RESEARCH

COLLABORATION AGREEMENT

This Agreement made as of the 12thday ofNovember2003 among:

MATERIALS AND MANUFACTURING ONTARIO
        
                    (herein called "MMO")

-and-

MICROMEM TECHNOLOGIES INC.
        
                    (herein called "Industry Participant")

- and -

THE GOVERNING COUNCIL OF THE UNIVERSITY OF TORONTO
                   
        
        (herein called "University")

- and -

Dr. Francis Dawson
        (herein called the "Researcher")

WHEREAS the Researcher is employed by the University as a
professor and principal investigator and is entitled to participate in research
projects funded in whole or in part by MMO in accordance with the terms of the
University Collaboration Agreement between MMO and the University effective as
of January 1, 1998, (the University Collaboration Agreement).

AND WHEREAS the Researcher has prepared and submitted a
project proposal entitled

AND WHEREAS the parties have agreed to proceed with the Proposal and wish to
set out their respective rights and obligations with respect thereto;

LIAISON PERSONNEL

|MMO LIAISON:                  | Dr. Bradley Fox   
|----------------------------- | ------------------
|                              |                   
|INDUSTRY PARTICIPANT LIAISON: | Mr. Manoj Pundit  
|                              |                   
|PROJECT LEADER:               | Dr. Francis Dawson

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                            | 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | 
|    | NOW THEREFORE for valuable consideration the parties agree as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | For the purpose of this Agreement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(a) | "Technology" shall mean any technology, invention,
    formula, method, development, computer software (including source code and
    all related documentation), process, know how, pattern, machine, device
    manufacture, composition of material, compilation of information, data,
    database or any improvement thereof, and including all related intellectual
    property rights such as patents, copyrights, trade secrets, trade-marks and
    other proprietary rights, which was, in whole or in part, conceived or
    reduced to practice using funds provided by MMO under this Agreement. In
    those cases where Industry participants are involved or there are
    pre-existing rights, only that portion of the intellectual property
    supported by funds contributed by the MMO will be Technology.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(b) | "Proposal" means the final written project proposal
    dated December 4, 2002 and submitted to MMO by the Researcher with respect
    to the project entitled "Development of a Hall Effect Sensor for Magnetic
    Memory Devices"(MMO Project #EE40103) including schedules thereto, all
    as may be amended from time to time by agreement of the parties hereto;                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(c) | "Project" means the project outlined in, and to be undertaken
    pursuant to, the Proposal;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(d) | "Net Revenue" means gross revenues received by MMO
    from sublicensing the Technology less all costs of sublicensing, including,
    but not limited to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                           
|    | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | application for, prosecution and maintenance of letters patent;                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                           
|    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | fabrication of prototypes and production of samples;                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                           
|    | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | identifying sublicensees and negotiating sublicense
            agreements including the legal costs associated therewith.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(e) | "Confidential Information" shall mean the
    confidential business or technical information of a party hereto that is
    identified as such in writing at the time of its disclosure or identified
    orally at the time of its disclosure, minuted and confirmed in writing
    within two weeks of the oral identification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



The provisions of the University Collaboration Agreement, to
the extent the same do not conflict with the provisions of this agreement, shall
apply to the Project and bind the Researcher, the University and MMO in respect
thereof in accordance with its terms. In the event of a conflict between the
provisions of the University Collaboration Agreement or Proposal and the
provisions of this Agreement, the provisions of this Agreement shall prevail to
the extent of such conflict.



PART A - THE PROJECT

Al.         Each of the parties hereto accepts the Proposal and
subject to the terms and conditions hereof agrees to participate in the Project
as contemplated by the terms of the Proposal. Payment to the University will be
made through MMO accounts set up at the University. Payments will be made in the
same manner as payments are made for all other MMO accounts.

A2.         The contributions of the respective parties to the
Project shall be in accordance with the Proposal, except that the cash
contribution by the Industry Participant shall be as specified in paragraph two
of this clause. Continued funding by MMO pursuant to the Proposal is conditional
on satisfactory progress with respect to the milestones, as determined by MMO.
Continued funding by Micromem pursuant to the Proposal is conditional on
satisfactory progress with respect to the milestones, as determined by Micromem
and the Researcher. The parties agree to provide such records and other
assurances as may be reasonably requested by any party hereto as evidence of
their respective contributions.

Industry Participants cash contribution, + 7% G.S.T., will be
payable to MMO in installments in advance, against invoices provided by MMO. Of
the total amount of $162,000.00, $81,000.00+ 7% G.S.T. will be billed to
Industry Participant once the contract has been signed by all parties and issued
and will be payable within 30 days of receipt by Micromem. The balance as
follows: an invoice for $81,000.00 + 7% G.S.T. to be issued on the one-year
anniversary date of the execution of this Research Collaboration Agreement and
will be payable within 30 days of receipt by Micromem.

A3.         In addition to the contributions of the parties outlined
in the Proposal, during the term of the Project MMO shall provide ongoing
project management services including an annual review of the progress with
respect to the agreed upon milestones.

A4.         Each of the parties agree to co-operate with respect to
the successful completion of the Project provided that in the event any of the
parties fails to comply with its contribution obligations outlined in paragraph
A2 above and such failure is not remedied within forty-five (45) days after a
request to do so has been made, in addition to any other rights or remedies that
may be available at law or in equity, the other parties or either of them may
withdraw from the Project and their obligations with respect thereto. In no
event shall a party be liable for damages if the Project results are not
successful or commercially useful provided they have acted in good faith and
with due diligence in the performance of their obligations under the Proposal.

A5.         Notwithstanding paragraph A4 above, in the event that at
any time during the currency of the Project Ontario government funding to MMO is
at any time suspended, revoked or terminated and MMO is then unable to provide
the contributions contemplated hereby, MMO shall be released from its
obligations hereunder and shall not be liable for any damages arising therefrom,
provided however that the University will be compensated for appropriate costs
incurred and commitments made hereunder to the date of such suspension,
revocation or termination.

A6.         The Project Leader will provide a final report of this
Collaborative Project to MMO and to Industry Participant within 60 days after
the completion of the project as described above, or as modified for reasons of
delays beyond the control of the University, but as restated.

A7.         Subject to clauses A3 and A4 above, the duration of the Project shall be
24 months.

PART B - OWNERSHIP IN THE TECHNOLOGY

B1.         Researcher warrants that he is and will continue to be
the project leader and a potential inventor of the Technology. Researcher agrees
to ensure that every participant and potential inventor in the Project shall
execute and deliver to MMO an acknowledgement in the form attached as Schedule
"A". Ownership in the Technology shall be dealt with in accordance with the
University Inventions Policy and the University Collaboration Agreement.

B2.         Researcher and/or the University covenant and agree to
indemnify MMO and/or the Industry Participant from and against any claims,
demands, liability, costs or expenses which either of them may suffer or incur
arising from, out of or in connection with controversy or dispute among the
participants in the Project with respect to the issue of inventorship or
ownership of the Technology.

B3.         The parties jointly and severally agree to co-operate
fully with a view to the commercial exploitation of the results from the
Project, which shall include the following obligations to be performed as
required (without reimbursement or remuneration):

| | (i)   | maintaining complete and accurate records
          detailing thestages, procedures and personsinvolved in
          theProject and make such records available to MMO upon
          request;                                                                                                                             
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                            
| | (ii)  | providing to MMO full and true disclosure of all aspects of
          and particulars relating to the Project;                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                            
| | (iii) | responding to reasonable requests from MMO for further
          clarification or particulars relating to the Project;                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                            
| | (iv)  | executing and delivering all documents or
          other assurances as may be necessary to file and prosecute letters
          patent or other intellectual property rights relating to the Project
          and assisting if necessary with any written or verbal responses or
          presentations related thereto;
| |       |                                                                                                                                                                                                                                                                                                                            
| | (v)   | providing reasonable assistance to MMO to
          support MMO's commercialization activities for the Technology.                                                                                                                                                                                                         

B4.         University and Researcher hereby grant to MMO the
exclusive right to obtain a worldwide exclusive license to grant sublicenses of
the Technology. In consideration for such license, MMO agrees to pay to the
University, for and on behalf of all inventors and owners of the Technology, two
thirds of all Net Revenue received by MMO in connection with the sublicense of
such Technology. This grant and license applies to all applications of the
Technology and any Improvements thereto. Any arrangements for revenue sharing
between the Researcher, the University and/or any other inventors or owners
shall be made directly between such parties. The University and the Researcher
reserve the right to use the Technology for research and educational purposes
subject to paragraph B5.



B5.         (a)     The purpose of the Project is to foster
university-industry collaboration and to promote research for the creation of
new knowledge. Accordingly, the parties accept and agree that it is their mutual
interest and intention to publish and disseminate the results of the Project in
the scientific literature and at scientific conferences as part of their joint
interests to contribute to knowledge in the field. The parties accept that there
will not be any restriction to such publication or disclosure and affirms that
there shall not be any restriction on the publication of any thesis prepared and
submitted by any graduate student in partial fulfilment of University degree
requirements or other communications submitted for the purpose of academic
evaluation of the graduate student or Researcher.



(b)     The Researcher will give written notice to MMO, the
Industry Participant and the University at least thirty (30) working days in
advance of any public disclosure of research or development results, data or
technical information relating to the Technology, to provide MMO and the
Industry Participant with the opportunity to review the results of the Project
for potential business benefits or commercialization and to ensure that
Confidential Information has not been included. MMO and the Industry Participant
shall have twenty (20) working days from receipt of the notice to respond to the
University. The failure of either MMO or the Industry Participant to respond
shall be deemed to be its respective approval of the disclosure. If MMO elects
to file for protection of the Technology, the Researcher will delay publication
or disclosure for a period of sixty (60) days from the receipt of MMO's written
request. Subject to the foregoing, the Participant may publish and disclose the
Technology and research results arising from the performance of the Project and
shall acknowledge the support of MMO and the Industry Participant in all such
publications.



PART C - INDUSTRY PARTICIPANT RIGHTS

C1.         Provided that the Industry Participant is in compliance
with the provisions of this Agreement, the Industry Participant shall have the
first right to an exclusive, world-wide and perpetual sub-license
("Sub-License") for the use of any Technology with a Royalty ("Royalty) payable
to MMO as set forth in sections C2 and C3 below. The Industry Participant must
exercise such right within **** months of the completion of the Project by
notice in writing to the other parties. The parties shall finalize and execute
an agreement in writing for the SubLicense within **** months of such notice on
the terms set forth in this agreement.

C2.         The Royalty shall constitute an annual royalty of: (i)
****% of those revenues ("Product Revenues") of the Industry Participant that
are directly and specifically allocable to the sale of products incorporating
the Technology by the Industry Participant; and (ii) a percentage to be
negotiated, but which in no event shall exceed ****%, of those revenues
("Sub-license Revenues") of the Industry Participant that are directly and
specifically allocable to the sublicense of the Technology by the Industry
Participant (with consideration being given to costs incurred by the Industry
Participant directly related to the sub-license or sub-licenses of the
Technology). The Royalty rate shall decrease to ****% immediately when the
aggregate of all royalties and license fees (including those described in
section C3 below) paid to MMO by the Industry Participant in respect of this
project equals $****. The Industry Participant's obligation to make any Royalty
payments shall cease in respect of sales or sub-licenses entered into following
the expiry of any patents issued in Canada or the United States in connection
with the Technology.

_________________________*Material contained at this place in the document has been
omitted pursuant to a request for confidential treatment and such material has
been separately filed with the Securities and Exchange Commission.

C3.         There will be no other fees or charges payable by the
Industry Participant to any party in order to maintain the License in good
standing in addition to the Royalty payments set forth in section C2 above,
except that Industry Participant shall pay MMO a license fee of $**** at the end
of each year commencing the **** year following execution of the License
agreement. Industry Participant will receive credit toward the $**** license fee
in respect of a year for: (i) any Royalty payments made in respect of the year,
and (ii) any legal or other costs incurred during such year in protecting all
intellectual property associated with the Technology to a maximum of $**** per
year.

C4.         Permitted uses of the Technology under the License shall
consist of the use, development, design, manufacture, license, sub-license and
sale of **** and **** devices incorporating the Technology or any portion of the
Technology exclusively throughout the world.

C5.         For further clarity, it is agreed that nothing in this
Agreement nor any document or agreement referenced in this Agreement conveys any
rights or interests in Micromem's Background Technology from Micromem and/or its
affiliates to the other parties to this Agreement, and that Technology shall
exclude Micromem's Background Technology.

C6.         In the event that, within **** days of completion of
development of the Technology or any portion of the Technology that is
patentable, MMO does not make an application for patent in respect of the same,
Industry Participant shall have the exclusive right to file patent applications
in respect of the same in such jurisdictions as it deems necessary. The
Researcher and such other persons who are by law deemed to be inventors of the
Technology shall be named as the inventor or inventors under any patent
application in respect of the Technology. Upon request from one of Industry
Participant and MMO to the other, the other party shall certify forthwith in
writing whether a patent application has been or will be made for a particular
Technology or portion of the Technology in each jurisdiction named in the
request.

"Micromem's Background Technology" means any technology,
invention, formula, method, development, computer software (including source
code and all related documentation), process, know how, pattern, machine, device
manufacture, composition of material, compilation of information, data, database
or any improvement thereof, and including all related intellectual property
rights such as patents, copyrights, trade secrets, trade-marks and other
proprietary rights, which are, in whole or in part, conceived or reduced to
practice by or on behalf of the Industry Participant and/or its subsidiaries and
affiliates without using funds provided by MMO under this agreement.

_________________________*Material contained at this place in the document has been
omitted pursuant to a request for confidential treatment and such material has
been separately filed with the Securities and Exchange Commission.

PART D - GENERAL

Dl.         (a)     The parties may disclose Confidential Information one
to another to facilitate work under this Agreement. Such information shall be
safeguarded and only disclosed to persons with a need to know within the
University, MMO and the Industry Participant. All parties shall use their best
efforts to protect such information from disclosure to third parties not bound
by relevant nondisclosure agreements.



(b)     The obligation to keep confidential shall however not
apply to information which:

(i)     is already known to a third party to whom it is disclosed;

(ii)     becomes part of the public domain without breach of this
        Agreement;

(iii)     is obtained from third parties which have no confidentiality
        obligations to the contracting parties; or,

(iv)     is authorized for release by the disclosing party.



(c)     Each party shall take all proper measures, and at least
the same measures as it takes in respect of its own Confidential Information, to
keep confidential the Confidential Information provided to it by another party.
No party shall use another party's Confidential Information for any purpose
except that for which it was initially provided to the party. The University
shall have all persons involved with the Project sign research participant
agreements in the form attached as Schedule "A".

(d)     Each party hereto accepts and agrees that this term of
confidentiality shall persist for a period of five (5) years after the
completion or termination of this Agreement. Upon completion or termination of
this Agreement, each party that has received confidential information or
material during the course of the Agreement shall, upon written request, return
such confidential information and material to the other and shall not retain
copies or transcripts thereof for any purpose whatsoever.



D2.         The failure of either party to exercise their rights
herein upon the occurrence of any breach by the other party of its obligations
shall not in any event constitute a waiver of such rights if any such breach by
the other party should reoccur.

D3.         This Agreement and all its rights and privileges
hereunder may not be assigned by any party without the prior written consent of
the others. This Agreement and everything herein contained shall inure to the
benefit of and be binding upon each of the parties hereto and upon their
respective successors and permitted assigns.

D4.         This Agreement shall be construed in accordance with the
laws of the Province of Ontario.



D5.         (a)     The parties shall use their best efforts to settle in
a fair and reasonable manner any financial or business dispute arising in
connection with this Agreement. If such dispute cannot be settled by the parties
between themselves, it shall be first submitted to mediation by a mediator
chosen jointly by the parties.

(b)     In the event that mediation does not bring a resolution
of the dispute within thirty (30) days, the dispute shall be submitted to
arbitration before a single arbitrator pursuant to the Arbitration Act of
Ontario and the schedules thereto (as amended from time to time). Any such
arbitration will be subject to the rules set forth in Schedule "E" of the
University Collaboration Agreement.

D6.         In no event shall any of the parties hereto be liable to
each other for any indirect, special or consequential damages, including loss of
profit, arising from or in connection with the breach, non-performance or
termination of this Agreement or any of the rights or obligations arising
hereunder.



D7.         The parties are not and shall not be considered to be
joint venturers, partners or agents of each other and neither of them shall have
the power to bind or obligate the other except as set forth in this Agreement.
The parties mutually covenant and agree that neither shall they, in any way,
incur any contractual or other obligation in the name of the other, nor shall
they have liability for any debts incurred by the other.



D8.         All notices, demands or other communications required to
be made or given pursuant to the terms of this Agreement shall be in writing and
shall be delivered personally, by courier or by prepaid first class post, to the
parties at their respective addresses as hereinafter set out, or such other
addresses as the parties may subsequently advise in writing. Any notice, demand
or other communication mailed shall be deemed to be received either:

| | (i)   | if mailed, then on the fifth (5th) day of business next following
        that date of mailing;                                                               
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                               
| | (ii)  | if delivered personally, then on the actual day of delivery; or                                                                                               
| |       |                                                                                                                                                               
| | (iii) | if delivered by courier, then on the second (2nd) day of
        business next following the date the same was delivered by the sender to
        the courier.

In the event that the postal services shall be disrupted due
to strike, lockout or otherwise, all notices, demands or other communication
shall be delivered personally or by courier. The following shall be the
addresses for the delivery of notices to each of the parties:





|(a) | MMO:                              | Materials and Manufacturing Ontario
|--- | --------------------------------- | -----------------------------------
|    |                                   | 2655 North Sheridan Way            
|    |                                   | Suite 250                          
|    |                                   | Mississauga, Ontario               
|    |                                   | L5K 2P8                            
|    |                                   | Attention: Mr. J.G. Clarke         
|    |                                   | President & CEO                    
|    |                                  
|(b) | Industry Participant:            
|    |                                   | Micromem Technologies Inc.         
|    |                                   | 777 Bay Street, Suite 1910         
|    |                                   | Toronto, Ontario                   
|    |                                   | M5G-2E4                            
|    |                                   | Attention: Mr. Manoj Pundit        
|    |                                   | Executive Vice President           
|    |                                  
|(c) | University: University of Toronto
|    |                                   | Research Services                  
|    |                                   | 27 King's College Circle           
|    |                                   | Toronto, Ontario                   
|    |                                   | M5S lAl                            
|    |                                   | Attention: Ms. Gillian Pearson     
|    |                                   | Contracts Officer                  
|    |                                  
|(d) | Researcher: Dr. Francis Dawson   
|    |                                   | Dept. of Electrical & Computer Eng.
|    |                                   | University of Toronto              
|    |                                   | Sandford Fleming Building          
|    |                                   | 10 King's College Road             
|    |                                   | Toronto, Ontario                   
|    |                                   | M5S 3G4                            



or to such other address as the addressee may have specified in prior written
notice to the addressor.

IN WITNESS WHEREOF the parties hereto have executed this Agreement.

|       |  | For University: |  |                                                                                                                                                            
|------ |  | --------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                 |  |                                                                                                                                                            
|       |  | "signed"        |  | Peter B. Munsche Assistant
                        Vice-President Technology
                        Transfer
                        University of Toronto
|(date) |  | (signature)     |  | (title)                                                                                                                                                    



|For Materials and Manufacturing Ontario:
|----------------------------------------
|                                        
|(date)                                  



|For Industry Participant:
|-------------------------
|                         
|(date)                   

For Project Leader:

ACKNOWLEDGEMENT:

I, the project leader, having read this Agreement, hereby
agree to act in accordance with all the terms and conditions herein and further
agree to ensure that all university participants are informed of their
obligations under such terms and conditions.

|Nov 4 03 | "signed"   
|-------- | -----------
|(date)   | (signature)







Schedule "A"

RESEARCH PARTICIPANT AGREEMENT

THIS AGREEMENT is made the 12day of November,
2003 between Materials and Manufacturing Ontario (the "Centre"), the University
of Toronto (the "University"), Dr. Francis Dawson (the "Project Leader") and Dr.
Harry Ruda (the "Participant(s)") with respect to the project entitled "Development of a Hall Effect Sensor for Magnetic Memory Devices"(MMO
Project #EE40103).

WHEREAS:

(a)     the Centre and the University are parties to a University Collaboration
Agreement dated January 1, 1998 (the "UC Agreement"), under which the Centre
will provide funding to the University to carry out certain research projects
("University Projects"), while the Centre ensures the commercialization of the
intellectual property emanating from such projects in collaboration with the
University where appropriate;

(b)     the Participant is associated with the University and will be involved in
University Projects; and

(c)     it is a condition of the UC Agreement that the
    Participant signs this Agreement.

NOW THEREFORE, in consideration of the mutual promises set forth in this
Agreement, the parties hereto agree as follows:

1. UNIVERSITY PROJECT

The research participant will, on a best efforts basis, strive to achieve the
objectives and deliverables defined in the University Project proposal.

2.     INTELLECTUAL PROPERTY

(a) Ownership. Centre Intellectual Property shall be
owned by the Inventor(s), subject to any existing obligations to transfer
assignable rights arising from the relevant policies of the University, and
subject to the terms of this Agreement. If the Participant owns the Centre
Intellectual Property, the Participant may assign the rights in Centre
Intellectual Property to the Centre or the University upon the agreement between
the Participant and the Centre if assigned to the Centre, and between the
Participant and the University if assigned to the University. The Participant
represents and warrants that he/she has notified in writing the University and
the project leader for the University Project of any pre-existing rights that
would interfere with the commercialization of intellectual property arising from
the University Project.



(b)    Commercialization. Unless the Participant is
otherwise notified in writing by the Centre, the Centre shall be responsible for
ensuring the commercialization of the Centre Intellectual Property, in
collaboration with the University where appropriate. To this end, the Centre
shall have and the Participant hereby grants to the Centre the exclusive rights
'to obtain a world-wide, exclusive, royalty-free, fully paid-up license to make,
use, reproduce, sell, modify and sub-license (with a right to further
sub-license) Centre Intellectual Property. These rights shall be subject to a
license agreement consisting of standard terms and negotiated special terms as
outlined in Schedule "F" to the UC Agreement. This license shall be perpetual
and irrevocable subject to the conditions as set out in Schedule "F" to the UC
Agreement. The perpetual terms of the license may be withdrawn and the license
revoked upon reasonable notice of the Owner(s) if the Centre fails to pursue
commercialization of a particular Centre Intellectual Property within a
reasonable time. The University shall retain the right to use such Centre
Intellectual Property for research and educational purposes subject to
agreements related to Confidential Information.



(c) Revenue Sharing. Except as otherwise provided for
a particular University Project, Net Revenues derived from Centre Intellectual
Property shall be divided as follows: one third to the Centre; and the remainder
among the University and Inventors according to University policy.



(d) Termination. The Participant acknowledges and
agrees that if the Centre ceases to carry on the research program related to the
Centre Intellectual Property, or if the funding of the research program is
terminated, the Government of Ontario shall have the first right (but not the
obligation) to take an assignment of the rights and interest of the Centre in
and to the Centre Intellectual Property.



(e) 
Disclosure; Patents. The Participant shall keep the
Centre fully and promptly informed on an on-going basis of the development of
Centre Intellectual Property, as well as of applications for intellectual
property Protection (if any) filed in respect of Centre Intellectual Property.
The Participant shall use the University invention disclosure form set out in
Appendix D 1 hereto. The Centre shall have the first right to file for
intellectual property Protection on the Centre Intellectual Property. If, within
three months after receipt of the relevant completed disclosure form, the Centre
has not filed for intellectual property Protection, in respect of the Centre
Intellectual Property, the University or the Inventor shall be entitled to do
so.

(f)Confidentiality.
The Participant shall take reasonable measures, and at least the same measures
as it takes in respect of his/her own Confidential Information, to keep
confidential the Confidential Information provided to it by the Centre or the
University. The Participant shall not use the Confidential Information of the
Centre or the University for any purpose except that for which it was initially
provided to the party.

The obligation to keep confidential shall, however, not
    apply to information which:



| | i.   | is already known to a third party to whom it is
    disclosed;                                                  
| | ---- | ----------------------------------------------------------------------------------------------------------------
| | ii.  | becomes part of the public domain without breach of this Agreement;                                             
| | iii. | is obtained from third parties which have no
        confidentiality obligations to the contracting parties, or;
| | iv.  | is authorized for release by the disclosing party.                                                              

(g) Definitions. In this Agreement:

| | (i)   | "Centre Intellectual Property" means any
            technology, invention, formula, method, development, computer
            software (including source code and all related documentation),
            process, know how, pattern, machine, device, manufacture,
            composition of material, compilation of information, data, database,
            or any improvement thereof, and including all related intellectual
            property rights such as patents, copyrights, trade secrets,
            trade-marks and other proprietary rights, which was, in whole or in
            part, conceived or reduced to practice using funds provided by the
            Centre under the UC Agreement.                                                                                                                                                                                                               
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (ii)  | "Confidential Information" means the
            confidential business or technical information of the Centre or the
            University that is identified as such in writing at the time of its
            disclosure or disclosed orally at the time of its disclosure, minuted and confirmed in writing within 2 weeks of the oral
            identification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (iii) | "Inventor" means the inventor, originator,
            creator, developer or author of Centre Intellectual Property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (iv)  | "Net Revenues" means the revenue from
            royalties, license fees or other sources received by the Centre in
            respect of Centre Intellectual Property (or received by the
            University if there is a mutual agreement to have the University
            administer the Centre Intellectual Property) remaining after all
            out-of-pocket and arm's length expenses relating to the legal
            protection (including patenting and licensing costs) and the
            commercialization of such Centre Intellectual Property have been
            recovered and any payments with respect to obligations to third
            party sponsors have been made. For greater clarity, Net Revenues
            will include shares, securities or other ownership interests issued
            as consideration for the use or exploitation of Centre Intellectual
            Property.

3.     PUBLICATION



(a) Pre-Dissemination Review. The Participant shall
give written notice to the Centre and the University at least 30 days in advance
of any public disclosure of research or development results, data or technical
information relating to the Centre Intellectual Property (including any public
defense of a thesis that contains relevant information or submission of the
thesis or research results to external reviewers or anyone else outside of the
University) in order to permit the Centre to exercise its rights under Section 2
(b) as well as to advise on the commercial value and/or patentability of the
information disclosed. The Centre shall have 20 days from receipt of the notice
to respond to the University; the Centre's failure to respond shall be deemed to
be approval of the disclosure. If the Centre elects to file for protection of
the Centre Intellectual Property, pursuant to sub-section 2(e) above, the
Participant shall delay publication or disclosure for a period of 60 days from
the receipt of the Centre's written request to enable the Centre to secure
adequate protection of Centre Intellectual Property that would be affected by
said publication or disclosure. Subject to the foregoing, the Participant may
publish and disclose the Centre Intellectual Property and research results
arising from the performance of University Projects and shall acknowledge the
support of the Centre in all such publications.



(b)     Theses. Nothing in this Agreement shall impose
restrictions on the content or handling, for academic purposes, of theses of the
Participant in a University Project. Nonetheless, the Centre may request, in
writing, that the Participant delay publication or disclosure of a thesis for a
period not to exceed one (1) year from the date of intended publication or
disclosure, only if such publication or disclosure would prevent protection or
commercialization of any Centre Intellectual Property or research results
arising from performance of a University Project. The Centre may also request
that a thesis defence be held in camera and that the members of the thesis
examination board, including the external examiner(s), be required to sign a
non-disclosure agreement. The Centre acknowledges that this Agreement does not
obligate the Participant to delay publication or disclosure of a thesis.

4.     GOVERNING LAW

This agreement shall be governed by and construed in accordance of the laws
of the Province of Ontario.

THE PARTICIPANT ACKNOWLEDGES HAVING READ THIS AGREEMENT,
UNDERSTANDING IT, HAVING HAD THE OPPORTUNITY TO OBTAIN INDEPENDENT LEGAL ADVICE
IN RESPECT OF IT, AND AGREEING TO ITS TERMS. The Participant acknowledges having
received a fully executed copy of this Agreement.

IN WITNESS WHEREOF the parties have executed this agreement as the day and
year first above written.

|Materials and Manufacturing Ontario | University of Toronto                        
|----------------------------------- | ---------------------------------------------
|                                    |                                              
|By:                                 | /s/
    J.G. Clarke                          
|                                    | Name: J.G. Clarke
    Title:  President & CEO
|                                    |                                              
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|)                                   | "signed"                                     
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|)                                   | Frances Dawson                               
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