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Exhibit 10.4

 
[visualant.jpg]
 
Via Electronic Mail
 
October 23, 2008
 
Dr. Tom Furness
RATLab, LLC
5607  40th Ave NE
Seattle, WA 98115
 

RE:           Letter Agreement

 
Dear Tom:
 
The purpose of this Letter (“Letter”) is to set forth the agreement between
Visualant, Inc. and assigns (“VSUL”) and RATLAB, LLC, and affiliates (“RATLAB”),
with respect to a resolution of outstanding matters between the parties,
proposed future collaboration between the parties and licensing and equity
participation agreements whereby RATLAB and/or assigns will exploit the VSUL
technology in certain enumerated fields of use.  RATLAB and VSUL are sometimes
collectively referred to as “parties” and individually as a “party.”
 
 
1. SUMMARY OF TERMS.  The following paragraphs constitute a description of the
parties’ agreements with respect to the transactions. Except as described
herein, this Letter is binding on the parties and the provisions described below
shall be enforceable against the parties either in the manner set forth in the
individual agreements referenced herein and attached hereto or as described
below.
 
1.1  VSUL has provided a non-exclusive non-commercial license referenced in
Exhibit A and made a part of this agreement by this reference.

1.2  VSUL has provided an exclusive, world-wide, commercial license to the
RATLAB referenced in Exhibit B and made a part of this agreement by this
reference.

1.3  RATLAB shall provide to VSUL a license on independently developed and
RATLAB owned IP referenced in Exhibit C and made a part of this agreement by
this reference.

1.4  In addition to the royalties payable to VSUL under the license described in
Section 1.2, if at any time the RATLAB elects to create an affiliate to exploit
the VSUL IP under the Section 1.2 license, the RATLAB will provide VSUL 10% of
the initial equity of such affiliate in consideration for the granting of the
Section 1.2 license to RATLAB.   The VSUL interest in such RATLAB affiliate
shall benefit from the same preemptive rights and other protections, if any,
enjoyed by the other founders and will be subject to the same dilution risk from
additional investment, stock option grants, etc. as the other founders face.
 
 
 
 
 
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1.5 Upon request, VSUL may grant one or more non-exclusive or exclusive
commercial licenses to the VSUL IP to the RATLAB in designated fields of use
outside of the Exclusive Fields.  The scope and terms of such additional
licenses will be negotiated in good faith at the time of grant and will reflect
the royalty rates for the Exclusive Fields, with equitable adjustments to
reflect differences in scope, duration, industry, and other nuances inherent in
the license.  The license agreement memorializing this intent is attached hereto
as Exhibit D to this Letter and incorporated herein by this reference.

1.6  VSUL shall issue the RATLAB and RATLAB personnel VSUL common stock in the
amounts and for the benefit of the individuals as set forth in Exhibit E to this
the Letter and incorporated herein by this reference.  The common stock in the
“vested column” for all individuals shall immediately vest.  The additional
common stock for Messrs Furness and Schowengerdt shall vest upon according to
the schedule set forth in Exhibit F to the Letter and incorporated herein by
this reference.

1.7  Upon receipt of debt or equity financing from any source in an amount of at
least $100,000, VSUL shall pay the RATLAB the amount of $65,000 in cash for
previously unpaid invoices, which amount shall bear simple interest at the
annual rate of eighteen percent (18%), from June 1, 2007 until paid.  Upon
payment the RATLAB shall deliver the two demonstration units remaining to be
delivered.

1.8  VSUL shall pay the RATLAB for work on an on-going basis on rates and
pursuant to terms which are to be negotiated.

 
2. DEFINITIVE AGREEMENTS.  This agreement and the agreements attached hereto are
the definitive agreements covering the transactions between the parties.
 
3.  MEDIATION.  The parties hereto agree that any disputes arising out of the
interpretation of this Letter and/or the agreements attached hereto shall be
adjudicated by JAMS in Seattle, WA applying the laws of the State of
Washington.  The prevailing party in any such matter determined by JAMS shall be
paid their costs and attorneys fees.
 
4. CONFIDENTIALITY.  Any press releases or public announcements of activities
relating to this Letter and its attached agreements shall be approved by both
parties hereto.
 
5. DISCLAIMER OF LIABILITIES.  Except to the extent otherwise provided in this
Letter and the agreements attached hereto each party shall be solely responsible
for its own expenses, legal fees and consulting fees related to the negotiations
described in this Letter.
 
 
 
 
 
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6. BINDING NATURE OF THIS LETTER. This Letter as a whole, is intended to
constitute, and shall constitute a legal and binding obligation, contract or
agreement between the parties, and is intended to be relied upon by any party as
constituting such.
 
7. ENTIRE AGREEMENT.  This Letter and the other agreements attached hereto
constitutes the entire agreement, and supersedes any and all prior agreements (
including, without limitation, the Confidential  Letter of Intent, dated August
13,  2008) between the parties with regard to the transactions described in this
Letter.  No amendment of any provision of this Letter of the other agreements
attached hereto will be valid unless set forth in a written instrument signed by
both parties.  In the event of any conflict between this Letter and any of the
other agreements attached hereto, the terms of the applicable agreement will
govern.
 
8. COUNTERPARTS.  This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed an original, but all of which
taken together shall constitute one and the same document.
 
 
Sincerely,
 
 
/s/  Ron Erickson

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Visualant,
Inc.                                                                           
By: Ron Erickson
Its:
Chairman                                                                           

ACCEPTED AND AGREED as of
23 OCT     , 2008

RATLAB, LLC

/s/ Dr. Tom Furness

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Dr. Tom Furness, Manager

 
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EXHIBIT A

NON-COMMERCIAL LICENSE AGREEMENT
 
This Non-Commercial License Agreement (this "Agreement"), dated as of October
23, 2008, is made by and between Visualant, Inc., a Nevada corporation
("Visualant") and RatLab, LLC, a Washington limited liability company
("RatLab").  Visualant and RatLab (sometimes referred to herein individually as
a "Party" and collectively as the "Parties") therefore agree as follows:
 
Section 1.               Definitions
 
"Affiliate" means a corporation, limited liability company, joint venture or
other entity of which RatLab or its members has ownership and control of at
least fifty percent (50%) of all outstanding shares or securities or other
ownership interests that represent the power to direct the management and
policies of such entity.
 
"Improvement" means any advancement, development, improvement, enhancement,
correction, modification, adaptation, translation, transformation, annotation,
extension, compilation, collective work or derivative work.
 
"Intellectual Property Rights" means any patent, copyright, trademark, trade
secret, mask work, moral right or other intellectual property or proprietary
right under the laws of any jurisdiction.
 
"Third Party" means any individual, corporation, limited liability company,
partnership, trust, association, governmental authority or other entity that is
not a Party.
 
"Third Party Infringement" means any past, present or future infringement,
misappropriation, unauthorized use or other violation of any of the Visualant IP
by any Third Party.
 
"Visualant IP" means:  (a) the Visualant Patents: (b) any other intellectual
property assets listed in the attached Exhibit A; (c) any other intellectual
property or proprietary rights owned or controlled by Visualant that are
necessary or useful for RatLab's exploitation of license granted pursuant to
this Agreement; and (d) any Improvements to any of items described in (a), (b)
or (c) above developed, created or invented by Visualant.
 
"Visualant Patent" means: (a) any patent or patent application owned or
controlled by Visualant now or in the future listed, including any patents or
patent applications listed under the heading of "Visualant Patents" in the
attached Exhibit A, and any patents that may issue from the pending patent
applications listed in the attached Exhibit A; (b) any patent that may issue
from any continuation or divisional that has priority based upon any of the
patent applications described in (a) above; (c) any reissues, renewals,
substitutions, re-examinations and extensions of any of the patents described in
(a) or (b) above; and (d) any foreign patents corresponding to any of the
patents described in (a), (b) or (c) above.
 
 
 
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Section 2.               Non-Commercial License Grant
 
Visualant hereby grants to RatLab a non-exclusive, worldwide, non-transferable
(except as described in Section 4.2), sublicensable, fully paid-up, perpetual,
royalty-free right and license to use and exploit the Visualant IP for
non-commercial purposes.  Without limiting the generality of the foregoing, the
license and rights granted under this Section 2.1 include, without limitation,
the rights to do the following: (a) make, have made, use, distribute, have
distributed, and import any items covered by the Visualant IP; (b) make
Improvement to the Visualant IP; and (c) sublicense any of the licenses or
rights granted hereunder.
 
Section 3.               Intellectual Property Rights
 
3.1           Administration and Prosecution of Intellectual Property
Rights.  Visualant will control the prosecution, maintenance, registration and
other management of the Visualant IP.  Visualant will keep RatLab informed of
the status of all prosecution, maintenance, registration and other management
activities related to the Visualant IP and will provide RatLab with a reasonable
opportunity to advise Visualant on such activities.  Without limiting the
generality of the foregoing, if Visualant chooses to abandon any portion of the
Visualant IP, Visualant will provide RatLab written notice at least sixty (60)
days prior to the last allowable date for filing or taking any other action
required with respect to the prosecution, maintenance or registration of such
portion of the Visualant IP and RatLab may, at any time thereafter, take actions
necessary to preserve the Visualant IP.
 
3.2           Third Party Infringement.
 
(a)           If any Third Party Infringement comes to the attention of either
Party, then such Party will give the other Party prompt written notice thereof
(including, without limitation, a statement of the facts which are known by the
Party giving the notice and which such Party believes might reasonably serve as
a basis for a claim of Third Party Infringement, together with a copy of any
documentation evidencing the same).
 
(b)           Visualant will have the first right to respond to, address, and/or
prosecute any alleged Third Party Infringement by securing cessation of the
infringement or initiating an action or suit against the infringer or otherwise
responding to, addressing and/or prosecuting such alleged Third Party
Infringement.  To exercise this first right, Visualant must initiate bona fide
action to respond to, address, and/or prosecute any alleged Third Party
Infringement within ninety (90) days of learning of such infringement.  If
Visualant chooses to institute suit or action against an alleged infringer,
Visualant may bring such suit in its own name (or, if required by law, in its
and RatLab’s name) and at its own expense.  Further, if Visualant institutes an
action or suit against an alleged infringer as provided in this Agreement, then
(i) RatLab will fully and promptly cooperate and assist Visualant in connection
with any such suit or action, and Visualant will pay RatLab’s reasonable
attorney fees and other out-of-pocket directly associated expenses, and (ii)
Visualant will receive all damages, awards, or settlement proceeds.
 
 
 
 
 
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(c)           If Visualant fails, within ninety (90) days of learning of an
alleged Third Party Infringement, to secure cessation of the alleged Third Party
Infringement, institute suit against the alleged infringer, or to otherwise
respond to, address and/or prosecute the alleged Third Party Infringement, then
RatLab may, upon written notice to Visualant, assume full right and
responsibility to institute suit or action against the alleged infringer.  If
RatLab elects to commence an action as described above, then RatLab may do so in
its own name (or if required by law, in its own and Visualant’s name) and at its
own expense.  Further, if RatLab institutes an action or suit against an alleged
infringer as provided in this Agreement, then Visualant will fully and promptly
cooperate and assist RatLab in connection with the action or suit, and RatLab
will pay all of Visualant’s reasonable attorney fees and other out-of-pocket
directly associated expenses.  RatLab will not settle any suits or actions in
any manner relating to the Visualant IP without obtaining the prior written
consent of Visualant, which will not be unreasonably withheld, delayed or
conditioned. After RatLab has recovered its reasonable attorney’s fees and other
out-of-pocket expense directly related to any action, suit, or settlement for
infringement to Visualant IP, the remaining damages, awards, or settlement
proceeds will be divided as follows:  fifty percent (50%) to Visualant and fifty
percent (50%) to RatLab.
 
(d)           Neither RatLab nor Visualant is obligated under this Agreement to
institute or prosecute a suit against any alleged infringer of the Visualant IP.
 
3.3           Ownership of Improvements.
 
(a)           Visualant will be the owner of any Intellectual Property Right in
any Improvement of the Visualant IP developed, created or invented by Visualant.
 
(b)           RatLab or its sublicensees will be the owner of any Intellectual
Property Right in any Improvement of the Visualant IP developed, created or
invented by RatLab or its sublicensees (subject to any Intellectual Property
Rights of Visualant in the Visualant IP) and RatLab will not be obligated to
deliver to Visualant any such Improvement; provided, however, RatLab will
promptly notify Visualant of any Improvements to the Visualant IP developed,
created or invented by RatLab and will license such Improvements to Visualant
pursuant to a separate agreement containing the same terms as are applicable to
the "Visualant IP" licensed to RatLab on an exclusive basis pursuant to the
Commercial License Agreement, dated October 23, 2008, between the Parties.
 
3.4           Reservation of Rights:  Ownership of IP.  Except as expressly
provided in this Agreement, no title to or ownership of any Visualant IP or any
proprietary rights associated with the Visualant IP, is transferred to RatLab or
any other person under this Agreement.  RatLab acknowledges and agrees that
Visualant is the sole owner of all right, title and interest in and to the
Visualant IP listed on Schedule A hereto, and RatLab agrees that at the request
of Visualant, RatLab will execute all instruments and documents and will take
all other action necessary to insure that Visualant has vested title to the
Visualant IP.  RatLab represents and warrants that it will not undertake any act
or thing which in any way impairs or is intended to impair any part of the
right, title, interest or goodwill of Visualant in the Visualant IP.
 
 
 
 
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Section 4.               Miscellaneous
 
4.1           Waiver; Amendments.  The failure of any Party to insist, in any
one or more instances, upon performance of any of the terms, covenants or
conditions of this Agreement will not be construed as a waiver or a
relinquishment of any right or claim granted or arising hereunder or of the
future performance of any such term, covenant, or condition, and such failure
will in no way affect the validity of this Agreement or the rights and
obligations of the parties hereto.  This Agreement may not be modified, amended
or supplemented except by an agreement in writing signed by Visualant and
RatLab.
 
4.2           Assignment and Binding Effect.  Neither Party may transfer or
assign its rights or obligations under this Agreement without the express
written consent of the other Party; provided, however, RatLab may assign any of
its rights or obligations under this Agreement to an Affiliate without the prior
written consent of Visualant, but subject to giving Visualant notice of such
assignment and the terms and conditions thereof.  Subject to the foregoing, this
Agreement will inure to the benefit of and will be binding upon the Parties and
their respective successors and permitted assigns.
 
4.3           Governing Law.  This Agreement will be governed by and construed
under the laws of the state of Washington, without giving effect to any contrary
conflict of laws provisions.
 
4.4           Notices.  All notices and other communications hereunder will be
in writing and will be deemed given (a) upon receipt if delivered personally (or
if mailed by registered or certified mail), (b) the day after dispatch if sent
by overnight courier, (c) upon receipt if transmitted by telecopier or other
means of facsimile transmission (and confirmed by a copy delivered in accordance
with clause (a) or (b)), properly addressed to the parties at the following
addresses:
 
RatLab:
RatLab, LLC.
 
4939 NE 65th Street
Seattle, WA  98115
 
Visualant:
Visualant, Inc.
 
500 Union Street, Ste. 406
Seattle, WA  98101

 
Any Party may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
 
4.5           Protection of the License in Bankruptcy.  The Parties expressly
agree that the Visualant IP is "intellectual property" as defined in Section
101(35A) of the United States Bankruptcy Code, 11 U.S.C. Section 101 et. seq.
(the "Bankruptcy Code").  In the event of any proceeding under the Bankruptcy
Code for the bankruptcy, reorganization or protection of either Party, this
Agreement shall be subject to Section 365(n) of the Bankruptcy Code.
 
4.6           Severability.  If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be held to be invalid
or unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances will be interpreted so as best to
reasonably effect the intent of the parties hereto.  The parties further agree
to replace such invalid or unenforceable provision of this Agreement with a
valid and enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the invalid or unenforceable provision.
 
 
 
 
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4.7           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and all of which
together will constitute one and the same instrument notwithstanding that all
Parties are not signatories to each counterpart.
 
4.8           Entire Agreement.  This Agreement (together with any exhibit or
attachments) constitutes the entire agreement between the Parties hereto with
respect to the subject matter of this Agreement and supersedes all prior
negotiations, understandings and agreements between the Parties with respect to
the subject matter of this Agreement.
 
[Remainder of Page Left Intentionally Blank]
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be made and
executed by duly authorized officers.

Visualant, Inc.
 
By:                                                                        
Name:                                                                   
Title:                                                                     
Date Signed:                                                               
RatLab, LLC
 
By:                                                                       
Name:                                                                  
Title:                                                                    
Date Signed:                                                                

 
[Signature Page to Non-Coercial License Agreement]
 
 
 
 
 
 
 
 

 
 
 
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EXHIBIT A

VISUALANT IP

VISUALANT PATENTS

1.
Schowengerdt, B.T., Furness, T.A., Melville, R.D., Schroder, K.E., Burstein,
R.A., and Chinthammit, W. SYSTEM AND METHOD OF EVALUATING AN OBJECT USING
ELECTROMAGNETIC ENERGY. International Patent Application No. PCT/US2007/017082.

2.
Schowengerdt, B.T., Furness, T.A., and Walker, N.E. (2006) METHOD, APPARATUS,
AND ARTICLE TO FACILITATE DISTRIBUTED EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Patent Application No. 11/831,662.

3.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E., and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Patent Application No. 11/831,717.

4.
Schowengerdt, B.T., Furness, T.A., Melville, R.D., Schroder, K.E., Burstein,
R.A., and Chinthammit, W. SYSTEM AND METHOD OF EVALUATING AN OBJECT USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/820,938.

5.
Schowengerdt, B.T., Furness, T.A., and Walker, N.E. (2006) METHOD, APPARATUS,
AND ARTICLE TO FACILITATE DISTRIBUTED EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/834,662.

6.
Furness, T.A., Schowengerdt, B.T., Melville, R., and Walker, N.E. (2006) METHOD,
APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING ELECTROMAGNETIC
ENERGY. U.S. Provisional Patent Application No. 60/834,589.

7.
Furness, T.A., Schowengerdt, B.T., Melville, R., and Walker, N.E. (2006) METHOD,
APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING ELECTROMAGNETIC
ENERGY. U.S. Provisional Patent Application No. 60/871,639.

8.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E., and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/883,312.

9.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E. , and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/890,446.

 
 
 
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EXHIBIT B

COMMERCIAL LICENSE AGREEMENT
 
This Commercial License Agreement (this "Agreement"), dated as of October 23,
2008 (the "Effective Date"), is made by and between Visualant, Inc., a Nevada
corporation ("Visualant") and RatLab, LLC, a Washington limited liability
company ("RatLab").  Visualant and RatLab (sometimes referred to herein
individually as a "Party" and collectively as the "Parties") therefore agree as
follows:
 
Section 1.               Definitions
 
"Affiliate" means a corporation, limited liability company, joint venture or
other entity of which RatLab or its members has ownership and control of at
least fifty percent (50%) of all outstanding shares or securities or other
ownership interests that represent the power to direct the management and
policies of such entity.
 
"Fields of Use" means the worldwide market for products and services relating to
medical and healthcare testing (including medical diagnosis testing through both
home and physician-provided healthcare solutions), agricultural testing
(including both plant and animal, including veterinary medical testing),
environmental testing (including air and water testing), and gemology and
jewelry.
 
"Gross Revenue" means any revenue actually received by RatLab, or a RatLab
Affiliate, as a result of the sale to any of RatLab’s or RatLab Affiliate’s
customers or end users of Licensed Products that incorporate one or more of the
unexpired Visualant IP; provided, however, that "Gross Revenue" does not include
any (a) reimbursed expenses or costs that are passed through to a customer or
end user (e.g., travel), (b) taxes collected by RatLab for remittance to
governmental authorities, or (c) refunds or credits.
 
"Improvement" means any advancement, development, improvement, enhancement,
correction, modification, adaptation, translation, transformation, annotation,
extension, compilation, collective work or derivative work to or based upon the
Visualant IP.
 
"Intellectual Property Rights" means any patent, copyright, trademark, trade
secret, mask work, moral right or other intellectual property or proprietary
right under the laws of any jurisdiction.
 
"License" means the license granted by Visualant to RatLab pursuant to
Section 2.1 of this Agreement.
 
"Licensed Product" means any product or service of RatLab or its sublicensees
intended for use in the Fields of Use and that incorporates or uses any of the
Visualant IP.
 
"Third Party" means any individual, corporation, limited liability company,
partnership, trust, association, governmental authority or other entity that is
not a Party.
 
 
 
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"Third Party Infringement" means any past, present or future infringement,
misappropriation, unauthorized use or other violation of any of the Visualant IP
within the Field of Use by any Third Party.
 
"Visualant IP" means the Visualant Patents, any other intellectual property
assets listed in the attached Exhibit A, and any other intellectual property or
proprietary rights owned or controlled by Visualant that are necessary or useful
for exploitation of the Licensed Products.
 
"Visualant Patent" means:  (a) any patent or patent application owned or
controlled by Visualant now or in the future listed, including any patents or
patent applications listed under the heading of "Visualant Patents" in the
attached Exhibit A, and any patents that may issue from the pending patent
applications listed in the attached Exhibit A; (b) any patent that may issue
from any continuation or divisional that has priority based upon any of the
patent applications described in (a) above; (c) any reissues, renewals,
substitutions, re-examinations and extensions of any of the patents described in
(a) or (b) above; and (d) any foreign patents corresponding to any of the
patents described in (a), (b) or (c) above.
 
Section 2.               License Grant; Covenants
 
2.1           License Grant.  Subject to the provisions of Section 2.2 below,
Visualant hereby grants to RatLab an exclusive (within the Fields of Use),
worldwide, non-transferable (except as described in Section 5.2), sublicensable
(with the notice  of Visualant), royalty-bearing, right and license to use and
exploit the Visualant IP within the Fields of Use.  Without limiting the
generality of the foregoing, the license and rights granted herein include,
without limitation, the rights to do the following: (a) make, have made, offer
for sale, sell, use, distribute, have distributed, and import any products or
services within the Fields of Use under the Visualant IP; (b) make Improvements
of and to the Visualant IP; (c) exercise any other rights under the Visualant
IP, including the right to take any action against any past, present or future
infringement of the Visualant IP in the Fields of Use; and (d) sublicense any of
the licenses or rights granted hereunder, subject, however, to the prior
notice  consent of Visualant.
 
2.2           Exclusivity.  During the Term, and so long as RatLab satisfies the
milestones set forth in this Section 2.2 (the "Milestones") Visualant will not
grant to any Third Party any license under any of the Visualant IP to
incorporate or utilize the Visualant IP in products or services intended for use
in the Fields of Use.  The following Milestones will apply to RatLab's efforts
to commercialize the Visualant IP:
 
(a)           Within six (6) months after the Effective Date, create an
Affiliate for the purposes of commercializing the Visualant IP within the Fields
of Use;
 
(b)           Within twenty-four (24) months after the Effective Date, obtain
funding for such Affiliate so that the Affiliate can operate on a stand-alone
basis (i.e., is able to support its own officers and staff, and conduct research
either on its own or in conjunction with RatLab);
 
(c)           Within thirty-six (36) months after the Effective Date, develop a
demonstration unit of a Licensed Product; and
 
 
 
 
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(d)           Within forty-eight (48) months after the Effective Date, deliver
the first License Fee to Visualant.
 
If RatLab fails to satisfy any of the Milestones, the restrictions on Visualant
imposed by this Section 2.2 will terminate and RatLab's rights under the License
will be non-exclusive for the remainder of the Term.
 
Section 3.               Intellectual Property Rights
 
3.1           Administration of Visualant IP.  Visualant will control the
prosecution, maintenance, registration and other management of the Visualant
IP.  Visualant will keep RatLab informed of the status of all prosecution,
maintenance, registration and other management activities related to the
Visualant IP and will provide RatLab with a reasonable opportunity to advise
Visualant on such activities.  Without limiting the generality of the foregoing,
if Visualant chooses to abandon any portion of the Visualant IP, Visualant will
provide RatLab written notice at least sixty (60) days prior to the last
allowable date for filing or taking any other action required with respect to
the prosecution, maintenance or registration of such portion of the Visualant IP
and RatLab may, at any time thereafter, take actions necessary to preserve the
Visualant IP.
 
3.2           Third Party Infringement.

(a)           If any Third Party Infringement comes to the attention of either
Party, then such Party will give the other Party prompt written notice thereof
(including, without limitation, a statement of the facts which are known by the
Party giving the notice and which such Party believes might reasonably serve as
a basis for a claim of Third Party Infringement, together with a copy of any
documentation evidencing the same).
 
(b)           RatLab will have the first right to respond to, address, and/or
prosecute any alleged Third Party Infringement by securing cessation of the
infringement or initiating an action or suit against the infringer or otherwise
responding to, addressing and/or prosecuting such alleged Third Party
Infringement.  To exercise this first right, RatLab must initiate bona fide
action to respond to, address, and/or prosecute any alleged Third Party
Infringement within ninety (90) days of learning of such infringement.  If
RatLab chooses to institute suit or action against an alleged infringer, RatLab
may bring such suit in its own name (or, if required by law, in its and
Visualant’s name) and at its own expense.  Further, if RatLab institutes an
action or suit against an alleged infringer as provided in this Agreement, then
(i) Visualant will fully and promptly cooperate and assist RatLab in connection
with any such suit or action, and RatLab will pay Visualant’s reasonable
attorneys fees and other out-of-pocket directly associated expenses.  RatLab
will not settle any suits or actions in any manner relating to the Visualant IP
without obtaining the prior written consent of RatLab, which will not be
unreasonable withheld, delayed or conditioned. After RatLab has recovered its
reasonable attorney's fees and other out-of-pocket expenses directly related to
any action, suit, or settlement for infringement of Visualant IP, the remaining
damages, awards, or settlement proceeds will be divided as follows: fifty
percent (50%) to RatLab and fifty percent (50%) to Visualant.
 
 
 
 
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(c)           If RatLab fails, within ninety (90) days of learning of an alleged
Third Party Infringement, to secure cessation of the alleged Third Party
Infringement, institute suit against the alleged infringer, or to otherwise
respond to, address and/or prosecute the alleged Third Party Infringement, then
Visualant may, upon written notice to RatLab, assume full right and
responsibility to institute suit or action against the alleged infringer.  If
Visualant elects to commence an action as described above, then Visualant may do
so in its own name (or if required by law, in its own and RatLab’s name) and at
its won expense.  Further, if Visualant institutes an action or suit against an
alleged infringer as provided in this Agreement, then RatLab will fully and
promptly cooperate and assist Visualant in connection with the action or suit,
and Visualant will pay all of RatLab’s reasonable attorney fees and other
out-of-pocket directly associated expenses.   Visualant will not settle any
suits or actions in any manner relating to the Visualant IP without obtaining
the prior written consent of RatLab, which will not be unreasonably withheld,
delayed or conditioned. After Visualant has recovered its reasonable attorney’s
fees and other out-of-pocket expenses directly related to any action, suit, or
settlement for infringement of Visualant IP, the remaining damages, awards, or
settlement proceeds will be divided as follows:  fifty percent (50%) to
Visualant and fifty percent (50%) to RatLab.
 
(d)           Neither RatLab nor Visualant is obligated under this Agreement to
institute or prosecute a suit against any alleged infringer of the Visualant IP.
 
3.3           Ownership of Improvements.
 
(a)           By RatLab.

(i)           RatLab or its sublicensees will be the owner of any Intellectual
Property Rights in any Improvement to the Visualant IP developed, created or
invented by RatLab or its sublicensees at RatLab's expense and neither RatLab
nor its sublicensees will be obligated to deliver to Visualant any such
Improvement pursuant to this Agreement; provided, however, RatLab will promptly
notify Visualant of any such Improvements and license such Improvements to
Visualant for use in certain fields of use pursuant to a separate agreement
between the Parties containing substantially the same terms as are applicable to
the Visualant IP licensed to RatLab pursuant to this Agreement.
 
(ii)           Visualant will be the owner of any Intellectual Property Rights
in any Improvement to the Visualant IP developed, created or invented by RatLab
at Visualant's expense (e.g., pursuant to a separate research and development
agreement or otherwise) and Visualant will not be obligated to deliver to RatLab
any such Improvement pursuant to this Agreement; provided, however, RatLab will
promptly notify Visualant of any such Improvements and Visualant will license
such Improvements to RatLab for use in the Fields of Use pursuant to a separate
agreement between the Parties containing substantially the same terms as are
applicable to the Visualant IP licensed to RatLab pursuant to this Agreement.
 
 
 
 
14

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(b)           By Visualant.  Visualant will be the owner of any Intellectual
Property Right in any Improvement of the Visualant IP developed, created or
invented by Visualant and Visualant will not be obligated to deliver to RatLab
any such Improvement pursuant this Agreement; provided, however, Visualant will
promptly notify RatLab of any such Improvements and Visualant will license such
Improvements to RatLab for use in the Fields of Use pursuant to a separate
agreement between the Parties containing substantially the same terms as are
applicable to the Visualant IP licensed to RatLab pursuant to this Agreement.
 
3.4           Reservation of Rights; Ownership of IP.  Except as expressly
provided in this Agreement, no title to or ownership of any Visualant IP is
transferred to RatLab or any other person under this Agreement.  RatLab
acknowledges and agrees that Visualant is the sole owner of all right, title and
interest in and to the Visualant IP listed on Schedule A hereto, and RatLab
agrees that at the request of Visualant, RatLab will execute all instruments and
documents and will take all other action necessary to insure that Visualant has
vested title to the Visualant IP.  RatLab represents and warrants that it will
not undertake any act or thing which in any way impairs or is intended to impair
any part of the right, title, interest or goodwill of Visualant in the Visualant
IP.
 
Section 4.               Compensation
 
4.1           License Fee.  RatLab will pay Visualant five percent (5%) of the
Gross Revenues received with respect to any Licensed Product incorporating one
or more of the valid and unexpired Visualant IP (the "License Fee").
 
4.2           Reporting and Payment.  Once RatLab satisfies the Milestone set
forth in Section 2.2(d), within thirty (30) calendar days of the end of each
subsequent calendar quarter (or portion thereof) during the Term of this
Agreement, RatLab will remit payment to Visualant for all License Fees earned
during such calendar quarter (or portion thereof).  Each payment will be
accompanied by a statement setting forth in reasonable detail the basis for such
payment.  All amounts payable under this Agreement are payable in the lawful
money of the United States.
 
4.3           Taxes.  RatLab will collect and pay any sales, use, excise, import
or export value added or similar tax or duty not based on Visualant's or any of
its affiliates' net income associated with sales of the Licensed Products by
RatLab.
 
Section 5.               Term and Termination
 
5.1           General.  Unless otherwise terminated pursuant to Section 5.2, the
term of the License (the "Term") will commence as of the Effective Date and will
continue until the last to expire of the Visualant IP.
 
5.2           Early Termination.  RatLab may terminate this Agreement for its
convenience upon thirty (30) days’ written notice to Visualant.  In addition,
either Party may terminate the Agreement by giving the other Party written
notice of termination if:  (a) the other Party commits a material breach of this
Agreement and fails to cure such breach within thirty (30) days after the
non-breaching Party gives the breaching Party written notice of such breach; or
(b) the bankruptcy, receivership or similar proceeding against the other Party
which is not dismissed within thirty (30) days after it is commenced.
 
 
 
 
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5.3           Effect of Expiration or Termination.  Upon any expiration or
termination of the Term:  (a) the License will terminate immediately and
automatically; provided, however, all sublicense granted by RatLab  prior to the
effective date of any termination of the Term will survive such termination; and
(b) the Parties’ respective rights and obligations under Sections 3.3, 3.4, 5
and 6 of this Agreement will survive.
 
Section 6.               Miscellaneous
 
6.1           Waiver; Amendments.  The failure of any Party to insist, in any
one or more instances, upon performance of any of the terms, covenants or
conditions of this Agreement will not be construed as a waiver or a
relinquishment of any right or claim granted or arising hereunder or of the
future performance of any such term, covenant, or condition, and such failure
will in no way affect the validity of this Agreement or the rights and
obligations of the parties hereto.  This Agreement may not be modified, amended
or supplemented except by an agreement in writing signed by Visualant and
RatLab.
 
6.2           Assignment and Binding Effect.  Neither Party may transfer or
assign its rights or obligations under this Agreement without the express
written consent of the other Party; provided, however, RatLab may assign any of
its rights or obligations under this Agreement to an Affiliate without the prior
written consent of Visualant but subject to giving Visualant notice of such
assignment and the terms and conditions thereof.  Subject to the foregoing, this
Agreement will inure to the benefit of and will be binding upon the Parties and
their respective successors and permitted assigns.
 
6.3           Governing Law.  This Agreement will be governed by and construed
under the laws of the state of Washington, without giving effect to any contrary
conflict of laws provisions.
 
6.4           Notices.  All notices and other communications hereunder will be
in writing and will be deemed given (a) upon receipt if delivered personally (or
if mailed by registered or certified mail), (b) the day after dispatch if sent
by overnight courier, (c) upon receipt if transmitted by telecopier or other
means of facsimile transmission (and confirmed by a copy delivered in accordance
with clause (a) or (b)), properly addressed to the parties at the following
addresses:

RatLab:
RatLab, LLC.
 
4939 NE 65th Street
Seattle, WA  98115
 
Visualant:
Visualant, Inc.
 
500 Union Street, Ste. 406
Seattle, WA  98101

 
Any Party may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
 
 
 
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6.5           Protection of the License in Bankruptcy.  The Parties expressly
agree that the Visualant IP and RatLab Softwares "intellectual property" as
defined in Section 101(35A) of the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq. (the "Bankruptcy Code").  In the event of any proceeding
under the Bankruptcy Code for the bankruptcy, reorganization or protection of
either Party, this Agreement shall be subject to Section 365(n) of the
Bankruptcy Code.
 
6.6           Severability.  If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be held to be invalid
or unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances will be interpreted so as best to
reasonably effect the intent of the parties hereto.  The parties further agree
to replace such invalid or unenforceable provision of this Agreement with a
valid and enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the invalid or unenforceable provision.
 
6.7           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and all of which
together will constitute one and the same instrument notwithstanding that all
Parties are not signatories to each counterpart.
 
6.8           Entire Agreement.  This Agreement, together with any exhibit or
attachments, constitutes the entire agreement between the Parties hereto with
respect to the subject matter of this Agreement and supersedes all prior
negotiations, understandings and agreements between the Parties with respect to
the subject matter of this Agreement.
 
[Remainder of Page Left Intentionally Blank]
 
 
 
 
 
 
 

 
 
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EXHIBIT A

VISUALANT IP

VISUALANT PATENTS

1.
Schowengerdt, B.T., Furness, T.A., Melville, R.D., Schroder, K.E., Burstein,
R.A., and Chinthammit, W. SYSTEM AND METHOD OF EVALUATING AN OBJECT USING
ELECTROMAGNETIC ENERGY. International Patent Application No. PCT/US2007/017082.

2.
Schowengerdt, B.T., Furness, T.A., and Walker, N.E. (2006) METHOD, APPARATUS,
AND ARTICLE TO FACILITATE DISTRIBUTED EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Patent Application No. 11/831,662.

3.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E., and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Patent Application No. 11/831,717.

4.
Schowengerdt, B.T., Furness, T.A., Melville, R.D., Schroder, K.E., Burstein,
R.A., and Chinthammit, W. SYSTEM AND METHOD OF EVALUATING AN OBJECT USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/820,938.

5.
Schowengerdt, B.T., Furness, T.A., and Walker, N.E. (2006) METHOD, APPARATUS,
AND ARTICLE TO FACILITATE DISTRIBUTED EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/834,662.

6.
Furness, T.A., Schowengerdt, B.T., Melville, R., and Walker, N.E. (2006) METHOD,
APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING ELECTROMAGNETIC
ENERGY. U.S. Provisional Patent Application No. 60/834,589.

7.
Furness, T.A., Schowengerdt, B.T., Melville, R., and Walker, N.E. (2006) METHOD,
APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING ELECTROMAGNETIC
ENERGY. U.S. Provisional Patent Application No. 60/871,639.

8.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E., and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/883,312.

9.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E. , and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/890,446.

 
 
 
 
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EXHIBIT C

NON-EXCLUSIVE LICENSE AGREEMENT
(RATLAB SOFTWARE)
 
This Non-Exclusive License Agreement (this "Agreement"), dated as of October 23,
2008, is made by and between Visualant, Inc., a Nevada corporation ("Visualant")
and RatLab, LLC, a Washington limited liability company ("RatLab").  Visualant
and RatLab (sometimes referred to herein individually as a "Party" and
collectively as the "Parties") therefore agree as follows:
 
Section 1.               Definitions
 
"Affiliate" means a corporation, limited liability company, joint venture or
other entity of which RatLab or its members has ownership and control of at
least fifty percent (50%) of all outstanding shares or securities or other
ownership interests that represent the power to direct the management and
policies of such entity.
 
"Confidential Information" means any confidential or proprietary information of
a Party, including without limitation, trade secrets, functional and technical
specifications, designs, drawings, translations, analysis, research, processes,
computer programs (including, without limitation, the RatLab Software), beta
versions, algorithms, methods, ideas, "know how," and other technical
information.
 
"Fields of Use" means the fields of use identified in the attached Exhibit A.
 
"Gross Revenue" means any revenue actually received by Visualant as a result of
the sale to any of Visualant's customers or end users of Licensed Products;
provided, however, that "Gross Revenue" does not include any (a) reimbursed
expenses or costs that are passed through to a customer or end user (e.g.,
travel), (b) taxes collected by Visualant for remittance to governmental
authorities, or (c) refunds or credits.
 
"Improvement" means any advancement, development, improvement, enhancement,
correction, modification, adaptation, translation, transformation, annotation,
extension, compilation, collective work or derivative work.
 
"Intellectual Property Rights" means any patent, copyright, trademark, trade
secret, mask work, moral right or other intellectual property or proprietary
right under the laws of any jurisdiction.
 
"Licensed Product" means any product or service that includes the RatLab
Software.
 
"RatLab Software" means the computer code (both source code and object code) and
documentation listed in the attached Exhibit B.
 
"User" means an individual or entity to which Visualant provides a license to
use the RatLab Software (as part of a Licensed Product) for such Licensee's own
use and not for redistribution, subject to the restriction in Section 2.
 
 
 
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Section 2.               License Grant; Restrictions
 
2.1           License Grant; Delivery of RatLab Software.  Subject to the terms
and conditions of this Agreement including Visualant's payment of all fees due
under this Agreement, RatLab hereby grants to Visualant a non-exclusive,
worldwide, non-transferable (except as described in Section 8.4), sublicensable,
royalty-bearing right and license to do the following within the Fields of Use
during the Term: (a) incorporate and utilize the RatLab Software in Licensed
Products; (b) make Improvement to the RatLab Software for use in connection with
the exercise of the rights described in Section 2.1(a); (c) incorporate the
RatLab Software and Improvement to the RatLab Software into Licensed Products;
(d) grant sublicenses to Users to use the RatLab Software and Improvements to
the RatLab Software in accordance with the terms and conditions of this
Agreement; (e) make and use copies of the RatLab Software and Improvement to the
RatLab Software in connection with the exercise of the rights described in
subsections (a) through (d) of this Section 2.1; and (f) support and maintain
the RatLab Software and Improvement to the RatLab Software.  Upon execution of
this Agreement, RatLab will deliver one or more master copies of the RatLab
Software to Visualant.
 
2.2           No Third-Party Distribution.  Visualant may only sublicense rights
to the RatLab Software directly to Users within the Fields of Use and may not
market or distribute the RatLab Software through any third party.  No User will
have the right to further sublicense or distribute the RatLab Software to or
through any third party.
 
2.3           User License Agreements.  Visualant must enter into a license
agreement with each User, which agreement must:  (a) be no less protective of
RatLab and the RatLab Software than this Agreement; (b) provide for a limited,
non-exclusive license to install and use the RatLab Software within Fields of
Use and in accordance with this Agreement; (c) include a disclaimer that RatLab
will have no liability to User including any liability for damages, whether
direct, indirect, incidental or consequential or for loss of profits arising
from or related to the use of the RatLab Software provided by Visualant to the
User or Visualant's products or software; and (d) provide that RatLab is an
intended third-party beneficiary of such agreement.
 
2.4           Restrictions.  Visualant will not, and will not allow any User to:
(a) make any copies of the RatLab Software or install the RatLab Software on any
hardware or equipment other than a Licensed Product; (b) de-compile,
disassemble, or otherwise reverse engineer or attempt to reconstruct or discover
any source code, algorithms or file formats or programming or interoperability
interfaces of the RatLab Software or of any files contained or generated using
the RatLab Software by any means whatsoever; (c) except for the rights granted
to Visualant pursuant to Section 2.1(b), modify or create any derivative works
from the RatLab Software or any part thereof or separate the RatLab Software
into its component parts; (d) merge the RatLab Software with any other software
other than as expressly set forth in the documentation accompanying the RatLab
Software (if any); (e) disclose to any third party any performance information
or analysis relating to the RatLab Software; (f) except for the rights granted
to Visualant pursuant to Section 2.1, sell, sublicense, lease, rent, loan,
assign, convey or otherwise transfer the RatLab Software or any component
thereof; (g) use the RatLab Software on a different operating system(s) than
that specified in the documentation accompanying the RatLab Software (if any);
or (h) remove, obscure or alter any notice of copyright, trademark or other
proprietary right appearing on or in the RatLab Software (including any
component therein) or any documentation accompanying the RatLab
Software.  Visualant will permit RatLab, at all reasonable times, and at
RatLab's expense, to verify that the use of the RatLab is within the terms of
this Agreement.
 
 
 
 
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Section 3.               Intellectual Property Rights
 
3.1           Ownership of Improvements.
 
(a)           Visualant will be the owner of any Intellectual Property Right in
any Improvement of the RatLab Software developed, created or invented by
Visualant (subject to any Intellectual Property Rights of RatLab in the RatLab
Software) [and Visualant will not be obligated to deliver to RatLab any such
Improvement pursuant to this Agreement; provided however, Visualant will
promptly notify RatLab of any such Improvements and Visualant will license such
Improvements to RatLab pursuant to a separate agreement between the Parties
containing substantially the same terms as are applicable to the "Visualant IP"
licensed to RatLab on an exclusive basis pursuant to the Commercial License
Agreement, dated October 23, 2008, between the Parties.
 
(b)           RatLab will be the owner of any Intellectual Property Right in any
Improvement of the RatLab Software developed, created or invented by RatLab and
RatLab will not be obligated to deliver to Visualant any such Improvement.
 
3.2           Reservation of Rights.  Except as expressly provided in this
Agreement, no title to or ownership of any RatLab Software or any proprietary
rights associated with the RatLab Software, is transferred to Visualant or any
other person under this Agreement.
 
Section 4.               Compensation
 
4.1           License Fee.  Visualant will pay RatLab five percent (5%) of the
Gross Revenue received with respect to any Licensed Product incorporating any
RatLab Software (the "License Fee").
 
4.2           Reporting and Payment.  Within thirty (30) business days of the
end of each calendar quarter (or portion thereof) during the Term of this
Agreement, Visualant will remit payment to RatLab for all License Fees earned
during such calendar quarter (or portion thereof).  Each payment will be
accompanied by a statement setting forth in reasonable detail the basis for such
payment.  All amounts payable under this Agreement are payable in the lawful
money of the United States.
 
4.3           Taxes.  Visualant will collect and pay any sales, use, excise,
import or export value added or similar tax or duty not based on RatLab's or any
of its affiliates' net income associated with sales of the Licensed Products by
Visualant.
 
Section 5.               Term and Termination
 
5.1           General.  Unless otherwise terminated pursuant to Section 5.2, the
term of the License (the "Term") will commence as of the Effective Date and will
continue for a period of twenty (20) years.
 
 
 
 
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5.2           Early Termination.  Either Party may terminate the Agreement by
giving the other Party written notice of termination if:  (a) the other Party
commits a material breach of this Agreement and fails to cure such breach within
thirty (30) days after the non-breaching Party gives the breaching Party written
notice of such breach; or (b) the bankruptcy, receivership or similar proceeding
against the other Party which is not dismissed within thirty (30) days after it
is commenced.
 
5.3           Effect of Expiration or Termination.  Upon any expiration or
termination of the Term:  (a) the license granted to Visualant pursuant to this
Agreement will terminate immediately and automatically; provided, however, all
sublicense granted by Visualant prior to the effective date of any termination
of the Term will survive such termination; and (b) the Parties' respective
rights and obligations under Sections 2.4, 3, 5, 6 and 7 of this Agreement will
survive.
 
Section 6.               Confidentiality
 
Each Party agrees to hold the Confidential Information of the other Party in the
strictest confidence and not to disclose such Confidential Information to any
third party, except as otherwise expressly provided by this Agreement.  Each
Party will, however, be permitted to disclose relevant aspects of such
Confidential Information to its officers, employees, attorneys, or auditors, all
on a need-to-know basis, provided that such individuals or entities have
undertaken to protect the Confidential Information to the same extent as
required under this Agreement.  Each Party will give the other Party notice
immediately upon learning of any unauthorized use or disclosure of Confidential
Information.  The obligations set forth in this Section 7 do not apply if and to
the extent the Party receiving Confidential Information ("Receiving Party")
establishes that:  (a) the information disclosed to the Receiving Party was
already known to the Receiving Party, without obligation to keep it
confidential; (b) the Receiving Party received the information in good faith
from a third party lawfully in possession thereof without obligation to keep
such information; (c) the information was publicly known at the time of its
receipt by the Receiving Party or has become publicly known other than by a
breach of this Agreement; (d) the information is independently developed by the
Receiving Party without use of the other Party's Confidential Information; or
(e) the information is required to be disclosed by applicable statute or
regulation or by judicial or administrative process; provided that, in the case
of (e) above, the Receiving Party will use reasonable efforts under the
circumstances to notify the other Party of such requirements so as to provide
such Party the opportunity to obtain such protective orders or other relief as
the compelling court or other entity may grant.
 
Section 7.               Miscellaneous
 
7.1           No Warranties.  RATLAB MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, WITH REGARD TO THE RATLAB SOFTWARE (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR ANY IMPLIED WARRANTY ARISING OUT OF COURSE OF PERFORMANCE, COURSE OF
DEALING OR USAGE OF TRADE).  FURTHER, RATLAB DOES NOT REPRESENT OR WARRANT THAT
THE RATLAB SOFTWARE WILL MEET ALL OF VISUALANT'S OR ITS USERS' REQUIREMENTS, OR
WILL ALWAYS BE AVAILABLE, ACCESSIBLE, UNINTERRUPTED, TIMELY, SECURE, ACCURATE,
COMPLETE, ERROR-FREE, OR VIRUS-FREE.
 
 
 
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7.2           Limitation of Liability.  EXCEPT FOR VIOLATION OF ANOTHER PARTY'S
INTELLECTUAL PROPERTY RIGHTS OR BREACH OF SECTION 2.4, NEITHER PARTY'S AGGREGATE
LIABILITY TO THE OTHER PARTY OR ANY THIRD PARTY UNDER THIS AGREEMENT WILL EXCEED
THE LICENSE FEES PAID BY VISUALANT UNDER THIS AGREEMENT, AND NEITHER PARTY WILL
BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS, LOST REVENUE,
LOST DATA, REPLACEMENT GOODS, OR INTERRUPTION OF USE OF ANY OF THE COCO
PRODUCTS, WHETHER IN CONTRACT, TORT, NEGLIGENCE OR OTHERWISE, EVEN IF A PARTY
HAS BEEN ADVISED OF THE POSSIBILITY THEREOF.
 
7.3           Waiver; Amendments.  The failure of any Party to insist, in any
one or more instances, upon performance of any of the terms, covenants or
conditions of this Agreement will not be construed as a waiver or a
relinquishment of any right or claim granted or arising hereunder or of the
future performance of any such term, covenant, or condition, and such failure
will in no way affect the validity of this Agreement or the rights and
obligations of the parties hereto.  This Agreement may not be modified, amended
or supplemented except by an agreement in writing signed by Visualant and
RatLab.
 
7.4           Assignment and Binding Effect.  Neither Party may transfer or
assign its rights or obligations under this Agreement without the express
written consent of the other Party; provided, however, RatLab may assign any of
its rights or obligations under this Agreement to an Affiliate without the prior
written consent of Visualant.  Subject to the foregoing, this Agreement will
inure to the benefit of and will be binding upon the Parties and their
respective successors and permitted assigns.

7.5           Governing Law.  This Agreement will be governed by and construed
under the laws of the state of Washington, without giving effect to any contrary
conflict of laws provisions.
 
7.5           Notices.  All notices and other communications hereunder will be
in writing and will be deemed given (a) upon receipt if delivered personally (or
if mailed by registered or certified mail), (b) the day after dispatch if sent
by overnight courier, (c) upon receipt if transmitted by telecopier or other
means of facsimile transmission (and confirmed by a copy delivered in accordance
with clause (a) or (b)), properly addressed to the parties at the following
addresses:

RatLab:
RatLab, LLC.
 
4939 NE 65th Street
Seattle, WA  98115
 
Visualant:
Visualant, Inc.
 
500 Union Street, Ste. 406
Seattle, WA  98101

 
 
 
 
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Any Party may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
 
7.6           Protection of the License in Bankruptcy.  The Parties expressly
agree that the RatLab Software is "intellectual property" as defined in Section
101(35A) of the United States Bankruptcy Code, 11 U.S.C. Section 101 et. seq.
(the "Bankruptcy Code").  In the event of any proceeding under the Bankruptcy
Code for the bankruptcy, reorganization or protection of either Party, this
Agreement will be subject to Section 365(n) of the Bankruptcy Code.
 
7.7           Severability.  If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be held to be invalid
or unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances will be interpreted so as best to
reasonably effect the intent of the parties hereto.  The parties further agree
to replace such invalid or unenforceable provision of this Agreement with a
valid and enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the invalid or unenforceable provision.
 
7.8           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and all of which
together will constitute one and the same instrument notwithstanding that all
Parties are not signatories to each counterpart.
 
7.9           Entire Agreement.  This Agreement, together with any exhibit or
attachments, constitutes the entire agreement between the Parties hereto with
respect to the subject matter of this Agreement and supersedes all prior
negotiations, understandings and agreements between the Parties with respect to
the subject matter of this Agreement.
 
[Remainder of Page Left Intentionally Blank]
 
 
 
 
 
 
 
 
 
 
 
24

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be made and
executed by duly authorized officers.

Visualant, Inc.
 
By:                                                                      
Name:                                                                   
Title:                                                                   
Date Signed:                                                               
RatLab, LLC
 
By:                                                          
                     
Name:                                                                           
Title:                                       
                                     
Date Signed:                                                                

 
[Signature Page to Non-Exclusive License Agreement (RatLab Software)]
 
 
 
 
 
 

 
 
 
25

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EXHIBIT A
 
FIELDS OF USE
 
1. Verification of authenticity of various manufactured goods or substances when
compared against a prestored standard of the spectral signature of authentic
goods.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26

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EXHIBIT B
 
RATLAB SOFTWARE
 
Cyclops - Labview VIs    Version "Working"
Cyclops - Labview VIs    Version 01a "Master Fingerprint"
Cyclops - Labview VIs    Version "Cyclops_main modding for 30 LEDs.vi"
Cyclops - Labview Vis    Version "Cyclop30_DEMO.vi"
Cyclops - Labview VIs    Speech recognition    Version
"Cyclop30_DEMO_sound_SR.vi"
Cyclops - Labview VIs    Speech recognition    Version
"Cyclop30_DEMO_record_playback.vi"
Cyclops - Labview Vis    Version "Cyclop30_DEMO_v2.vi"
Cyclops - Labview VIs    Speech recognition    Version "Cyclop30_DEMO_v2.vi"
Cyclops - Labview VIs    Version "Cyclops_NYC_DEMO.llb"
Tetraclops - ARM 7 Firmware 1.0 Labview dependent - Version 1
Tetraclops - ARM 7 Firmware 1.0 Labview dependent - Version 2
Tetraclops - ARM 7 Firmware 1.0 Labview dependent - Version 3
Tetraclops - ARM 7 Firmware 1.0 Labview dependent - Version 4
Tetraclops - ARM 7 Firmware 1.0 Labview dependent - Version 5
Tetraclops - ARM 7 Firmware 1.0 Labview dependent - Version 6
Tetraclops - ARM 7 Firmware 1.0 Labview dependent - Version 7
Tetraclops - ARM 7 Firmware 1.0 Labview dependent - Version 8
Tetraclops - CPLD Firmware - Version 1
Tetraclops - CPLD Firmware - Version 2
Tetraclops - CPLD Firmware - Version 3
Tetraclops - CPLD Firmware - Version 4
Tetraclops - CPLD Firmware - Version 5
Tetraclops - CPLD Firmware - Version 6
Tetraclops - CPLD Firmware - Version 7
Tetraclops - CPLD Firmware - Version 8
Tetraclops - CPLD Firmware - Version 9
Tetraclops - Labview VIs - Version 1
Tetraclops - Labview VIs - Version 2
Tetraclops - Labview VIs - Version 3
Tetraclops - Labview VIs - Version 4
Tetraclops - Labview VIs - Version 5
Tetraclops - Labview VIs - Version 6
Tetraclops - Labview VIs - Version 7
Tetraclops - Labview VIs - Version 8
Tetraclops - Server software - Java + My SQL - Version 1
Tetraclops - PDA communication software + User Interface- C++    Version 1
Tetraclops - ARM 7 Firmware 2.0 Labview independent - Version 1
Simulator, initial import (rev 1)
Simulator, first working classifier (rev 14)
Simulator, first working pca (rev 57)
 
 
 
 
27

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Simulator, first working ica (rev 75)
Spectrographic reconstruction - C++ called by web page - Initial Version
Simulator, first working probability method (rev 95)
Object authentication - C DLL, called by labview - Version 2.0
Object authentication - C DLL, called by labview - Version 3.0
Object authentication - C DLL, called by labview - Version 4.0
Spectrographic reconstruction – C DLL called by LabView – first alpha test (rev
121)
Object authentication - C DLL, called by labview - Version 5.0
Object authentication - C DLL, called by labview - Version 6.0
Object authentication - C DLL, called by labview - Version 7.0
Object authentication – Java run on Server - First alpha test (rev 7)
Spectrographic reconstruction - C++ called by web page - Current version
Spectrographic reconstruction - C DLL called by LabView – Vancouver trip (rev
137)
Spectrographic reconstruction - C++ run local on PC (sent to CBN) Version 1
Object authentication - Java run on Server - SF Demo version (rev 56)
Simulator, set up to find best gel filters
Spectrographic reconstruction - C++ run local on PC Version 2
Spectrographic reconstruction - C++ run local on PC Version 3
Spectrographic reconstruction - Java run on Server - first alpha test (rev 49)
Spectrographic reconstruction - Java run on Server - black and white cal (rev
68)
Server-in-the-Sky networking algorithms (v. 1.0)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28

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EXHIBIT D

TEMPLATE LICENSE AGREEMENT
 
This Commercial License Agreement (this "Agreement"), dated as of ______________
(the "Effective Date"), is made by and between Visualant, Inc., a Nevada
corporation ("Visualant") and RatLab, LLC, a Washington limited liability
company ("RatLab").  Visualant and RatLab (sometimes referred to herein
individually as a "Party" and collectively as the "Parties") therefore agree as
follows:
 
Section 1.               Definitions
 
"Affiliate" means a corporation, limited liability company, joint venture or
other entity of which RatLab or its members has ownership and control of at
least fifty percent (50%) of all outstanding shares or securities or other
ownership interests that represent the power to direct the management and
policies of such entity.
 
"Fields of Use"
_______________________________________________________________________________________
 
"Gross Revenue" means any revenue actually received by RatLab, or a RatLab
Affiliate, as a result of the sale to any of RatLab’s or RatLab Affiliate’s
customers or end users of Licensed Products that incorporate one or more of the
unexpired Visualant IP; provided, however, that "Gross Revenue" does not include
any (a) reimbursed expenses or costs that are passed through to a customer or
end user (e.g., travel), (b) taxes collected by RatLab for remittance to
governmental authorities, or (c) refunds or credits.
 
"Improvement" means any advancement, development, improvement, enhancement,
correction, modification, adaptation, translation, transformation, annotation,
extension, compilation, collective work or derivative work to or based upon the
Visualant IP.
 
"Intellectual Property Rights" means any patent, copyright, trademark, trade
secret, mask work, moral right or other intellectual property or proprietary
right under the laws of any jurisdiction.
 
"License" means the license granted by Visualant to RatLab pursuant to
Section 2.1 of this Agreement.
 
"Licensed Product" means any product or service of RatLab or its sublicensees
intended for use in the Fields of Use and that incorporates or uses any of the
Visualant IP.
 
"Third Party" means any individual, corporation, limited liability company,
partnership, trust, association, governmental authority or other entity that is
not a Party.
 
"Third Party Infringement" means any past, present or future infringement,
misappropriation, unauthorized use or other violation of any of the Visualant IP
within the Field of Use by any Third Party.
 
 
 
29

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"Visualant IP" means the Visualant Patents, any other intellectual property
assets listed in the attached Exhibit A, and any other intellectual property or
proprietary rights owned or controlled by Visualant that are necessary or useful
for exploitation of the Licensed Products.
 
"Visualant Patent" means:  (a) any patent or patent application owned or
controlled by Visualant now or in the future listed, including any patents or
patent applications listed under the heading of "Visualant Patents" in the
attached Exhibit A, and any patents that may issue from the pending patent
applications listed in the attached Exhibit A; (b) any patent that may issue
from any continuation or divisional that has priority based upon any of the
patent applications described in (a) above; (c) any reissues, renewals,
substitutions, re-examinations and extensions of any of the patents described in
(a) or (b) above; and (d) any foreign patents corresponding to any of the
patents described in (a), (b) or (c) above.
 
Section 2.               License Grant; Covenants
 
2.1           License Grant.  Subject to the provisions of Section 2.2 below,
Visualant hereby grants to RatLab an exclusive (within the Fields of Use),
worldwide, non-transferable (except as described in Section 5.2), sublicensable
(with the notice  of Visualant), royalty-bearing, right and license to use and
exploit the Visualant IP within the Fields of Use.  Without limiting the
generality of the foregoing, the license and rights granted herein include,
without limitation, the rights to do the following: (a) make, have made, offer
for sale, sell, use, distribute, have distributed, and import any products or
services within the Fields of Use under the Visualant IP; (b) make Improvements
of and to the Visualant IP; (c) exercise any other rights under the Visualant
IP, including the right to take any action against any past, present or future
infringement of the Visualant IP in the Fields of Use; and (d) sublicense any of
the licenses or rights granted hereunder, subject, however, to the prior
notice  consent of Visualant.
 
2.2           Exclusivity.  During the Term, and so long as RatLab satisfies the
milestones set forth in this Section 2.2 (the "Milestones") Visualant will not
grant to any Third Party any license under any of the Visualant IP to
incorporate or utilize the Visualant IP in products or services intended for use
in the Fields of Use.  The following Milestones will apply to RatLab's efforts
to commercialize the Visualant IP:
 
(a)           Within six (6) months after the Effective Date, create an
Affiliate for the purposes of commercializing the Visualant IP within the Fields
of Use;
 
(b)           Within twenty-four (24) months after the Effective Date, obtain
funding for such Affiliate so that the Affiliate can operate on a stand-alone
basis (i.e., is able to support its own officers and staff, and conduct research
either on its own or in conjunction with RatLab);
 
(c)           Within thirty-six (36) months after the Effective Date, develop a
demonstration unit of a Licensed Product; and
 
(d)           Within forty-eight (48) months after the Effective Date, deliver
the first License Fee to Visualant.
 
 
 
30

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If RatLab fails to satisfy any of the Milestones, the restrictions on Visualant
imposed by this Section 2.2 will terminate and RatLab's rights under the License
will be non-exclusive for the remainder of the Term.
 
Section 3.               Intellectual Property Rights
 
3.1           Administration of Visualant IP.  Visualant will control the
prosecution, maintenance, registration and other management of the Visualant
IP.  Visualant will keep RatLab informed of the status of all prosecution,
maintenance, registration and other management activities related to the
Visualant IP and will provide RatLab with a reasonable opportunity to advise
Visualant on such activities.  Without limiting the generality of the foregoing,
if Visualant chooses to abandon any portion of the Visualant IP, Visualant will
provide RatLab written notice at least sixty (60) days prior to the last
allowable date for filing or taking any other action required with respect to
the prosecution, maintenance or registration of such portion of the Visualant IP
and RatLab may, at any time thereafter, take actions necessary to preserve the
Visualant IP.
 
3.2           Third Party Infringement.
 
(a)           If any Third Party Infringement comes to the attention of either
Party, then such Party will give the other Party prompt written notice thereof
(including, without limitation, a statement of the facts which are known by the
Party giving the notice and which such Party believes might reasonably serve as
a basis for a claim of Third Party Infringement, together with a copy of any
documentation evidencing the same).
 
(b)           RatLab will have the first right to respond to, address, and/or
prosecute any alleged Third Party Infringement by securing cessation of the
infringement or initiating an action or suit against the infringer or otherwise
responding to, addressing and/or prosecuting such alleged Third Party
Infringement.  To exercise this first right, RatLab must initiate bona fide
action to respond to, address, and/or prosecute any alleged Third Party
Infringement within ninety (90) days of learning of such infringement.  If
RatLab chooses to institute suit or action against an alleged infringer, RatLab
may bring such suit in its own name (or, if required by law, in its and
Visualant’s name) and at its own expense.  Further, if RatLab institutes an
action or suit against an alleged infringer as provided in this Agreement, then
(i) Visualant will fully and promptly cooperate and assist RatLab in connection
with any such suit or action, and RatLab will pay Visualant’s reasonable
attorneys fees and other out-of-pocket directly associated expenses.  RatLab
will not settle any suits or actions in any manner relating to the Visualant IP
without obtaining the prior written consent of RatLab, which will not be
unreasonable withheld, delayed or conditioned. After RatLab has recovered its
reasonable attorney's fees and other out-of-pocket expenses directly related to
any action, suit, or settlement for infringement of Visualant IP, the remaining
damages, awards, or settlement proceeds will be divided as follows: fifty
percent (50%) to RatLab and fifty percent (50%) to Visualant.
 
 
 
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(c)           If RatLab fails, within ninety (90) days of learning of an alleged
Third Party Infringement, to secure cessation of the alleged Third Party
Infringement, institute suit against the alleged infringer, or to otherwise
respond to, address and/or prosecute the alleged Third Party Infringement, then
Visualant may, upon written notice to RatLab, assume full right and
responsibility to institute suit or action against the alleged infringer.  If
Visualant elects to commence an action as described above, then Visualant may do
so in its own name (or if required by law, in its own and RatLab’s name) and at
its won expense.  Further, if Visualant institutes an action or suit against an
alleged infringer as provided in this Agreement, then RatLab will fully and
promptly cooperate and assist Visualant in connection with the action or suit,
and Visualant will pay all of RatLab’s reasonable attorney fees and other
out-of-pocket directly associated expenses.   Visualant will not settle any
suits or actions in any manner relating to the Visualant IP without obtaining
the prior written consent of RatLab, which will not be unreasonably withheld,
delayed or conditioned. After Visualant has recovered its reasonable attorney’s
fees and other out-of-pocket expenses directly related to any action, suit, or
settlement for infringement of Visualant IP, the remaining damages, awards, or
settlement proceeds will be divided as follows:  fifty percent (50%) to
Visualant and fifty percent (50%) to RatLab.
 
(d)           Neither RatLab nor Visualant is obligated under this Agreement to
institute or prosecute a suit against any alleged infringer of the Visualant IP.
 
3.3           Ownership of Improvements.
 
(a)           By RatLab.
 
(i)           RatLab or its sublicensees will be the owner of any Intellectual
Property Rights in any Improvement to the Visualant IP developed, created or
invented by RatLab or its sublicensees at RatLab's expense and neither RatLab
nor its sublicensees will be obligated to deliver to Visualant any such
Improvement pursuant to this Agreement; provided, however, RatLab will promptly
notify Visualant of any such Improvements and license such Improvements to
Visualant for use in certain fields of use pursuant to a separate agreement
between the Parties containing substantially the same terms as are applicable to
the Visualant IP licensed to RatLab pursuant to this Agreement.
 
(ii)           Visualant will be the owner of any Intellectual Property Rights
in any Improvement to the Visualant IP developed, created or invented by RatLab
at Visualant's expense (e.g., pursuant to a separate research and development
agreement or otherwise) and Visualant will not be obligated to deliver to RatLab
any such Improvement pursuant to this Agreement; provided, however, RatLab will
promptly notify Visualant of any such Improvements and Visualant will license
such Improvements to RatLab for use in the Fields of Use pursuant to a separate
agreement between the Parties containing substantially the same terms as are
applicable to the Visualant IP licensed to RatLab pursuant to this Agreement.
 
(b)           By Visualant.  Visualant will be the owner of any Intellectual
Property Right in any Improvement of the Visualant IP developed, created or
invented by Visualant and Visualant will not be obligated to deliver to RatLab
any such Improvement pursuant this Agreement; provided, however, Visualant will
promptly notify RatLab of any such Improvements and Visualant will license such
Improvements to RatLab for use in the Fields of Use pursuant to a separate
agreement between the Parties containing substantially the same terms as are
applicable to the Visualant IP licensed to RatLab pursuant to this Agreement.
 
 
 
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3.4           Reservation of Rights; Ownership of IP.  Except as expressly
provided in this Agreement, no title to or ownership of any Visualant IP is
transferred to RatLab or any other person under this Agreement.  RatLab
acknowledges and agrees that Visualant is the sole owner of all right, title and
interest in and to the Visualant IP listed on Schedule A hereto, and RatLab
agrees that at the request of Visualant, RatLab will execute all instruments and
documents and will take all other action necessary to insure that Visualant has
vested title to the Visualant IP.  RatLab represents and warrants that it will
not undertake any act or thing which in any way impairs or is intended to impair
any part of the right, title, interest or goodwill of Visualant in the Visualant
IP.
 
Section 4.               Compensation
 
4.1           License Fee.  RatLab will pay Visualant five percent (5%) of the
Gross Revenues received with respect to any Licensed Product incorporating one
or more of the valid and unexpired Visualant IP (the "License Fee").
 
4.2           Reporting and Payment.  Once RatLab satisfies the Milestone set
forth in Section 2.2(d), within thirty (30) calendar days of the end of each
subsequent calendar quarter (or portion thereof) during the Term of this
Agreement, RatLab will remit payment to Visualant for all License Fees earned
during such calendar quarter (or portion thereof).  Each payment will be
accompanied by a statement setting forth in reasonable detail the basis for such
payment.  All amounts payable under this Agreement are payable in the lawful
money of the United States.
 
4.3           Taxes.  RatLab will collect and pay any sales, use, excise, import
or export value added or similar tax or duty not based on Visualant's or any of
its affiliates' net income associated with sales of the Licensed Products by
RatLab.

Section 5.               Term and Termination
 
5.1           General.  Unless otherwise terminated pursuant to Section 5.2, the
term of the License (the "Term") will commence as of the Effective Date and will
continue until the last to expire of the Visualant IP.
 
5.2           Early Termination.  RatLab may terminate this Agreement for its
convenience upon thirty (30) days’ written notice to Visualant.  In addition,
either Party may terminate the Agreement by giving the other Party written
notice of termination if:  (a) the other Party commits a material breach of this
Agreement and fails to cure such breach within thirty (30) days after the
non-breaching Party gives the breaching Party written notice of such breach; or
(b) the bankruptcy, receivership or similar proceeding against the other Party
which is not dismissed within thirty (30) days after it is commenced.
 
5.3           Effect of Expiration or Termination.  Upon any expiration or
termination of the Term:  (a) the License will terminate immediately and
automatically; provided, however, all sublicense granted by RatLab  prior to the
effective date of any termination of the Term will survive such termination; and
(b) the Parties’ respective rights and obligations under Sections 3.3, 3.4, 5
and 6 of this Agreement will survive.
 
 
 
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Section 6.                      Miscellaneous
 
6.1           Waiver; Amendments.  The failure of any Party to insist, in any
one or more instances, upon performance of any of the terms, covenants or
conditions of this Agreement will not be construed as a waiver or a
relinquishment of any right or claim granted or arising hereunder or of the
future performance of any such term, covenant, or condition, and such failure
will in no way affect the validity of this Agreement or the rights and
obligations of the parties hereto.  This Agreement may not be modified, amended
or supplemented except by an agreement in writing signed by Visualant and
RatLab.
 
6.2           Assignment and Binding Effect.  Neither Party may transfer or
assign its rights or obligations under this Agreement without the express
written consent of the other Party; provided, however, RatLab may assign any of
its rights or obligations under this Agreement to an Affiliate without the prior
written consent of Visualant but subject to giving Visualant notice of such
assignment and the terms and conditions thereof.  Subject to the foregoing, this
Agreement will inure to the benefit of and will be binding upon the Parties and
their respective successors and permitted assigns.
 
6.3           Governing Law.  This Agreement will be governed by and construed
under the laws of the state of Washington, without giving effect to any contrary
conflict of laws provisions.
 
6.4           Notices.  All notices and other communications hereunder will be
in writing and will be deemed given (a) upon receipt if delivered personally (or
if mailed by registered or certified mail), (b) the day after dispatch if sent
by overnight courier, (c) upon receipt if transmitted by telecopier or other
means of facsimile transmission (and confirmed by a copy delivered in accordance
with clause (a) or (b)), properly addressed to the parties at the following
addresses:

RatLab:
RatLab, LLC.
 
4939 NE 65th Street
Seattle, WA  98115
 
Visualant:
Visualant, Inc.
 
500 Union Street, Ste. 406
Seattle, WA  98101

 
Any Party may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
 
6.5           Protection of the License in Bankruptcy.  The Parties expressly
agree that the Visualant IP and RatLab Softwares "intellectual property" as
defined in Section 101(35A) of the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq. (the "Bankruptcy Code").  In the event of any proceeding
under the Bankruptcy Code for the bankruptcy, reorganization or protection of
either Party, this Agreement shall be subject to Section 365(n) of the
Bankruptcy Code.
 
 
 
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6.6           Severability.  If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be held to be invalid
or unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances will be interpreted so as best to
reasonably effect the intent of the parties hereto.  The parties further agree
to replace such invalid or unenforceable provision of this Agreement with a
valid and enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the invalid or unenforceable provision.
 
6.7           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and all of which
together will constitute one and the same instrument notwithstanding that all
Parties are not signatories to each counterpart.
 
6.8           Entire Agreement.  This Agreement, together with any exhibit or
attachments, constitutes the entire agreement between the Parties hereto with
respect to the subject matter of this Agreement and supersedes all prior
negotiations, understandings and agreements between the Parties with respect to
the subject matter of this Agreement.
 
[Remainder of Page Left Intentionally Blank]
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be made and
executed by duly authorized officers.

Visualant, Inc.
 
By:                                                         
                    
Name:                                                                         
Title:                                                    
                      
Date Signed:                                                               
RatLab, LLC
 
By:                                                                
              
Name:                                                                          
Title:                                                  
                         
Date Signed:                                                                

 
[Signature Page to Commercial License Agreement]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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EXHIBIT A

VISUALANT IP

VISUALANT PATENTS

19.
Schowengerdt, B.T., Furness, T.A., Melville, R.D., Schroder, K.E., Burstein,
R.A., and Chinthammit, W. SYSTEM AND METHOD OF EVALUATING AN OBJECT USING
ELECTROMAGNETIC ENERGY. International Patent Application No. PCT/US2007/017082.

20.
Schowengerdt, B.T., Furness, T.A., and Walker, N.E. (2006) METHOD, APPARATUS,
AND ARTICLE TO FACILITATE DISTRIBUTED EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Patent Application No. 11/831,662.

21.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E., and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Patent Application No. 11/831,717.

22.
Schowengerdt, B.T., Furness, T.A., Melville, R.D., Schroder, K.E., Burstein,
R.A., and Chinthammit, W. SYSTEM AND METHOD OF EVALUATING AN OBJECT USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/820,938.

23.
Schowengerdt, B.T., Furness, T.A., and Walker, N.E. (2006) METHOD, APPARATUS,
AND ARTICLE TO FACILITATE DISTRIBUTED EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/834,662.

24.
Furness, T.A., Schowengerdt, B.T., Melville, R., and Walker, N.E. (2006) METHOD,
APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING ELECTROMAGNETIC
ENERGY. U.S. Provisional Patent Application No. 60/834,589.

25.
Furness, T.A., Schowengerdt, B.T., Melville, R., and Walker, N.E. (2006) METHOD,
APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING ELECTROMAGNETIC
ENERGY. U.S. Provisional Patent Application No. 60/871,639.

26.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E., and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/883,312.

27.
Furness, T.A., Schowengerdt, B.T., Melville, R., Walker, N.E. , and Sparks, B.E.
(2006) METHOD, APPARATUS, AND ARTICLE TO FACILITATE EVALUATION OF OBJECTS USING
ELECTROMAGNETIC ENERGY. U.S. Provisional Patent Application No. 60/890,446.

 

 
 
37

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EXHIBIT E

Name
SHARES VESTED
SHARES TO VEST per Exhibit F
Furness, Thomas
700,000
500,000
Schowengerdt, Brian
700,000
500,000
Walker, Nicholas
80000
 
Melville, Ross
100000
 
Burstein, Bob
80000
 
Burnette, John
80000
 
Chinthammit, Winyu
20000
 
Schroder, Konrad
80000
 
Jones, Alden
10000
       
TOTAL
1,850,000
1,000,000

 
 
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EXHIBIT F

VSUL Common Stock Vesting Schedule for each of Furness and Schowengerdt

150,000 shall vest upon the completion of the demonstration to JFE and/or
another Japanese company associated with Visualant KK.  In the case that this
milestone cannot be met with a Japanese Company, alternatively a demonstration
to any international company associated with VSUL or Visualant KK.

150,000 shall vest upon the closing of a financing for the RATLAB affiliate that
is developing commercial applications with in the Exclusive Fields.

200,000 shall vest upon the first commercial sale of a product developed
pursuant to the Exclusive Fields license.

 
 
 
 
 
 
 
 
 
39

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