The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

 

 

 

 

EXCLUSIVE FIELD-OF-USE

 

PATENT LICENSE AGREEMENT

 

BETWEEN

 

LOS ALAMOS NATIONAL SECURITY, LLC

 

AND

 

Manhattan Scientifics, Inc.

 

 

 

 

 

OFFICIAL USE ONLY

May be exempt from public release under the Freedom of Information Act

(5 U.S.C. 552), exemption number and category:

[Exemption # 4, Commercial / Proprietary]

Department of Energy review required before public release

Name/Org: Robert Dye / TT Division                Date: November 4, 2008

Guidance (if applicable): [DOE M 471.3-1]

 

 

 

 

 

 

OFFICIAL USE ONLY

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

 

TABLE OF CONTENTS

 

1. DEFINITIONS

3

2. GRANT

5

3. SUBLICENSES

6

4. FEES AND ROYALTIES

8

5. DILIGENCE

8

6. REPORTS

9

7. BOOKS AND RECORDS

9

8. TERM OF THE LICENSE AGREEMENT

10

9. TERMINATION BY THE LICENSOR

10

10. TERMINATION BY THE LICENSEE

10

11. PATENT PROSECUTION, MAINTENANCE AND DISCLAIMER

11

12. USE OF NAMES, TRADENAMES AND TRADEMARKS AND NON-DISCLOSURE OF AGREEMENT
TERMS

11

13. WARRANTY AND LIMITATION OF WARRANTY

12

14. INFRINGEMENT

13

15. WAIVER

15

16. ASSIGNMENT AND CONTROLLING INTEREST

15

17. INDEMNIFICATION

15

18. LATE PAYMENTS

17

19. NOTICES

17

20. FORCE MAJEURE

18

21. COMPLIANCE WITH LAWS

18

22. PREFERENCE FOR UNITED STATES INDUSTRY

18

23. DISPUTE RESOLUTION

19

24. GOVERNING LAW AND VENUE

21

25. PATENT MARKING

22

26. SURVIVAL

22

27. GOVERNMENT APPROVAL OR REGISTRATION

22

28. DISPOSITION OF LICENSED PRODUCTS UPON TERMINATION

23

29. PROTECTION OF PROPRIETARY INFORMATION

23

30. MISCELLANEOUS

24

APPENDIX A - PATENT RIGHTS

27

APPENDIX B - FEES, ROYALTIES AND REIMBURSEMENT OF COSTS

28

APPENDIX C - MILESTONES

30

APPENDIX D - PROGRESS REPORT FORMAT

31

APPENDIX E - ROYALTY REPORT FORMAT

32

 

OFFICIAL USE ONLY

2

 

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

EXCLUSIVE FIELD-OF-USE PATENT LICENSE AGREEMENT

 

This license agreement (“License Agreement”) is entered into by and between LOS
ALAMOS NATIONAL SECURITY, LLC, a Delaware company having its principal place of
business at P.O. Box 1663, Los Alamos, NM 87545, hereinafter referred to as the
“Licensor,” and Manhattan Scientifics, Inc., (MSI) a Delaware corporation having
offices at The Chrysler Building; 32nd Floor; 405 Lexington Avenue; New York, NY
10174, hereinafter referred to as the “Licensee,” the parties to this License
Agreement being referred to individually as a “Party,” and collectively as
“Parties.”

 

The Licensor conducts research and development at Los Alamos National Laboratory
for the U.S. Government under Contract No. DE-AC52-06NA25396, hereinafter
referred to as the “Contract,” with the U. S. Department of Energy, National
Nuclear Security Administration.

 

Rights in inventions and technical data made in the course of the Licensor’s
research and development at Los Alamos National Laboratory are governed by the
terms and conditions of the Contract.

 

Certain Technology relating to the manufacture and application of nanostructured
metals and alloys has been developed in the course of the Licensor’s research
and development at Los Alamos National Laboratory. The Technology is comprised
of a suite of three U.S. patents. Licensor is the exclusive assignee of one of
these patents; Licensor is an assignee of the other two patents and other
parties may also have been assigned rights in those other two patents.

 

The Licensor desires that such Technology be developed and utilized to the
fullest extent possible so as to enhance the accrual of economic and
technological benefits to the U.S. domestic economy, and is therefore willing to
grant to the Licensee a license to the Licensor’s interest in Patent Rights that
protect the Technology.

 

The Licensee desires to obtain from the Licensor these exclusive rights for the
commercial development, manufacture, use, and sale of the Technology.

 

Now, therefore, the Parties agree as follows:

 

1. DEFINITIONS

 

As used in this License Agreement, the following terms, whether used in the
singular or plural, shall have the following meanings:

 

1.1       "Affiliate" of the Licensee means any entity that, directly or
indirectly, Controls the Licensee, is Controlled by the Licensee, or is under
common Control with the Licensee.

 

1.2       "Control" means (i) having the actual, present capacity to elect a
majority of the directors of an entity, (ii) having the power to direct at least
forty percent (40%) of the voting rights entitled to elect directors, or (iii)
in any country where the local law will not permit foreign equity participation
of a majority, ownership or control, directly or indirectly, of the maximum
percentage of such outstanding stock or voting rights

 

OFFICIAL USE ONLY

3

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

permitted by local law. “Controls” and “Controlled” have the same meaning.
“Controlling Interest” means having Control of an entity.

 

1.3       “Effective Date” means the date upon which this License Agreement
becomes effective, and is the date of full execution by the Parties or the date
upon which the Licensor receives the License Issue Fee specified in Appendix B
(Fees, Royalties and Reimbursement of Costs), whichever comes later.

 

 

1.4

RESERVED

 

1.5       "Joint Venture" means any separate entity established pursuant to an
agreement between a third party and the Licensee and/or a sublicensee to
constitute a vehicle for a joint venture, in which the separate entity
manufactures, uses, purchases, Sells, or acquires Licensed Products or Licensed
Services from the Licensee.

 

 

1.6

“Licensed Invention” means any Licensed Product, Licensed Method or Licensed
Service.

 

1.7       "Licensed Method" means any process or method the use or practice of
which, but for the license granted in this License Agreement, would infringe or
contribute to or induce the infringement of any Patent Rights at the time of the
infringing activity.

 

1.8       "Licensed Product" means any composition of matter, article of
manufacture, and product the manufacture, use, Sale, offer for Sale, or import
of which, but for the license granted in this License Agreement, would infringe,
or contribute to or induce the infringement of any Patent Rights at the time of
the infringing activity, or would require the performance of the Licensed
Method.

 

 

1.9

"Licensed Service" means the use of the Licensed Method to provide a service.

 

 

1.10

“Net Sales Price” means:

 

 

1.10.a

for Licensed Inventions sold, leased, distributed, or transferred in an arm’s
length commercial transaction between the Licensee and a party that is not an
Affiliate or Joint Venture: the gross sales price of Licensed Inventions charged
to Licensee’s customers without any deductions other than (1) prompt payment and
other trade discounts; (2) credits, rebates, and allowances for return of
defective shipments; (3) transportation and packaging charges; (4) sales and
excise taxes, duties, and other governmental charges; and (5) transportation
insurance, to the extent that such items are separately stated in invoices or
appear as items of allowance in the records of the Licensee; or

 

 

1.10.b

for Licensed Inventions sold, leased, distributed, or transferred either in a
transaction between the Licensee and an Affiliate or Joint Venture or other
party that is not an arm’s length commercial transaction: the gross sales price
of the same quantity of similar or substantially similar Licensed Inventions
sold in an arm’s length commercial transaction, or, if similar or substantially
similar Licensed Inventions are not sold, then the fair market value thereof,
without any deductions other than (1) prompt payment and other trade discounts;
(2) credits, rebates, and allowances for return of defective shipments; (3)
transportation and packaging charges; (4) sales and excise taxes, duties, and
other governmental charges; and (5) transportation insurance, to the

 

OFFICIAL USE ONLY

4

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

extent that such items are separately stated in invoices or appear as items of
allowance in the records of the Licensee.

 

1.11     “Sublicense Consideration” means value, whether in the form of cash or
a cash equivalent, received by the Licensee for the grant of sublicense rights
to another party, including but not limited to, consideration for the granting
of a sublicense, such as sublicense issue fees and sublicense annual fees and
sublicense royalties.

 

1.12     "Patent Rights" means the Valid Claims of, to the extent assigned to or
otherwise obtained by the Licensor, the United States patent and any reissues,
continuations, divisions, and continuation-in-part applications (but only those
Valid Claims in the continuation-in-part applications that are entirely
supported in the specification and entitled to the priority date of the parent
application) thereof, listed in Appendix A (Patent Rights).

 

1.13     "Sale" means the act of selling, leasing or otherwise transferring,
providing, or furnishing for use for any consideration. Correspondingly, "Sell"
means to make or cause to be made a Sale, and "Sold" means to have made or
caused to be made a Sale.

 

1.14     “Sublicensee” means a third party or Joint Venture partner to whom the
Licensee grants all or a portion of the rights granted to Licensee hereunder.

 

1.15     “Technology” means technical information, know-how, data and Patent
Rights owned or controlled by the Licensor and relating to nanostructured metals
and alloys that possess significantly enhanced mechanical properties.

 

1.16     "Valid Claim" means a claim of a patent that (i) has not expired; (ii)
has not been disclaimed; (iii) has not been cancelled, or if cancelled has been
reinstated; and (iv) has not been revoked, held invalid, or otherwise declared
unenforceable or not allowable by a tribunal or patent authority of competent
jurisdiction over such claim from which no further appeal has or may be taken.

 

2. GRANT

 

2.1       The Licensor grants to the Licensee, subject to the provisions of this
Article 2, an exclusive United States license to make, have made, use, import,
sell, offer to sell, and have sold Licensed Inventions under the Patent Rights,
with the right to sublicense to others under the terms of Article 3
(Sublicenses).

 

2.1.a    For purposes of removal of doubt, Licensee acknowledges that other
parties may also have ownership interests in U.S. Patent 7152448 and U.S. Patent
6399215, and that Licensor is only granting a license to the Licensor’s right,
title and interest in, U.S. Patent 7152448 and U.S. Patent 6399215. If the
Licensee wishes to have full exclusive rights to this patent, the Licensee must
seek rights from other assignees (if any) of those patents.

 

 

2.1.b

The Licensor will grant no further licenses in U.S. Patent 7152448 and U.S.
Patent 6399215.

 

 

2.2

Rights not expressly granted to the Licensee herein are expressly reserved to
the Licensor.

 

 

OFFICIAL USE ONLY

5

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

2.3       The Licensor expressly reserves the right to use the Technology,
including the right to make, have made, use and have used Licensed Inventions
for any purpose permitted under the Contract, including, but not limited to,
Cooperative Research and Development Agreements, Work for Others Agreements,
User Facility Agreements, research and education.

 

2.4       The U.S. Government has a nonexclusive, nontransferable, irrevocable,
paid-up license to practice or have practiced throughout the world, for or on
behalf of the U.S. Government, inventions covered by the Patent Rights, and has
certain other rights under 35 U.S.C. 200-212 and applicable implementing
regulations.

 

2.5       Under 35 U.S.C. 203 the U.S. Department of Energy has the right to
require the Licensee to grant a nonexclusive, partially exclusive or exclusive
license under the Patent Rights in any field-of-use to a responsible applicant
or applicants in accordance with 48 CFR 27.304-1 (g). The terms of such license
shall be as required by DOE notwithstanding anything else in this Agreement.

 

2.6       Nothing in this License Agreement will be deemed to limit the right of
the Licensor to publish any and all technical data resulting from any research
performed by the Licensor, provided that such publication shall be delayed as
necessary to preserve both United States of America and foreign Patent Rights.

 

2.7       As between Licensor and Licensee, Licensee shall own all rights,
title, and interest throughout the world in and to any and all inventions,
original works of authorship, developments, concepts, know-how, improvements or
trade secrets, whether or not patentable or registrable under copyright or
similar laws, which Licensee may conceive or develop or reduce to practice, or
cause to be conceived or developed or reduced to practice, including without
limitation improvements on the Patent Rights, hereunder.

 

3. SUBLICENSES

 

3.1       The Licensor also grants to the Licensee, so long as it retains
exclusive rights under this License Agreement, the right to issue sublicenses
under the rights and licenses granted to Licensee in Article 2 (Grant) where the
Licensor may lawfully grant such licenses. For the avoidance of doubt,
Affiliates and Joint Ventures shall have no licenses under the Patent Rights
unless such Affiliates and Joint Ventures are granted a sublicense.

 

3.1.a    For purposes of removal of doubt, Licensee acknowledges that other
parties may also have ownership interests in U.S. Patent 7152448 and U.S. Patent
6399215, and that Licensor is only granting a license to the Licensor’s right,
title and interest in, U.S. Patent 7152448 and U.S. Patent 6399215. If the
Licensee wishes to have full exclusive rights to this patent, the Licensee must
seek rights from other assignees (if any) of those patents

 

3.2       All sublicenses will require the performance of, all the obligations
due to the Licensor and the United States Government under this License
Agreement other than those rights and obligations specified in Articles 4 (Fees
and Royalties), 5 (Diligence), and 11 (Patent Prosecution, Maintenance, and
Disclaimer) and understanding that the insurance requirements of sections
17.2-17.5 will apply to such sublicensee with insurance amounts determined based
on such sublicensee’s activities only.

.

 

OFFICIAL USE ONLY

6

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

3.3       All sublicenses also will contain a provision that will require the
payment of royalties by the sublicensees to the Licensee in an amount sufficient
to allow the Licensee to meet its royalty obligations to the Licensor pursuant
to Article 4 (Fees and Royalties).

 

3.4       The Licensee also will pay to the Licensor the percentage, specified
in Appendix B (Fees, Royalties and Reimbursement of Costs), Section 3, of any
cash or the cash equivalent of Sublicense Consideration the Licensee receives
for the grant of rights under each sublicense agreement pursuant to this Article
3.

 

3.5       For the purposes of this License Agreement, the operations of all
sublicensees related to sublicenses granted to pursuant to this Article 3 shall
be deemed to be the operations of the Licensee, for which the Licensee shall be
responsible (except that sales by sublicensees shall be treated as sales by a
sublicensee and not also as sales by Licensee for purposes of calculating
royalties).

 

3.6       The Licensee will not grant its sublicensees the right to license the
Technology to others without the express written permission of the Licensor.

 

3.7       Sublicensees will be required to carry the insurance requirements
specified under Article 17 (Indemnification) with insurance amounts determined
based on sublicensee’s activities only.

.

3.8       The Licensee will notify the Licensor of each sublicense granted
hereunder and provide the Licensor with a complete copy of each sublicense
within thirty (30) days of issuance of the sublicense. Consideration owed to the
Licensor under this Article 3 and Article 4 (Fees and Royalties) will be paid to
the Licensor on or before the due date of the royalty report applicable to the
semi-annual period in which consideration was due and owed to the Licensee under
the sublicense. The Licensee will collect from the sublicensees and pay to the
Licensor all fees, royalties, cash, and the cash equivalent of consideration due
the Licensor as set forth in Articles 3 and 4. The Licensee will guarantee all
monies and Other Consideration due the Licensor from the sublicensees. The
Licensee will require sublicensees to provide it with copies of all progress
reports and royalty reports in accordance with the provisions herein, and the
Licensee will collect and deliver to the Licensor all such reports due from
sublicensees.

 

3.9       Upon termination of this License Agreement for any reason, the
Licensor, at its sole discretion, will determine whether any or all sublicenses
will be canceled or assigned to the Licensor. In the event of termination of
this License Agreement and if the Licensor accepts assignment of any sublicense,
the Licensor will not be bound by any grant of rights broader than nor will be
required to perform any obligation other than those rights and obligations
contained in this License Agreement. Moreover, the Licensor will have the sole
right to modify each such assigned sublicense to include all of the rights of
the Licensor (and, if applicable, the United States Government) that are
contained in this License Agreement, including the payment directly to the
Licensor of royalties and other fees in accordance with Article 4 (Fees and
Royalties) and patent prosecution costs in accordance with Article 11 (Patent
Prosecution, Maintenance and Disclaimer).

 

4. FEES AND ROYALTIES

 

4.1       In consideration for the rights, privileges and license granted under
this License Agreement, the Licensee must pay to the Licensor the fees and
royalties and/or equity payments specified in Appendix B (Fees,

 

OFFICIAL USE ONLY

7

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

Royalties and Reimbursement of Costs).

 

4.2       Royalty payments are to be calculated based on Net Sales during the
semiannual periods extending from January 1 through June 30 (first half) and
July 1 through December 31 (second half) of each year, for as long as this
License Agreement remains in effect. The first royalty payment due under this
License Agreement is based on Net Sales from the Effective Date to the end of
the semiannual period which includes the Effective Date. Subsequent royalty
payments are due concurrently with the royalty reports, pursuant to Article 6
(Reports), on the following dates:

 

 

•

August 31 for the calendar half beginning January 1 and ending June 30.

 

•

February 28 for the calendar half beginning July 1 and ending December 31.

 

4.3       All payments due the Licensor must be paid in U.S. currency at the
address set forth in Article 19 (Notices). The Licensee must convert Net Sales
invoiced in foreign currency into equivalent U.S. currency at the exchange rate
for the foreign currency prevailing as of the last day of the reporting period,
as reported in the Wall Street Journal®.

 

 

4.4

RESERVED.

 

4.5       No royalty as provided in this Article 4 will be collected or paid
hereunder to the Licensor on Licensed Inventions Sold to, or otherwise exploited
for, the account of the United States Government.

 

4.6       Unless specifically stated elsewhere in this License Agreement, the
fees set forth in this Article 4, whether paid in cash or equity, are not
refundable, nor creditable, nor an advance against any royalties or other
payments required under this License Agreement.

 

5. DILIGENCE

 

5.1       The Licensee, upon execution of this License Agreement, will proceed
with the development, manufacture, and Sale of Licensed Inventions and will make
reasonable commercial efforts to market the same.

 

5.2       Subject to Section 20 herein, to be in compliance with this Article 5,
the Licensee must meet the Milestones set out in Appendix C (Milestones).

 

5.3       Article 5 is a material term of this License Agreement, without which
the license grant under Article 2 (Grant) would not have been made. If the
Licensee is unable to perform in accordance with this Article 5, Licensor will
have the right and option to terminate this License Agreement in accordance with
Article 9 (Termination by Licensor) which option must be elected not later than
sixty (60) days after the date on which the missed Milestone was due.

 

6. REPORTS

 

 

6.1

Progress Reports. The Licensee will submit to the Licensor a semiannual progress
report

 

OFFICIAL USE ONLY

8

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

covering activities by the Licensee related to the development and testing of
all Licensed Inventions and obtaining government approvals necessary for
marketing them. These progress reports will be provided to the Licensor to cover
the progress of the research, development and commercialization activities,
until Net Sales exceed One Million Dollars ($1,000,000). Progress reports shall
comply with the report format shown in Appendix D (Progress Reports). Progress
reports will be treated by the Licensor as Licensee’s Proprietary Information.

 

Progress Reports are due on the following dates:

 

 

•

August 31 for the calendar half beginning January 1 and ending June 30

 

•

February 28 for the calendar half beginning July 1 and ending December 31

 

6.2       Royalty Reports. After the first Sale or other exploitation of a
Licensed Product or Licensed Service, the Licensee must submit semiannual
royalty reports. Royalty reports shall comply with the report format shown in
Appendix E (Royalty Report) and shall include reports on Sales by sublicensees.
Royalty reports will be treated by the Licensor as Licensee’s Proprietary
Information.

 

If no sale, sublicense or use of Licensed Inventions has been made during a
reporting period, a statement to this effect must be sent to Licensor.

 

Royalty Reports are due on the following dates:

 

 

•

August 31 for the calendar half beginning January 1 and ending June 30

 

•

February 28 for the calendar half beginning July 1 and ending December 31

 

7. BOOKS AND RECORDS

 

7.1       The Licensee will keep books and records accurately showing all
Licensed Inventions manufactured, used, offered for Sale, imported, Sold, and/or
otherwise exploited, all payments received by Licensee for the same, and all
payments due the Licensor. Such books and records will be preserved for at least
three (3) years after the date of the payment to which they pertain and will be
open to examination by representatives or agents of the Licensor, upon no less
than ten (10) business days notice and at reasonable times, but not more than
once in any 12 month period to determine their accuracy and assess the
Licensee’s compliance with the terms of this License Agreement.

 

7.2       The fees and expenses of the Licensor’s representatives performing the
inspection and audit will be borne by the Licensor. However, if the audit
discloses an error in royalties owed the Licensor more than the greater of (a)
$5,000 and (b) of more than five percent (5%) of royalties paid to the Licensor,
then the Licensee will pay the fees and expenses of said representatives within
thirty (30) days after receipt of invoice.

 

8. TERM OF THE LICENSE AGREEMENT

 

 

8.1

This License Agreement is in full force and effect from the Effective Date and
remains in effect

 

OFFICIAL USE ONLY

9

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

until the expiration of the last Valid Claim to expire of the patents included
within the Licensor’s Patent Rights, unless sooner terminated by operation of
law or by acts of either of the Parties in accordance with the terms of this
License Agreement.

 

9. TERMINATION BY THE LICENSOR

 

9.1       If the Licensee fails to deliver to the Licensor any report when due,
or fails to pay any royalty or fee when due, or if the Licensee breaches any
other material term of this License Agreement, including, but not limited to,
Article 5 (Diligence) the Licensor may exercise its right to terminate this
License Agreement. To exercise its rights, the Licensor must give written notice
of default to the Licensee pursuant to Article 19 (Notices). If the Licensee
fails to cure the default, and provide written tangible evidence satisfactory to
the Licensor that the deficiency has been cured, within thirty (30) days from
the effective date of notification to the Licensee, the Licensor may, at its
option, terminate this License Agreement immediately.

 

9.2       Termination pursuant to this Article 9 does not relieve the Licensee
of its obligation to pay any royalty or license fees due or owing at the time of
termination and does not impair any accrued right of the Licensor.

 

9.3       The License Agreement will terminate automatically on the date of
filing a voluntary petition in bankruptcy by the Licensee or an involuntary
petition in bankruptcy by the Licensee which petition is not dismissed within 90
days.

 

10. TERMINATION BY THE LICENSEE

 

10.1     If the Licensor breaches any material term of this License Agreement,
the Licensee may exercise its right to terminate this License Agreement. To
exercise its rights, the Licensee must give written notice of default to the
Licensor pursuant to Article 19 (Notices). If the Licensor fails to cure the
default, and provide written tangible evidence satisfactory to the Licensee that
the deficiency has been cured, within thirty (30) days from the effective date
of notification to the Licensor, the Licensee may, at its option, terminate this
License Agreement immediately.

 

10.1     The Licensee may terminate this License Agreement for convenience by
giving written notice to the Licensor. Such termination will be effective ninety
(90) days from the date of delivery of the notice, and all the Licensee’s rights
under this License Agreement will cease as of that date.

 

10.2     Termination pursuant to this Article 10 does not relieve the Licensee
of any obligation or liability accrued by the Licensee prior to the effective
date of termination or affect any rights of the Licensor arising under this
License Agreement prior to termination.

 

11. PATENT PROSECUTION, MAINTENANCE AND DISCLAIMER

 

11.1     The Licensor will maintain the U.S. patents identified in Appendix A,
using counsel of its choice. Licensor has disclosed to the Licensee, copies of
documents relating to patent prosecution of the

 

OFFICIAL USE ONLY

10

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

Licensed Patents that are in possession of Licensor, and copies of documents
between Licensor and other parties to the extent such documents affect the title
to or rights in the Licensed Patents. The Licensor represents that it has made
commercially reasonable efforts to locate such documents, and represents that to
the best of its knowledge such documents are true and correct and unaltered.
Such documents will be protected as the proprietary information of Licensor
subject to the exclusions of section 29.4.

 

 

11.2

RESERVED

 

 

11.3

RESERVED

 

 

11.4

RESERVED

 

 

11.5

RESERVED

 

 

11.6

RESERVED

 

 

12. USE OF NAMES, TRADENAMES AND TRADEMARKS AND NON-DISCLOSURE OF AGREEMENT
TERMS

 

12.1     With the exception of the statements listed below, this License
Agreement does not confer any right to use in advertising, publicity, or other
promotional activities any name, tradename, trademark, or other designation of
the Department of Energy, Los Alamos National Security, LLC, or Los Alamos
National Laboratory (including any contraction, abbreviation, or simulation of
any of the foregoing) without prior written approval pursuant to Article 19
(Notices).

 

 

12.1.a

“The technology, originally developed at Los Alamos National Laboratory,.......”

 

 

12.1.b

“The technology, licensed from Los Alamos National Security,.....”

 

 

12.1.c

“COMPANY was founded upon technology created at Los Alamos National Laboratory.”

 

 

12.1.d

“COMPANY has exclusively licensed technology/intellectual property from Los
Alamos National Security.”

 

12.2     Licensee will not use names Department of Energy, Los Alamos National
Security, LLC, or Los Alamos National Laboratory (including any contraction,
abbreviation, or simulation of any of the foregoing) to endorse Licensee’s
products or services.

 

12.3     The Licensor may disclose to third parties the existence of this
License Agreement and the extent of the grant in Article 2 (Grant), but will not
disclose royalty or fee obligations or rates, or other information identified as
proprietary by the Licensee herein, if any, except where the Licensor is
required to release information under applicable law, and Licensor has informed
Licensee of such requirement and given Licensee reasonable opportunity to
contest such agreement or seek protective provisions relating to such
disclosure.

 

 

12.4

The Licensee may disclose to third parties the existence of this License
Agreement and the terms

 

OFFICIAL USE ONLY

11

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

and conditions to the extent determined appropriate by the Licensee.

 

13. WARRANTY AND LIMITATION OF WARRANTY

 

13.1     The Licensor warrants that it is the lawful owner of the Patent Rights
and has the right to grant the licenses granted herein.

.

13.2     Except as expressly set forth in this License Agreement, the licenses
and the associated Technology, Patent Rights, Licensed Products, Licensed
Services, and Licensed Methods are provided by the Licensor AS IS, WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. THE LICENSOR AND THE U. S. GOVERNMENT MAKE NO
EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY THAT THE LICENSED PRODUCTS,
LICENSED SERVICES, OR LICENSED METHODS WILL NOT INFRINGE ANY PATENT, COPYRIGHT,
TRADEMARK OR OTHER PROPRIETARY RIGHT.

 

 

13.3

Nothing in this License Agreement will be construed as:

 

 

a.

a warranty or representation by the Licensor or the U. S. Government as to the
validity or scope of the Licensor’s Patent Rights;

 

 

b.

an obligation to bring or prosecute actions or suits against third parties for
patent infringement, except as provided in Article 14 (Infringement);

 

 

c.

conferring by implication, estoppel, or otherwise any license or rights under
any patents of the Licensor or the U. S. Government other than the Licensor’s
Patent Rights; or

 

 

d.

an obligation by the Licensor or the U. S. Government to furnish any know-how,
technical assistance, or technical data other than as stated in Article 2
(Grant).

 

13.4     NEITHER THE LICENSOR NOR THE U.S. GOVERNMENT WILL BE LIABLE FOR ANY
LOST PROFITS, COSTS OF PROCURING SUBSTITUTE GOODS OR SERVICES, LOST BUSINESS,
ENHANCED DAMAGES FOR INTELLECTUAL PROPERTY INFRINGEMENT, OR FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE, OR OTHER SPECIAL DAMAGES SUFFERED
BY LICENSEE, ITS SUBLICENSEES, JOINT VENTURES, OR AFFILIATES ARISING OUT OF OR
RELATED TO THIS AGREEMENT FOR ALL CAUSES OF ACTION OF ANY KIND (INCLUDING TORT,
CONTRACT, NEGLIGENCE, STRICT LIABILITY AND BREACH OF WARRANTY) EVEN IF THE
LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

14. INFRINGEMENT

 

 

14.1

In the event that the Licensor or the Licensee learns of infringement of

commercial significance of Patent Rights licensed under this License Agreement,
the knowledgeable Party will provide the other Party with (i) written notice of
such infringement and (ii) any evidence of such infringement

 

OFFICIAL USE ONLY

12

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

reasonably available to it. During the period in which, and in the jurisdiction
where, the Licensee has exclusive rights under this License Agreement, neither
the Licensor nor the Licensee will notify an infringer of infringement or put
such infringer on notice of the existence of any Patent Rights without first
obtaining consent of the other. If the Licensee puts such infringer on notice
(‘Infringement Notice”) of the existence of any Patent Rights with respect to
such infringement without first obtaining the written consent of the Licensor
and if a declaratory judgment action is filed by such infringer against the
Licensor, then Licensee’s right to initiate a suit against such infringer for
infringement under Paragraph 14.2 below will terminate immediately without the
obligation of the Licensor to provide notice to the Licensee. If the Licensor
puts such infringer on notice of the existence of any Patent Rights with respect
to such infringement without first obtaining the written consent of the Licensee
and if a declaratory judgment action is filed by such infringer against the
Licensor, then Licensor’s right to any recovery from a suit against such
infringer for infringement shall be limited to Licensor’s actual costs of
participating in such litigation, if any. Both the Licensor and the Licensee
will use their diligent efforts to cooperate with each other to terminate such
infringement without litigation.

 

14.2     If infringing activity of commercial significance by the infringer has
not been abated within ninety (90) days following the date the Infringement
Notice takes effect (or a greater or lesser time if both Licensor and Licensee
approve, with such approval not to be unreasonably withheld), the Licensee may
institute suit for patent infringement against the infringer. The Licensor may
voluntarily join such suit at its own expense, but may not otherwise commence
suit against the infringer for the acts of infringement that are the subject of
the Licensee’s suit or any judgment rendered in that suit. The Licensee may not
join the Licensor as a party in a suit initiated by the Licensee without the
Licensor’s prior written consent. If in a suit initiated by the Licensee, the
Licensor is involuntarily joined other than by the Licensee, the Licensee will
pay any costs incurred by the Licensor arising out of such suit, including but
not limited to, any legal fees of counsel that the Licensor selects and retains
to represent it in the suit.

 

14.3     If, within one hundred and eighty (180) days following the date the
Infringement Notice takes effect, (or a greater or lesser time if both Licensor
and Licensee approve, with such approval not to be unreasonably withheld)
infringing activity of commercial significance by the infringer has not been
abated and if the Licensee has not brought suit against the infringer, the
Licensor may institute suit for patent infringement against the infringer. If
the Licensor institutes such suit, the Licensee may not join or be joined in
such suit without the consent of both the Licensor and the Licensee, and may not
otherwise commence suit against the infringer for the acts of infringement that
are the subject of the Licensor’s suit or any judgment rendered in that suit.

 

14.4     Any recovery or settlement, whether compensatory or punitive, received
in connection with any suit will first be shared by the Licensor and the
Licensee equally to cover the litigation costs each incurred and next shall be
paid to the Licensor or the Licensee to cover any litigation costs it incurred
in excess of the litigation costs of the other. For the avoidance of doubt,
litigation costs of Licensor reimbursed by Licensee shall be considered incurred
by Licensor for the purposes of this paragraph.

 

14.5     In any suit initiated by the Licensee, any recovery of damages in
excess of litigation costs (hereinafter referred to as “Excess Recovery”) will
be shared as follows, regardless of whether the infringement was found to be
willful.

 

 

14.5.a

The Licensor will receive twenty-five percent (25%) of the Excess Recovery if
the Licensor was

 

OFFICIAL USE ONLY

13

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

not a party to the suit.

 

 

14.5.b

The Licensor will receive fifty percent (50%) of the Excess Recovery if the
Licensor was a party to the suit, whether joined voluntarily or involuntarily.

 

14.6     In any suit initiated by the Licensor, any recovery in excess of
litigation costs will belong to the Licensor unless Licensee was joined as a
party to the suit in which case Licensor and Licensee shall share equally any
recovery in excess of litigation costs.

 

14.7     The Licensor and the Licensee agree to be bound by all determinations
of patent infringement, validity, and enforceability (but no other issue)
resolved by any adjudicated judgment in a suit brought in compliance with this
Article 14, unless otherwise agreed by the Parties.

 

14.8     Any agreement made by the Licensee that settles an infringement by
granting a sublicense shall comply with the requirements of Article 3
(Sublicenses) of this License Agreement.

 

14.9     Each Party will cooperate with the other in litigation proceedings
instituted hereunder but at the expense of the Party who initiated the suit
(unless such suit is being jointly prosecuted by the Parties).

 

14.10   Any litigation proceedings will be controlled by the Party bringing the
suit, except that the Licensor may be represented by counsel of its choice in
any suit brought by the Licensee.

 

15. WAIVER

 

15.1     No waiver by either Party of any breach or default of any of the
covenants or terms of this License Agreement will be deemed a waiver as to any
prior, subsequent and/or similar breach or default.

 

16. ASSIGNMENT AND CONTROLLING INTEREST

 

16.1     This License Agreement is binding upon and will inure to the benefit of
the Licensor and Licensee, and their successors and assigns. The Licensee may
not assign or transfer this License Agreement to a foreign owned or controlled
entity without the Licensor’s prior written consent, which shall not be
unreasonably withheld. Such determination by the Licensor will be provided to
the Licensee within forty-five (45) days of receipt of a request from the
Licensee.

 

16.2     For all other assignments of this License Agreement, the Licensee or
its successor will notify the Licensor within thirty (30) days of such
assignment.

 

17. INDEMNIFICATION

 

17.1     The Licensee will, and will require its sublicensees to, indemnify,
hold harmless, and defend the Licensor, the sponsors of the research that led to
the Technology; the inventors of any invention claimed in

 

OFFICIAL USE ONLY

14

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

patents or patent applications under Patent Rights (including the Licensed
Products, Licensed Services, and Licensed Methods contemplated thereunder);
their employers; and the officers, employees, and agents of any of the foregoing
(each an “Indemnitee”), against any and all claims, suits, losses, damages,
costs, fees, and expenses resulting from, or arising out of, the exercise of
this License Agreement or any sublicense, except for any negligent acts or
omissions or willful misconduct of an Indemnitee and except for claims or suits
brought by an Indemnitee against another Indemnitee. This indemnification will
include, but will not be limited to, any product liability.

 

17.2     The Licensee, at its sole cost and expense, will insure its activities
in connection with the work under this License Agreement and obtain, keep in
force, and maintain insurance or an equivalent program of self insurance as
follows:

 

 

17.2.a

While the Technology is in a research and development, engineering and prototype
stage, up to, but not including any Sales:

 

 

i.

Comprehensive or Commercial Form General Liability Insurance (contractual
liability included) with limits as follows:

 

 

Each Occurrence

$1,000,000

 

Personal and Advertising Injury

$1,000,000

 

General Aggregate (commercial form only)

$2,000,000

 

 

17.2.b

When the Technology is in a Sales stage and Sales are less than or equal to
$3,000,000:

 

 

i.

Comprehensive or Commercial Form General Liability Insurance (contractual
liability included) with minimum limits as follows:

 

 

Each Occurrence

$3,000,000

 

Products/Completed Operations Aggregate

$3,000,000

 

Personal and Advertising Injury

$3,000,000

 

General Aggregate (commercial form only)

$3,000,000

 

 

17.2.c

When Sales exceed $3,000,000:

 

 

i.

Comprehensive or Commercial Form General Liability Insurance (contractual
liability included) with limits as follows:

 

 

Each Occurrence

$5,000,000

 

Products/Completed Operations Aggregate

$5,000,000

 

Personal and Advertising Injury

$5,000,000

 

General Aggregate (commercial form only)

$5,000,000

 

17.3     It should be expressly understood, however, that the coverages and
limits referred to under Paragraph 17.2 will not in any way limit the liability
of the Licensee. Within thirty (30) days of receiving a written request from the
Licensor, the Licensee will furnish the Licensor with certificates of insurance
or evidence of self-insurance documenting compliance with all requirements. Such
certificates will:

 

OFFICIAL USE ONLY

15

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

 

 

17.3.a

Provide for thirty (30) day advance written notice to the Licensor of any
modification;

 

 

17.3.b

Indicate that the Licensor has been endorsed as an additional insured under the
coverages referred to under the above; and

 

 

17.3.c

Include a provision that the coverages will be primary and will not participate
with or be excess over any valid and collectable insurance or program of
self-insurance carried or maintained by the Licensor.

 

17.4     Failure of the Licensee to provide certificates of insurance pursuant
to Paragraph 17.3 will be a material breach of this License Agreement and the
Licensor may immediately terminate this License Agreement without the obligation
to provide notice pursuant to Article 9 (Termination by Licensor).

 

17.5     The Licensor will promptly notify the Licensee in writing of any claim
or suit brought against the Licensor for which the Licensor intends to invoke
the provisions of this Article 17. The Licensee will keep the Licensor informed
of its defense of any claims pursuant to this Article 17.

 

17.6     If the Licensor, in its reasonable discretion, believes that there will
be a conflict of interest or it will not otherwise be adequately represented by
counsel chosen by the Licensee to defend the Licensor in accordance with this
Article 17, then the Licensor may retain counsel of its choice to represent it,
and the Licensee will pay all expenses for such representation.

 

18. LATE PAYMENTS

 

18.1     In the event royalty payments or fees are not received by the Licensor
when due, the Licensee will pay to the Licensor the amount due plus simple
interest calculated at the prime rate, as given in The Wall Street Journal on
the date the payment was due, plus four percent (4%).

 

19. NOTICES

 

19.1     Any notice or payment required to be given to either Party will be
deemed to have been properly given and to be effective on the date of

 

 

19.1.a

delivery, if delivered in person;

 

19.1.b

three (3) days after mailing, if mailed by first-class certified mail; or

 

19.1.c

three (3) days after mailing, if mailed by any global express carrier service
that requires the recipient to sign the documents demonstrating the delivery of
such notice or payment;

 

to the respective addresses given below, or to another address as designated in
writing as specified herein by the Party changing its address.

 

 

OFFICIAL USE ONLY

16

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

 

In the case of the Licensee:

 

Manhattan Scientifics, Inc.

Attention: Dan Blacklock

 

3321 Columbia Dr. N.E.

Albuquerque, NM 87107

County: Bernalillo

Phone: 505-884-1922

Cell: 505-350-9754

Fax: 505-884-1923

 

In the case of the Licensor:

 

Los Alamos National Laboratory

Technology Transfer Division

P.O. Box 1663, Mail Stop C334

Los Alamos, New Mexico 87545

Attention: License Compliance Officer

Telephone: (505) 665-9091

Facsimile: (505) 665-0154

Email address: tt-cmt@lanl.gov

 

For Courier Service to the Licensor:

 

Los Alamos National Laboratory

Technology Transfer Division

Bikini Atoll Road, Bldg. SM-30

Los Alamos, NM 87545

Attention: License Compliance Officer

Telephone: (505) 665-9091

For payments due the Licensor:

Los Alamos National Laboratory
Technology Transfer Division
P.O. Box 1663, Mail Stop P245
Los Alamos, NM  87544
Attention:  License Compliance Officer

 

 

19.2     Telephone numbers, fax numbers, and email addresses are given above for
purposes of convenience of communication only. Official notices must be sent
pursuant to Paragraph 19.1.

 

20. FORCE MAJEURE

 

20.1     The Parties shall not be responsible for any failure to perform due to
the occurrence of any events beyond their reasonable control which render their
performance impossible or onerous, including, but not limited to biological or
nuclear incidents; earthquakes; fires; floods; governmental acts, orders or
restrictions; permit requirements; inability to obtain suitable and sufficient
labor, transportation, fuel, equipment or materials; local, national, or state
emergency; power failure and power outages; acts of terrorism; strike; and war.

 

20.2     Either Party to this License Agreement, however, will have the right to
terminate this License Agreement without penalty upon thirty (30) days' prior
written notice if either Party is unable to fulfill its obligations under this
License Agreement due to any of the causes specified in Paragraph 20.1 for a
period of one (1) year.

 

21. COMPLIANCE WITH LAWS

 

21.1     The Licensee will observe all applicable United States laws with
respect to the transfer of Licensed Products and Licensed Methods and related
technical data and the provision of Licensed Services to foreign countries,
including, without limitation, the International Traffic in Arms Regulations
(ITAR) and the

 

OFFICIAL USE ONLY

17

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

Export Administration Regulations. Failure of Licensee to comply with this
requirement is a material breach of this License Agreement.

 

21.2     The Licensee shall comply with all applicable international, national,
state, regional, and local laws and regulations in performing its obligations
hereunder and in its use, manufacture, Sale, or import of the Licensed Products,
Licensed Services, or practice of the Licensed Method.

 

22. PREFERENCE FOR UNITED STATES INDUSTRY

 

22.1     In accordance with 35 U.S.C. 204, Licensed Products or products
produced through the use of Licensed Methods sold in the United States must be
manufactured substantially in the United States.

 

23. DISPUTE RESOLUTION

 

 

23.1

The individuals designated in Paragraph 19 agree to exert their best efforts to
resolve disputes arising from this License Agreement. In the event that any
dispute arising out of this License Agreement cannot be resolved by the
aforestated individuals or their successors, the matter will immediately be
referred to the respective management of each Party for resolution. In the event
the managements of the Parties fail to resolve the matter within thirty (30)
days of referral of the matter to them, either Party may give the other Party
notice of its intention to seek other recourse.

 

23.2 Definitions. For purposes of this clause:

 

23.2.a     “Board” means the General Services Administration, Civilian Board of
Contract Appeals or such successor Board as may be established by law.

 

23.2.b     “Arbitration decision” means a decision of the Board in an
arbitration pursuant to this clause.

 

23.2.c     “Claim” means a written demand or written assertion by either
contracting party seeking as a matter of right, the payment of money in a sum
certain, the adjustment or interpretation of a license term, or other relief
arising under or relating to this license. A voucher, invoice, or other request
for payment or equitable adjustment under the terms of the license that is not
in dispute when submitted is not a claim. The Licensee may convert such
submission into a claim if it is disputed either as to liability or amount, or
is not acted upon in a reasonable time, by demanding a decision by the Contract
Administrator.

 

23.2.d     “Counterclaim” means a claim asserted in a pleading filed with the
Board in an arbitration proceeding pursuant to this clause which arises from the
same occurrence or transaction that is the subject matter of the opposing
party’s claim. Counterclaims do not need to be submitted to the Licensor
Contract Administrator for decision.

 

OFFICIAL USE ONLY

18

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

23.2.e     “Rules of the Board” means the Board’s rules promulgated at 41 CFR
Part 6101 and 6102 or as promulgated by a successor Board.

 

23.3 Nature of the License. This license is not a Government contract and,
therefore, is not subject to the Contract Disputes Act of 1978 (41 U.S.C.
§§601-613). However, this license is a subcontract executed under the authority
of prime contract DE-AC52-06NA25396. The Licensee acknowledges that DOE is not a
party to the license and, for purposes of the license, LANS is not an agent of
DOE. Consequently, the provision for arbitration by the Board, as provided for
in this clause, does not create or imply the existence of privity of contract
between the Licensee and DOE.

 

23.4 Scope of Clause. The rights and procedures set forth in this clause are the
exclusive rights and procedures for resolution of all claims and disputes
arising under, or relating to, this license, and no action based upon any claim
or dispute arising under, or relating to, this license shall be brought in any
court except as provided in this clause. The parties shall be bound by any
arbitration decision rendered pursuant to this clause, which shall be vacated,
modified, or corrected only as provided in the Federal Arbitration Act (9 U.S.C.
§§1-16). An arbitration decision may only be enforced in any court of competent
jurisdiction in the State of New Mexico.

 

23.5 Filing a Claim/Licensor Contract Administrator’s Decision.

 

23.5.a      Unless otherwise provided in this License, the Licensee must file
any claim against LANS within 60 Days after the Licensee knew or should have
known the facts giving rise to the claim. Failure to file a claim within the
period prescribed by this paragraph shall constitute a waiver of the Licensee’s
right, if any, to an equitable adjustment under the License.

 

23.5.b      The Licensee shall submit any claim in writing to the Contract
Administrator who shall issue a decision on the matter within 60 Days of receipt
of the claim. If the Contract Administrator fails to issue a decision within 60
Days, the Licensee may request mediation or demand for arbitration as provided
in paragraphs (e) and (f) of this clause.

 

23.5.c     LANS may, at any time prior to license expiration file a claim
against the Licensee by issuing a written decision by the Contract Administrator
asserting such a claim.

 

23.5.d     The decision of the Contract Administrator shall be final and
conclusive unless the Licensee requests mediation or demands arbitration in
accordance with the terms of this clause.

 

23.6 Request for Mediation.

 

23.6.a     If the decision of the Contract Administrator is not satisfactory to
the Licensee or the Contract Administrator has failed to timely issue a decision
in accordance with subparagraph (d) 2) of this provision and the Licensee
desires to pursue further action, the Licensee may request that the matter be
scheduled for mediation. The request for mediation must be made within 45 Days
after receipt of the Contract Administrator’s decision.

 

23.6.b     If the Contract Administrator believes that mediation of the dispute
is likely to lead to a satisfactory resolution, he or she will so inform the
Licensee and the matter will be scheduled for

 

OFFICIAL USE ONLY

19

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

mediation. The parties will agree on the format of the mediation and will
jointly select the mediator. The cost of the mediator and related expenses shall
be divided evenly between the parties.

 

23.6.c     If the Contract Administrator decides that mediation is not likely to
lead to a satisfactory resolution of the claim, or that a mediation undertaken
pursuant to this clause has been unsuccessful, he or she will so inform the
Licensee in writing.

 

23.7 Demand for Arbitration.            If the decision of the Contract
Administrator is not satisfactory to the Licensee, or if the Licensee’s request
for mediation has been denied, or a mediation undertaken pursuant to Section
23.6 of this clause has been unsuccessful, or the Contract Administrator has
failed to timely issue a decision in accordance with subparagraph 23.5.b of this
provision and the Licensee desires to pursue further action, the Licensee must
submit to the Board a written demand for arbitration of the claim within 45 Days
after receipt of the Contract Administrator’s decision, or within 45 Days after
the Contract Administrator notifies the Licensee that its request for mediation
has been denied or that the mediation undertaken pursuant to paragraph (e) has
been unsuccessful, whichever is later.

 

23.8 Arbitration Procedures/Costs. The Board shall arbitrate the claim and any
counterclaims in accordance with the Rules of the Board. All claims for $100,000
or less shall be arbitrated under the Board’s Small Claims (Expedited) Procedure
(Rule 202). All other claims, regardless of dollar amount, shall be arbitrated
under the Board’s Accelerated Procedure (Rule 203). Both parties shall be
afforded an opportunity to be heard and to present evidence in accordance with
the Rules of the Board. Unless the Board orders otherwise, each party shall pay
its own costs of prosecuting or defending an arbitration before the Board.

 

23.9 Review of Arbitration Decision. An arbitration decision shall be final and
conclusive unless a party files a timely action to vacate, modify, or correct
the decision pursuant to the Federal Arbitration Act.

 

23.10 Licensee Performance Pending Claim Resolution. The Licensee shall proceed
diligently with performance of the license and shall comply with any decision of
the Contract Administrator pending final resolution of any claim or dispute
arising under, or relating to, the license.

 

23.11 Choice of Law. The license shall be governed by federal law as provided in
this paragraph. Irrespective of the place of award, execution, or performance,
the license shall be construed and interpreted, and its validity determined,
according to the federal law of intellectual property and federal common law of
government contracts as enunciated and applied to prime government contracts by
the federal boards of contract appeals and federal courts having appellate
jurisdiction over their decisions rendered pursuant to the Contract Disputes Act
of 1978. The Federal Arbitration Act, other federal statutes, and federal rules
shall govern as applicable. To the extent that federal common law of government
contracts is not dispositive, the laws of the State of New Mexico shall apply.

 

23.12 Interest. Interest on amounts adjudicated due and unpaid by a party shall
be paid from the date the complaining party files a demand for arbitration with
the Board. Interest on claims shall be paid at the rate established by the
Secretary of the Treasury of the United States pursuant to Public Law 92-41 (85
Stat. 97).

 

24. GOVERNING LAW AND VENUE

 

OFFICIAL USE ONLY

20

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

 

24.1     THIS LICENSE AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW MEXICO, excluding any choice of law rules that
would direct the application of the laws of another jurisdiction, but the scope
and validity of any patent or patent application will be governed by the
applicable laws of the country of such patent or patent application.

 

24.2     Any legal action brought by the Parties hereto relating to this License
Agreement will be conducted in New Mexico.

 

25. PATENT MARKING

 

25.1     The Licensee agrees to mark, in accordance with the applicable patent
marking statute, all Licensed Products, and their containers, which have been
made, used, sold or otherwise transferred to a third party, under the terms of
this License Agreement.

 

26. SURVIVAL

 

26.1     When this License Agreement expires or is terminated in accordance with
the terms hereof, the following Articles will survive any expiration or
termination:

 

 

Article    1

Definitions

 

Article

3

Sublicenses

 

Article

4

Fees and Royalties

 

Article

7

Books And Records

 

Article

11

Patent Prosecution, Maintenance And Disclaimer

 

Article

12

Use Of Names, Tradenames, And Trademarks

 

Article

13

Warranty and Limitation of Warranty

 

Article

17

Indemnification

 

Article

18

Late Payments

 

Article

19

Notices

 

Article

24

Governing Law and Venue

 

Article

26

Survival

 

Article

28

Disposition of Licensed Products Upon Termination

 

Article    29

Protection of Proprietary Information

 

Article    30

Miscellaneous

 

 

27. GOVERNMENT APPROVAL OR REGISTRATION

 

27.1     If this License Agreement or any associated transaction is required by
the law of any nation to be either approved, permitted or registered with any
governmental agency, the Licensee will assume all legal obligations to do so.
The Licensee will notify the Licensor if the Licensee becomes aware that this
License Agreement is subject to a U.S. or foreign government reporting,
permitting, or approval requirement. The Licensee will make all necessary
findings and pay all costs including fees, penalties and all other out-of-pocket

 

OFFICIAL USE ONLY

21

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

costs associated with such reporting, permitting or approval process. This
provision does not apply to any requirement arising out of LANS’s contract or
relationship with federal, state, and local governments.

 

28. DISPOSITION OF LICENSED PRODUCTS UPON TERMINATION

 

28.1     Upon termination of this License Agreement, the Licensee will have one
hundred eighty (180) days to Sell all previously made or partially made Licensed
Products, and the license granted in Section 2.1 (Grant) shall be extended
accordingly. The Sale of such Licensed Products will be subject to the terms of
this License Agreement including, but not limited to, the payment of royalties
pursuant to Article 4 (Fees and Royalties).

 

29. PROTECTION OF PROPRIETARY INFORMATION

 

29.1     The Licensee and the Licensor will treat and maintain the other Party’s
proprietary business, patent prosecution, software, engineering drawings,
process and technical information, and other proprietary information, including
the negotiated terms of this License Agreement and any progress and royalty
reports, and any sublicense agreement issued pursuant to this License Agreement
("Proprietary Information") in confidence using at least the same degree of care
as the receiving Party uses to protect its own proprietary information of a like
nature from the date of disclosure until five (5) years after the termination or
expiration of this License Agreement.

 

29.2     The Licensee and the Licensor may use and disclose Proprietary
Information to their employees, agents, consultants, contractors, and, in the
case of the Licensee, its sublicensees, provided that such parties are bound by
a like duty of confidentiality as that found in this Article 29. Notwithstanding
anything to the contrary contained in this License Agreement, the Licensor may
release this License Agreement or any sublicense, including any terms thereof,
and information regarding royalty payments or other income received in
connection with this License Agreement to the inventors and senior
administrative officials employed by the Licensor. If such release is made, the
Licensor will ensure that such terms be kept in confidence in accordance with
the provisions of this Article 29.

 

29.3     All written Proprietary Information not expressly so designated herein
will be labeled or marked confidential or proprietary. If the Proprietary
Information is orally disclosed and not expressly so designated herein, it will
be reduced to writing or some other physically tangible form, marked and labeled
as confidential or proprietary by the disclosing Party and delivered to the
receiving Party within thirty (30) days after the oral disclosure.

 

29.4     Nothing contained herein will restrict or impair in any way the right
of the Licensee or the Licensor to use or disclose any Proprietary Information:

 

 

29.4.a

that recipient can demonstrate by written records was known to it prior to its
disclosure by the disclosing Party;

 

29.4.b

that recipient can demonstrate by written records is now, or becomes in the
future, public knowledge other than through acts or omissions of recipient;

 

29.4.c

that recipient can demonstrate by written records was obtained lawfully and
without restrictions

 

OFFICIAL USE ONLY

22

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

on the recipient from sources independent of the disclosing Party;

 

29.4.d

that the recipient can demonstrate it has developed independently of Proprietary
Information received from the disclosing Party; or

 

29.4.e

that the recipient is required to disclose under applicable law, subject to the
following paragraph.

 

The Licensee or the Licensor may disclose Proprietary Information that is
required to be disclosed (i) to a governmental entity or agency in connection
with seeking any governmental or regulatory approval, governmental audit, or
other governmental requirement or (ii) by law, provided that the recipient uses
reasonable efforts to give the Party owning the Proprietary Information
sufficient notice of such required disclosure to allow the Party owning the
Proprietary Information reasonable opportunity to object to, and to take legal
action to prevent such disclosure. The Licensor also may disclose the existence
of this License Agreement and the extent of the grant in Article 2 (Grant) and
Article 3 (Sublicenses) to a third party that inquires whether a license to the
Patent Rights is available, but the Licensor will not disclose the name of the
Licensee, unless Licensee has already made such disclosure publicly.

 

29.5     Upon termination of this License Agreement, the Licensee and the
Licensor will destroy or return any of the disclosing Party’s Proprietary
Information in its possession within fifteen (15) days following the termination
of this License Agreement. The Licensee and the Licensor will provide each
other, within thirty (30) days following termination, with written notice that
such Proprietary Information has been returned or destroyed. Each Party may,
however, retain one copy of such Proprietary Information for archival purposes
in non-working files.

 

29.6     Nothing in this License Agreement will relieve either Party of any
obligation under a separate nondisclosure or confidentiality agreement.

 

30. MISCELLANEOUS

 

30.1     The headings of the several sections of this License Agreement are
included for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this License Agreement.

 

30.2     No amendment or modification of this License Agreement is binding on
the Parties unless made in a writing executed by duly authorized representatives
of the Parties.

 

30.3     This License Agreement, with the attached appendices, contains all of
the terms and conditions agreed upon by the Parties relating to the subject
matter of the License Agreement and supersedes all prior agreements,
negotiations, correspondence, undertakings and communications of the Parties,
whether oral or written, respecting that subject matter.

 

30.4     In the event any one or more of the provisions of this License
Agreement is held to be invalid, illegal, or unenforceable in any respect, the
provision will be replaced with the valid provision that most clearly expresses
the Parties’ intent and the invalidity, illegality, or unenforceability will not
affect any other provisions hereof, and this License Agreement will be construed
as if such invalid or illegal or unenforceable provisions had never been part of
this License Agreement.

 

OFFICIAL USE ONLY

23

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

30.5     This License Agreement has been negotiated and prepared jointly by both
Parties and shall not be construed for or against any Party.

 

30.6     This License Agreement may be executed in counterparts, including by
facsimile or email attachment.

 

OFFICIAL USE ONLY

24

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

IN WITNESS WHEREOF, both the Licensor and the Licensee have executed this
License Agreement, in duplicate originals, by their respective officers on the
day and year hereinafter written.

 

LOS ALAMOS NATIONAL SECURITY, LLC:

 

By:

__________________________________

 

Michael R. Anastasio

Director, Los Alamos National Laboratory

President, Los Alamos National Security, LLC

 

Date:

__________________________________

 

 

MANHATTAN SCIENTIFICS, INC.

 

By:

__________________________________

 

Manny Tsoupanarias

Chief Executive Officer

MANHATTAN SCIENTIFICS, INC.:

 

Date:

__________________________________

 

 

OFFICIAL USE ONLY

25

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

APPENDIX A

PATENT RIGHTS

 

1.

U.S. Patent Rights:

 

 

 

a.

DOE S# 100,665 entitled "CONTINUOUS EQUAL CHANNEL ANGULAR PRESSING" by Raab,
Georgy J., Valiev, Ruslan, Zhu, Yuntian Theodore and Lowe, Terry Curtis, US
Patent Number 7,152,448 issued 12/26/2006.

 

 

b.

DOE S# 94, 639 entitled "METHOD FOR PRODUCING ULTRAFINE-GRAINED MATERIALS  USING
REPETITIVE CORRUGATION AND STRAIGHTENING" by Lowe, Terry Curtis, Jiang,
Honggang, Huang, Jianyu and Zhu, Yuntian Theodore, US Patent Number 6,197,129
issued 3/6/2001.

 

 

c.

DOE S# 91,713 entitled "ULTRAFINE-GRAINED TITANIUM FOR MEDICAL IMPLANTS" by
Valiev, Ruslan Z., Zhu, Yuntian Theodore, Lowe, Terry Curtis, Latysh, Vladimir
V., Raab, Georgy J. and Stolyarov, Vladimir V., US Patent Number 6,399,215
issued 6/4/2002.

 

For purposes of removal of doubt, Licensee acknowledges that other parties may
also have ownership interests in U.S. Patent 7152448 and U.S. Patent 6399215,
and that Licensor is only granting a license to the Licensor’s right, title and
interest in, U.S. Patent 7152448 and U.S. Patent 6399215. If the Licensee wishes
to have full exclusive rights to this patent, the Licensee must seek rights from
other assignees (if any) of those patents

 

OFFICIAL USE ONLY

26

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

APPENDIX B

FEES, ROYALTIES AND REIMBURSEMENT OF COSTS

 

1.

Issue and Annual Fees

 

 

a.

A non-refundable License Issue Fee of [***].

 

 

b.

Annual License Fees, as cash payments, are due and payable on February 28 of
each year, according to the following schedule:

[***]

 

The Licensor will credit the Annual License Fee for a particular calendar year
against any royalties earned during that same year. After the royalties
accumulated during a given year equals the Annual License Fee previously paid to
the Licensor on February 28th of that same year, Licensee shall consider such
credit as having been fully applied and shall begin paying actual royalties
earned for the remainder of that same calendar year.

 

 

c.

As partial consideration for this License Agreement, Licensee will issue to
Licensor [***]. In order to make a properly informed decision in accordance with
the Licensor’s procedures for accepting equity in licensing transactions, final
acceptance by the Licensor of said equity is conditioned upon receipt and
acceptance of Licensee shareholders’ agreement, capitalization table, articles
of incorporation, or the equivalent.

 

d.

Upon final acceptance of said equity, the Licensor reserves the right and sole
discretion to direct Licensee to distribute such shares directly to the
respective inventors or to the Licensor’s Office of the Treasurer that is
responsible for managing Licensor equity transactions. In the case that the
Licensor is unable to accept said equity, the Licensor and Licensee shall
renegotiate in good faith for a substitution of similar value for consideration
of this License Agreement.

 

 

e.

Upon receipt of approval for Licensor to accept equity from the Licensee,,
Licensee shall issue to the Licensor a stock certificate for all common stock,
which shall be issued in the Licensor’s name, Los Alamos National Security LLC.

 

 

f.

If Licensee fails to issue the shares provided for herein within ninety (90)
days from execution of this License Agreement, the Licensor may immediately
terminate this License Agreement without recourse to the notification procedure
specified in Article 9.

 

 

g.

If the Issue Value (equaling the closing price per share on the date of stock
issuance times 2,000,000) exceeds [***], then the Excess Value (equaling the
[***]) shall be credited against future royalty payments due to Licensor under
this License Agreement.

 

2.

Earned Royalties

 

 

OFFICIAL USE ONLY

27

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

The Licensee will pay the Licensor an earned royalty on the Net Sales Price of
Licensed Inventions that incorporate the Patent Rights during the term of this
License Agreement according to the following schedule:

 

 

a.

Net Sales by Licensee. The Licensee will pay the Licensor a royalty of [***] of
Net Sales by Licensee.

 

Amounts received from a customer of a Joint Venture partner by either the Joint
Venture partner or Licensee shall trigger royalties in accordance with Section 2
herein; provided, however, that if consideration is received by both the Joint
Venture partner and the Licensee, then only the greater of the two amounts (and
not both) shall trigger payments to the extent due pursuant to Section 2 of this
Appendix B.

 

3.

Sublicense Consideration

 

Licensee will pay to Licensor a percentage of Sublicense Consideration received
from each sublicense granted by the Licensee, as specified below. If Sublicense
Consideration is in the form of publicly traded stock, Licensee will pay to
Licensor cash based on the price of the stock on the date such stock is actually
received by Licensee from the Sublicensee. If Sublicense Consideration is in the
form of privately traded stock, Licensee must obtain Licensor’s and the third
party's consent to pay Licensor in shares of stock. Otherwise, Licensee will pay
Licensor in cash based on the price of such privately traded stock.

 

Sublicense Consideration Due From Third-Party Sublicenses:

 

Licensee will pay to Licensor [***] of Sublicense Consideration received from
third-party (non-Joint Venture) sublicensees.

 

Sublicense Consideration Due From Joint Venture Sublicenses:

 

Licensee will pay to Licensor [***] of Sublicense Consideration received from
Joint Venture sublicensees.

 

4.

Assignment Fee

 

Licensee or its successor will pay the Licensor an Assignment Fee of twenty
thousand U.S. Dollars [***]in consequence of a merger, acquisition or other
change in controlling interest where Licensee is not the surviving
entity.                            

 

 

OFFICIAL USE ONLY

28

 

--------------------------------------------------------------------------------

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

APPENDIX C

MILESTONES

 

 

Due Date

Milestone

12 months from Effective Date

MSI will initiate negotiations with at least 5 companies regarding manufacture
or distribution of licensed products, within 12 months of license execution.

24 months from Effective Date

MSI will establish capability for manufacturing licensed product in New Mexico
within 24 months of license execution

36 months from Effective Date

MSI will either manufacture a licensed product, or close a sublicense agreement,
or initiate request for required government approval for Licensed Product (e.g.
FDA or FAA) within 36 months of license execution.

 

OFFICIAL USE ONLY

29

 

--------------------------------------------------------------------------------

 

The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request
in accordance with Rule 406 under the Securities Act of 1933, and Rule 24b-2,
under the Securities Exchange Act of 1934, Redacted portions of this exhibit are
marked by an [***].

 

APPENDIX D

PROGRESS REPORT FORMAT

 

Date of Report:

Reporting Period:

o

January 1 – June 30

 

o

July 1 – December 31

 

 

1.

Development:

 

•

Progress towards commercialization and milestones (Appendix C)

 

•

Problems encountered

 

2.

Commercialization:

 

•

First commercial sale in the U.S.

 

•

Sales, production or other royalty-generating activity

 

•

Royalty calculations and royalties due

 

•

Sublicenses

 

4.

Of General Interest:

 

•

Promotional material, news releases, etc.

 

•

Company annual reports

 

•

Scientific publications

 

•

Any feedback, positive or negative

 

•

Suggestions

 

5.

Statement of Insurance

 

•

Name of insurance company

 

•

Policy number

 

•

Coverage

 

 

OFFICIAL USE ONLY

30

 

--------------------------------------------------------------------------------