive.  If the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control Event, the Board shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm
shall be borne solely by the Company.

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(c)           If the Executive is, or could be,
entitled to receive a Gross-Up Payment, pursuant to Section 13(a) the Executive
shall take any position requested by the Company (a “Requested Position”)
on the Executive’s federal income tax returns with respect to the treatment of
the Payment from the Company, any Gross-Up Payment, the payment of any
Indemnified Amount (as defined below), and the receipt of any refund or
interest paid by the government to the Executive as a result of a Contest (as
defined below), provided that: (i) the Company shall provide the Executive
with an opinion from a nationally recognized accounting firm that there is “substantial
authority” for the Requested Position within the meaning of Code
Section 6662; and (ii) the general long term or senior unsecured
corporate credit rating of the Company or its successor is at least BBB- as
rated by Standard & Poors and Baa3 as rated by Moody’s Investor
Services at the time the Executive would be required to take a Requested
Position or the Company places in an escrow account or otherwise provides
security reasonably requested by Executive to ensure payment to the Executive
of the indemnity amount that could become due to the Executive pursuant to the
following sentence.  The Company shall indemnify
the Executive for any tax, penalty and interest incurred by him as a result of
taking the Requested Position.  The
amount for which the Executive is indemnified under the preceding sentence (the
“Indemnified Amount”) shall be computed on an after-tax basis, taking
into account any income, Excise or other taxes, including interest and
penalties.  The Executive shall keep the
Company informed of all developments in any audit with respect to a Requested
Position.  Upon payment of the
Indemnified Amount, or (if the Indemnified Amount is not yet payable) upon the
Company’s written affirmation, in form and substance reasonably satisfactory to
the Executive, of the Company’s obligation to indemnify the Executive with
respect to the Requested Position, and provided part (ii) of the first
sentence of this Section 13(c) is satisfied at such time, the Company
shall be entitled, at its sole expense, to control the contest of any
disallowance or proposed disallowance of a Requested Position (a “Contest”),
and the Executive agrees to cooperate in connection with a Contest, including,
without limitation, executing powers of attorney and other documents at the
reasonable request of the Company.  The
Indemnified Amount shall be payable whenever an amount is payable to the
Internal Revenue Service as a result of the disallowance of a Requested
Position.  Following payment by the
Company of the Indemnified Amount, if the Requested Position is sustained by
the Internal Revenue Service or the courts, the Company shall be entitled to
any resulting receipt of interest or refund of taxes, interest and penalties
that were properly attributable to the Indemnified Amount.  If a Requested Position is sustained in whole
or in part in a final resolution of a Contest, and if the Indemnified Amount
therefore exceeds the amount of taxes, penalties and interest payable by the
Executive as a result of the Requested Position (determined on an after-tax
basis after taking into account payments made pursuant to the preceding
sentence and this sentence), any such excess portion of the Indemnified Amount
shall be treated as a loan by the Company to the Executive, which loan the
Executive must repay to the Company together with interest at the applicable
federal rate under Code Section 7872(f)(2).

[Signature
Page Follows.]

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IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first written above.

	
  

  	
  RED ROBIN GOURMET BURGERS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward T. Harvey

  
	
   

  	
   

  	
  Edward T. Harvey

  
	
   

  	
   

  	
  Lead Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Dennis B. Mullen

  
	
   

  	
  Dennis B. Mullen

  

 

 8Exhibit
10.22

 

[AXT
LETTERHEAD]

 

January
8, 2007

PRIVATE
AND CONFIDENTIAL

VIA
EMAIL AND FACSIMILE

 

Mr. Mark Tindale

Vice President

Recapture Metals Limited

625 Neal Drive

Peterborough, Ontario

Canada K9J 6X7

 

Re:          Purchase of 7N Gallium Metal

Dear Mark:

 

In this letter (the “Agreement”) we are
entering into an agreement between AXT, Inc., a Delaware corporation (“AXT” or “the
Company”) and Recapture Metals Limited (“Recapture”), regarding the purchase by
the Company of 7N gallium metal (the “Gallium”) from Recapture during calendar
years 2007 and 2008.  This letter sets
forth the terms and conditions of the Company’s agreement to purchase the
Gallium, and supercedes any and all prior verbal and written agreements or
expressions of interest from the Company concerning the subject matter hereof.

 

The Company and Recapture agree and acknowledge that
Recapture is in the business of producing the Gallium, and the Company wishes
to purchase such Gallium for use in its own products on the terms and
conditions of this Agreement. 
Accordingly, in consideration of the mutual promises and covenants set
forth herein, the parties agree as follows.

 

1.             Purchase of Gallium.

 

1.1           Product.  All
Gallium purchased pursuant to this Agreement shall be 7N Gallium.  The Company shall purchase the Gallium for
use in its products and for distribution to third parties.  The Company shall not purchase the Gallium
for resale.

 

1.2           Volume.  The
Company shall purchase up to 18,000 kg of Gallium pursuant to this Agreement,
as such amount may be increased or decreased as set forth below.  Recapture shall be obligated to deliver the
full 18,000 kg according to this Agreement.

 

1.3           Delivery. 
Recapture shall deliver 1,000 kg of Gallium per month to the Company,
beginning July 1, 2007.  All Gallium
shall be shipped by Recapture to the Company’s facilities in Beijing, People’s
Republic of China.  All Gallium shall be
packed and shipped in accordance with instructions or specifications provided
by the Company, or, in the absence of such instructions, Recapture shall comply
with the best practices to ensure safe arrival at destination at the lowest
possible cost.  If Gallium is not
delivered in accordance with the agreed monthly schedule, the Company may
terminate, without further liability, this Agreement as to Gallium not yet
shipped, by notice effective upon receipt by Recapture.

 

 [***]  Indicates redacted terms for which confidential treatment has been requested from the Securities and Exchange Commission.
  
 

 

2.             Price.

 

2.1           Price.  For
all deliveries of Gallium made by Recapture to the Company during the period
beginning on July 1, 2007 and ending on March 31, 2008, representing delivery
of at least 9,000 kg of Gallium, the purchase price shall be [$***]per kg.  For all deliveries of Gallium made by
Recapture to the Company during the period beginning on April 1, 2008 and
ending on December 31, 2008, representing delivery of at least 9,000 kg of
Gallium, the purchase price shall be [$***] per kg.  The period from July 1, 2007 through December
31, 2008 shall be referred to herein as the “Delivery Term.”  Delivery shall be made FOB Blanding,
Utah.  In the event of any changes to the
delivery dates, the parties agree that the first 9,000 kg of Gallium delivered
by Recapture to the Company shall be at [$***] per kg, no matter when
delivered, and the second 9,000 kg shall be at [$***] per kg, no matter when
delivered.

 

3.             Payment.

 

3.1           Due Date. 
Except as provided below, payment shall be due thirty (30) days after
the receipt of the invoice by the Company. 
Recapture may invoice each shipment separately and each shipment shall
be considered a separate and individual contract.

 

3.2           Shipping Costs. 
Shipment costs will be paid initially by Recapture, but billed as a
separate item on the same invoice to the Company.  The carrier will be selected by Recapture in
the absence of specific instructions by the Company.  In no event shall Recapture be liable for any
delay in delivery, or assume any liability in connection with shipment, nor
shall the carrier be deemed an agent of Recapture.

 

4.             Increase or Decrease in Orders.

 

4.1           Guaranteed Delivery.  Subject to any changes made by the Company pursuant
to this section, Recapture shall guarantee the delivery of 1,000 kg of Gallium
to the Company per month, during the Delivery Term, up to a total of 18,000
kg.  The Company shall be committed to
purchase 18,000 kg of Gallium, unless this agreement is terminated prior to the
end of the Delivery Term, as set forth below.

 

4.2           Increase or Decrease in Monthly Delivery.  Upon agreement of the Company and Recapture,
the Company may increase or decrease the amount of Gallium delivered in any
particular month from the guaranteed 1,000 kg per month during the Delivery
Period, upon thirty (30) days prior notice to Recapture, up to an amount equal
to 2,000 kg.  Any increase or decrease in
a particular monthly delivery shall not change Recapture’s obligation to supply,
and the Company’s obligation to purchase, a total of 18,000 kg at the purchase
prices agreed, during the Delivery Period, and the deferment of a shipment from
a previous month shall not affect the Company’s purchase obligation or
Recapture’s supply obligation in any subsequent month.  Adjustment to future monthly deliveries
caused by an increase or decrease in a delivery in a particular month shall be
made upon mutual agreement of Recapture and the Company.

 

5.             Special Orders.

 

5.1           Procedure. 
An additional order above the scheduled deliveries set forth herein that
is placed by the Company shall be deemed to be a “Special Order.”  The Special Order procedure should be used by
the Company solely to fill unexpected needs. 
All Special Orders must be in writing,

 

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or, if given verbally, confirmed in writing.  Each Special Order shall be subject to
written acceptance by Recapture at its headquarters.

 

5.2           Price.  Such
Special Order, if accepted by Recapture, shall be at a purchase price of [$***]
per kg or [$***] per kg of Gallium, whichever is the then applicable purchase
price for shipments made in accordance with this Agreement as set forth in
Section 2.1 above.

 

6.             Shipments. 
All shipments will be made F.O.B. Recapture’s distribution center in
Blanding, Utah.  Delivery will be deemed
complete and risk of loss or damage to the Gallium will pass to the Company
upon delivery to the carrier.

 

7.             Acceptance. 
The Gallium shall be deemed accepted by the Company unless notice of
defect is received within thirty (30) days of shipping thereof and the Gallium
is returned to Recapture within sixty (60) days of shipping.  In the event of discovery of Gallium that
does not qualify as 7N, the Company’s sole remedy shall be to exchange such
Gallium for a new shipment of Gallium.

 

8.             Warranties.

 

8.1           Limited Warranty. 
Recapture warrants to Company that the Gallium will be 7N Gallium.  Recapture’s exclusive obligation with respect
to non-conforming Gallium shall be (a) to replace that Gallium with Gallium
that conforms to the specifications, or (b) to refund to Company the
purchase price paid for the Gallium.  The
Company shall notify Recapture of any nonconformance during the warranty
period, obtain a return authorization for the nonconforming Gallium from
Recapture, and return the nonconforming Gallium to Recapture’s designated
facility, freight prepaid, with a statement describing the nonconformity.  THE FOREGOING IS COMPANY’S SOLE AND EXCLUSIVE
REMEDY FOR BREACH OF WARRANTY BY RECAPTURE.

 

8.2           Recapture warrants that all Gallium supplied pursuant to
this Agreement will have been produced and supplied in compliance with all
applicable federal, state, foreign, and local laws, orders, rules and
regulations, including any laws relating to the production, sale, storage or shipment
of hazardous materials, toxic substances, or other environmental
regulations.  Recapture shall indemnify
the Company against any liability caused by any non-compliance with this
provision.

 

8.3           Disclaimer of Warranties.  THE FOREGOING WARRANTIES ARE THE SOLE
WARRANTIES, EXPRESS OR IMPLIED, GIVEN BY RECAPTURE IN CONNECTION WITH THE
GALLIUM AND RECAPTURE DISCLAIMS ALL OTHER WARRANTIES, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT OF THIRD
PARTY RIGHTS.

 

9.             Recapture’s Indemnification.

 

9.1           Scope of Warranty. 
Recapture agrees to indemnify and hold harmless the Company, and its
subsidiaries, and all of their officers, directors and employees against any
claims, actions or demands alleging that the manufacture or distribution of the
Gallium infringes any copyrights, patents, trade secrets or mask works rights
of any third parties arising under United States law.  To terminate such obligation, Recapture may,
at its option, (a) replace or modify the Gallium with product that is
functionally equivalent and non-infringing, (b) obtain a license for the
Company to continue the use and distribution of the Gallium or (c) accept
the return of the Gallium held by Company and return the purchase price paid by
Company for the Gallium.

 

 3
 

 

9.2           Contingencies. 
This obligation is contingent upon (a) the Company giving prompt
written notice to Recapture of any such claim, action or demand, (b) the
Company allowing Recapture to control the defense and related settlement
negotiations and (c) the Company fully assisting, at Recapture’s expense,
in the defense.

 

9.3           Limitations. 
Recapture shall have no obligation hereunder for any such claims,
actions or demands which result from:

 

(a)           The Company’s use of the Gallium in a combination which
violates the rights of third parties or in a combination with materials or
products not supplied by Recapture; or

 

(b)           The modification or attempted modification of the Gallium
by parties other than Recapture or the use or distribution of such modified
products.

 

10.           Company’s Indemnification.

 

10.1         Scope of Indemnity.

 

(a)           Unless the manufacture or distribution of the Gallium by
Recapture directly infringes the patent rights of such third parties and
Recapture has agreed to indemnify Company under Section 9.3 above, the Company
agrees to indemnify and hold harmless Recapture, and its officers, directors
and employees against any claims, actions or demands alleging that Recapture is
liable for infringement of patents of any third parties due to the actions of
the Company.  This obligation extends to
liability arising under any theory including, but not limited to, contributory
infringement, inducement of infringement and unfair competition.

 

(b)           The Company agrees to indemnify and hold harmless Recapture,
and its officers, directors and employees against any claims, actions or
demands alleging that the development, manufacture or distribution of the
Gallium infringes any copyrights, patents, trade secrets, mask works or other
third party proprietary rights based on:

 

(1)           The Company’s use of the Gallium in a combination which
violates the rights of third parties or in a combination with materials or
products not supplied by Recapture; or

 

(2)           The modification or attempted modification of the Gallium by
parties other than Recapture or the use of distribution of such modified
products.

 

10.2         Contingencies. 
The obligation under Sections 10.1 and 10.2 is contingent upon
(a) Recapture giving prompt written notice to the Company of any such
claim, action or demand, and (b) Recapture fully assisting, at the Company’s
expense, in the defense.

 

11.           Consequential Damages.  NEITHER PARTY SHALL BE LIABLE FOR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING UNDER THIS AGREEMENT, EVEN
IF RECAPTURE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS
OF THE LEGAL THEORY ON WHICH SUCH DAMAGES MAY BE BASED.

 

 4
 

 

12.           Confidential Information.

 

12.1         Confidential Information.  Recapture agrees to maintain in confidence
what it knows or has reason to know is regarded as confidential by the Company
(“Confidential Information”). 
Confidential Information will include, but will not be limited to, the
proprietary information and trade secrets of the Company, the processes used by
the Company in the development and manufacture of its products, including but
not limited to its processes for crystal growth, and further production and
manufacture of its products, marketing plans, blueprints, techniques,
processes, procedures and formulae.

 

12.2         Limitations on Use. 
Recapture will not disclose the Confidential Information to any
person.  Recapture agrees that the
Confidential Information will be disclosed or made available only to those of
its employees or consultants who have agreed to receive it under terms at least
as restrictive as those specified in this Agreement.  Recapture will take reasonable measures to
maintain the confidentiality of the Confidential Information, but not less than
the measures it uses for its confidential information of similar type.  Recapture will immediately give notice to the
Company of any unauthorized use or disclosure of the Confidential
Information.  Recapture agrees to assist
the Company in remedying any such unauthorized use or disclosure of the
Confidential Information.  This obligation
will not apply to the extent that Recapture can demonstrate:

 

(a)           the disclosed information at the time of disclosure is
part of the public domain;

 

(b)           the disclosed information became part of the public
domain, by publication or otherwise, except by breach of the provisions of this
Agreement;

 

(c)           the disclosed information is received from a third party
without similar restrictions and without breach of this Agreement; or

 

(d)           the disclosed information is required to be disclosed by a
government agency to further the objectives of this Agreement or by a proper
court of competent jurisdiction; provided however that Recapture will use its
best efforts to minimize the disclosure of such information and will consult
with the Company prior to such disclosure.

 

12.3         Publicity. 
Neither party shall make public information concerning the terms of this
Agreement nor the supplies or services provided hereunder without the prior
written consent of the other party except as may be required by law or pursuant
to a lawful request of a governmental agency, or as may be necessary or
advisable by the Company to fulfill its disclosure obligations under applicable
United States securities laws.

 

13.           Termination.

 

13.1         Term.  This
Agreement shall commence on the Effective Date and shall continue through the
Delivery Term, unless earlier terminated pursuant to this Agreement.

 

13.2         Causes for Termination.  This Agreement will terminate:

 

(a)           On the conclusion of the Delivery Term;

 

 5
 

 

(b)           By the Company, upon thirty (30) day’s prior written
notice to Recapture, if Recapture is unable to meet the agreed monthly delivery
schedule set forth in this Agreement;

 

(c)           On the thirtieth (30th) day after either party gives the
other notice of a material breach by the other of any term or condition of this
Agreement, unless the breach is cured before that day; provided that any breach
of Section 12.1 or 12.2 will be deemed a material breach of this Agreement that
cannot be cured and the Agreement may be terminated immediately; or

 

(d)           Upon notice by a party, immediately, if

 

(1)           a receiver is appointed for the other party or its
property;

 

(2)           the other party becomes insolvent or unable to pay its
debts as they mature in the ordinary course of business or makes an assignment
for the benefit of its creditors; or

 

(3)           any proceedings are commenced against the other party
under any bankruptcy, insolvency or debtor’s relief law and such proceedings
are not vacated or set aside within sixty (60) days from the date of
commencement thereof.

 

13.3         Effect of Termination.  After termination:

 

(a)           Except as provided in Section 13.3(b), all orders not
shipped upon the date of termination shall be cancelled;

 

(b)           The Company will be entitled to have delivered, at its
sole discretion, the Gallium ordered prior to termination on a letter of
credit, C.O.D., or cash-in-advance basis;

 

(c)           All sums owed to Recapture by the Company shall become due
and payable within thirty (30) days upon the effective date of termination; and

 

(d)           Neither party will be liable for damages of any kind as a
result of exercising its right to terminate this Agreement according to its
terms, and termination will not affect any other right or remedy at law or in
equity of either party.

 

14.           General.

 

14.1         Waiver.  No
term or provision hereof will be considered waived by either party, and no
breach excused by either party, unless such waiver or consent is in writing
signed on behalf of the party against whom the waiver is asserted.  No consent by either party to, or waiver of,
a breach by either party, whether express or implied, will constitute a consent
to, waiver of, or excuse of any other, different, or subsequent breach by
either party.

 

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

 

14.3         Choice of Law. 
This Agreement will be governed by and construed in accordance with the
laws of the United States and the State of California as applied to agreements
entered into and to be performed entirely within California between California
residents.  The parties agree that 

 6
 

 

the United Nations Convention on Contracts for the
International Sale of Goods (1980) is specifically excluded from application to
this Agreement.

 

14.4         Choice of Forum. 
The parties hereby submit to the jurisdiction of, and waive any venue
objections against, the United States District Court for the Northern District
of California, and the Superior and Municipal Courts of the State of
California, Alameda County, in any litigation arising out of the Agreement.

 

14.5         Notices.  Any
notice provided for or permitted under this Agreement will be treated as having
been given when (a) delivered personally, (b) sent by confirmed telex
or telecopy, (c) sent by commercial overnight courier with written
verification of receipt, or (d) mailed postage prepaid by certified or
registered mail, return receipt requested, to the party to be notified, at the
address set forth below, or at such other place of which the other party has
been notified in accordance with the provisions of this Section.

 

	
  If to Recapture:

  	
   

  	
  AXT

  
	
   

  	
   

  	
  4281 Technology Drive

  
	
   

  	
   

  	
  Fremont,
  California 94538

  
	
   

  	
   

  	
  Attention: Mr.
  Wilson Cheung

  
	
   

  	
   

  	
  Facsimile: 510-438-4793

  
	
   

  	
   

  	
   

  
	
  If to Company:

  	
   

  	
  Recapture Metals Limited

  
	
   

  	
   

  	
  625 Neal Drive

  
	
   

  	
   

  	
  Peterborough,
  Ontario

  
	
   

  	
   

  	
  Canada K9J 6X7

  
	
   

  	
   

  	
  Attention: Mr.
  Mark Tindale

  
	
   

  	
   

  	
  Facsimile: (705)
  755-0163

  

 

Such notice will be treated as having been received upon the earlier of
actual receipt or five (5) days after posting.

 

14.6         Entire Agreement.  This Agreement constitutes the entire
agreement between the parties relating to this subject matter and supersedes
all prior or simultaneous representations, discussions, negotiations, and
agreements, whether written or oral.  Any
purchase orders issued by the Company for the Gallium shall be for
informational and scheduling purposes only. 
The terms and conditions of such purchase orders shall be governed by
the terms of this Agreement.

 

14.7         Amendment. 
This Agreement may be amended or supplemented only by a writing that
refers explicitly to this Agreement and that is signed on behalf of both
parties.

 

14.8         Allocation of Risk. 
The sections on limitation of liability, warranties and disclaimer of
warranties allocate the risks in the Agreement between the parties.  This allocation is reflected in the pricing
of the Gallium and is an essential element of the basis of the bargain between
the parties.

 

14.9         Arbitration. 
Any claim, dispute or controversy arising out of or in connection with
or relating to this Agreement or the breach or alleged breach thereof shall be
submitted by the parties to arbitration by the American Arbitration Association
in the City of San Francisco, State of California, United States of America
under the commercial rules then in effect for that Association except as
provided herein.  All proceedings shall
be held in English and a transcribed record shall be prepared in English.  Each party shall choose one arbitrator within
thirty (30) days of receipt of notice of the intent to 

 7
 

 

arbitrate. 
Within sixty (60) days of receipt of the notice of the intent to
arbitrate the two arbitrators shall choose a neutral third arbitrator who shall
act as chairman.  If no arbitrator is
appointed within the times herein provided or any extension of time which is
mutually agreed upon, the Association shall make such appointment within thirty
(30) days of such failure.  The award
rendered by the arbitrators shall include costs of arbitration, reasonable
attorneys’ fees and reasonable costs for expert and other witnesses, and
judgment on such award may be entered in any court having jurisdiction thereof;
provided, however, that nothing in this Section shall be deemed as preventing
either party from seeking relief from the courts as necessary to protect either
party’s name, proprietary information, trade secrets, know how or any other
appropriate provisional remedy.  The
parties shall be entitled to discovery as provided in Sections 1283.05 and
1283.1 of the Code of Civil Procedure of the State of California, whether or
not the California Arbitration Act, is deemed to apply to said arbitration.

 

14.10       Survival. 
Sections 3 (“Payment”), 8 (“Warranties”), 9 (“Recapture’s
Indemnification”), 10 (“Company’s Indemnification”), 11 (“Consequential Images”),
12 (“Confidential Information”), 13.3 (“Effect of Termination”) and 14 (“General”)
will survive the termination of this Agreement.

 

14.11       Statute of Limitations. 
No action by either party arising under this Agreement may be brought at
any time more than twelve (12) months after the facts occurred upon which the
cause of action arose.

 

14.12       Force Majeure. 
Except for the payment of money, neither party will be liable for any
failure or delay in performance under this Agreement which might be due, in
whole or in part, directly or indirectly, to any contingency, delay, failure,
or cause of, any nature beyond the reasonable control of such party, including,
without in any way limiting the generality of the foregoing, fire, explosion,
earthquake, storm, flood or other weather, unavailability of necessary
utilities or raw materials, strike, lockout, unavailability of components,
activities of a combination of workmen or other labor difficulties, war,
insurrection, riot, act of God or the public enemy, law, act, order, export
control regulation, proclamation, decree, regulation, ordinance, or
instructions of Government or other public authorities, or judgment or decree
of a court of competent jurisdiction (not arising out of breach by such party
of this Agreement).  In the event of the
happening of such a cause, the party whose performance is so affected will give
prompt, written notice to the other party, stating the period of time the same
is expected to continue.  Such delay will
not be excused under this Section for more than one hundred eighty (180) days.  If Recapture’s production is curtailed for
any of the reasons set forth in this section, Recapture may allocate its
production among its customers in a manner Recapture deems, in its sole
discretion, to be fair and reasonable.

 

14.13       Export Control. 
In exercising its rights under this Agreement, the Company agrees to
comply with all export controls imposed on the Gallium, by any country or
organization or nations within whose jurisdiction the Company operates or does
business.

 

14.14       Assignment. 
Recapture may assign this Agreement to any person to whom it transfers all
or substantially all of its proprietary rights in the Gallium.  Otherwise, neither party may assign,
voluntarily, by operation of law, or otherwise, any rights or delegate any
duties under this Agreement (other than the right to receive payments) without
the other party’s prior written consent, and any attempt to do so without that
consent will be void.  This Agreement
will bind and inure to the benefit of the parties and their respective
successors and permitted assigns.

 

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

 8
 

 

We are excited about this opportunity to work
with you further.  If you have any
questions, please do not hesitate to contact me at (510) 438-4703 direct or by
email at minsheng.lin@axt.com.

 

If the foregoing sets forth the terms and
conditions of the Agreement, please sign below and return to us an originally
executed counterpart at your earliest convenience.

 

Yours truly,

 

/s/ 
MinSheng Lin

 

MinSheng
Lin

Chief Operating Officer

 

Cc:          Phil
Yin

Wilson
Cheung

Bob
Ochrym

 

IN WITNESS WHEREOF, we hereby agree to the foregoing terms and
conditions of the Agreement:

 

	
  RECAPTURE METALS LIMITED

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  By

  	
  /s/ J. Mark Tindale

  	
   

  	
   

  	
   

  
	
   

  
	
  Name 

  	
   J. Mark Tindale

  	
   

  	
   

  	
   

  
	
   

  
	
  Title 

  	
   Vice President

  	
   

  
	
   

  
	
  Date

  	
   February 27, 2007

  	
   

  
													

 

 9

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