10-KSB










Exhibit 10.11  




[TRANSLATION FROM
HEBREW] 



Cooperation and
Licensing Agreement  

Prepared
and signed on the 28th day of the month of October 2007. 



Between 



The Life Science Research Israel Ltd.

a governmental company, P.O.B. 139, Nes Tziona 70451 (“LSRI”) 



on the one part 



and 



Acro Inc.

a company registered in Nevada, U.S.A.

of which the registered address in Israel is - 37 Inbar St., Caesarea

by means of its managers authorized to bind the company


(“Acro”) 


on the other part 




	WHEREAS  	The
Israeli Biological  Research Institute ("MMBI") is a governmental  research institute
 specializing                   in  applied  research,  development,  and  manufacturing
 in the  fields  of  biology,  chemistry,  the                   environment,  and public
health and in the basic  research  derived from MMBI's applied  projects,  and
                  possesses knowledge and technology in the aforementioned fields; and 






	WHEREAS  	LSRI
is authorized to make commercial use of MMBI's  technologies and the research programs
 undertaken                   by MMBI; and 






	WHEREAS  	Acro
 operates in the area of  development,  manufacturing  and  marketing of the means to
identify and                   detect explosive material; and 






	WHEREAS  	Acro
is interested in  undertaking  Compatibility  Work, as defined  below,  and to receive
from LSRI a                   license to  manufacture  and market  identification
 systems - all in  accordance  with the  provisions                   herein; and 






	WHEREAS  	The
parties  wish to set forth in this  Agreement  the terms and  conditions  that shall
apply to their                   collaborative efforts. 
















Therefore,
the parties have declared, stipulated and agreed, as follows: 



	1.  	Definitions  






	 	
In
this Agreement, language in the singular includes the plural, and vice versa, and
language that refers to males shall include females and vice verse, unless the content or
context require otherwise.  






	 	
In
this agreement the following terms shall have the meaning appearing next to them, unless
the content or context requires otherwise.  






	 	1.1. 	“Related
Party” – With regard to any person or entity; any                person or
entity that controls, is controlled by, or is jointly controlled. For                the
purposes of this Agreement “control” shall mean the effective
               power to influence or to cause to be influenced the management or policies
of a                person or entity, as above; 






	 	1.2. 	The
“Agreement” – This Agreement and all of its appendices
               and addendums; 






	 	1.3. 	“First
Commercial Sale” – The first sale of the                Identification
System as part of a commercial transaction at market terms; 






	 	1.4. 	“LSRI’s
Knowledge” – All knowledge, information,                materials, results,
instruments, procedures, processes, technologies,                components, versions,
protocols, techniques, methods, software, design, charts,                sketches,
figures, and details and/or any other information of any other kind,
               whether a patent can be registered for such or not, which is in LSRI’s
               possession prior to the signing of this Agreement or thereafter. As for
the                development of methods, [such includes] equipment and systems for the
detection                and identification of chemicals, including the ETK Kit and its
components,                including the chemical components. 






	 	1.5. 	“Acro’s
Knowledge” all knowledge, information, materials,                results,
instruments, procedures, processes, technologies, components, versions,
               protocols, techniques, methods, software, design, charts, sketches,
figures, and                details and/or any other information of any other kind,
whether a patent can be                registered for such or not, which is in Acro’s
possession prior to the                signing of this Agreement or thereafter with
regard to the Apparatus, as defined                below, and with regard to the means
for identifying peroxides, including U.S.                Patent No. 6,767,717. 






	 	1.6. 	The
“Knowledge” or “Joint Knowledge” –               all
knowledge, information, materials, results, instruments, processes,
               procedures, technologies, components, versions, protocols, techniques,
methods,                software, design, charts, sketches, figures, and details and/or
any other                information of any other kind, whether a patent can be
registered for such or                not, with regard to the Compatibility Work and the
Identification System, so                long as the foregoing does not include LSRI’s
knowledge or Acro’s                Knowledge. 

















	 	1.7. 	The
“License” – The license and the right that shall be
               granted by LSRI to Acro to make use of the Joint Knowledge and the
               Identification System, in accordance with Section 5.1 below; 






	 	1.8. 	“Licensing
Fee” – the licensing fee discussed in Section                6.4 below; 






	 	1.9. 	“ETK
Kit” – A kit for the detection of explosive materials                that
was developed by MMBI and which is operated on the basis of wet
               chemicals/color reactions; 






	 	1.10. 	“Chemical
Components” – The chemical materials that                comprise the ETK
Kit; 






	 	1.11. 	The
“Apparatus” – the apparatus known commercially as
               “Explosive Tester P.E.T. Peroxide, whether such is manual, automatic,
or                semi-automatic, which was developed by Acro; 






	 	1.12. 	The
“Identification System” – A system for the
               identification of explosive materials based upon the arrangement of
chemical                components in the apparatus as set forth in the Specifications
and Protocol; 






	 	1.13. 	“Compatibility
Work” – Work to be undertaken by Acro, at                Acro’s cost,
as specified in the Protocol for the purpose of manufacturing                and
assembling the Identification System in accordance with the Specifications.
               In order to carry out the Compatibility Work, LSRI shall transfer to Acro
the                chemical components in order so that Acro may assemble them in the
Apparatus.                Upon completion of the Compatibility Work, Acro shall begin to
conduct the                Compatibility Tests in accordance with the timelines set forth
in the                Specifications and Protocol; 






	 	1.14. 	“Compatibility
Tests” – Examination of the compatibility                of the
Identification System with the Specifications and the Protocol; 






	 	1.15. 	“Net
Sales” – The total amount received by Acro, its                Related
Parties or parties that work with Acro and its distributors for the sale
               of the Identification System on market terms, [after] deducting the
following:                (1) commercial discounts and credits; (2) special credits and
additional                discounts that were given for returns or due to defects in the
Identification                Systems; (3) Delivery costs, shipment and insurance; and
(4) taxes, duties, and                governmental customs (excluding income tax), so
long as the amount of such is                reasonable and acceptable and were paid for
an actual sale as above, and were                not deducted from the aforementioned
total amount of intake. 






	 	1.16. 	“Royalties” – Royalties
shall be calculated on the basis                of Net Sales in accordance with Section 6
below; 

















	 	1.17. 	“Protocol” – The
description of the scope of the planned                work in the framework of carrying
out the Compatibility Work, attached hereto as Appendix “A”; 






	 	1.18. 	“Specifications” – The
specifications attached hereto as Appendix “B”;






	 	1.19. 	The
“Consideration from Other Projects” – The
               consideration that shall be paid to LSRI for undertaking other work or
tests                that will be carried out by LSRI as mutually agreed by the parties,
as set forth                in the Protocol and in Section 6.2 below; 






	 	1.20. 	The
“Minimal Annual Quota” – The minimal sales quota for a
               given year, as set forth in Appendix “C”; 






	 	1.21. 	The
“Term of the Agreement” – The term of the Agreement,
               as set forth in Section 11 below. 






	 	1.22. 	“Acrotech” – Acrotech
Ltd., a subsidiary registered in                Israel, fully owned by Acro. 






	2. 	The
Compatibility Work






	 	2.1. 	General.
Acro shall be responsible for carrying out the Compatibility                Work and any
other work that is required for the purpose of manufacturing the
               Identification System in accordance with the Specifications, Protocols and
               provisions of this Agreement. Acro shall bear all costs incurred as a
result of                carrying out the Compatibility Work. For the purpose of such,
Acro shall                allocate the necessary manpower and technical resources to
carry out the                Compatibility Work in accordance with the terms and
conditions of this                Agreement. 






	 	2.2. 	Scope
of the Compatibility Work. (A) The Compatibility Work shall be                carried
out in accordance with the Protocol; (B) Acro shall develop                Compatibility
Tests, as set forth in Section 2.3; and (C) Acro shall prepare and                supply
the documentation, software, and services as set forth in the Protocol
               with regard to the Identification System; (D) LSRI shall supply to Acro
the                chemical components for the purpose of carrying out the Compatibility
Work, as                well as the documentation regarding the durability of the
chemical components in                the ETK Kit. 






	 	2.3. 	Compatibility
Tests. Acro, in coordination with LSRI, shall, in                accordance with the
Protocol, create a test to examine the compatibility of the                Identification
System to the Specifications. 






	 	
In
the event that the Compatibility Tests or trials of the Identification System per the
Protocol reveal that the Identification System is incompatible with the Specifications,
Acro (A) will notify LSRI about such incompatibility; and (B) Subject to the provisions
of Section 3.3 below, Acro will make the necessary repairs in order to make the
Identification System compatible with the Specifications within fourteen (14) days from
the time such incompatibility was discovered. 



















	 	2.4. 	Modifications.
The parties hereto hereby affirm and agree that, in the                course of carrying
out the Compatibility Work, modifications to the Protocol may                be required
in order to provide a solution for unexpected events or results that                are
not within the reasonable control of the parties. Any modifications to the
               Protocol, as above, require the prior, written agreement of the parties,
so long                as the timeframes, required manpower, consideration and anything
else that is                affected by such modification are adjusted appropriately. 






	 	2.5. 	License
required for the Compatibility Work. Each party shall grant to                the
other, for no consideration, a non-exclusive, non-transferable,
               non-assignable license to use its rights, including LSRI’s Knowledge
and                Acro’s Knowledge, for the purpose of performing the Compatibility
Work                only. Such license shall be granted only for the aforementioned
purpose and only                in such cases where such a license is required to carry
out the Compatibility                Work. For the avoidance of doubt, the provisions of
this Agreement                notwithstanding, Acro does not and shall not have any right
to LSRI’s                Knowledge and/or that which is related thereto or any right
to cite figures or                details regarding any product that is not the
Identification System, and LSRI                shall not be obligated to develop, supply,
grant a license, or allow access to                knowledge, including regulatory
information, with regard to any product that is                not the Identification
System. 






	 	2.6. 	Supply
of the Chemical Components. LSRI shall supply Acro with the                chemical
components for both the Compatibility Work and for manufacturing                purposes.
For the purpose of carrying out the Compatibility Work, LSRI shall                supply
[to Acro] at LSRI’s cost the chemical components in the amounts set
               forth in Appendix “D1”. As for the chemical components
required                for manufacturing purposes, Acro shall pay LSRI in accordance
with the                provisions of Appendix “D2.” It is hereby agreed
that in any                event Acro shall grant LSRI the right of first refusal with
regard to the sale                of the chemical components to Acro for the ongoing
manufacturing. 






	 	2.7. 	Contact
persons. Each party hereto shall appoint its own contact person,                who
shall handle requests with regard to the Compatibility Work. 






	 	2.8. 	Additional
work. Any additional work that shall be required by Acro with                regard
to the Identification System that is to be performed by LSRI and which
               LSRI wishes to perform, at its discretion, shall be performed by LSRI
subject to                payment for such additional work in the amount that shall be
agreed by the                parties. 

















	3. 	Manufacture






	 	3.1. 	Upon
completion of the Compatibility Work, Acro shall make use of the License to
               manufacture, market, supply and service the Identification System that is
               compatible with the Specifications, in accordance with all applicable
laws,                regulations, standards and rules. 






	 	3.2. 	Acro
shall be the party exclusively liable for obtaining all the licenses,
               approvals, and permits, and for carrying out all registrations under the
law;                for [upholding] all applicable standards that apply to the
manufacture,                marketing, supply and service of the Identification System;
and for the renewal                [of such license and permits] at the required time and
the safe-keeping thereof. 






	 	3.3. 	Acro
shall not make any change to the chemical components, to the
               specifications, to the Identification System, or to the manufacturing
process or                the testing of the Identification System, without the prior,
written approval of                LSRI, [which shall be granted] at its discretion. Upon
receiving such approval,                Acro shall have the right to make the desired
changes, so long as: 






	 	A. 	Such
changes are permitted under the law and/or by the relevant authorized
               authority, and are made in accordance with and fulfill the conditions of
any                license, registration, approval or permit that was granted with regard
to the                Identification System prior to the time that such change is made.  






	 	B. 	LSRI
receives copies of the documentation that relates to the approved changes.  






	 	3.4. 	So
far as such change, as described above, is contingent upon licenses,
               approvals, permits, or other or additional registration by any authorized
               authority, such change shall not be effected until after LSRI receives
written                verification that the permit or approval for the change was indeed
granted by                the authorized authority/authorities. The parties hereto shall
cooperate to                prepare the figures and details required in order to submit
an appropriate                request to the authorized authorities for the permit or
approval of the change                to the materials, Specifications, equipment,
manufacturing process or tests. So                far as a change is required pursuant to
the instructions of an authorized                authority, LSRI shall not withhold its
approval of such, without a reasonable                basis. 






	4. 	Commercialization






	 	4.1. 	Upon
completion of the Compatibility Work, Acro shall work continuously and
               consistently to develop and expand to the greatest extent possible the Net
Sales                of the Identification System. Acro shall carry out its First
Commercial Sale of                the Identification System no later than 90 days
following the signature of this                Agreement, and within thirty (30) days of
making such sale, Acro shall notify                LSRI. 

















	 	4.2. 	Acro
shall be liable for fulfilling all that is required under the law,
               regulations, standards, and rules that apply to the sale of the
Identification                System and for the submission of any relevant information
related thereto. 






	 	4.3. 	For
the duration of the Term of the Agreement, Acro hereby undertakes to carry
               out sales of amounts of the Identification System that shall not fall
below the                Minimum Annual Sales Quota during the 12 months following the
First Commercial                Sale. The Minimum Annual Sales Quota with regard to every
country in which the                Identification System is to be sold is set forth in
Appendix                “C”. It is hereby clarified that the exclusive
status of Acro,                pursuant to the License [granted] under this agreement, is
conditioned upon: the                fulfillment of the Annual Sales Quotas, as reflected
by the reports that shall                be submitted in accordance with Section 7 below;
the payment in full and receipt                of such payment at the time such becomes
due of all of the amounts that are owed                to LSRI pursuant to the Annual
Sales Quota; and the fulfillment of all of the                other terms and conditions
set forth in this Agreement. 






	 	4.4. 	It
is hereby agreed and clarified that, subject to Acro’s fulfillment of
               all of its obligations under this Agreement with regard to the completion
of the                development and manufacture of the Identification System – it
is hereby                agreed that within 30 days from the date of the First Commercial
Sale, the                parties hereto will enter into good-faith negotiations regarding
the terms of an                agreement pursuant to which Acro will be granted a
worldwide license, excluding                Israel, to market and sell the ETK Kit. Such
agreement shall be based upon the                grant of territorial exclusivity,
subject to Acro’s meeting the sales                targets. The sales targets for
each territory shall be determined in accordance                with the level of LSRI’s
sales in such territory. In any event, it is                hereby agreed that only a
detailed and signed agreement by both parties shall                bind the parties with
regard to the foregoing. 






	5. 	The
License






	 	5.1. 	Subject
to the terms and conditions set forth herein, including, but without
               derogating from the above, the timely payment in full of the amounts set
forth                in this agreement, including the payment of Royalties, LSRI shall
grant Acro for                the Term of the Agreement an exclusive, worldwide license,
excluding Israel, for                the Joint Knowledge and the Identification System
for the purpose of producing,                manufacturing, using, marketing, offering,
selling, importing, exporting and                serving the Identification System. It is
hereby clarified that the grant of the                License to Acro as set forth in
this Section with regard to the State of Israel                shall be subject to the
terms that shall be set forth in the good-faith                negotiations between the
parties. With that said, Acro may undertake activities                related to the
marketing and sale of the new system in Israel, subject to                LSRI’s
advanced, written approval. 
















	 	5.2. 	The
term of the License per this agreement shall apply for each country so long
               as such was not revoked due to a breach in accordance with this Agreement.
The                [grant of the] License is conditioned upon the fact that Acro will
make                reasonable commercial efforts to realize the potential of the
Identification                System; to foster sales of the Identification System to the
fullest extent                possible; and to advance other commercial initiatives with
regard to the                Identification System, and upon the fact that Acro will
perform sales that will                not fall below the [required] Minimal Annual Sales
Quota, as set forth in                Section 4.3 above and in Appendix “C”. 






	 	5.3. 	During
the Term of the Agreement, Acro will have the right to grant a                sub-license
to third parties that conforms to the provisions of this Agreement
               regarding the License, so long as Acro is and remains liable to LSRI with
regard                to the fulfillment of this Agreement by the sub-licensee, and
collects at the                time they become due all the payments that the
sub-licensee owes in full. A                grant of a sub-license pursuant to the
License, as set forth above, is                conditioned upon receipt of LSRI’s
advanced, written approval and the                submission of a copy of the sub-license
agreement to LSRI. For the avoidance of                doubt and subject to the above
provisions – LSRI hereby approves the grant                of a sub-license to
Acrotech. In the event that a sub-licensee is declared                insolvent or upon
the occurrence of one of the events described in Section 11                below to the
sublicense, Acro shall undertake the necessary actions to collect                from the
sub-licensee all of the payments that are owed pursuant to the                sublicense
and shall cause the revocation and/or forfeiture of the sub-license                by a
competent court. Upon termination of this Agreement for any reason and/or
               by any party hereto, all of the sub-licenses that were granted shall be
               terminated immediately. 






	6. 	The
Consideration






	 	
In
consideration for the grant of the License to Acro pursuant to this Agreement, Acro shall
pay LSRI the following payments:  






	 	6.1. 	Compatibility
Work. Acro alone shall fund the Compatibility Work, as set                forth in Appendices
“D1”-“D2”. 






	 	6.2. 	Consideration
for additional work. Acro shall pay LSRI for additional work in accordance
with the payments set forth in the                Protocol. 






	 	6.3. 	Royalties
for Net Sales. Acro shall pay LSRI Royalties each quarter in
               accordance with the quarterly report regarding sales of the new system.
The rate                of Royalties shall be as follows: for a year from the date of the
First Sale,                Acro shall pay an amount that equals 6% of Net Sales; for
sales in the second                year for a duration of a year, Acro shall pay an
amount equaling 8% of Net                Sales; and for sales from the third year and
onwards, Acro shall pay an amount                that equals 10% of Net Sales of the
Identification System that were made by                Acro, sub-licensees, distributors
or any other related party. 

















	 	6.4. 	Licensing
Fee. Acro shall pay to LSRI a licensing fee in an amount that                equals
fifty percent (50%) of all intake and consideration (excluding Net Sales)
               that shall be received or produced by Acro, sub-licensees, distributors,
or any                other related party, with regard to or as a result of the
commercial utilization                of the License of the Identification System; the
following shall be deducted                from the forgoing: (a) any payment that was
received for research and                development; (b) any tax, duty, or government
impositions. 






	 	6.5. 	It
is hereby clarified that the forgoing in no way derogates from the [the
               requirements pursuant to the] Minimal Sales Quota, as defined above and as
set                forth in Appendix “C”. 






	7. 	Reporting
and Payments






	 	7.1. 	Payments
pursuant to Sections 6.3 and 6.4 above and reports with regard to the
               sales of the Identification System shall be made and submitted quarterly. 






	 	7.2. 	Unless
otherwise explicitly stated in this Agreement, Acro shall pay LSRI the
               payments owed pursuant to Section 6 above within sixty (60) days from the
end of                each quarter. Each payment as above, shall be accompanied by a
sufficiently                detailed report for the purpose of calculating and verifying
the payment that                was effected, which shall include, without derogating
from the foregoing,                [information regarding] the number of Identification
Systems that were sold in                each country; the gross income and Net Sales of
the Identification System; other                intake or consideration related to the
Identification System; income per country                with details regarding all
discounts granted and returns; Royalties that are                owed pursuant to Section
6.3 above; and Licensing Fees that are owed pursuant to                Section 6.4 above,
with [the foregoing] presented in USD amounts and including                the manner by
which the Royalties and Licensing Fees were calculated; the                exchange rate;
date of the invoice; and any other information that is necessary                to
calculate the payments due under this Agreement. The senior finance manager
               of Acro shall confirm in every report submitted to LSRI that such report
               correctly and accurately reflects all of the payments owed to LSRI.
Reports                shall be submitted throughout the Term of the Agreement, starting
from the date                for the First Commercial Sale, and including periods in
which the Identification                System was not sold and no payments were received
regarding the License and/or                the Identification System. In the event that
Acro does not effect payment at the                time such comes due, Acro shall owe
the same amount plus interest, per Section                7.5 below. 

















	 	7.3. 	The
value of each sale of the Identification System, any other intake or
               consideration relating to the License and/or the Identification System
shall be                calculated in accordance with their USD value at the time of
receipt. Royalties                and Licensing Fees shall be calculated in USD and paid
in NIS in accordance with                the dollar exchange rate published by the Bank
of Israel on the date of payment                to LSRI. VAT, if applicable, shall be
added to each payment in accordance with                the rate set forth in the law at
the time. 






	 	7.4. 	All
payments by Acro to LSRI under this Agreement shall be effected by means of
               a bank transfer and actual receipt in the bank accounts so designated for
such                purpose by LSRI or by any other means as determined by LSRI in
writing. 






	 	7.5. 	Any
amount that is owed to LSRI under this Agreement that is not paid on the
               date it becomes due shall bear interest at the maximum rate charged by
Poalim                Bank Ltd. for unauthorized overdrafts, accumulating on a monthly
basis, starting                from the date upon which it became due until such amount
is actually paid. 






	 	7.6. 	Acro
shall maintain and cause all of the parties related to and involved with
               Acro, [its] sub-licensees and distributors to maintain books of accounting
in                which full and precise accounts of the sales of the Identification
System and/or                any other use of the License of the Identification will be
recorded and will                include necessary details so that LSRI can verify the
precise amounts of the                payments due to it under this Agreement. Pursuant
to a written request, which                may not be submitted more than once each
calendar year, LSRI will have the right                to audit such books by means of a
certified accountant in order to verify the                amount of Net Sales, Royalties
and Licensing Fees for each calendar year for the                three years preceding
the date upon which the audit was requested. LSRI shall                maintain in
confidence and see to it that the aforementioned accountant maintain                the
confidentiality of all of the information and not make any use thereof or
               reveal such, unless such disclosure is required to determine whether the
               provisions of this Agreement have, indeed, been fulfilled. The accountant’s
               visit as above shall be made during normal business hours and with
advanced,                written notice to Acro within a reasonable amount of time prior
to such visit.                In the event that an audit reveals that a payment was not
made in full, Acro                shall pay to LSRI the amount missing plus interest, [at
a rate] set forth in                Section 7.5 above. Such payment shall be made within
ten (10) days that the                results of the audit are submitted to the parties.
The parties shall make all of                the adjustments that are required in light
of the results of the audit without                delay. The party that carries out the
audit, as above, shall bear the costs                required for such. However, in the
event that the audit reveals that any payment                whatsoever that was made was
missing more than five percent (5%) of the amount                owed, Acro shall bear
the costs incurred by the audit. LSRI right to audit the                accounting books
as set forth above, shall continue for three (3) years beyond                the Term of
this Agreement. 

















	8. 	Property
Rights






	 	8.1. 	All
the rights to LSRI’s Knowledge and the rights to the Knowledge related
               to the ETK Kit and/or derived from them, including the rights to all
               improvements, developments and modifications, are hereby the property of
LSRI                and shall remain as such. 






	 	8.2. 	All
the rights to the Joint Knowledge and the Identification System and/or all
               that is derived from them, including all improvements, developments, and
               modifications – except with regard to the ETK Kit – are hereby
jointly                owned by the parties in equal parts (50% LSRI and 50% Acro) and
shall remain as                such. 






	 	8.3. 	Acro
hereby undertakes to take all action necessary in order to give effect to
               this Section 8, including making the necessary changes to the protection
               [mechanisms that safeguard the rights of] the Acro Knowledge. 






	 	8.4. 	Acro
is hereby required to include in all communications with third parties
               related to the License a declaration that LSRI and Acro are the joint
owners of                all of the rights in every invention that shall be developed or
derived as a                result of the implementation and performance of this
Agreement with regard to                the Knowledge and the Identification System,
while LSRI [is and] shall continue                to be the exclusive owner of the
[rights] related to LSRI’s Knowledge and                the chemical components. 






	 	8.5. 	LSRI
shall have the right to make use freely of the Knowledge and of LSRI’s
               Knowledge for any purpose except the manufacture and marketing of the
               Identification System that is subject to the License. 






	 	8.6. 	Acro
shall act, at its cost, to [protect and] enforce all of its property rights
               of any kind, in whole or in part, which are subject to the License,
pursuant to                this Agreement, against infringement thereof by third parties.
The foregoing                shall not apply to all that is related to the protection of
the rights of LSRI                to LSRI’s Knowledge and the ETK Kit. In this
framework, and without                derogating from the above, Acro shall act at its
own cost and in coordination                with LSRI to apply for patents, to register
patents, to protect a patent and/or                a patent application with regard to
inventions and other discoveries related to                the Joint Knowledge and the
Identification System. In the event that Acro                receives monetary damages or
that the payment of royalties is ordered instead of                damages, Acro hereby
undertakes to pay LSRI Royalties for the amounts received,                as described
above, that exceed the costs of the lawsuit. Each party shall                report to
the other regarding any potential infringement of rights as above                within
thirty (30) days of becoming aware of such. 

















	 	8.7. 	For
the avoidance of doubt, it is hereby clarified and agreed that the ownership
               to the information, including inventions, discoveries or any other
intellectual                property rights – whether such can be registered as a
patent or not –               that were produced or achieved during the Term of the
Agreement by either of the                parties or a representative thereof by chance
and/or without any relation to the                Identification System and/or the
Compatibility Work, shall remain the exclusive                property of the party that
discovered or invented such. For the avoidance of                doubt – such
information, as above, shall not include the Joint Knowledge                or the
Knowledge of the other party, as defined in this Agreement. 






	9. 	Liability






	 	9.1 	Acro
shall be exclusively liable for the manufacture of the Identification System, and shall
arrange for insurance coverage as is customary with regard to the License and/or the
Identification System. The insurance policies should include a provision regarding the
waiver of the right to recourse vis a vis LSRI. 






	 	9.2 	Acro
shall indemnify and compensate LSRI for all debts, lawsuit[s], payment[s], cost[s],
damage[s], or loss[es] that were caused by or as a result of: the License; the exercise
of Acro’s rights pursuant to this Agreement; or the manufacture, marketing, sale,
service or use of the Identification System. The foregoing shall not apply in a case in
which it was determined that LSRI’s liability was the result of the fact that LSRI’s
knowledge infringes upon the intellectual property rights of a third party. 






	 	9.3 	In
any event, LSRI shall not be held liable, either explicitly or implicitly, for any
indirect, accompanying or consequential damages or loss of income or profits that was
caused as a result of the manufacture, marketing, offer, sale, import, export, servicing,
or use of the Identification System. 






	 	9.4 	Acro
hereby declares and confirms that LSRI makes no representation herein regarding the
operation of the Identification System, the ETK Kit and the chemical components, [nor
regarding] their suitability for any use; their safety; their approval by local
authorities; the time or cost of the performance of the Compatibility Work and/or the
compatibility of the Identification System and/or the ability to protect the
Identification System by means of a patent. 

















	10.  	Confidentiality
and Publication  






	 	10.1 	Any
information that is transferred from one party to another and is marked as “Confidential”:
(a) shall be maintained in full confidence by the recipient of such information; (b)
shall serve the recipient solely for the purpose of performing the provisions of this
Agreement; and (c) shall not be transferred by the recipient, his advisors, or employees
to another party (unless so required under the law or pursuant to a court order) without
the prior, written approval of the party that has submitted the information, unless the
recipient of the information possesses written proof that the information: 









	 	(a) 	was
publicly available at the time of its receipt; or  






	 	(b) 	became
publicly available after its receipt as a result of an act or omission by
               a party other than the recipient, his advisors, employees, or
representatives;                or  






	 	(c) 	was
transmitted to the recipient by a third party that was authorized to
               transmit such information; or  






	 	(d) 	was
already known to the recipient at the time of its receipt;  






	 	(e) 	was
developed independently by the recipient without any use of the confidential
               information of another [sic] party; or  






	 	(f) 	was
required to be transferred under the law or applicable regulations.  






	 	10.2 	The
confidentiality requirements under this Agreement shall be considered as having been
fulfilled by a party if such party treated the confidential information of the other
party in the same manner as such party would treat its own confidential information and
in a reasonable manner. Such [confidentiality] obligations shall apply during the Term of
the Agreement and for a period of ten (10) thereafter. 






	 	10.3 	LSRI
shall have the right to publish scientific discoveries related to the Knowledge and/or
LSRI’s Knowledge and/or the ETK Kit and/or the chemical components and/or the
Identification System, while giving proper attention to the interest of Acro. 






	11.  	Term
and Termination  






	 	11.1 	Term
of the Agreement. This Agreement shall remain in force from the date of signature of
this Agreement until the conclusion of five (5) years from the date of the First
Commercial Sale, unless it was terminated prior to such in accordance with the provisions
of this Agreement. The parties may extend the Term of the Agreement from time to time for
two additional one-year terms (the “Extended Term of the Agreement”),
contingent upon Acro’s performance of its obligations hereunder in full and
contingent upon the grant by both parties of their written agreement to such no later
than 60 days prior to the conclusion of the Term of this Agreement, so long as the terms
of the Minimal Annual Quota are fulfilled (Appendix C), as well as the other terms that
stem from the extension of the Term of the Agreement as above. 

















	 	11.1 	Mutual
Termination of the Agreement. This Agreement may be terminated at any time by the
mutual, written consent of the parties. 






	 	11.2 	Termination
of the Agreement by LSRI. In the event that Acro fails to make any payment owed under
this Agreement when it becomes due, and such amounts remain outstanding thirty (30) days
after LSRI submits written notice that such amounts are due, LSRI has the right to
terminate the Agreement immediately, at any time, upon written notice to Acro. 






	 	11.3 	Termination
of the Agreement due to bankruptcy. Either party may terminate the Agreement
immediately, upon the submission of written notice to the other sides [sic], in the event
that the other party was declared bankrupt by a competent court; a request for
liquidation was submitted to a competent court, either willingly or otherwise, which was
not withdrawn within ninety (90) days; or a creditors’ arrangement was offered. 






	 	11.4 	Termination
due to a material breach of the Agreement. Either party may terminate the Agreement
in the event that the other party breaches the provisions of this Agreement (with the
exclusion of that which is set forth in Section 11.2 above) upon sixty (60) days advanced
notice by the non-breaching party, so long as such breach was not remedied within sixty
(60) days from the date that the termination notice was submitted. For the sake of
clarity, it is hereby noted that any breach of any of the provisions of this Agreement
that is not remedied within 60 days from the date upon which notice of termination is
submitted as above, shall be considered a fundamental breach for all purposes. 






	 	11.5 	Consequence
of termination; applicability of the provisions. 






	 	(a) 	If
this Agreement is terminated or the License that was granted to Acro by LSRI
               expires, all the rights to the Identification System and to the Knowledge,
               including any other right that may be derived from the License, shall
return to                be the exclusive and absolute property of LSRI.  






	 	(b) 	In
the event of the termination or expiration of this Agreement, as above, Acro
               shall return to LSRI all of the information that LSRI transferred to Ecro
in the                course of this Agreement (whether such information is found in the
possession of                Acro or was transferred by Acro to third parties) including,
but without                derogating from the above – the chemical components or
other substances;                written materials or documents; or [information]
contained in other media                including documents, drafts, figures, and the
like, [and] materials related to                the Knowledge or LSRI’s Knowledge,
including any copy of such materials. In                addition, and without derogating
from the above, LSRI shall return to Acro upon                termination of the
Agreement or expiration thereof, all of Acro’s Knowledge                that is in
LSRI’s possession at the time of the termination or expiration                of the
Agreement.  

















	 	(c) 	Termination
of this Agreement or the expiration thereof shall not release the                parties
hereto from the obligations that accrued prior to the termination or
               expiration of this agreement, as described above; Acro shall continue to
be                bound by Sections 6 and 10 above and shall immediately cease all uses
of the                information and/or the Identification System in any manner
whatsoever. It is                hereby agreed that with the termination or expiration of
this Agreement, as set                forth above, Ecro shall be required to transfer to
LSRI any payment that is owed                for the period preceding the date of
termination or expiration of the Agreement                no later than thirty (30) days
from the date or termination or termination, as                discussed above.  






	 	11.6 	Remedies.
In the event of a breach of the provisions of this Agreement, in addition to the
termination rights as set forth above, each side shall have the rights and be entitled to
the remedies set forth in the applicable law for the enforcement of this Agreement. 






	12.  	Force
Majeure  






	 	
It
is hereby agreed and declared that a party shall not be liable for any loss or damage
incurred as a result of such party’s breach of this Agreement, excluding the duty to
effect payments on time, as a result of a war (whether such was declared or not), force
majeure, revolt, strike, fire, earthquake, flood, plague, riot, accident, labor dispute,
shortage of materials, equipment, transportation, or any other factor that is not beyond
the reasonable control of the parties, and performance of the obligations under this
Agreement will be postponed so long as the reason for the delay remains in existence, but
not beyond such time. A party that exercises its right under this Section 12 shall make
reasonable efforts to remove the cause of the delay of the fulfillment of such party’s
obligations under this Agreement and shall report such efforts to the other parties
[sic]. In the event that performance of the obligations hereunder was delayed as above
for one hundred eighty days (180), each [sic] other party shall have the right any time
thereafter, to terminate the Agreement immediately and the provisions of Section 11 above
shall apply.  

















	13.  	Governing
Law  






	 	
The
laws of Israel shall govern this Agreement, and the competent courts of Tel Aviv-Jaffa
shall have exclusive jurisdiction [over any dispute which may arise hereunder].  






	14.  	General  






	 	14.1 	This
Agreement comprises and reflects all of the terms and conditions agreed upon by the
parties with regard to the approval system. Any oral or written representations,
agreements and understandings that was granted or made by the parties prior to the
signing of this agreement that is not explicitly stated herein shall not supplement,
derogate from, or alter the rights and duties set forth in this Agreement or that are
derived therefrom, and the parties shall not be bound by such from the date that this
Agreement is signed. 






	 	14.2 	The
Agreement shall have no effect unless it is signed by both Parties.






	 	14.3 	Any
amendment to the provisions of this Agreement must be made in writing only and such
amendment shall not be valid unless made in writing and signed by the authorized
representative of each party. 






	 	14.4 	It
is hereby declared and agreed that each party hereto is an independent contractor and no
employment relationship and/or agency and/or partnership, exists or shall be created
between the parties and/or their employees. 






	 	14.5 	The
parties hereto are not permitted to transfer and/or assign their rights and/or their
obligations hereunder unless the parties grant their prior, written approval. The
foregoing shall not apply to transfers or assignments to Related Parties, so long as the
party that wishes to transfer or assign its rights or obligations to the Related Party as
above remains responsible and liable for the fulfillment of the provisions of this
Agreement by the Related Party vis a vis the other parties [sic] and shall cause the
Related Party to fulfill all of its obligations under this Agreement. In the event that
such Related Party ceases to be a Related Party of the assigning party, the parties must
approve in writing the continuation of such assignment of rights; otherwise such
assignment shall be considered void. 






	 	14.6 	No
waiver, allowance, default, grant of an extension, failure to respond in the event of a
breach, non-fulfillment of any term of this Agreement, or failure to exercise one or more
of the rights granted herein shall be considered as a waiver of any right granted
hereunder or as a forfeiture thereof. 






	 	14.7 	Each
party hereto shall bear the costs it incurred related to the preparation of this
Agreement.

















	 	14.8 	Headings
that appear herein are provided for the sake of convenience only, and shall not be used
for interpretation purposes. 






	 	14.9 	The
preamble to this Agreement and all appendices and addendums constitute an integral party
of this agreement. In the event of a contradiction or incompatibility between the
provisions of this Agreement and the provisions of any appendix or addendum to this
Agreement, the provisions of this Agreement shall prevail. 






	 	14.10 	Any
agreement, approval or offer that was made or granted by one of the parties shall not be
binding unless signed by the party’s authorized representatives. 






	 	14.11 	In
the event that a provision of this Agreement or implementation thereof in accordance with
this Agreement was deemed void or declared by a competent court to be illegal, invalid or
unenforceable, this Agreement will [nonetheless] remain in full effect and shall be
interpreted in such a way that its illegal, void or unenforceable portion will be severed
and replaced by a provision that achieves, to the extent possible, the economic,
business, and other goals of that illegal, void, or unenforceable provision. 






	15.  	Notices  






	 	
The
parties’ addresses for purposes of this Agreement shall be as they appear above. Any
notice that is sent via registered mail or via a messenger by a party to the other at the
address that appears above shall be considered as having been delivered to its destination
after 7 (seven) days, if it was sent by registered mail, or upon delivery, if hand
delivered, whichever was earlier. 






And
as witness hereto, the parties have hereunto signed: 








		/s/ Acro Inc.
—————————

Acro Inc.	/s/ Life Science Research Israel Ltd.
————————————————

Life Science Research Israel Ltd.


















Appendices A and B  



Protocol and
Specifications 



Experimental development
of the Acro-NET 



General 



	 	—  	The
general idea is to use the same device that was developed by Acro for testing peroxide
explosives (Acro-PET)






	 	—  	The
Acro-NET will be color coded differently (blue and white) from the Acro-PET (black and
yellow).






	 	—  	The
Acro-NET will comprise three ampoules, 300 ML each, containing solutions 1, 2, and 3 of
the ETK. 






Experiments 



	 	—  	Loading
of all three ampoules will be carried under nitrogen atmosphere using either a glove box
or a glove bag. 






	 	—  	The
Acro-NET will be examined for sensitivity, selectivity (false positive and false
negative), mechanical reliability, and shelf life. 






	 	—  	Three
representative explosives will be used: TNT, RDX and ammonium nitrate (AN). 






	 	—  	The
sensitivity limit of each explosive will be determined by examining a solution of each
explosive is known concentration in either alcohol (ethanol or isopropanol) for TNT and
RDX or water for AN. 






	 	—  	False
positive tests will be carried out with variety of household powders, such as sugars,
flowers and other foods, washing machine powders, etc. 






	 	—  	False
negative experiments will be carried out with the explosives mixed together with
non-explosive powders and liquids 






	 	—  	Shelf
life will be estimated by keeping the Acro-NET at elevated temperatures (up to 50oC)
for extended periods of times before checking their performance 






	 	— 	Mechanical
reliability will be examined by testing a set of 100 units. This experiment may be used
for final determination of the sensitivity limit by using 33 unites for each explosive. 


















Appendix C  



Minimum Sales Quota  



In 2008 – 1,000 units,
primarily for the purposes of testing and demonstrations –an effort will be made to
charge the minimum price of USD $5.00 for each unit; the total consideration is estimated
to be a few thousand USD.  



		
		
		
		
		
	In 2009 - 5,000 units - with a net price of $10 -	total $50,000
	 
	In 2010 - 10,000 units - same as above -	total $100,000
	 
	In 2011 - 10,000 units - same as above -	total $100,000
	 
	In 2012 - 10,000 units - same as above -	total $100,000
		







Note:
all prices are in USD



The amount charged (in accordance
with the rate of Royalties set forth in Section 6.3 of the Agreement) shall be in New
Israeli Shekels, in accordance with the published dollar exchange rate on the date the
invoice is issued + VAT.  














Appendix “D1”  



The amount of chemical
components needed for the Compatibility Work  



At the R7D stage, the amount of
Reagents that are sufficient for 1,000 syringes (approximately a half-liter), and, if
required, and additional amount will be given, in accordance with the additional request
submitted by Acro.  














Appendix “D2”  



Prices of the chemical
components for production purposes  



The
price of the chemical components for a cartridge (according to a calculation of 0.3 ML per
cartridge) 



The
prices [listed below] are based on a single order and can be modified based upon the size
of the order. 



For
an amount between 1,000-5,000 cartridges – $0.80 



For an
amount between 5,000-10,000 cartridges – $0.65 



For
an amount above 10,001 cartridges – $0.50 



The amount charged shall be in New
Israeli Shekels, in accordance with the published dollar exchange rate on the date the
invoice is issued + VAT