**Exhibit 10.63**

 

RESEARCH COLLABORATION AGREEMENT

— INVENTIONS AND MATERIALS —

 

ThisAgreement, effective as of September 21, 2005 (the “Effective Date”), isbetween the University of Massachusetts Lowell (“UML” or “Institution”), apublic institution of higher education of the Commonwealth of Massachusetts,and MFIC Corporation, a Delaware corporation (“Sponsor”),

 

WHEREAS: UML has identified Sponsor’s proprietaryMicrofluidizer® processor and Microfluidizer® Mixer/Reactor technology as apotentially important sizing and reaction process component to itsnanomanufacturing initiative,

 

WHEREAS: UML desires to evaluate this premise viaresearch and development using Microfluidizer equipment,

 

WHEREAS: MIFC desires to evaluate their Microfluidizer®materials processor and Microfluidizer® Mixer/Reactor technologies fornanomanufacturing opportunities,

 

THEN:  Institution and Sponsor hereby agree to thisResearch Collaboration Agreement as defined by the following terms:

 

1.     Definitions.

 

1.1.       “Confidential Information” means confidential or proprietaryinformation furnished by one party (the “Disclosing Party”) to the other party(the “Receiving Party”) in connection with the performance of the ResearchProject, provided that the information is specifically designated asconfidential. Confidential Information includes, without limitation, tradesecrets, know-how, inventions, technical data or specifications, testingmethods, and research and development activities.1.2.  “Indemnitees” means either Institutionand its trustees, officers, faculty, students, employees, and agents and theirrespective successors, heirs and assigns of Sponsor and its directors,officers, employees, and agents and their respective successors, heirs andassigns.

 

1.3.       “Inventions” means any potentially patentable or copyrightableinnovation based on the Research Results, which is conceived during the term ofthis Agreement by employees of Institution or Sponsor.

 

1.4.       “Materials” means any tangible materials, including recorded data,writings, etc.

 

1.5.       “Patent Rights” means all United States and foreign patentapplications claiming an Invention, including any divisional, continuation,continuation-in-part (to the extent that the

 

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claims are directed to an Invention), and foreignequivalents thereof, as well as any patents issued thereon or reissues orreexaminations thereof. “Institution Patent Rights” means Patent Rightsclaiming Inventions that are conceived or reduced to practice solely byemployees of Institution or by employees of Sponsor utilizing Institution facilities,as determined under the patent laws of the United States, and assigned toInstitution. “Joint Patent Rights” means Patent Rights claimingInventions that are conceived or reduced to practice jointly by employees of Institutionand employees of Sponsor, as determined under the patent laws of the UnitedStates, and assigned to institution or Sponsor.

 

1.6.       “Principal Investigator” means an employee of Institution who hasprimary responsibility for the performance of the Research Project. ThePrincipal Investigator is identified in Section 2.1 below.

 

1.7.       “Proprietary Materials” means any proprietary Materials other thanProject Materials that are furnished by one party (the “Supplier”) to the otherparty (the “Recipient”) in connection with performance of the Research Project.

 

1.8.       “Research Project” means the activities described on Exhibit A(“Description of Research Project”), which Institution agrees to perform underthe terms and conditions of this Agreement.

 

1.9.       “Research Results” means all data, test results, laboratory notes,techniques, know-how, and any other information obtained in the performance ofthe Research Project. The term “Research Results” does not include ProjectMaterials, patentable inventions, copyrighted or copyrightable works,trademarks or service marks, or other intellectual property based on theResearch Results. As a matter of policy, Institution ordinarily will not asserttrade secret protection for Research Results.

 

1.10.     “Technical Representative” means an individual designated bySponsor as its principal contact for consultation and communications withInstitution and the Principal Investigator. The Technical Representative isidentified in Section 2.1 below.

 

2.     Performance of Research Project.

 

2.1.       Principal Investigator and Technical Representative. Dr. Robert Nicolosi, who shall serve asthe Project Manager, will have overall responsibility for the Research Projectand will be one of the three faculty representatives that serve on the AdvisoryCommittee. The Principal Investigator shall be Dr. Julie Chen, Director –UML Nanomanufacturing Center. She will manage the interaction required toidentify specific research initiatives recommended by the Advisory Committee tobe set up under this agreement. This Advisory Committee will be composed of Dr. Chen,Dr. Nicolosi and one other faculty representative and two TechnicalRepresentatives of Sponsor. Whena project is identified, Dr. Chen will recommend a specific PrincipalInvestigator for that project. If Dr. Chen ceases to serve as PrincipalInvestigator for any reason, Institution will promptly notify Sponsor andInstitution and Sponsor shall use good faith efforts to identify a mutuallyacceptable replacement within sixty (60) days. If a suitable replacementPrincipal Investigator cannot be identified within the sixty-day period,Sponsor may

 

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terminate this Agreement as provided in Section 6.2.The Sponsor may change its Technical Representative upon thirty (30) dayswritten notice to Institution.

 

2.2.       Performance of Research Project. Institution shall use reasonable efforts to complete the ResearchProject; however, Institution makes no warranties regarding the completion ofthe Research Project or the achievement of any particular results. TheTechnical Representative may consult informally with the PrincipalInvestigator, both in person and by telephone, regarding the performance of theResearch Project. The Institution shall provide the Technical Representativereasonable access to Institution facilities where the Research Project is beingconducted.

 

2.3        Records, Materials, and Reports. The Project Manager shall prepare and maintainrecords containing all Research Results, including laboratory notebooksmaintained in accordance with customary academic practice. During the term ofthis Agreement, at his/her convenience, the Principal Investigator shallprovide the Technical Representative reasonable access to research records, andthe Project Manager shall furnish Sponsor, upon request, reasonable amounts ofany Project Materials, subject to availability. Within ninety (90) days afterthe expiration or termination of this Agreement, the Principal Investigatorshall deliver to sponsor a final report describing all significant ResearchResults in reasonable detail. However, the Principal Investigator may extendthis ninety-day deadline for a period of up to an additional thirty (30) dayswith the consent of Sponsor, which consent shall not be unreasonably withheld.

 

3.     Responsibilities of Sponsor.

 

3.1.       Contributions to Research Project. Sponsor shall contribute to the Research Project the support,equipment, personnel, technology, and other resources listed on Exhibit B(“Sponsor Contributions”). Sponsor may also furnish Institution and thePrincipal Investigator with certain Confidential Information or ProprietaryMaterials, which shall remain the property of Sponsor. Institution and thePrincipal Investigator reserve the right to refuse to accept any ConfidentialInformation or Proprietary Materials offered by Sponsor. Exhibit C(“Sponsor Value Contribution to the Research Collaboration Agreement”) providesan estimated value of $545,000 as Sponsor’s contribution to this collaboration.

 

3.2.       Consideration to Institution. The primary consideration is related to access to the Microfluidizertechnologies for purposes of evaluation in UML’s Nanomanufacturing programdirected towards new product applications and formulations.

 

Inaddition, for each project approved by the Advisory Committee, MFIC willbear the first $3,000 for each discrete project. Any additional monies requiredfor the project will be provided by UML if the monies are available. A Project will proceed only if the Scope ofWork, appropriate joint UML and MFIC personnel, a budget, and funds areavailable.

 

4.     Confidential Information: Proprietary Materials:Publications.

 

4.1.       Confidential information.

 

(a)     Designation. ConfidentialInformation that is disclosed in writing shall be marked with a legend (suchas, “Confidential” or “Proprietary”), indicating its

 

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confidential status. Confidential Informationthat is disclosed orally or visually shall be designated as such at the time ofits disclosure and shall be documented in a written notice prepared by theDisclosing Party and delivered as soon as possible to the Receiving Party butat latest****within thirty (30) days of the date ofdisclosure; the notice shall summarize the Confidential Information disclosedto the Receiving Party and reference the time and place of disclosure.

 

(b)     Obligations. During theterm of this Agreement and thereafter for a period of five (5) years, theReceiving Party shall (i) maintain all Confidential Information inconfidence, except that the Receiving Party may disclose or permit thedisclosure of Confidential Information to its directors, officers, employees,consultants, and advisors who are obligated to maintain the confidential natureof Confidential Information and who need to know Confidential Information forthe performance of the Research Project; (ii) use all ConfidentialInformation solely for the performance or furtherance of the Research Project;and (iii) allow its directors, officers, employees, consultants, andadvisors to reproduce the Confidential Information only to the extent necessaryfor performance of the Research Project, with all reproductions beingconsidered Confidential Information.

 

(c)     Exceptions. The obligations of the Receiving Party under Section 4.1.(b) abovedo not apply to the extent that the Receiving Party can demonstrate thatConfidential Information (i) was in the public domain prior to the time ofits disclosure under this Agreement; however this exception shall not apply to any specific information merelybecause it is included in more general non-confidential information, nor to anyspecific combination of information merely because individual elements, but notthe combination, are included in non-confidential information, (ii) entered the public domain after thetime of its disclosure under this Agreement through means other than anunauthorized disclosure resulting from an act or omission by the ReceivingParty; (iii) was independently developed or discovered by the Receiving Partywithout use of the Confidential Information, (iv) is or was disclosed tothe Receiving Party at any time by a third party having no fiduciaryrelationship with the Disclosing Party and having no obligation ofconfidentiality with respect to the Confidential Information; or (v) is,in the opinion of legal counsel to the Receiving Party required to be disclosedto comply with applicable laws or regulations, or with a court oradministrative order, provided that the Disclosing Party receives reasonable priorwritten notice of that disclosure in order to afford the Disclosing Party the opportunity, at election and expense of the Disclosing Party, to respond to suchrequest and /or to attempt to block such disclosure. Further, if suchdisclosure is compelled the Receiving Partyshall disclose only the minimum of the Confidential Information that isrequired to be disclosed to comply with such order, law or regulation.

 

(d)     Ownership and Return. TheReceiving Party acknowledges that the Disclosing Party (or any third partyentrusting its own information to the Disclosing Party) owns its ConfidentialInformation in the possession of the Receiving Party. Upon the expiration ortermination of this Agreement or at the request of the Disclosing Party, theReceiving party shall return to the Disclosing Party all originals, copies, andsummaries of documents, materials, and other tangible manifestations ofConfidential Information in

 

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the possession or control of theReceiving Party, except that the Receiving Party may retain one (1) copyof the Confidential Information in the possession of its legal counsel solelyfor the purpose of monitoring its obligations under this Agreement.

 

4.2.       Proprietary Materials.

 

(a)     Limited Use and Transfer.The Recipient shall use Proprietary Materials only for the performance of theResearch Project. The Recipient shall use the Proprietary Materials only incompliance with all applicable federal, state, and local laws and regulations.The Recipient shall not use the Proprietary Materials in any in vivo experimentson human subjects. The Recipient shall not transfer any Proprietary Materialsto any third party without the prior written consent of the Supplier.

 

(b)     Warranty Disclaimer. THESUPPLIER MAKES **NO** REPRESENTATIONS, AND EXTENDS **NO** WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITHRESPECT TO PROPRIETARY MATERIALS. THERE ARE **NO**EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULARPURPOSE, OR THAT THE USE OF PROPRIETARY MATERIALS WILL NOT INFRINGE ANY PATENTRIGHTS OR OTHER PROPRIETARY RIGHTS OF A THIRD PARTY.

 

(c)     The Recipient acknowledges that the Supplier (or any third partyentrusting its Materials to the Supplier) claims ownership of its ProprietaryMaterials in the possession of the Recipient. The Recipient agrees to cause itsemployees to execute and deliver any documents of assignment or conveyance toeffectuate the ownership rights of the Supplier in Proprietary Materials. Uponthe expiration or termination of this Agreement, the Recipient shall at theinstruction of Supplier either destroy or return any unused Proprietary Materials.

 

4.3.       Publications. Institutionand its employees may publicly disclose (through journals, lectures, orotherwise) the Research Results, provided that the Institution shall haveprovided a copy of the proposed disclosure to Sponsor at least sixty (60) daysprior to the submission of any written publication and at least thirty (30)days prior to any oral public disclosure (the “Review Period”) to allow Sponsorto determine whether any Invention or its Confidential Information would bedisclosed. The parties expressly agree that research grant proposals submittedto federal, state, or local agencies or non-profit organizations should not besubject to review under this Section. If Sponsor reasonably determines that theproposed disclosure would reveal an Invention or Sponsor ConfidentialInformation, then Sponsor shall notify Institution and the PrincipalInvestigator of the determination and its basis prior to the expiration of theReview Period. With respect to disclosure of an Invention, upon receipt oftimely notice by Sponsor, the Institution agrees to delay submission of thewritten publication or presentation of the oral public disclosure until one (1) ofthe following events occurs: (i) Sponsor and Institution agree that nopatentable Invention exists; (ii) Institution or Sponsor files a patentapplication claiming the relevant Invention pursuant to Article 5; (iii) Sponsorand Institution jointly agree upon deletions that prevent disclosure of anyInvention; or (iv) a period of sixty (60) days elapses commencing with theeffective date of notice to Institution. With respect to disclosure of SponsorConfidential

 

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Information, upon receipt of timely notice by Sponsor,the Institution shall use reasonable efforts to cause its employees to delete theConfidential Information from any proposed disclosure.

 

5.0        Intellectual Property.

 

The parties agree to the following:

 

5.1.       Assignment of Rights in Inventions and Project Materials. Either the Principal Investigator or theProject Manager, as appropriate, shall assign to Institution all rights inInventions and commercial rights in Project Materials. The PrincipalInvestigator shall certify that every person involved in the Research Projectshall have signed the University Participation Agreement, which assigns toInstitution all rights in Inventions and commercial rights in ProjectMaterials. Sponsor represents and warrants that all of its employees andconsultants who may be involved in the Research Project shall have agreedto assign to Sponsor all rights in Inventions and all commercial rights inProject Materials.

 

5.2.       0wnership of Patent Rights and Project Materials. In accordance with United States patent law,Institution shall have sole ownership of all Institution Patent Rights andInstitution and Sponsor shall have joint, undivided ownership of all JointPatent Rights. Institution shall have sole ownership of commercial rights inProject Materials not claimed in the Patent Rights; however, if a ProjectMaterial incorporates one or more Sponsor Proprietary Materials, Institution may notexploit commercial rights in that Project Material without the written consentof Sponsor.

 

5.3.       Notice of Inventions and Project Materials. The Principal Investigator or the ProjectManager, as appropriate, shall promptly disclose to Institution the conceptionor reduction to practice of any Invention and the development or discovery ofany commercially valuable Project Material that is not otherwise disclosed asan Invention. Institution and Sponsor shall provide prompt written notice tothe other of the internal disclosure by its employees of any Invention.Institution and Sponsor shall discuss whether to obtain Patent Rights for theInvention and whether the Patent Rights would constitute Institution Patent Rightsor Joint Patent Rights. Institution shall provide prompt written notice toSponsor of the internal disclosure of any commercially valuable ProjectMaterial that is not otherwise disclosed as an Invention.

 

5.4.       Responsibility for Patent Rights.

 

Subject to any Inter-Institutional Patent ManagementAgreement resulting from joint inventions, the following procedures will befollowed.

 

(a)     Primary Responsibility with Institution. Institution shall have primary responsibility for the preparation,filing, prosecution, and maintenance of all Institution Patent Rights, usingpatent counsel reasonably acceptable to Sponsor. Institution shall consult withSponsor as to the preparation, filing, prosecution and maintenance of PatentRights reasonably prior to any deadline or action with the United States Patent &Trademark Office or any foreign patent office and shall furnish Sponsor withcopies of all relevant documents reasonably in advance of such consultation.

 

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(b)     Cooperation. Institutionand Sponsor shall cooperate fully in the preparation, filing, prosecution, andmaintenance of all Institution Patent Rights and Joint Patent Rights.Cooperation includes, without limitation, (i) promptly executing allpapers and instruments or requiring employees of Institution or Sponsor toexecute papers and instruments as reasonable and appropriate so as to enableInstitution or Sponsor to file, prosecute, and maintain such Patent Rights inany country; and (ii) promptly informing the other party of matters that may affectthe preparation, filing, prosecution, or maintenance of any such Patent Rights.

 

(c)     Payment of Expenses.Within thirty (30) days after Institution invoices Sponsor for patent expensesrelated to Section 5.5 or from the Inter-Institutional Patent ManagementAgreement, Sponsor shall reimburse Institution for all reasonablepatent-related expenses incurred by Institution pursuant to Subsection 5.4(a).Sponsor may elect, upon sixty (60) days written notice to Institution, tocease payment of the expenses associated with obtaining or maintaining patentprotection of or one or more Patent Rights in one or more countries. In thatevent, Sponsor will lose all rights under this Agreement with respect to PatentRights in those countries.

 

5.5.       Optionfor Exclusive License. For work funded by the Sponsor, Institution grantsSponsor a first option to obtain aworldwide, royalty-bearing, exclusive license (with the right to sublicense)under its commercial rights in any Institution Patent Rights and Joint PatentRights in the Field (the “Option Right”). Sponsor may exercise the OptionRight with respect to a particular Patent Right by written notice toInstitution, which is received by Institution not later than sixty (60) daysafter the disclosure to Sponsor of the relevant Invention (the “Option Period”).If sponsor elects not to exercise the Option Right, or fails to exercise theOption Right during the Option Period, Institution is free to license itscommercial rights under the relevant Patent Right to any third party. IfSponsor does elect to exercise the Option Right, Institution and Sponsor shallnegotiate in good faith a license agreement containing commercially reasonableterms. Institution and Sponsor are unable to reach agreement within six (6) monthsafter Sponsor exercised the Option Right (the “Negotiation Period”),Institution may offer its commercial rights in the relevant Patent Rightto any third parties. However, for a period of one (l) year after theNegotiation Period expires, Institution may only offer those rights tothird parties on terms that are not more favorable than the last offer made byInstitution to Sponsor, unless Institution first provides Sponsor with writtennotice of the more favorable offer and Sponsor either (i) declines inwriting to accept the offer or (ii) fails to respond to the offer withinthirty (30) days alter receiving the notice.

 

5.6        Joint Inventions. In the case of joint inventions, the partiesagree to execute an Inter-Institutional Patent Management Agreement using theUniversity’s Agreement in which the following terms will apply:

 

•           For new product applications in the areas relatedto nanoemulsions, nanosuspensions, other formats involving drugs,nutraceuticals, coatings, etc., the Institution will be named as the patentmanager, will receive a fee of 15% for marketing and licensing these potentialinventions before patent expenses and will distribute to Sponsor 15% of therevenue, which sum shall paid from the Chancellor’s share.

 

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•           For new process improvements in MFZR and MMRtechnologies, related to materials, design, etc., the Sponsor will be named asthe patent manager, will receive a fee of 15% for marketing and licensing thesepotential inventions before patent expenses and will distribute 5% of theremaining applicable revenue to the Institution.

 

5.7        Use of Research Results****and****Project****Materials.****Each****party****may use****Research Results****for****any****purpose****and****to****use****Project****Materials****for****internal****research****(but****not****in****a commercial****product****or****in****connection****with****a commercial****service);****provided,****however,****that****in****the case****of****Sponsor,****the****use****does****not****infringe****any****claim****of****a patent****application****or****an****issued****patentincluded****in****the****Institution****Patent****Rights****for****which****Sponsor****has****failed****to****obtain****a license****as provided****in****Section 5.5.****above.****If****Sponsor****desires****to****obtain****a license****under****the****commercialrights****of****Institution****in****any****Project****Materials,****Institution****agrees****to****discuss****the****possibility****of granting****a license,****provided****that****commercial****rights****are****available****for****licensing****when****Sponsor makes****its****request.

 

5.8.       Copyrightable****Works.****Institution****or****its****employees****own****any****copyrighted****or copyrightable****works****(including****reports****and****publications)****that****are****created****by****Institution employees****in****the****performance****of****the****Research****Project.****Institution****and****the****Principal****Investigator hereby****grant****Sponsor****an****irrevocable,****royalty-free,****nontransferable,****nonexclusive****right****to****copy and****distribute****any****research****reports****furnished****to****Sponsor****under****this****Agreement****and****to****prepare, copy,****and****distribute****derivative****works****based****on****these****research****reports.

 

6.          Term****and****Termination.

 

6.1.**      **Term.****This****Agreement****commences****on****the****Effective****Date****and****remains****in****effect for****12****months,****unless****earlier****terminated****in****accordance****with****the****provisions****of****this****Agreement.

 

6.2.**     **Loss****of****Principal****Investigator.****If either the****Principal****Investigator orthe Project Manager shall leave Institution or otherwise terminates his or her involvement****in****the****Research****Project,****and****if****Institution****and****Sponsor****fail to****identity****a mutually****acceptable****substitute****as****provided****in****Section 2.****1.,****Sponsor****may terminate this****Agreement****upon****sixty****(60)****days****prior****written****notice****to****Institution.

 

6.3.**      **Termination****for****Default.****If****either****party****commits****a material****breach****of****itsobligations****under****this****Agreement****and****fails****to****cure****that****breach****within****sixty****(60)****days****afterreceiving****written****notice****thereof,****the****other****party****may terminate****this****Agreement****immediately****upon written****notice****to****the****party****in****breach.

 

6.4.      Force****Majeure.****Neither****party****will****be****responsible****for****delays****resulting****from****causes beyond****its****reasonable,****including****without****limitation****fire,****explosion,****flood,****war,****strike,****or****riot, Provided****that****the****non-performing****party****uses****commercially****reasonable****efforts****to****avoid****or****remove those****causes****of****nonperformance****and****continues****performance****under****this****Agreement****with reasonable****dispatch****whenever****the****causes****are****removed.

 

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6.5.**     **Effect****of****Termination.****The****following****provisions****survive****the****expiration****or termination****of****this****Agreement:****Articles****1,****4,****and****7;****Sections****2.3.****(obligation****to****deliver****final report),****3.2.****(obligation****to****deliver****final****accounting),****6.5,8.2.****8.3.,****8.5.,****8.****14.****And****8.****15.****In addition,****the****provisions****of****Article 5survive****termination****of****this****Agreement,****as****necessary****to effectuate****the****rights****of****Sponsor,****unless****Institution****has****terminated****this****Agreement****because****of****a material****breach****by****Sponsor****pursuant****to****Section 6.3.

 

7.          Dispute****Resolution.

 

7.1.**     **Procedures****Mandatory. The****parties****shall****resolve****disputes****arising****out****of****or****relating****to this****Agreement****solely****by****means****of****the****procedures****set****forth****in****this****Article.****These****procedures constitute****legally****binding****obligations****that****are****an****essential****provision****of****this****Agreement.However,****all****procedures****and****deadlines****specified****in****this****Article may be****modified****by****written agreement****of****the****parties.****If****either****party****fails****to****observe****the****procedures****of****this****Article,****as modified****by****their****written****agreement,****the****other****party****may bring****an****action****for****specificperformance****in****any****court****of****competent****jurisdiction.

 

7.2.**     **Dispute****Resolution****Procedures.

 

(a)     Negotiation.****If****there****is****a dispute****arising****out****of****or****relating****to****this Agreement,****the****affected****party****shall****notify the****other****party,****and****the****parties****shall****attempt****in****good faith****to****resolve****the****matter****within****ten**(10) **days****after****the****date****notice****is****received****(the****“Notice Date”).****Any****disputes****not****resolved****by****good****faith****discussions****shall****be****referred****to****senior executives****of****each****party,****who****shall****meet****at****a mutually****acceptable****time****and****location****within****thirty (30)****days****after****the****Notice****Date****and****attempt****to****negotiate****a settlement.

 

(b)     Mediation.****If****the****matter****remains****unresolved****within****sixty****(60)****days****after the****Notice****Date,****or****if****the****senior****executives****fail****to****meet****within****thirty****(30)****days****after****the****Notice Date,****either****party****may initiate****mediation****upon****written****notice****to****the****other****party,****whereupon****both parties****shall****be****obligated****to****engage****in****a mediation****proceeding****under****the****then****current****Center****for Public****Resources****(“CPR”)****Model****Procedure****for****Mediation****of****Business****Disputes, except that specific provisions of this Section overrideinconsistent provisions of the CPR Model Procedure. The mediator will beselected from the CPR Panels of Neutrals. If the parties cannot agree upon theselection of a mediator within ninety (90) days after the Notice Date, thenupon the request of either party, the CPR shall appoint the mediator. Theparties shall attempt to resolve the dispute through mediation until one of thefollowing occurs: (i) the parties reach a written settlement; (ii) themediator notifies the parties in writing that they have reached an impasse; (iii) theparties agree in writing that they have reached an impasse; or (iv) theparties have not reached a settlement within one hundred and twenty (l20) daysafter the Notice Date.

 

(c)     Trial Without Jury. If theparties fail to resolve the dispute through the procedures of this Article 7,or if neither party elects to initiate mediation, either party may pursueany other remedies legally available to resolve the dispute. However, theparties waive any right to a jury trial in any legal proceeding under thisSection.

 

7.3.      Preservation of Rights Pending Resolution.

 

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(a)     Performance to Continue.Each party shall continue to perform its obligations under this Agreementpending final resolution of any dispute arising out of or relating to thisAgreement. However, either party may suspend performance of itsobligations during any period in which the other party fails or refuses to perform itsobligations.

 

(b)     Provisional Remedies.Although the procedures specified in this Article 7 are the exclusive proceduresfor resolution of disputes arising out of or relating to this Agreement, eitherparty may seek a preliminary injunction or other provisional equitablerelief its reasonable judgment, that action is necessary to avoid irreparableharm to itself or to preserve its rights under this Agreement.

 

(c)     Statute of Limitations.The parties agree that all applicable statutes of limitation and time-baseddefenses (such as, estoppel and laches) will be tolled while the procedures setforth in Subsections 7.2. (a) and 7.2. (b) are pending. The partiesshall take any actions necessary to effectuate this result.

 

8.          Miscellaneous.

 

8.1.       Compliance with Law and Policies. Sponsoragrees to comply with applicable law and the policies of Institution in thearea of technology transfer, including the University of Massachusetts Policyon Conflicts of Interest Relating to Intellectual Property and CommercialVentures, the University of Massachusetts Intellectual Property Policy, and theUniversity of Massachusetts Policy on Faculty Consulting and Outside Activitiesand shall promptly notify Institution of any violation that Sponsor knows orhas reason to believe has occurred or is likely to occur.

 

8.2.       Indemnification.

 

(a)     Indemnity. Sponsor shallindemnify, defend, and hold harmless Indemnities against any liability, damage,loss, or expense (including reasonable attorneys fees and expenses oflitigation) incurred by or imposed upon any of the Indemnities in connectionwith any claims suits, actions, demands or judgments arising out of any theoryof liability (including without limitation actions in the form of tort,warranty, or strict liability and regardless of whether the action has anyfactual basis) relating to this Agreement or concerning any product, process,or service that is made, used, or sold pursuant to any right or license grantedunder this Agreement. However, indemnification shall not apply to anyliability, damage, loss or expense to the extent directly attributable to (i) thenegligent activities, gross, wanton or willful conduct or intentionalmisconduct of the Indemnitees or (ii) the settlement of a claim, suit,action, or demand by Indemnitees without the prior written approval of Sponsor.To the extent allowed by****law, institution shall indemnify Sponsoragainst any suit, claim or proceeding brought against Institution or Sponsor inwhich and to the extent that: (i) any alleged patent infringement arisesfrom the use by Institution, without advance written approval or consent ofSponsor, of a combination of the Sponsor’s MFZR or MMR equipment with productsnot supplied by Sponsor, (ii) any material violation of any affirmativecovenant or restriction including but not limited to not use the Proprietary Materials in any in vivo experiments onhuman subjects, non-****permitteddisclosure of Sponsors trade secrets and customer identities, or the use of .To the extent allowed by law, **i**nstitution shall indemnify and holdSponsor, its officers, directors and agents

 

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harmless in such suit, claim or proceeding and anydamages arising from any of the foregoing acts.

 

(b)     Procedures. To the extent allowed by****law**, a**nyof the Indemnities agree to provide the indemnifying party with prompt writtennotice of any claim, suit, action, demand, or judgment for which indemnificationis sought from the indemnifying party under this Agreement. the indemnifying partyagrees, at its own expense, to provide attorneys reasonably acceptable to Indemniteesto defend against a claim. To theextent allowed by****law,**t**he Indemnities shall cooperatefully with the indemnifying party in any defense and will permit theindemnifying party to conduct and control the defense and the disposition ofthe claim, suit, or action (including, all decisions relative to litigation,appeal, and settlement). However, **to theextent allowed by law,**any Indemnitee may retain its owncounsel, at the expense of the indemnifying party, if representation by thecounsel retained by the indemnifying party would be inappropriate because ofactual or potential differences in the interests of the Indemnitee and anyother party represented by that counsel. To the extent allowed by**law, t**heindemnifying party agrees to keep Indemnitees informed of the progress in thedefense and disposition of the claim and to consult with Indemnitees withregard to any proposed settlement.

 

8.3.       Publicity Restrictions.Sponsor shall not use the name of Institution or any of its trustees, officers,faculty, students, employees, or agents, or any adaptation of their names, orany terms of this Agreement in any promotional material or other publicannouncement or disclosure without the prior written consent of Institution.The foregoing notwithstanding, Sponsor shall have the right to disclose thatinformation without the consent of Institution in any prospectus, offeringmemorandum, or other document or filing required by applicable securities lawsor other applicable law or regulation, provided that Sponsor gives Institutionat least ten(lO) days prior written notice of the proposed text for the purpose of allowingInstitution to comment on the text.

 

8.4.       Warranty Disclaimer.Institution makes no express warranties and disclaims any implied warranties asto any matter relating to this Agreement, including without limitation theperformance or results of the Research Project; the availability of legalprotection for any Research Results, Project Materials, Inventions,copyrightable works, or any other product of the Research Project; or thevalidity or enforceability of any Patent Right that may be obtainedpursuant to this Agreement. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OFMERCHANTABILTTY OR FITNESS FOR A PARTICULAR PURPOSE FOR ANY PROJECT MATERTALSOR RESEARCH RESULTS, OR THAT THE USE OF PROJECT MATERIALS OR RESEARCH RESULTSWILL NOT INFRINGE ANY PATENT RIGHTS OR OTHER PROPRIETARY RIGHTS OF A THIRDPARTY.

 

8.5.       Notice to Other Investigators. The Principal Investigator shall furnish all investigators involved inthe Research Project, including faculty, staff, students, and postdoctoral fellows,with written notice of their obligations under Articles 4 and 5 of thisAgreement.

 

8.6.       Research Partially Funded by Grants.

 

(a)     Federal Government. To theextent that any Invention has been funded by the federal government, thisAgreement and the grant of any rights in that Invention is subject to

 

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and governed by federal law asset forth in 35 U.S.C. 9~ 201-21 i, and the regulations promulgated thereunder,as amended, or any successor statutes or regulations. If any term of thisAgreement fails to conform to those laws and regulations, the relevantterm shall be invalid and modified by the parties pursuant to Section 8.16.

 

(b)     Other Organizations. Tothe extent that any Invention has been partially funded by a non-profitorganization or state or local agency, this Agreement and the grant of anyrights in that Invention is subject to and governed by the terms of theapplicable research grant. If any term of this Agreement fails to conform tothose terms, the relevant term shall be deemed an invalid provision andmodified by the parties pursuant to Section 8.16. At the request ofSponsor, Institution shall make available to Sponsor the terms of any researchgrants that will partially fund the Research Project.

 

8.7.       Tax-Exempt Status. Sponsoracknowledges that Institution, as a public institution of the Commonwealth ofMassachusetts, is an exempt organization under the United States InternalRevenue Code of 2986, as amended. Sponsor also acknowledges that certainfacilities in which the Research Project may be performed were financedthrough offerings of tax-exempt bonds. If the Internal Revenue Servicedetermines, or if counsel to Institution reasonably determines, that any termof this Agreement jeopardizes the tax-exempt status of Institution or the bondsused to finance Institution facilities, the relevant term or provision thereinshall be invalid and modified by the parties pursuant to Section 8. 16.

 

8.8.       Relations, Parties. Eachparty is an independent contractor and not an agent or employee of the otherparty. Neither party may make any statements, representations, orcommitments of any kind, or take any action, which is binding on the otherparty, except as may be explicitly provided for in this Agreement orauthorized in writing by the other party.

 

8.9.       Counterparts. This Agreement may be executed in one or more counterparts, eachof which is deemed an original, and all of which together are deemed to be oneand the same instrument.

 

8.10.     Headings. All headings arefor convenience only and do not affect the meaning of any provision of thisAgreement.

 

8.11.     Binding Effect. ThisAgreement is binding upon and inures to the benefit of the parties and theirrespective permitted successors and assigns.

 

8.12.     Assignment. This Agreementmay not be assigned by either party without the prior written consent ofthe other party, except that Sponsor may assign this Agreement to anaffiliate or to a successor in connection with the merger, consolidation, orsale of all or substantially all of its assets or that portion of its businessto which this Agreement relates.

 

8.13.     Amendment and Waiver. ThisAgreement may be amended, supplemented, or otherwise modified only bymeans of a written instrument signed by both parties. Any waiver of any rightsor failure to act in a specific instance shall relate only to that instance andshall not be construed as an agreement to waive any rights or fail to act inany other instance, whether or not

 

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similar.

 

8.14.     Governing Law. ThisAgreement shall be governed by and construed in accordance with the laws of theCommonwealth of Massachusetts irrespective of any conflicts of law principles.

 

8.15.     Notice. Any noticesrequired or permitted under this Agreement shall be in writing, shallspecifically refer to this Agreement, and shall be sent by hand confirmed inwriting, recognized national overnight courier, confirmed facsimiletransmission, confirmed electronic mail, or registered or certified mail,postage prepaid, return receipt requested, to the following addresses orfacsimile numbers of the parties:

 

If to Institution:

 

Office of Commercial Ventures and Intellectual PropertyUniversity of Massachusetts Lowell

600 Suffolk Street, 2nd Floor South

Lowell, MA 01854

 
| Attention: | Louis J. Petrovic     |
|------------|-----------------------|
| Title:     | Director, CVIP/Lowell |
| Tel:       | 978-934-2577          |
| Fax:       | 978-934-4043          |

 

If to Sponsor:

 
| MFIC Corporation      |
|-----------------------|
| 30 Ossipee Road       |
| Newton, MA 02464-9101 |
| Attention:            | Irwin  J. Gruveman, P.E. |
| Title:                | Chairman &  CEO |
| Tel:                  | 617-969-5452 |
| Fax:                  | 617-965-1213 |

 

All notices under this Agreement are effective uponreceipt. A party may change its contact information immediately uponwritten notice to the other party in the manner provided in this Section.

 

8.16.     Severability. In the eventthat any provision of this Agreement: (i) is held invalid or unenforceablefor any reason, or (ii) jeopardizes the tax-exempt status of Institutionor the bonds used to finance Institution facilities under circumstances set forthe in Section 8.7, the invalidity, unenforceability, or offendinglanguage or provision shall not affect any other provision of this Agreement,and the parties shall negotiate in good faith to modify the Agreement topreserve (to the extent possible) their original intent. If the parties fail toreach a modified agreement within sixty (60) days after the relevant provisionis held invalid or unenforceable, then the dispute shall be resolved accordingto Article 7. While the dispute is

 

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pending resolution, this Agreement shall be construed asif the provision were deleted by agreement of the parties.

 

8.17.     Entire Agreement. ThisAgreement constitutes the entire agreement between the parties with respect toits subject matter and supersedes all prior agreements or understandingsbetween the parties relating to its subject matter.

 

The parties have caused this Agreement to be executed bytheir duly authorized representatives as of the date first written above.

 
| UNIVERSITY OF MASSACHUSETTS, |
|------------------------------|
| LOWELL                       |
|                         |
|                         |
| By:                          |   |   |
|                         | William Hogan |
|                         | Chancellor |

 
| MIFC CORPORATION |
|------------------|
|             |
|             |
| By:              |   |   |
|             | Irwin J. Gruveman, P.E. |
|             | Chairman & CEO |

 

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**Exhibit A**

 

The UML Nanomanufacturingresearch initiative will investigate in a series of research projects thesizing, encapsulation, reaction, and other potential applications of Microfluidizer**®**technology. Initial projects will be focused on the Sponsor’sMicrofluidizer**®** Processor (MFZR) and Microfluidizer®Mixer/Reactor (MMR) technologies.

 

Projectsfor this research collaboration will be chosen after review of an AdvisoryCommittee composed of Dr. Julie Chen, Dr. Robert Nicolosi and oneother Institution faculty representative and two Technical Representatives of Sponsor.

 

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**Exhibit B**

 

For this researchcollaboration, Sponsor will:

 

1.       Consign an MMRlab system to be installed and located at UML.

 

2.       Train users,consult on proposed uses, and advise on development.

 

3.       Share MMRtechnology and MFZR technology/database subject to the confidentiality terms ofthis Research Collaboration Agreement.

 

4.       Developchamber design and optimization technology, and optimize process and post-processprocedures, both general and specific, jointly with UML research investigators.

 

5.       If additionalMFZR and MMR equipment is needed, it will be provided at 70% of best thirdparty price. Acquisition is dependent on UML’s ability to pay for the equipment.

 

6.       For eachproject recommended by the Advisory Committee that is specifically orientedtowards Sponsor’s research objectives, Sponsor will bear the first $3,000 foreach discrete project. Any further monies needed will be provided by UML if themonies are available**.**Sponsor’scommitment to fund $3000 for recommended discrete projects in any twelve monthperiod shall be capitated at $36,000. Sponsor shall not be obligated to fundadditional projects in such timeframe, except as Sponsor in its sole discretionshall deem reasonable and appropriate.

 

7.**      **Sponsor will supportUML’s efforts to obtain funding from Federal, Massachusetts, Foundation, andcommercial (strategic partner) sources. Such support could be in the form ofsubcontract, consignment of equipment, matching funds, in kind contributions,and other as required on a case by case basis, but only to the extent thatSponsor, in its sole discretion, shall determine is reasonable and warrantedunder the circumstances.

 

8.       When needed, Sponsorwill provide marketing inputs needed and required by the Advisory Committee andundertaken by various units (CVIP, College of Management, other) of UML. Suchmarketing inputs shall be provided in such reasonable amounts and at such timesas shall be reasonably convenient to MFIC as shall not unduly interfere with Sponsor’sbusiness, in Sponsor’s sole judgment.

 

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**Appendix C**

 

**MFIC(Sponsor) Value Contribution to Research Collaboration Agreement**

 

MFICCorporation, together with its subsidiary,****MicrofluidicsCorporation, collectively “Sponsor”, has been in discussions since the summer,2004 with the University of Massachusetts Lowell (the “University”) regardingthe proposed Research Collaboration. During this period of time, Sponsor hasdevoted considerable time and attention to identifying and evaluating key termsand conditions to meet the University’s objectives in this collaboration.

 

As an indication of goodfaith and seriousness regarding the proposed Research Collaboration, Sponsorhas already committed and proposes to commit significant monetary value andresources, including but not limited to:

 

1.     A Microfluidizer®processor, valued at almost $100,000 has already been on loan to ProfessorRobert Nicolosi. This Microfluidizer processor resides in Dr. Nicolosi’slab on the University’s South Campus.

 

2.     Sponsor hasalready supported the ongoing operation of the Microfluidizer****processor in Dr. Nicolosi’s lab, including provisionof technical support, spare parts and service support. This work to date isvalued at ~$10,000.

 

3.     As part ofthe proposed future Research Collaboration, Sponsor has already agreed toprovide one of only two state-of-the-art MMR systems, equipped with dual feedand chamber capability. The MMR has a current value of over $350,000 and Sponsorhas agreed to having this MMR system physically reside on the campus of theUniversity.

 

4.     In support ofthe MMR system on campus at the University, Sponsor has also agreed to supportwith technical capability, spare parts and service to ensure full andcontinuous operation of the MMR system. This service component offering if soldcommercially has a value of ~10% or $35,000 of the MMR system’s sale value over2005.

 

5.     The proposedResearch Collaboration calls for the formation, assembly and participation ofkey members of both Sponsor and University to identify and evaluate ongoingresearch and development product applications using both Sponsor’sMicrofluidizer processor and the MMR system. To this end, senior management at Sponsorare anticipating spending some days per month ensuring that the ResearchCollaboration is proceeding according to the agreed to plan, milestones andtimeframe. We estimate the monetary value of this personnel effort andcontribution by Sponsor to be worth in excess of $50,000 over 2005. Suchvaluation of Sponsor’s contribution is predicated upon the appropriateexpenditure of time to the Research Collaboration activities by MFIC’s VicePresident of R&D, Dr. Thomai Panagiotou.

 

Therefore, we estimate Sponsor’smonetary value to the Research Collaboration to be in excess of $545,000, andduring 2005, in excess of the likely time and materials effort on the part ofthe University.

 

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