Exhibigt 10.1


    
      

    

     

     

    Exhibit
      10.1

    
 

    LETTER
      OF
      INTENT

    


    This
      Letter of
      Intent (LOI) is made and entered by and between DA LING CO., Ltd. (herein DA
      LING), a corporation with the address at 3F-2 No. 68 Gongye 1st
      Road, Situn
      District, Taichung City 407, Taiwan, and APPLIED NANOTECH, INC. (herein “ANI”),
      a corporation with the address at 3006 Longhorn Blvd., Suite 107, Austin, TX
      78758, USA, jointly "the Parties."

    


    1.    By
      signing this
      Letter of Intent, the Parties acknowledge their desire to commence working
      diligently in formulating and signing an agreement to establish a joint venture
      (JVA) dedicated to the manufacturing engineering of carbon nanotube (CNT) TV
      samples in a Pilot Line (Pilot Line) as specified in Revision D of Pilot Line
      Plan of 2/20/2006 that is attached to this Letter of Intent and is an integral
      part of this agreement. 

    


    2.     The
      purpose of the
      Joint Venture will be to acquire the equipment, install this equipment in a
      facility in Taiwan provided by DA LING, to identify and train adequate personnel
      that will be able to operate this equipment and start producing prototypes
      of
      CNT TVs as specified in Revision D of Pilot Line Plan of 2/20/2006.


    


    3.     The
      Parties
      acknowledge by signing this LOI that the JVA will include pre-negotiated
      conditions for a license agreement of ANI’s CNT TV intellectual property, know
      how and technology to be effective once the Parties decide that the Pilot Line
      was successful and decide to move to the next step of manufacturing and
      commercialization. The license agreement will include among other items an
      upfront royalty fee and running royalty at parity with the standards in the
      flat
      panel TV industry as well as other standard provisions.

    


    4.     During
      the Pilot
      Line installation and activation, the Parties will work together to survey
      the
      market, the situation of competitors, analysis of possibilities of
      commercialization related to large area CNT TVs and make together strategic
      changes if necessary.

    


    5.     In
      the JVA, ANI
      will be responsible to disclose all the technology and know how related to
      CNT
      electron sources and their utilization for CNT TVs to the joint venture
      employees. DA LING will be responsible to manage the joint venture and to secure
      the location, acquisition of equipment, installation and to provide adequate
      personnel to be trained by ANI. 

    


    6.     During
      the term of
      JVA, the Parties will own newly developed intellectual property as
      follows:

    


    
      	 	
              (1)

            	
              If
                the
                invention is made using the Pilot Line in Taiwan, the invention will
                belong to the Joint Venture;

            


    

    
      	 	
              (2)

            	
              If
                the
                invention is made in Austin Texas, the invention will belong to
                ANI;

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    7.     For
      the investment
      in the joint venture ANI will provide the technology and necessary intellectual
      property and training of personnel in Austin, Texas needed to demonstrate that
      the pilot line as presented in Revision D Pilot Line Plan of 2/20/2006 is
      operational and can achieve the intended results as an investment in-kind and
      DA
      LING will provide al the necessary cash requirement to acquire the equipment,
      facilitate the location, install the equipment, provide engineering and
      technical personnel and other running costs for the joint venture. For their
      investment the Joint Venture will be 50% owned by ANI and 50% owned by DA LING.
      

    


    8.     In
      addition, DA
      LING will pay ANI $1 million at the time of signing the JVA for the right of
      the
      joint venture to receive and use all the knowledge, technology, know how, etc.,
      from ANI in the pilot line, but this will not include any license to any of
      the
      technology used. 

    


    9.    The
      $1 million
      payment as stated above will be deducted from the upfront royalty payment when
      and if a license agreement is consummated as stated in Article 3. 

    


    10.    The
      joint venture
      will be obliged to absorb its costs of all the training of its personnel, in
      Taiwan and in Austin, Texas. The joint venture will also be required to
      reimburse all of ANI’s expenses for sending ANI’s employees to work in Taiwan
      for technology transfer and training if such training is needed. 

    


    11.     The
      Parties
      acknowledge that according to the Revision D of the Pilot Line Plan 2/20/2006,
      they are aware that the necessary capital investment in equipment is
      approximately $10 million. The capital investment does not include the
      facilities and does not include projected use of man-power that need to be
      identified and hired by DA LING and all other costs necessary for the day to
      day
      operation of the pilot line. 

    


    12.    The
      Parties
      acknowledge that they will work together diligently and timely from the date
      of
      signing of this LOI with the scope to achieve an agreeable joint venture license
      agreement no later than June 30, 2006. 

    


    The
      Parties,
      represented by duly authorized representatives, have signed this Agreement
      in
      duplicate originals to be effective on the date written below.

    


    


    Date:
      March 3,
      2006

    


    


    Accepted
      and
      Agreed:    

    DA
      LING CO., LTD.   


     

    /s/
      Sunny
      Tsai

    Mr.
      Sunny Tsai

    President

    DA
      LING CO., LTD.

    
 

    


    March
      3, 2006
  

    


    


    


    Accepted
      and
      Agreed:   

    
 

    
 

    /s/
      Zvi
      Yaniv

    Dr.
      Zvi Yaniv,
      President & CEO

    Applied
      Nanotech,
      Inc.

    


    March
      3, 2006
  

    
 

    Witness
      By:

     

     

    /s/
      Madame Hung Ying Leung
      (Anna)

    Mada,
      Hung Ying Leung 
(Anna)

    President

    Sino-Canadian
      Cultural And
      Economic

    Association

     

     

    March
      3,
      2006