STEP 3 COLLABORATION AGREEMENT

Exhibit 10.31

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

STEP 3 COLLABORATION AGREEMENT

 

This Step 3 Collaboration Agreement (“ Agreement ”) is effective as of January 1, 2006, by and between HOKU SCIENTIFIC, INC., a Delaware corporation located at 1075 Opakapaka Street, Kapolei, Hawaii 96707 USA (“ HOKU ”), and NISSAN MOTOR CO., LTD., a Japanese corporation, having its registered office at 2 Takara-cho, Kanagawa-ku, Yokohama, Kanagawa 220-8623 Japan (“ NISSAN ” and, together with HOKU, the “ Parties ”).

 

BACKGROUND & PURPOSE

 

HOKU is developing HOKU Membrane and HOKU MEA (each as defined below) for use in proton exchange membrane fuel cells (“ PEMFC ”).

 

NISSAN develops and manufactures NISSAN Fuel Cells (as defined below).

 

HOKU and NISSAN are parties to that certain MEA Engineering Agreement dated as of September 1, 2004 (the “ Engineering Agreement ”) that certain Membrane & MEA Purchase Agreement dated as of September 1, 2004 (the “ Purchase Agreement ”), and that certain Collaboration Agreement dated March 22, 2005 (the “ Collaboration Agreement ”) pursuant to which HOKU optimized Automotive HOKU MEA and the Automotive HOKU MEA Assembly Process, and NISSAN purchased HOKU Membrane and HOKU MEA for test and evaluation.

 

Subject to the terms set forth herein NISSAN desires HOKU to engineer the Step 3 HOKU MEA for use in automotive PEMFC, and to continue supplying HOKU Products for test and evaluation by NISSAN.

 

For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows:

 

AGREEMENT

 

1. Definitions . The following terms shall be defined in this Agreement as set forth below:

 

1.1. “ Acquisition ” means the sale, conveyance or other disposal of all or substantially all of the assets or property of a Party, a merger with or into or consolidation of a Party into any other corporation, limited liability company or other entity (other than a wholly-owned subsidiary of such Party), or the merger of any other corporation, limited liability company or other entity into a Party, or any other corporate reorganization, sale, conveyance or other disposal of assets, consolidation, reorganization or merger, in which the shareholders of such Party receive distributions in cash or securities of another corporation, limited liability company or other entity as a result of such sale of assets, consolidation, reorganization or merger.

 

1.2. “ Agreement ” means this Step 3 Collaboration Agreement.

 

1.3. “ Automotive HOKU MEA ” means the HOKU MEA that is developed by HOKU for use in automotive PEMFC, regardless of the date or source of development.

 

1.4. “ Automotive HOKU MEA Assembly Process ” means the process, techniques and know-how that is developed by HOKU to assemble the Automotive HOKU MEA, regardless of the date of development or source of development.

 

1.5. “ Catalyst ” means a Component that typically consists of precious metals and/or alloys, which helps to initiate and maintain the electrochemical reaction of fuel and oxidant that is needed to generate electricity in a PEMFC.

 

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

1.6. “ Catalyst Support ” means the Component used to support the Catalyst in a PEMFC.

 

1.7. “ CCM ” means Membrane coated on both sides with Catalyst.

 

1.8. “ Collaboration Agreement ” has the meaning set forth in the Background & Purpose of this Agreement.

 

1.9. “ Component ” means any and all components (including, but not limited to, Catalyst, Catalyst Support, Electrode, Membrane, Liquid Ionomer, GDL, binder and seal) incorporated into MEA.

 

1.10. “ Confidentiality Agreement ” has the meaning set forth in Section 2 below.

 

1.11. “ Electrode ” means the Component that is the combination of Catalyst and Catalyst Support, and which consists of an anode and cathode located on opposite sides of the Membrane in a PEMFC.

 

1.12. “ Engineering Agreement ” has the meaning set forth in the Background & Purpose of this Agreement.

 

1.13. “ Full-scale HOKU Membrane ” means approximately [ * ] of HOKU Membrane.

 

1.14. “ Full-scale Automotive HOKU MEA ” consists of Automotive HOKU MEA with Full-scale HOKU Membrane, approximately [ * ] of active Electrode area, and GDL.

 

1.15. “ GDL ” means the material used to diffuse the fuel and oxidant in a PEMFC.

 

1.16. “ HOKU ” means HOKU SCIENTIFIC, INC., a Delaware corporation.

 

1.17. “ HOKU Authorized Personnel ” means the Chief Executive Officer and Chief Technology Officer of HOKU.

 

1.18. “ HOKU Background Intellectual Property ” means any and all Intellectual Property conceived or developed by HOKU prior to or outside the scope of this Agreement. “HOKU Background Intellectual Property” includes such Intellectual Property that is owned by HOKU under the Engineering Agreement and the Collaboration Agreement.

 

1.19. “ HOKU Catalyst ” means any Catalyst, other than NISSAN Catalyst, incorporated into any HOKU MEA.

 

1.20. “ HOKU Catalyst Support ” means any Catalyst Support, other than NISSAN Catalyst Support, incorporated into any HOKU MEA.

 

1.21. “ HOKU CCM ” means any CCM developed by HOKU at any time. “HOKU CCM” does not include such CCM developed solely by NISSAN or by NISSAN and a third party other than HOKU.

 

1.22. “ HOKU Component ” means any and all Components developed by HOKU at any time. “HOKU Component” does not include such Component developed solely by NISSAN or by NISSAN and a third party other than HOKU.

 

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

1.23. “ HOKU Electrode ” means any Electrode, other than NISSAN Electrode, incorporated into any HOKU MEA.

 

1.24. “ HOKU Facility ” means any facility owned, occupied or leased by HOKU.

 

1.25. “ HOKU Foreground Intellectual Property ” means any and all Intellectual Property conceived or developed solely by employees of HOKU under this Agreement.

 

1.26. “ HOKU GDL ” means any GDL, other than NISSAN GDL, incorporated into any HOKU MEA.

 

1.27. “ HOKU Intellectual Property ” means HOKU Background Intellectual Property, HOKU Foreground Intellectual Property, Step 3 HOKU MEA Intellectual Property, all intellectual property related to the Step 3 HOKU MEA Assembly Process and the Step 3 HOKU Membrane, and all Intellectual Property related to HOKU Products and processes, techniques and know how used to manufacture HOKU Products that have been developed under this Agreement.

 

1.28. “ HOKU MEA ” means all MEA developed by HOKU at any time, including the Automotive HOKU MEA and the Step 3 HOKU MEA, whether or not patented by HOKU. “HOKU MEA” does not include NISSAN MEA.

 

1.29. “ HOKU Membrane ” means all Membrane developed by HOKU at any time, whether or not patented by HOKU, including, without limitation, (i) the Step 3 HOKU Membrane; (ii) all materials used in any such Membrane; (iii) all solid polymer and Liquid Ionomer forms of any such Membrane; (iv) all formulations of any such Membrane, including monomer and polymer formulations; and (v) all reinforcements adjacent to any such Membrane, regardless of the date of development or the source of development.

 

1.30. “ HOKU Product ” means Automotive HOKU MEA, HOKU Catalyst, HOKU Catalyst Support, HOKU CCM, HOKU Components, HOKU Electrode, HOKU GDL, HOKU MEA, HOKU Membrane, Step 3 HOKU MEA and Step 3 HOKU Membrane.

 

1.31. “ Intellectual Property ” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications and invention disclosures, together with all reissues, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof; (b) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith; (c) all trade secrets and confidential business information (including without limitation, ideas, research and development, know-how, formulas, compositions, prototypes, manufacturing and production processes and techniques, technical data, designs, drawings, bills of materials, specifications, customer and supplier lists, contracts, pricing and cost information, and business and marketing plans and proposals); (d) all computer software and firmware (including related data, routines and documentation) in any media, type of code and format; (e) all trademarks and service marks (whether registered or not); and (f) all other proprietary rights of the foregoing items (a) through (e) of this definition and derivatives thereof in whatever tangible or intangible form, medium or embodiments.

 

1.32. “ Joint Foreground Intellectual Property ” means all Intellectual Property conceived or developed by one or more employees of HOKU and one or more employees of NISSAN under this Agreement. All Joint Foreground Intellectual Property shall be documented by both a HOKU Authorized Personnel and a NISSAN scientist in a joint book labeled: “Project Unity: Work Towards to Joint Foreground Intellectual Property,” and signed and dated by both persons.

 

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

1.33. “ Joint Laboratory ” means a laboratory facility located within the HOKU Facilities that may include a single cell and limited short stack testing equipment, and which is used by NISSAN and/or HOKU to evaluate HOKU Membrane and Automotive HOKU MEA pursuant to this Agreement.

 

1.34. “ Liquid Ionomer ” means a liquid electrolyte substance that is used to combine the Catalyst on the Electrode with Membrane for use in PEMFC.

 

1.35. “ MEA ” means CCM, 5-Layer MEA and 5-Layer MEA With Seal.

 

1.36. “ 5-Layer MEA ” means a membrane electrode assembly for electrochemical devices such as fuel cells and electrolyzers, which consists of a Membrane, Liquid Ionomer, two Electrodes (anode and cathode), a Catalyst and Catalyst Support, and GDL.

 

1.37. “ 5-Layer MEA With Seal ” means a 5-Layer MEA with the addition of seals or gaskets.

 

1.38. “ Membrane ” means a solid polymer electrolyte used in PEMFC to separate two Electrodes (anode and cathode) and conduct protons to facilitate the electrochemical reaction that generates electricity from fuel and oxidant in a PEMFC.

 

1.39. “ NISSAN ” means NISSAN MOTOR CO., LTD., a Japanese corporation.

 

1.40. “ NISSAN Affiliates ” means NISSAN’s associated companies in which it controls, directly or indirectly, greater than fifty percent (50%) of the voting power.

 

1.41. “ NISSAN Background Intellectual Property ” means any and all Intellectual Property conceived or developed by NISSAN prior to or outside the scope of this Agreement.

 

1.42. “ NISSAN Catalyst ” means the Catalyst developed solely by NISSAN or by NISSAN and a third party other than HOKU at any time.

 

1.43. “ NISSAN Catalyst Support ” means any Catalyst Support developed solely by NISSAN or by NISSAN and a third party other than HOKU at any time.

 

1.44. “ NISSAN Derivative Process ” means any process to assemble MEA that is developed solely by NISSAN or by NISSAN and a third party other than HOKU after this Agreement and which is (i) an improvement on any Automotive HOKU MEA Assembly Process that is licensed to NISSAN pursuant to this Agreement; and (ii) not otherwise included in the definition of HOKU Intellectual Property.

 

1.45. “ NISSAN Electrode ” means any Electrode developed solely by NISSAN or by NISSAN and a third party other than HOKU at any time.

 

1.46. “ NISSAN Facility ” means a facility owned, operated or leased exclusively by NISSAN.

 

1.47. “ NISSAN Foreground Intellectual Property ” means any and all Intellectual Property conceived or developed solely by employees of NISSAN under this Agreement.

 

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

1.48. “ NISSAN Fuel Cells ” means PEMFC stacks, integrated systems and balance of plant developed solely by NISSAN or by NISSAN and a third party other than HOKU at any time, for use in trucks and passenger vehicles produced by NISSAN, NISSAN Affiliates or RENAULT.

 

1.49. “ NISSAN GDL ” means the GDL developed solely by NISSAN or by NISSAN and a third party other than HOKU at any time.

 

1.50. “ NISSAN Intellectual Property ” means NISSAN Background Intellectual Property and NISSAN Foreground Intellectual Property and Intellectual Property related to the NISSAN Derivative Process; provided, however, that under no circumstances shall NISSAN Intellectual Property include any HOKU Intellectual Property.

 

1.51. “ NISSAN MEA ” means any MEA developed solely by NISSAN or by NISSAN and a third party other than HOKU that incorporates Components other than HOKU Components, whether or not patented by NISSAN, regardless of the date of development or the source of development. NISSAN MEA may not include any MEA made with the Automotive HOKU MEA Assembly Process.

 

1.52. “ PEMFC ” means proton exchange membrane fuel cells.

 

1.53. “ Purchase Agreement ” has the meaning set forth in the Background & Purpose of this Agreement.

 

1.54. “ RENAULT ” means RENAULT s.a.s., a corporation duly incorporated and existing under the laws of France and having its head office at 13/15 Quai Alphonse Le Gallo 92513 Boulogne-billancourt, France.

 

1.55. “ Step 2 Cross-check Goals ” has the meaning set forth in the Collaboration Agreement.

 

1.56. “ Step 3 Cross-check Goals ” means all of the goals identified in the table labeled “Step 3 Cross-check Goals and Dates” on Exhibit B attached hereto.

 

1.57. “ Step 3 Guidelines ” means all of the guidelines identified in the columns labeled “Step 3 Guidelines” on Exhibit A attached hereto; provided, however, that the numeric values in the column titled “Step 3 Guidelines” are tentative and may be modified by mutual written agreement between the Parties.

 

1.58. “ Step 3 HOKU MEA ” means such specific Automotive HOKU MEA comprising Step 3 HOKU Membrane and a specific combination of Components that is developed by HOKU under this Agreement using the Step 3 HOKU MEA Assembly Process, and which is described with particularity in a written disclosure that is signed by both Parties prior to the termination or expiration of this Agreement.

 

1.59. “ Step 3 HOKU MEA Assembly Process ” means the specific Automotive HOKU MEA Assembly Process that is developed by HOKU under this Agreement, to assemble the Step 3 HOKU MEA. This includes any process to apply NISSAN Catalyst, NISSAN Catalyst Support, NISSAN Electrode, or NISSAN GDL to the Step 3 HOKU MEA that is developed by HOKU under this Agreement, but excludes any assembly or manufacturing process of any HOKU Components incorporated into the Step 3 HOKU MEA.

 

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

1.60. “ Step 3 HOKU MEA Intellectual Property ” means all Intellectual Property related to the Step 3 HOKU MEA, excluding (i) any Intellectual Property related to the Step 3 HOKU MEA Assembly Process, (ii) any Intellectual Property related to the HOKU Components incorporated into the Step 3 HOKU MEA, (iii) NISSAN Intellectual Property, and (iv) Joint Foreground Intellectual Property.

 

1.61. “ Step 3 HOKU Membrane ” means the specific HOKU Membrane that is developed by HOKU under this Agreement, and which is described with particularity in a written disclosure that is signed by both Parties prior to the termination or expiration of this Agreement.

 

1.62. “ Sub-scale HOKU Membrane ” is [ * ] of HOKU Membrane.

 

1.63. “ Sub-scale HOKU CCM ” consists of Sub-scale HOKU Membrane coated on each side with [ * ] of Catalyst.

 

1.64. “ Sub-scale Automotive HOKU MEA ” consists of Automotive HOKU MEA with Sub-scale HOKU Membrane, a [ * ] active Electrode area, and GDL.

 

2. Confidentiality; Extension of Confidentiality Agreement Term .

 

2.1. Without limiting the terms of the Mutual Confidentiality Agreement (the “ Confidentiality Agreement ”) dated January 15, 2004, by and between the Parties, the terms of this Agreement and all information and materials disclosed by the Parties pursuant to this Agreement shall be deemed Confidential Information as defined in the Confidentiality Agreement, except for the permitted disclosures set forth in Section 10 below. By execution of this Agreement, the Parties agree to extend the term of the Confidentiality Agreement until the expiration or termination of this Agreement; provided, however, that each Party’s obligations to protect the confidentiality of any information disclosed prior to termination shall continue for a period of five (5) years after such expiration or termination.

 

2.2. Notwithstanding Section 2.1 above, NISSAN may disclose Confidential Information as defined in the Confidentiality Agreement to NISSAN Affiliates and RENAULT; provided, however, that (i) NISSAN shall disclose to HOKU the names of all such NISSAN Affiliates that have received Confidential Information, (ii) NISSAN shall impose on NISSAN Affiliates and RENAULT the same confidentiality obligations as NISSAN owes herein and pursuant to the Confidentiality Agreement, and (iii) NISSAN shall be liable for any breach of the terms of the Confidentiality Agreement by RENAULT or the NISSAN Affiliates.

 

2.3. Notwithstanding Section 2.1 above and the terms of the Confidentiality Agreement, HOKU may file a copy of this Agreement with the United States Securities & Exchange Commission; provided, however, that HOKU shall use commercially reasonable efforts to obtain confidential treatment from the United States Securities & Exchange Commission for all product pricing and technical information set forth in this Agreement.

 

3. Completion of Collaboration Agreement . The Parties mutually acknowledge and agree that (i) HOKU has satisfied its obligations to the satisfaction of NISSAN pursuant to the Collaboration Agreement, and (ii) the execution of this Agreement constitutes the Step Completion Verification (as defined in the Collaboration Agreement) for the Step 2 Cross-check Goals.

 

4. Scope of Work . HOKU agrees to further optimize HOKU Membrane, Automotive HOKU MEA and Automotive HOKU MEA Assembly Process for integration into the NISSAN Fuel Cells in accordance with the Step 3 Guidelines and Step 3 Cross-check Goals.

 

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

4.1. Location of Work . All work related to this Agreement shall be performed at the HOKU Facility in Hawaii, or at another location that is mutually agreed in writing by the Parties. NISSAN shall have the option, at its cost, to locate one of its employees in the Joint Laboratory on a full or part-time basis during the term of this Agreement for the sole purpose of evaluating Automotive HOKU MEA in single cells to verify the progress that HOKU is making towards the Step 3 Guidelines. HOKU shall have no obligation to disclose to such NISSAN employee any HOKU Intellectual Property beyond the extent necessary for the collaboration between the Parties hereunder. Any such NISSAN employee shall have unrestricted access to the Joint Laboratory from 9:00 a.m. until 6:00 p.m., Monday through Friday, but shall not be permitted to enter any other laboratory or research facility within the HOKU Facility unless accompanied by one of the HOKU Authorized Personnel.

 

4.2. Work Timing . Work related to this Agreement shall occur between January 1, 2006 and September 30, 2006.

 

5. Intellectual Property .

 

5.1. Ownership .

 

5.1.1. Except as specifically set forth in Sections 5.3, 5.4, and 11.3.1, as between the Parties, HOKU has the exclusive worldwide ownership and rights with respect to all HOKU Intellectual Property and all Joint Foreground Intellectual Property.

 

5.1.2. Except as expressly set forth herein, as between the Parties, NISSAN has the exclusive worldwide ownership and rights with respect to all NISSAN Intellectual Property.

 

5.2. No Transfer of Rights .

 

5.2.1. Except as specifically set forth in Sections 5.3, 5.4, and 11.3.1, no rights are granted to NISSAN with respect to HOKU Intellectual Property or Joint Foreground Intellectual Property.

 

5.2.2. Except as specifically set forth herein, no rights are granted to HOKU with respect to NISSAN Intellectual Property.

 

5.3. Licenses . The Parties hereby agree that following each Party’s substantial satisfaction of its respective obligations under this Agreement (including any amendments hereof), including, without limitation, all payment obligations set forth in Section 9, then:

 

5.3.1. HOKU will grant to NISSAN a non-exclusive, non-transferable, royalty-free, fully-paid, worldwide license, without the right to grant any sublicense, to the Step 3 HOKU MEA Intellectual Property; provided, however, that (1) the foregoing license may only be used by NISSAN to make or have made MEA that incorporates HOKU Membrane purchased from HOKU or its authorized agent/distributor, and (2) NISSAN may use a subcontractor for the purpose of having such product made by such subcontractor only after receiving written permission from HOKU to do so, which permission shall not be unreasonably withheld.

 

5.3.2. HOKU will grant to NISSAN a non-exclusive, non-transferable, royalty-free, fully-paid, worldwide license, without the right to grant any sublicense, to the Step 3 HOKU MEA Assembly Process; provided, however, that (1) the foregoing license may only be used by NISSAN to make or have made MEA that incorporates HOKU Membrane purchased from HOKU or its authorized agent/distributor; and (2) NISSAN may use a subcontractor for the purpose of having the MEA made by

 

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

such subcontractor only after receiving written permission from HOKU to do so, which permission shall not be unreasonably withheld. The foregoing license shall not be construed to grant any right to NISSAN to make or manufacture MEA (including, without limitation Step 3 HOKU MEA) using the Step 3 HOKU MEA Assembly Process for resale of MEA itself to any third party except for resale of such MEA as repair parts for the vehicles of NISSAN.

 

5.3.3. The granting of any license by HOKU pursuant to this Agreement shall include disclosure of all relevant information and granting of a non-exclusive, non-transferable, royalty-free, fully-paid, worldwide license, without the right to grant any sublicense, to HOKU Background Intellectual Property owned or controlled by HOKU at the time the license is granted, to the extent required for NISSAN to make MEA that includes HOKU Membrane using the Step 3 HOKU MEA Intellectual Property or Step 3 HOKU MEA Assembly Process; provided, however, that HOKU shall not be required to disclose any information regarding, and no license shall be granted pursuant to this paragraph to, any materials or processes used to produce or manufacture any HOKU Component incorporated into the Step 3 HOKU MEA.

 

5.3.4. NISSAN will grant to HOKU an exclusive, non-tra