Document:

Unassociated Document

    
      
        

      

    

    Exibit
10.4

     

    CO-EXCLUSIVE
LICENSE

    

    BETWEEN

    

    AXIS
TECHNOLOGIES, INC.

    

    AND

    

    THE
REGENTS OF THE UNIVERSITY OF CALIFORNIA

    

    FOR

    

    SIMPLIFIED
DAYLIGHT HARVESTING TECHNOLOGY

    

    

    UC Case
Nos.:  2006-239; 2006-277; and 2006-347 

    
      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    CO-EXCLUSIVE
LICENSE AGREEMENT FOR

    

    SIMPLIFIED
DAYLIGHT HARVESTING TECHNOLOGY

    

     U.C. Case
Nos.:  2006-239; 2006-277; and 2006-347 

      
        

      

    

     

    This
co-exclusive license agreement (“Agreement”) is effective January 1, 2008
(“Effective Date”), by and between The Regents of the University of California,
a California corporation, having its statewide administrative offices at 1111
Franklin Street, 12th Floor, Oakland, California 94607-5200, acting through its
Davis Campus Technology Transfer Services, at the University of California,
Davis, 1850 Research Park Drive, Suite 100, Davis, CA 95618 ("The Regents") and
Axis Technologies, a Delaware corporation registered in the State of Nebraska
having a principal place of business at 2055 So. Folsom Street, Lincoln,
Nebraska 68522 ("Licensee").  The Regents and Licensee will be
referred to herein, on occasion, individually as “party” or collectively as
“parties”.

    

    
       
RECITALS

       

    

    Whereas,
The Regents has an assignment of the following inventions (collectively,
“Inventions”), characterized as “Simplified Daylight Harvesting Technology “
invented by Konstantinos Papamichael, Keith Graeber, Erik R. Page and Michael
Siminovitch, all employed by the University of California, Davis, as described
in The Regents' Case Nos. 2006-239, 2006-277 and 2006-347, and to the patents
and patent applications under Patent Rights (as defined in Paragraph 1.10) which
are directed to the Inventions;

    

    Whereas,
The Regents and Licensee entered into a Mutual Confidentiality Agreement (UC
Agreement Control No. 2007-20-0670) effective June 6, 2007 (“Confidentiality
Agreement”), for the purpose of allowing Licensee to evaluate its interest in a
license agreement covering the Inventions;

    

    Whereas,
Licensee has provided The Regents with commercialization information concerning
the Inventions and Licensee’s business strategy, in order to allow The Regents
to evaluate Licensee’s capabilities;

    

    Whereas,
The Regents has not sought, and does not intend to seek, foreign patent rights
under Patent Rights;

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

     Whereas, The Regents and
Licensee desire to have the Inventions developed and commercialized so that
products resulting therefrom may be available for public use and
benefit;

    

    Whereas,
Licensee desires to acquire, and The Regents desires to grant, a license under
Patent Rights to manufacture, use, sell, offer for sale and import products,
methods and services resulting from the Inventions, in accordance with the terms
herein; and,

    

    Whereas,
The Regents and Licensee desire that such license under Patent Rights from The
Regents to Licensee be a co-exclusive license whereby The Regents would not,
during the term of the co-exclusive grant to Licensee as called for herein,
grant more than three other co-exclusive licenses under Patent Rights to
commercial entities except as otherwise provided for herein.

     

    Now,
therefore, the parties agree as follows: 

     

     

    1.     DEFINITIONS

    

    
      	
              1.1

            	
              "Affiliate"
      of Licensee means any entity that, directly or indirectly, Controls
      Licensee, is Controlled by Licensee, or is under common Control with
      Licensee. "Control" means (i) having the actual, present capacity to elect
      a majority of the directors of such entity, (ii) having the power to
      direct at least forty percent (40%) of the voting rights entitled to elect
      directors of such entity, or (iii) in any country where the local law will
      not permit foreign equity participation of a majority of the outstanding
      stock or voting rights, the ownership or control, directly or indirectly,
      of the maximum percentage of such outstanding stock or voting rights
      permitted by local law.

            

    

    

    
      	
              1.2

            	
              “Fixture”
      means a complete operational lighting
unit.

            

    

    

    
      	
              1.3
      

            	
              “Joint
      Venture” means any separate entity established pursuant to an agreement
      between a third party and the Licensee, and/or between a third party and
      an Affiliate of Licensee, to constitute a vehicle for a joint venture, in
      which the separate entity manufactures, uses, purchases, Sells, or
      acquires Licensed Products or Licensed Services from the Licensee or from
      an Affiliate of Licensee.

            

    

    

    
      	
              1.4
      

            	
              "Licensed
      Field of Use" means all fields of
use.

            

    

    

    
      	
              1.5
      

            	
              "Licensed
      Methods" means any process or method the use or practice of which, but for
      the license granted pursuant to this Agreement, (a) would infringe, or
      contribute to or induce the infringement of, a Valid Claim of any issued,
      unexpired patent under Patent Rights, or (b) is covered by a claim in a
      pending patent application under Patent Rights.  As used in
      subsection (b) of this Paragraph 1.5, “covered by a claim in a pending
      patent application” means that such use or practice would, but for the
      license granted pursuant to this Agreement, constitute infringement, or
      contributory infringement, or inducement of infringement of such claim if
      such claim were issued.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    
      	
              1.6
      

            	
              "Licensed
      Products" means any product, material, kit, or other article of
      manufacture or composition of matter, the manufacture, use, Sale, offer
      for Sale, or import of which (a) would require the performance of the
      Licensed Method, or (b) but for the license granted pursuant to this
      Agreement, would infringe, or contribute to or induce the infringement of
      a Valid Claim of any issued, unexpired patent under Patent Rights, or (c)
      is covered by a claim in a pending patent application under Patent
      Rights.  As used in subsection (c) of this Paragraph 1.6,
      “covered by a claim in a pending patent application” means that such
      manufacture, use, Sale, offer for Sale or import would, but for the
      license granted pursuant to this Agreement, constitute infringement, or
      contributory infringement, or inducement of infringement of such claim if
      such claim were issued.

            

    

    

    
      	
              1.7

            	
              “Licensed
      Service” means a service provided using Licensed Products or Licensed
      Method, including without limitation any such service provided in the form
      of contract research or other research performed by Licensee on behalf of
      a third party.

            

    

    

    
      	
              1.8
      

            	
              "Licensed
      Territory" means United States of America, its territories and
      possessions.

            

    

    

    
      	
              1.9
      

            	
              "Net
      Sales" means the gross invoice price charged, and the value of non-cash
      consideration owed to, Licensee or a Sublicensee for Sales
      of  Licensed Products,  Licensed Services, and
      Licensed Methods, less the sum of the following actual and customary
      deductions where applicable:  cash, trade or quantity discounts;
      sales, use, tariff, import/export duties or other excise taxes when
      included in gross sales, but not value-added taxes assessed or income
      taxes derived from such sales; transportation charges; and allowances or
      credits to customers because of rejections or returns.  For
      purposes of calculating Net Sales, a Sale to a Sublicensee for end use by
      the Sublicensee will be treated as a Sale at Licensee’s list
      price.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              1.10
      

            	
              "Patent
      Rights" means The Regents' rights in the claims of the
      following:

            

    

    

    
      	
            	
              (a)   
      

            	
              U.S.
      Patent Application Serial No. 60/771,770 entitled “Dual Photo-Sensor
      Dimming Daylight Controls” filed on February 8, 2006 by Konstantinos
      Papamichael and Keith Graeber (UC Case No. 2006-239-1) and assigned to The
      Regents; and continuing applications thereof including divisions,
      substitutions, extensions and continuation-in-part applications (only to
      the extent, however, that claims in the continuation-in-part applications
      are entitled to the priority filing date of the above-listed parent patent
      application); and any patents issuing on said application or continuing
      applications including reissues.

            

    

    

    
      	
            	
              (b)    

            	
              U.S.
      Patent Application Serial No. 11/703,936  entitled “Method for
      Calibrating A Lighting Control System That Facilitates Daylight
      Harvesting” filed on February 8, 2007 by Konstantinos Papamichael, Keith
      Graeber, Erik Page and Michael Siminovitch (UC Case No. 2006-239-2) and
      assigned to The Regents; and continuing applications thereof including
      divisions, substitutions, extensions and continuation-in-part applications
      (only to the extent, however, that claims in the continuation-in-part
      applications are entitled to the priority filing date of the above-listed
      parent patent application); and any patents issuing on said application or
      continuing applications including
reissues.

            

    

    

    
      	
            	
              (c)  
      

            	
               U.S.
      Patent Application Serial No. 11/704,037 entitled “Method for Preventing
      Incorrect Lighting Adjustments in a Daylight-Harvesting System” filed on
      February 8, 2007 by Konstantinos Papamichael, Keith Graeber, Erik Page and
      Michael Siminovitch (UC Case No. 2006-277-2) and assigned to The Regents;
      and continuing applications thereof including divisions, substitutions,
      extensions and continuation-in-part applications (only to the extent,
      however, that claims in the continuation-in-part applications are entitled
      to the priority filing date of the above-listed parent patent
      application); and any patents issuing on said application or continuing
      applications including reissues.

            

    

    

    
      	
            	
              (d)    

            	
              U.S.
      Patent Application Serial No. 60/900,080 entitled “Dual Photo-Sensor
      Dimming Daylight Controls” filed on February 7, 2007 by Konstantinos
      Papamichael, Keith Graeber, Erik Page and Michael Siminovitch (UC Case No.
      2006-347-1) and assigned to The Regents; and continuing applications
      thereof including divisions, substitutions, extensions and
      continuation-in-part applications (only to the extent, however, that
      claims in the continuation-in-part applications are entitled to the
      priority filing date of the above-listed parent patent application); and
      any patents issuing on said application or continuing applications
      including reissues.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    
      	
              1.11
      

            	
              "Sale"
      means, for Licensed Products and Licensed Services, the act of selling,
      leasing or otherwise transferring, providing, or furnishing such product
      or service, and for Licensed Method the act of performing such method, for
      any consideration.  Correspondingly, "Sell" means to make or
      cause to be made a Sale, and "Sold" means to have made or caused to be
      made a Sale.

            

    

    

    
      	
              1.12

            	
              “Sublicense”
      means a sublicense under this
Agreement.

            

    

    

    
      	
              1.13
      

            	
              “Sublicensee”
      means a sublicensee under this
Agreement.

            

    

    

    
      	
              1.14
      

            	
              “Sublicense
      Agreement” means a sublicense agreement under this
    Agreement.

            

    

    

    
      	
              1.15
      

            	
              “Valid
      Claim” means a claim of a patent where the claim (a) has not expired and
      (b) has not been held to be invalid by a final judgment of a court of
      competent jurisdiction from which no appeal can be or is
      taken.

            

    

    

     

    2.     GRANT

    

    
      	
              2.1
      

            	
              Subject
      to the limitations set forth in this Agreement, including without
      limitation the rights reserved in Paragraph 2.2 and the provisions of
      Paragraph 16.4(d), The Regents hereby grants to Licensee a co-exclusive
      license under Patent Rights, in the Licensed Field of Use in the Licensed
      Territory, to make, have made, use, offer for Sale, import, Sell and have
      Sold Licensed Products and Licensed Services, and to practice Licensed
      Methods.  Subject to Paragraph 2.2, The Regents agrees not to
      grant more than a total of four co-exclusive license agreements under
      Patent Rights at any given point in time, unless (a) The Regents obtains
      the approval of all co-exclusive licensees under Patent Rights at the
      given point in time, or (b) The Regents enters one or more additional
      license agreements in conjunction with resolution, or settlement, of
      litigation or anticipated litigation involving Patent
    Rights.

            

    

    

    
      	
              2.2
      

            	
              The
      Regents reserves the right to publish any technical data resulting from
      research performed by The Regents relating to the Inventions; to make and
      use the Inventions, Licensed Products, and Licensed Services; to practice
      Licensed Methods and associated technology; and to allow other educational
      and non-profit institutions to do any of the foregoing for educational and
      research purposes.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    
      	
              2.3  

            	
              This
      Agreement is subject to rights of, or obligations owed to, the U.S.
      Government, if any.

            

    

    

     

    3.     SUBLICENSES

    

    
      	
              3.1
      

            	
              The
      Regents hereby further grants to Licensee the right to grant to Affiliates
      and to Joint Ventures, but not to other entities, a Sublicense under the
      rights granted to Licensee hereunder, provided that, Licensee has license
      rights under this Agreement at the time of the grant of the
      Sublicense.  Every Sublicense will include:
  

            

    

    

    
      
        
          	
                	
                  (a)

                	
                  a
      statement setting forth the date upon which Licensee's license rights
      hereunder will expire;

                

        

      

    

     

    
      
        
          	
                	
                  (b) 

                	
                  a
      provision requiring the performance of all the obligations due to The
      Regents under this Agreement other than those rights and obligations
      specified in Article 4 (License Issue Fee/Maintenance Fees) and Paragraph
      5.3 (Minimum Annual
Royalty);

                

        

      

    

    

    
      
        
          	
                	
                  (c)

                	
                  a
      provision requiring payment of royalties to Licensee in an amount
      sufficient to permit Licensee to meet its royalty obligations to The
      Regents at the rates and bases set forth in this
  Agreement;

                

        

      

    

     

    
      
        
          	
                	
                  (d) 

                	
                  a
      prohibition on the grant of further Sublicenses;
  and

                

        

      

    

     

    
      
        
          	
                	
                  (e) 

                	
                  the
      same provision for indemnification of The Regents as has been provided for
      in this Agreement.

                

        

      

    

    

    
      	
              3.2
      

            	
              Licensee
      will pay to The Regents twenty-five percent (25 %) of any cash
      consideration, and of the cash equivalent of all other consideration,
      which is due to Licensee for the grant of rights under a Sublicense,
      excluding payments due to Licensee as a royalty based on Sales by the
      Sublicensee.  Payment owed to The Regents under this Paragraph
      3.2 is in addition to payments owed by Licensee to The Regents as Earned
      Royalties under Paragraph 5.1 based on Sales by the
      Sublicensee.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    
      	
              3.3
      

            	
              Licensee
      will notify The Regents of each Sublicense granted hereunder and furnish
      to The Regents a copy of each such Sublicense Agreement and any amendments
      thereof.

            

    

    

    
      	
              3.4
      

            	
              Affiliates
      and Joint Ventures of Licensee will have no licenses under Patent Rights
      except as granted by Sublicense pursuant to this
  Agreement.

            

    

    

    
      	
              3.5

            	
              For
      the purposes of this Agreement, the operations of all Sublicensees will be
      deemed to be the operations of Licensee, for which Licensee will be
      responsible.

            

    

    

    
      	
              3.6
      

            	
              Licensee
      will collect and guarantee payment of all monies and other consideration
      due The Regents from Sublicensees, and deliver all reports due The Regents
      and received from Sublicensees.

            

    

    

    
      	
              3.7
      

            	
              Upon
      termination of this Agreement for any reason, all Sublicenses that are
      granted by Licensee pursuant to this Agreement will automatically
      terminate.

            

    

     

     

    4.     LICENSE ISSUE
FEE/MAINTENANCE FEES

    

    
      	
              4.1
      

            	
              Licensee
      will pay to The Regents a non-creditable, non-refundable license issue fee
      (“License Issue Fee”) of Five Thousand Dollars ($5,000.00) due upon
      signing of this Agreement.

            

    

    

    
      	
              4.2
      

            	
              Until
      the first Sale of Licensed Products, Licensee will pay to The Regents a
      non-creditable, non-refundable license maintenance fee (“License
      Maintenance Fee”) of Three Thousand Dollars ($3,000.00) on each of the
      one-year, two-year and three-year anniversaries of the Effective Date, and
      Five Thousand Dollars ($5,000.00) on each anniversary of the Effective
      Date thereafter.

            

    

    

     

    5.     ROYALTIES

    

    
      	
              5.1
      

            	
              Licensee
      will pay to The Regents earned royalties (“Earned Royalties”) as
      follows:

            

    

    

    
      
        
          	
                	
                  (a) 

                	
                  For
      Licensed Products which are Fixtures, the Earned Royalty will be 0.85% of
      Net Sales of such Licensed
Products.

                

        

      

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    
      
        
          	
                	
                  (b) 

                	
                  For
      Licensed Products which are components of Fixtures, or which are otherwise
      not Fixtures, the Earned Royalty will be 1.70% of Net Sales of such
      Licensed Products.

                

        

      

    

    

    
      
        
          	
                	
                  (c) 

                	
                  In
      the event of Net Sales of Licensed Services, Licensee will provide The
      Regents with written notice of such Net Sales within thirty (30) days of
      the first instance of such Net Sales, and the parties will agree to an
      appropriate Earned Royalty to be paid by Licensee for Net Sales of
      Licenses Services, such Earned Royalty will be 1.5% of Net Sales of
      Licensed Services.

                

        

      

    

    

    
      	
              5.2
      

            	
              Earned
      Royalties accruing to The Regents will be paid to The Regents quarterly
      within sixty (60) days after the end of each calendar quarter as follows:
      May 31 (for first quarter); August 31 (for second quarter); November 30
      (for third quarter); and February 28 (for fourth
  quarter).

            

    

    

    
      	
              5.3
      

            	
              Beginning
      in the calendar year (“First Calendar Year”) in which the first Sale of
      Licensed Products or Licensed Services occurs, and in each calendar year
      thereafter, Licensee will pay to The Regents a minimum annual royalty
      (“Minimum Annual Royalty”) as
follows:

            

    

    

    
      
        	
              	
                (a) 

              	
                Five
      Thousand Dollars ($5.000.00) for the First Calendar
  Year;

              

      

    

    

    
      
        	
              	
                (b) 

              	
                Six
      Thousand Dollars ($6,000.00) for the calendar year which is one year
      subsequent to the First Calendar
Year;

              

      

    

    

    
      
        	
              	
                (c) 

              	
                Eight
      Thousand Dollars ($8,000.00) for the calendar year which is two years
      subsequent to the First Calendar
Year;

              

      

    

    

    
      
        	
                (d) 

              	
                Ten
      Thousand Dollars ($10,000.00) for the calendar year which is three years
      subsequent to the First Calendar Year;
and

              

      

    

    

    
      
        
          	
                	
                  (e) 

                	
                  Ten
      Thousand Dollars ($10,000.00) for each calendar year thereafter for the
      life of this Agreement.

                

        

      

    

    

    The
Minimum Annual Royalty will be paid to The Regents by February 28 of the year
subsequent to the applicable prior calendar year, and will be credited against
the Earned Royalties due and owing for such prior calendar year.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    
      	
              5.4

            	
              All
      payments due The Regents will be payable in United States
      dollars.  When Licensed Products, Licensed Services, or Licensed
      Methods are Sold for monies other than United States dollars, Earned
      Royalties due based on use or manufacture in the United States will first
      be determined in the foreign currency of the country in which the Sale was
      made and then converted into equivalent United States
      dollars.  The exchange rate will be that rate quoted in the
      Wall Street
      Journal on the last business day of the reporting
      period.

            

    

    

    
      	
              5.5
      

            	
              Payments
      due for Sales occurring in any country outside the United States will not
      be reduced by any taxes, fees, or other charges imposed by the government
      of such country on the remittance of royalty income.  Licensee
      will also be responsible for all bank transfer
  charges.

            

    

    

    
      	
              5.6
      

            	
              Licensee
      will make all payments under this Agreement either by check or electronic
      transfer, payable to "The Regents of the University of California" and
      Licensee will forward such payments to The Regents at the address shown in
      Paragraph 23.1.

            

    

    

    
      	
              5.7
      

            	
              If
      any patent or patent application, or any claim thereof, included within
      Patent Rights expires or is held invalid in a final decision by a court of
      competent jurisdiction and last resort and from which no appeal has been
      or can be taken, all obligation to pay Earned Royalties based on such
      patent, patent application or claim will cease as of the date of such
      expiration or final decision.  Licensee will not, however, be
      relieved from paying any Earned Royalties that accrued before such
      expiration or decision or that are based on another valid patent or claim
      not expired or involved in such
decision.

            

    

    

     

    
       
6.     DILIGENCE

    

    

    
      	
              6.1

            	
              Licensee,
      upon execution of this Agreement, will diligently proceed with the
      development, manufacture, and Sale of Licensed Products, Licensed
      Services, and Licensed Methods, and will diligently market them in
      quantities sufficient to meet the market
demand.

            

    

    

    
      	
              6.2

            	
              In
      addition to its obligations under Paragraph 6.1, Licensee commits to
      achieving objectives and milestones in its activities under this
      Agreement, as set forth below in this Paragraph 6.2.  Licensee
      will Sell Licensed Products or Licensed Services within five (5) years of
      the Effective Date of this Agreement, and will continue to Sell Licensed
      Products or Licensed Services during the subsequent term of this
      Agreement.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    
      	
              6.3

            	
              If
      Licensee is unable to meet any of its diligence obligations set forth in
      Paragraphs 6.1 and 6.2, then The Regents will so notify Licensee of
      failure to perform. Licensee will have the right and option to extend the
      target date of any such diligence obligation for a period of six (6)
      months upon the payment of five thousand dollars ($5000) within thirty
      (30) days of the date to be extended for each such extension option
      exercised by Licensee.  Licensee may further extend the target
      date of any diligence obligation for an additional six (6) months upon
      payment of an additional five thousand dollars
      ($5000).  Additional extensions may be granted only by written
      agreement of the parties.  These payments are in addition to the
      Maintenance Fees specified in Paragraph 4.2 and the Minimum Annual Royalty
      payments specified in Paragraph 5.3.  Should Licensee opt not to
      extend the obligation or fail to meet it by the extended target date, then
      The Regents will have the right and option to terminate this
      Agreement.  This right, if exercised by The Regents, supersedes
      the rights granted in Article 2 and Article
3.

            

    

    

    
      	
              6.4
      

            	
              To exercise either the right to
      terminate this Agreement for lack of diligence under Paragraph 6.1 or 6.2,
      The Regents will give Licensee written notice of the
      deficiency.  Licensee thereafter has ninety (90) days to cure
      the deficiency or to request arbitration, with such arbitration to take
      place in San Francisco, California and to be administered by JAMS
      (Judicial Arbitration and Mediation Services).  If The Regents
      has not received a written request for arbitration or satisfactory
      tangible evidence that the deficiency has been cured by the end of the
      ninety (90)-day period, then The Regents may, at its option, terminate the
      Agreement by giving written notice to Licensee.  These notices
      will be subject to Article 22
(Notices).

            

    

    

     

    7.     PROGRESS AND
ROYALTY REPORTS

    

    
      	
              7.1
      

            	
              For
      the period beginning January 1, 2008, within sixty (60) days of each
      subsequent June 30 and December 31, Licensee will submit to The Regents a
      semi-annual progress report covering Licensee's activities related to the
      development and testing of all Licensed Products, Licensed Services and
      Licensed Methods and the obtaining of necessary governmental approvals, if
      any, for marketing in the United States.  These progress reports
      will be made for all development activities until the first Sale occurs in
      the United States.

            

    

    

    
      	
              7.2
      

            	
              Each
      progress report will be a sufficiently detailed summary of activities of
      Licensee and any Sublicensees so that The Regents may evaluate and
      determine Licensee’s progress in development of Licensed Products,
      Licensed Services, and Licensed Methods, and in meeting its diligence
      obligations under Article 6, and will include (but not be limited to) the
      following: summary of work completed and in progress; current schedule of
      anticipated events and milestones, including the diligence milestones
      under Paragraph 6.2; anticipated market introduction dates for the
      Licensed Territory; and Sublicensees’ activities during the reporting
      period.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    
      	
              7.3

            	
               In
      Licensee’s progress report immediately subsequent to the first Sale by
      Licensee or a Sublicensee, Licensee will report the date of such first
      Sale.

            

    

    

    
      	
              7.4

            	
               After
      the first Sale, Licensee will make quarterly royalty reports to The
      Regents within sixty (60) days after the quarters ending March 31, June
      30, September 30, and December 31, of each year.  Each such
      royalty report will include at least the
  following:

            

    

    

    
      
        
          	
                  
                  

                	
                  (a) 

                	
                  The
      number of Licensed Products manufactured and the number of Licensed
      Products Sold;

                

        

      

    

    

    
      
        
          	
                	
                  (b) 

                	
                  Gross
      revenue from Sale of Licensed Products or Licensed
    Services;

                

        

      

    

    

    
      	
            	
              
                (c) 

              

            	
              
                Net
      Sales pursuant to Paragraph
1.9;

              

            

    

    

    
      	
            	
              
                (d) 

              

            	
              
                Total
      Earned Royalties due The Regents;
and

              

            

    

    

    
      	
            	
              
                (e) 

              

            	
              
                Names
      and addresses of any new Sublicensees along with a summary of the material
      terms of each new Sublicense Agreement entered into during the reporting
      quarter.

              

            

    

    

    
      
        
          	
                  7.5

                	
                  If
      no Sales have occurred during the report period, a statement to this
      effect is required in the royalty report for that
  period.

                

        

      

    

    

     

    8.     BOOKS AND
RECORDS

    

    
      	
              8.1

            	
              Licensee
      will keep full, true, and accurate books of accounts containing all
      particulars that may be necessary for the purpose of showing the amount of
      Earned Royalties payable to The Regents and Licensee’s compliance with
      other obligations under this Agreement.  Said books of accounts
      will be kept at Licensee's principal place of business or the principal
      place of business of the appropriate division of Licensee to which this
      Agreement relates.  Said books and the supporting data will be
      open at all reasonable times during normal business hours upon reasonable
      notice, for five (5) years following the end of the calendar year to which
      they pertain, to the inspection and audit by representatives of The
      Regents for the purpose of verifying Licensee's royalty statement or
      compliance in other respects with this Agreement.  Such
      representatives will be bound to hold all information in confidence except
      as necessary to communicate Licensee's non-compliance with this Agreement
      to The Regents.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    
      	
              8.2
      

            	
              The
      fees and expenses of The Regents' representatives performing such an
      examination will be borne by The Regents.  However, if an error
      in underpaid royalties to The Regents of more than ten percent (10%) of
      the total Earned Royalties due for any year is discovered, then the fees
      and expenses of these representatives will be borne by
      Licensee.

            

    

    

     

    9.     LIFE OF THE
AGREEMENT

    

    
      	
              9.1
      

            	
              Unless
      otherwise terminated by the operation of law or by acts of the parties in
      accordance with the terms of this Agreement, this Agreement will be in
      force from the Effective Date and will remain in effect for the life of
      the last-to-expire patent or last-to-be-abandoned patent application
      licensed under this Agreement, whichever is
  later.

            

    

    

    
      	
              9.2
      

            	
              Any
      termination of this Agreement will not affect the rights and obligations
      set forth in the following
articles:

            

    

    

    
      
        	
              	
                Article
      1

              	
                Definitions

              

      

    

    
      	
            	
              
                Article
      3

              

            	
              
                Sublicenses

              

            

    

    
      	
            	
              
                Article
      8

              

            	
              
                Books
      and Records

              

            

    

    
      	
            	
              
                Article
      9 

              

            	
              
                Life
      of the Agreement

              

            

    

    
      	
            	
              
                Article
      12

              

            	
              
                Disposition
      of Licensed Products Upon
Termination

              

            

    

    
      	
            	
              
                Article
      15

              

            	
              
                Use
      of Names and Trademarks

              

            

    

    
      	
            	
              
                Article
      16

              

            	
              
                Limited
      Warranties

              

            

    

    
      	
            	
              
                Article
      18

              

            	
              
                Indemnification

              

            

    

    
      	
            	
              
                Article
      22

              

            	
              
                Notices

              

            

    

    
      	
            	
              
                Article
      23

              

            	
              
                Payments

              

            

    

    
      	
            	
              
                Article
      25

              

            	
              
                Confidentiality

              

            

    

    
      	
            	
              
                Article
      28

              

            	
              
                Applicable
      Law; Venue; Attorneys’ Fees

              

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    
      
        
          	
                  9.3

                	
                  Any
      termination of this Agreement will not relieve Licensee of its obligation
      to pay any monies due or owing at the time of such termination and will
      not relieve any obligations, of either party to the other party,
      established prior to
termination.

                

        

      

    

    

     

    10.     TERMINATION
BY THE REGENTS

    

    
      	
              10.1

            	
              If
      Licensee should violate or fail to perform any term of this Agreement,
      then The Regents may give written notice of such default ("Notice of
      Default") to Licensee.  If Licensee should fail to repair such
      default within ninety (90) days of the effective date of such notice, The
      Regents will have the right to terminate this Agreement and the licenses
      herein by a second written notice ("Notice of Termination") to
      Licensee.  If a Notice of Termination is sent to Licensee, this
      Agreement will automatically terminate on the effective date of such
      notice.  Such termination will not relieve Licensee of its
      obligation to pay any royalty or license fees owing at the time of such
      termination and will not impair any accrued rights of The
      Regents.  These notices will be subject to Article 22
      (Notices).

            

    

    

    
      	
              10.2
      

            	
              Notwithstanding
      Paragraph 10.1, this Agreement will terminate immediately, upon written
      notice given by The Regents in its sole discretion, if Licensee files a
      claim including in any way the assertion that any portion of The Regents’
      Patent Rights is invalid or unenforceable where the filing of such claim
      is (a) by the Licensee directly, (b) by a third party on behalf of the
      Licensee, or (c) by a third party at the written urging of the
      Licensee.

            

    

    

     

    11.     TERMINATION
BY LICENSEE

    

    
      	
              11.1
      

            	
              Licensee
      will have the right at any time to terminate this Agreement in whole or as
      to any portion of Patent Rights by giving notice in writing to The
      Regents.  Such notice of termination will be subject to Article
      22 (Notices) and termination of this Agreement will be effective ninety
      (90) days after the effective date of such
  notice.

            

    

    

    
      	
              11.2
      

            	
              Any
      termination pursuant to Paragraph 11.1 will not relieve Licensee of any
      obligation or liability accrued hereunder prior to such termination or
      rescind anything done by Licensee or any payments made to The Regents
      hereunder prior to the time such termination becomes effective, and such
      termination will not affect in any manner any rights of The Regents
      arising under this Agreement prior to such
  termination.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    12.     DISPOSITION
OF LICENSED PRODUCTS UPON TERMINATION

    

    
      	
              12.1
      

            	
              Upon
      termination of this Agreement, for a period of one hundred twenty (120)
      days after the date of termination Licensee may complete and Sell any
      partially made Licensed Products and continue to render any previously
      commenced Licensed Services, and continue the practice of Licensed Methods
      only to the extent necessary to do the foregoing; provided that, all such
      Sales will be subject to the terms of this Agreement including, but not
      limited to, the payment of royalties at the rate and at the time provided
      herein and the rendering of reports
thereon.

            

    

    

     

    13.     PATENT
PROSECUTION AND MAINTENANCE

    

    
      	
              13.1
      

            	
              The
      Regents will diligently prosecute and maintain the United States patent
      applications and patents under Patent Rights, subject to Licensee’s
      reimbursement of The Regents’ out-of-pocket costs under Article
      13.3.  All patent applications and patents under Patent Rights
      will be held in the name of The Regents.  The Regents will have
      sole responsibility for retaining and instructing patent
      counsel.  The Regents will promptly provide Licensee with copies
      of all official patent office correspondence so that Licensee may be
      informed of the continuing prosecution, and Licensee agrees to keep this
      documentation confidential in accordance with Article
      25.  Licensee may provide comments upon such documentation, and
      The Regents agrees to take such comments into account, as appropriate, if
      timely received.

            

    

    

    
      	
              13.2
      

            	
              Subject
      to Paragraph 13.3, one-fourth of all costs incurred by The Regents through
      December 31, 2007 for preparing, filing, prosecuting, and maintaining
      patent applications and patents under Patent Rights will be paid by
      Licensee.  If at any given date subsequent to December 31, 2007
      there are less than a total of four (4) co-exclusive licensees under
      Patent Rights, and for so long of a time period as there are less than a
      total of four (4) such co-exclusive licensees, then upon notice from The
      Regents, Licensee will pay during such time period 1/n of all patent costs
      incurred subsequent to December 31, 2007 for preparing, filing,
      prosecuting, and maintaining patent applications and patents under Patent
      Rights, where “n” is the total number of co-exclusive licensees as of such
      date.  Payments are due within thirty (30) days after receipt of
      invoice from The Regents.

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    
      	
              13.3
      

            	
              Licensee's
      obligation to underwrite and to pay costs for
      preparing,  filing, prosecuting, and maintaining patent
      applications and patents under Patent Rights as called for in Paragraph
      13.2 will continue for so long as this Agreement remains in
      effect.  In the event of a non-ordinary prosecution event
      (“Non-Ordinary Prosecution Event”), as that term is defined below in this
      Paragraph 13.3, Licensee may terminate its obligations to pay such costs
      with respect to any given patent application or patent under Patent Rights
      upon three (3) months’ written notice to The Regents.  The
      Regents will undertake to curtail applicable patent costs billable to
      Licensee for such patent application or patent when such a notice is
      received from Licensee.  The Regents may continue prosecution
      and/or maintenance of such patent application or patent at its sole
      discretion, provided that Licensee will have no further right or licenses
      under such patent application or patent.  For purposes of this
      Paragraph 13.3, Non-Ordinary Prosecution Event means (a) an appeal; (b) an
      interference; (c) a reexamination; (d) a reissue; or (e) a divisional,
      continuation, continuation-in-part or other refiling of a patent
      application (exclusive of the refiling of U.S. provisional patent
      application Serial No. 60/900,080, specified in Paragraph 1.10(d), as a
      U.S. non-provisional patent application), where the total cost of the
      refiling of the patent application (exclusive of subsequent prosecution
      costs for the refiled patent application) to be billed by The Regents to
      co-exclusive licensees under Patent Rights is in excess of
      $10,000.

            

    

    

     

    14.     MARKING

    

    
      	
              14.1
      

            	
              Licensee
      will mark all products made, used or Sold under this Agreement, or their
      containers, in accordance with applicable patent marking
    laws.

            

    

    

     

    15.     USE OF NAMES
AND TRADEMARKS

    

    
      	
              15.1
      

            	
              Nothing
      contained in this Agreement will be construed as conferring any right to
      use in advertising, publicity or other promotional activities any name,
      trademark, trade name, or other designation of either party by the other
      (including any contraction, abbreviation, or simulation of any of the
      foregoing).  Unless required by law or consented to in writing
      by The Regents, the use by Licensee of the name "The Regents of the
      University of California" or the name of any University of California
      campus in advertising, publicity or other promotional activities is
      expressly prohibited.

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    16.     LIMITED
WARRANTIES

    

    
      	
              16.1
      

            	
              The
      Regents warrants to Licensee that it has the lawful right to grant this
      license.

            

    

    

    
      	
              16.2
      

            	
              This
      license and the associated Inventions are provided WITHOUT WARRANTY OF
      MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY,
      EXPRESSED OR IMPLIED.  THE REGENTS MAKES NO REPRESENTATION OR
      WARRANTY THAT THE INVENTIONS, PATENT RIGHTS, LICENSED PRODUCTS, LICENSED
      SERVICES OR LICENSED METHODS WILL NOT INFRINGE ANY PATENT OR OTHER
      PROPRIETARY RIGHT.

            

    

    

    
      	
              16.3
      

            	
              IN
      NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR
      CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE
      OF THE INVENTIONS, PATENT RIGHTS, LICENSED METHODS, LICENSED SERVICES OR
      LICENSED PRODUCTS.

            

    

    

    
      	
              16.4
      

            	
              Nothing
      in this Agreement is or will be construed
as:

            

    

    

    
      
        
          	
                  
                  

                	
                  (a)

                	
                  A
      warranty or representation by The Regents as to the patentability,
      validity, enforceability or scope of Patent Rights;
  or

                

        

      

    

    

    
      
        
          	
                	
                  (b)

                	
                  A
      warranty or representation that anything made, used, or Sold under any
      license granted in this Agreement is or will be free from infringement of
      patents of third parties;
or

                

        

      

    

    

    
      
        
          	
                	
                  (c)

                	
                  An
      obligation to bring or prosecute actions or suits against third parties
      for patent infringement;
or

                

        

      

    

    

    
      
        
          	
                	
                  (d)

                	
                  Conferring
      by implication, estoppel, or otherwise any license or rights under any
      patents of The Regents other than Patent Rights, regardless of whether
      such patents are dominant or subordinate to Patent Rights;
    or

                

        

      

    

    

    
      
        
          	
                	
                  (e)

                	
                  An
      obligation to furnish any know-how not provided in the patents and patent
      applications under Patent
Rights.

                

        

      

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    17.     PATENT
INFRINGEMENT

    

    
      	
              17.1
      

            	
              In
      the event that Licensee learns of the substantial infringement of any
      Patent Rights, Licensee will promptly provide The Regents with notice and
      reasonable evidence of such infringement (“Infringement
      Notice”).  Licensee will not notify a third party, including the
      infringer, of the infringement without first obtaining written consent of
      The Regents.   If The Regents requests, Licensee will
      assist The Regents in terminating such infringement without
      litigation.

            

    

    

    
      	
              17.2
      

            	
              If
      such infringing activity has not been abated within ninety (90) days
      following the effective date of the Infringement Notice, The Regents, in
      its sole discretion may institute suit for patent infringement against the
      infringer.  In the event Licensee wishes to join such suit, and
      The Regents consents in writing to such joinder, such joinder will be
      subject to written agreement between (a) The Regents and Licensee, or (b)
      The Regents, Licensee and one or more other co-exclusive licensees under
      Patent Rights (if The Regents consents to joinder of such one or more
      other co-exclusive licensees), that addresses procedures and terms for
      bringing such suit, including without limitation with respect to (i)
      choice of counsel, (ii) litigation control and responsibilities, (iii)
      payment of costs, and (iv) allocation of
  proceeds.

            

    

    

    
      	
              17.3
      

            	
              In
      no event will The Regents be obligated to institute an infringement suit,
      either as a sole plaintiff or jointly with
  Licensee.

            

    

    

     

    18.     INDEMNIFICATION

    

    
      	
              18.1
      

            	
              Licensee
      will, and will require its Sublicensees to, indemnify, hold harmless, and
      defend The Regents and its officers, employees, and agents; sponsor(s) of
      the research that led to the Inventions; and the inventors of any patents
      and patent applications under Patent Rights and their employers, against
      any and all claims, suits, losses, damages, costs, fees, and expenses
      resulting from or arising out of exercise of this license or any
      Sublicense.  This indemnification will include, but not be
      limited to, any product liability.

            

    

    

    
      	
              18.2  

            	
              Licensee,
      at its sole cost and expense, will insure its activities in connection
      with any work performed hereunder and will obtain, keep in force, and
      maintain the following insurance:

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    
      
        
          	
                	
                  (a) 

                	
                  Commercial
      Form General Liability Insurance (contractual liability included) with
      limits as follows:

                

        

      

    

    
      

      
        	
                Each
      Occurrence

              	 	$	5,000,000	 
	
                Products/Completed
      Operations Aggregate

              	 	$	10,000,000	 
	
                Personal
      and Advertising Injury 

              	 	$	5,000,000	 
	
                General
      Aggregate 

              	 	$	10,000,000	 

      

    If the
above insurance is written on a claims-made form, it will continue for three (3)
years following termination or expiration of this Agreement. The insurance will
have a retroactive date of placement prior to or coinciding with the Effective
Date of this Agreement; and

    

    
      
        
          	
                	
                  (b) 

                	
                   Worker's
      Compensation as legally required in the jurisdiction in which Licensee is
      doing business.

                

        

      

    

    

    
      
        
          	
                  18.3

                	
                   The coverage and
      limits referred to in Subparagraphs 18.2a and 18.2b will not in any
      way limit the liability of Licensee under this Article 18. Upon the
      execution of this Agreement, Licensee will furnish The Regents with
      certificates of insurance evidencing compliance with all requirements, and
      Licensee will promptly notify The Regents of any material modification of
      the insurance coverages. Such certificates
will:

                

        

      

    

    

    
      
        
          	
                	
                  (a) 

                	
                   provide
      for thirty (30) days' (ten (10) days for non-payment of premium) advance
      written notice to The Regents of any cancellation of insurance
      coverages;

                

        

      

    

    

    
      
        
          	
                	
                  (b) 

                	
                   indicate
      that The Regents has been endorsed as an additional insured under the
      coverage described in Paragraph l8.2;
and

                

        

      

    

    

    
      
        
          	
                	
                  (c) 

                	
                   include
      a provision that the coverage will be primary and will not participate
      with, nor will be excess over, any valid and collectable insurance or
      program of self-insurance maintained by The
  Regents.

                

        

      

    

    

    
      	
              18.4  

            	
              The
      Regents will promptly notify Licensee in writing of any claim or suit
      brought against The Regents for which The Regents intends to invoke the
      provisions of this Article 18.  Licensee will keep The Regents
      informed of its defense of any claims pursuant to this Article
      18.

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    19.     COMPLIANCE
WITH LAWS/EXPORT CONTROLS

    

    
      	
              19.1
      

            	
              The
      Licensee will comply with all applicable international, national, state,
      regional, and local laws and regulations in performing its obligations
      hereunder and in Licensee’s use, manufacture, Sale, or import of the
      Licensed Products or Licensed Services, or in Licensee’s practice of the
      Licensed Method.  The Licensee will observe all applicable
      United States and foreign laws and regulations governing the transfer to
      foreign countries of technical data related to Licensed Products,
      including without limitation with respect to the International Traffic in
      Arms Regulations (ITAR) and the Export Administration
      Regulations.

            

    

    

    
      	
              19.2
      

            	
              Licensee
      understands that The Regents is subject to United States laws and
      regulations (including the Arms Export Control Act, as amended, and the
      Export Administration Act of 1979), controlling the export of technical
      data, computer software, laboratory prototypes and other commodities, and
      The Regents' obligations to Licensee under this Agreement are contingent
      on and subject to compliance with such laws and
      regulations.  The transfer of certain technical data and/or
      commodities may require a license from the cognizant agency of the United
      States Government and/or written assurances by Licensee that Licensee will
      not export such technical data and/or commodities to certain foreign
      countries without prior approval of such agency.  The Regents
      neither represents that such a license will not be required nor that, if
      required, it will be issued.

            

    

    

     

    20.     GOVERNMENT
APPROVAL OR REGISTRATION

    
 

    
      	
              20.1
      

            	
              If
      this Agreement or any associated transaction is required by the law of any
      nation to be either approved or registered with any governmental agency,
      Licensee will assume all legal obligations to do so.  Licensee
      will notify The Regents if it becomes aware that this Agreement is subject
      to a United States or foreign government reporting or approval
      requirement.  Licensee will make all necessary filings and pay
      all costs including fees, penalties, and all other out-of-pocket costs
      associated with such reporting or approval
  process.

            

    

     

    21.     ASSIGNMENT

    

    
      	
              21.1
      

            	
              This
      Agreement is binding upon and will inure to the benefit of The Regents,
      its successors and assigns.  This Agreement is personal to
      Licensee and assignable by Licensee only with the written consent of The
      Regents, provided that, Licensee may, on written notice to The Regents,
      assign this Agreement, including without limitation all obligations owed
      to The Regents hereunder, to an acquiror of all or substantially all of
      Licensee's stock or assets.

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    22.     NOTICES

     

    
      	
              22.1

            	
               All
      notices under this Agreement will be deemed to have been fully given and
      effective when done in writing and delivered in person, or mailed by
      registered or certified U.S. mail, or deposited with a carrier service
      requiring signature by recipient, and addressed as
  follows:

            

    

     

    
      
        	
                To
      The Regents: Technology

              	
                 Transfer
      Services

              
	 
      	
                1850
      Research Park Drive, Suite 100

              
	 
      	
                Davis,
      CA 95618-6134

              
	 
      	
                Attn.:  Director
      (UC Case Nos.: 2006-239; 2006-277; and 2006-347)

              
	 
      	 
      
	
                To
      Licensee:

              	
                 Axis
      Technologies, Inc.

              
	 
      	
                  2055
      So. Folsom Street

              
	 
      	
                 Lincoln,
      Nebraska 68522

              
	 
      	
                 Telephone:  (866)
      458-9880

              
	 
      	
                 Facsimile:    (866)
      458-9881

              
	 
      	
                 Attn.:  Kip
      Hirschbach

              

      

       

    

    Either
party may change its address upon written notice to the other
party.

    

     

    23.     PAYMENTS

    

    
      	
              23.1
      

            	
              Payments
      to The Regents will be made to the following
  address:

            

    

     

    
      
        
          	 
      	
                  The
      Regents of the University

                
	 
      	
                  of
      California

                
	 
      	
                  1111
      Franklin Street, 5th Floor

                
	 
      	
                  Oakland,
      CA 94607-5200

                
	 
      	
                  Attention:  Executive
      Director,

                
	 
      	
                  Research
      Administration and

                
	 
      	
                  Technology
      Transfer

                
	 
      	
                  Referring
      to: UC Case Nos. 2006-239; 2006-277;
      and      2006-347

                

        

      

    

    
    

    

    
      	
              23.2
      

            	
              If
      monies owed to The Regents under this Agreement are not received by The
      Regents when due, Licensee will pay to The Regents interest charges at a
      rate of ten percent (10%) per annum.  Such interest will be
      calculated from the date payment was due until actually received by The
      Regents.  Such accrual of interest will be in addition to, and
      not in lieu of, enforcement of any other rights of The Regents related to
      such late payment.  Acceptance of any late payment will not
      constitute a waiver under Article 24 (Waiver) of this
      Agreement.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    24.     WAIVER

    

    
      	
              24.1
      

            	
              The
      failure of either party to assert a right hereunder or to insist upon
      compliance with any term or condition of this Agreement will not
      constitute a waiver of that right or excuse a similar subsequent failure
      to perform any such term or condition by the other party.  None
      of the terms and conditions of this Agreement can be waived except by the
      written consent of the party waiving
compliance.

            

    

    

     

    25.     CONFIDENTIALITY

    

    
      	
              25.1
      

            	
              Subject
      to Paragraphs 25.2 and 25.3, each party will hold the other party's
      proprietary business and technical information, patent prosecution
      material and other proprietary information, including the negotiated terms
      of this Agreement, in confidence and against disclosure to third parties
      with at least the same degree of care as it exercises to protect its own
      data and license agreements of a similar nature.  This
      obligation will expire five (5) years after the termination or expiration
      of this Agreement.

            

    

    

    
      	
              25.2
      

            	
              Nothing
      contained herein will in any way restrict or impair the right of Licensee
      or The Regents to use, disclose, or otherwise deal with any information or
      data which:

            

    

    

    
      
        
          	
                	
                  (a)

                	
                  at
      the time of disclosure to a receiving party is available to the public or
      thereafter becomes available to the public by publication or otherwise
      through no act of the receiving party;
or

                

        

      

    

    

    
      
        
          	
                	
                  (b)

                	
                  the
      receiving party can show by written record was in its possession prior to
      the time of disclosure to it hereunder and was not acquired directly or
      indirectly from the disclosing party;
or

                

        

      

    

    

    
      
        
          	
                	
                  (c)

                	
                  is
      independently made available to the receiving party without restrictions
      as a matter of right by a third party;
or

                

        

      

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    
      
        
          	
                	
                  (d)

                	
                  is
      independently developed by employees of the receiving party who did not
      have access to the information disclosed by the disclosing party;
      or

                

        

      

    

    

    
      
        
          	
                	
                  (e)

                	
                  is
      subject to disclosure under the California Public Records Act or other
      requirements of law.

                

        

      

    

    

    
      	
              25.3
      

            	
              The
      Regents will be free to release to the inventors and senior administrators
      employed by The Regents the terms and conditions of this Agreement upon
      their request.  If such release is made, The Regents will inform
      such employees of the confidentiality obligations set forth above and will
      request that they do not disclose such terms and conditions to
      others.  Should a third party inquire whether a license to
      Patent Rights is available, or should The Regents otherwise wish to
      publicly announce the existence of this Agreement, The Regents may
      disclose the existence of this Agreement, the extent of the grant in
      Articles 2 and 3, and the name of
Licensee.

            

    

    

    
      	
              25.4
      

            	
              Licensee
      and The Regents agree to destroy or return to the disclosing party
      proprietary information received from the other in its possession within
      fifteen (15) days following the effective date of termination of this
      Agreement.  However, each party may retain one copy of
      proprietary information of the other solely for archival purposes in
      non-working files for the sole purpose of verifying the ownership of the
      proprietary information, provided such proprietary information will be
      subject to the confidentiality provisions set forth in this Article
      25.  Licensee and The Regents agree to provide each other,
      within thirty (30) days following termination of this Agreement, with a
      written notice that proprietary information has been returned or
      destroyed.

            

    

    

     

    26.     FORCE
MAJEURE

    

    
      	
              26.1
      

            	
              Except
      for Licensee’s obligation to make any payments to The Regents hereunder,
      and subject to Paragraph 26.2 the parties  will be excused from
      any performance required hereunder if such performance is rendered
      impossible or infeasible due to any catastrophe or other major event
      beyond their reasonable control, including, without limitation, war, riot,
      and insurrection; laws, proclamations, edicts, ordinances, or regulations;
      strikes, lockouts, or other serious labor disputes; and floods, fires,
      explosions, or other natural disasters.  When such events have
      abated, the parties' respective obligations hereunder will
      resume.

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    
      	
              26.2
      

            	
              Either
      party to this Agreement will have the right to terminate this Agreement
      upon thirty (30) days’ prior written notice if either party is unable to
      fulfill its obligations under this Agreement due to any of the causes
      specified in Paragraph 26.1 for a period of one (1)
  year.

            

    

    

     

    27.     SEVERABILITY

    

    
      	
              27.1
      

            	
              The
      provisions of this Agreement are severable, and in the event that any
      provision of this Agreement is determined to be invalid or unenforceable
      under any controlling body of law, such invalidity or enforceability will
      not in any way affect the validity or enforceability of the remaining
      provisions hereof.

            

    

    

     

    28.     APPLICABLE
LAW; VENUE; ATTORNEYS’ FEES

    

    
      	
              28.1
      

            	
              THIS
      AGREEMENT WILL BE CONSTRUED, INTERPRETED, AND APPLIED IN ACCORDANCE WITH
      THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules
      that would direct the application of the laws of another jurisdiction,
      except that the scope and validity of any patent or patent application
      under Patent Rights will be determined by the applicable law of the
      country of such patent or patent application.  Any legal action
      brought by the parties relating to this Agreement will be conducted in San
      Francisco, California. The prevailing party in any legal action under this
      Agreement will be entitled to recover its reasonable attorneys’ fees in
      addition to its costs and necessary
  disbursements.

            

    

    

     

    29.     SCOPE OF
AGREEMENT

    

    
      	
              29.1
      

            	
              This
      Agreement incorporates the entire agreement between the parties with
      respect to the subject matter hereof and supersedes all previous
      communications, representations or understandings, whether oral or
      written, between the parties relating to the subject matter hereof
      (including the Confidentiality Agreement specified in the Recitals above
      of this Agreement, effective June 6, 2007), provided that, the
      Affiliate Membership Agreement between The Regents and Licensee, effective
      October 19, 2006, remains in full force and
  effect.

            

    

    

    
      
        
          	
                  29.2

                	
                  Neither
      party will use this Agreement as a basis to invoke the CREATE Act, 35
      U.S.C.Sec.103(c)(2),
      without the written consent of the other
party.

                

        

      

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    
      
        
          	
                  29.3

                	
                  This
      Agreement may be altered or modified only by written amendment duly
      executed by the
parties.

                

        

      

    

    

    In
witness whereof, the parties have executed this Agreement in duplicate originals
by their duly authorized officers or representatives.

     

    
    

     

    
      	 AXIS
      TECHNOLOGIES, INC.	 	 THE REGENTS OF
      THE UNIVERSITY OF
      CALIFORNIA
	 	 	 	 	 
	By	 /s/ Jim
      Erickson	 	By	 /s/ David R.
      McGee
	 	 	 	 	David R. McGee
	Printed 	 Name	 Jim
      Erickson 	 	 	Executive Director,
      UC Davis 
	 	 	 	 	InnovationAccess
	Title	 President	 	 	 
	 	 	 	 	 
	Date 	 2/8/2008 	 	Date	 2/14/2008

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    

    TABLE OF
CONTENTS

     

    
      
        	
                1.

              	
                DEFINITIONS

              	
                2

              
	
                2.

              	
                GRANT

              	
                5

              
	
                3.

              	
                SUBLICENSES

              	
                6

              
	
                4.

              	
                LICENSE
      ISSUE FEE/MAINTENANCE FEES

              	
                7

              
	
                5.

              	
                ROYALTIES

              	
                7

              
	
                6.

              	
                DILIGENCE

              	
                9

              
	
                7.

              	
                PROGRESS
      AND ROYALTY REPORTS

              	
                10

              
	
                8.

              	
                BOOKS
      AND RECORDS

              	
                11

              
	
                9.

              	
                LIFE
      OF THE AGREEMENT

              	
                12

              
	
                10.

              	
                TERMINATION
      BY THE REGENTS

              	
                13

              
	
                11.

              	
                TERMINATION
      BY LICENSEE

              	
                13

              
	
                12.

              	
                DISPOSITION
      OF LICENSED PRODUCTS UPON TERMINATION

              	
                14

              
	
                13.

              	
                PATENT
      PROSECUTION AND MAINTENANCE

              	
                14

              
	
                14.

              	
                MARKING

              	
                15

              
	
                15.

              	
                USE
      OF NAMES AND TRADEMARKS

              	
                15

              
	
                16.

              	
                LIMITED
      WARRANTIES

              	
                16

              
	
                17.

              	
                PATENT
      INFRINGEMENT

              	
                17

              
	
                18.

              	
                INDEMNIFICATION

              	
                17

              
	
                19.

              	
                COMPLIANCE
      WITH LAWS/EXPORT CONTROLS

              	
                19

              
	
                20.

              	
                GOVERNMENT
      APPROVAL OR REGISTRATION

              	
                19

              
	
                21.

              	
                ASSIGNMENT

              	
                19

              
	
                22.

              	
                NOTICES

              	
                20

              
	
                23.

              	
                PAYMENTS

              	
                20

              
	
                24.

              	
                WAIVER

              	
                21

              
	
                25.

              	
                CONFIDENTIALITY

              	
                21

              
	
                26.

              	
                FORCE
      MAJEURE

              	
                22

              
	
                27.

              	
                SEVERABILITY

              	
                23

              
	
                28.

              	
                APPLICABLE
      LAW; VENUE; ATTORNEYS’ FEES

              	
                23

              
	
                29.

              	
                SCOPE
      OF AGREEMENT

              	
                23

              

      

    

     

     

    iex10_5.htm

    
      

    

    Exhibit
10.5

     

    MANUFACTURING
AGREEMENT

     

    This
Manufacturing Agreement (hereinafter “Agreement”) is entered into by and
between:

    

    AXIS TECHNOLOGIES, INC., a
Delaware corporation, with it principal place of business at 2055 South Folsom
Street, Lincoln, Nebraska, 68522, and Shanghai Gold Lighting Co., Ltd. a Peoples
Republic of China Company with its principal place of business at No. 218 Minhe
Road, Shanghai, PRC 200070, with reference to the following facts:

    

    
      	
               
      

            	
              A.

            	
              Shanghai
      Gold is engaged in the development, manufacture and sale of certain
      electrical energy saving products, including the Products defined in this
      Agreement;

            

    

    

    
      	
               
      

            	
              B.

            	
              Axis
      wishes to source the Products from a qualified party and wishes to
      authorize such party to manufacture the Products for and to supply the
      Products exclusively to Axis.

            

    

    

    
      	
               
      

            	
              C.

            	
              Manufacturer
      is willing to manufacture the Products and supply them to Axis and has
      represented to Axis that it has the requisite manufacturing facilities,
      personnel and expertise.

            

    

    

    In
consideration of the foregoing, the mutual promises set forth below and the
mutual benefits to be derived therefrom, Axis and Manufacturer hereby agree as
follows:

    

    For
purposes of this Agreement, the following terms shall have the meanings and
definitions set forth below:

     

    
      
        
           

        

        
          -1-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
1

    

    Definitions

    

    1.1           “Affiliate”:
of a party shall mean any company or other business entity controlled by,
controlling or under common control with Axis and Shanghai Gold. “Control” shall
mean the direct or indirect ownership of more than fifty per cent (50%) of the
voting rights or income interest in a company or other business entity or such
other relationship as, in fact, constitutes actual control.

    

    1.2           “Confidential
Information” shall mean and include the Product Specifications, customer
lists and all other trade secrets, know—how, data and other information not in
the public domain that relate to, are embodied in or are associated with, the
Products and/or the present or future products, technology, services, business,
customers and/or affairs of Axis and Shanghai Gold. Confidential Information may
be disclosed orally, in writing or in any other recorded or tangible form. Trade
secrets, know—how, data and information shall be considered to be Confidential
Information hereunder (a) if they have been marked as such; (b) if Manufacturer
has been advised orally or in writing of their confidential nature; or (c) if,
due to their character or nature, a reasonable person in a like position and
under like circumstances as Manufacturer would treat them as
confidential.

    

    1.3           “Improvements
and Modifications” shall mean any and all changes in the design or
specifications of any of the Products including the addition of new features or
capacities.

    

    1.4           “Intellectual
Property Rights” shall mean any and all trademarks, patents, licenses,
copyrights and other proprietary rights owned or used by Axis and Shanghai Gold
or its affiliates in connection with the Products.

    

    1.5           “Product
Specifications” shall mean and include any and all designs, drawings,
blueprints, formulations, models, specifications, manufacturing data,
techniques, processes, procedures, performance data, know—how and other
technical information relating to the design, manufacture and/or operation of
the Products, which are provided by Axis to Manufacturer for the purpose of
manufacturing Products pursuant to this Agreement, or provided by Manufacturer
to Axis for the purpose of confirming same to Axis.

    

    1.6           “Third
Party Right” shall mean and include any patent, copyright, trademark,
trade secret or other proprietary right of any third person or entity in the
Territory that conflicts with the activities contemplated under this
Agreement.

    

    1.7           “Trademarks”
shall mean any and all trademarks, whether registered or not, owned or used by
Axis for the Products and any and all trade names used by Axis and its
affiliates in connection with the sale of the Products including, without
limitation, any non—English language variants of such trademarks and
tradenames.

     

    
      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
2

    

    SUPPLY
OF PRODUCTS

    

    2.1           Sale
and Purchase. Subject to the terms and conditions set forth in this
Agreement, Manufacturer agrees to sell to Axis, and Axis agrees to purchase from
Manufacturer, such products as Axis may order from time to time.

    

    2.2           Exclusive
Supply. During the term of this Agreement, neither Manufacturer nor its
employees or agents shall manufacture or supply the Products to any purchaser
other than Axis. During the term of this Agreement, neither Manufacturer nor its
employees or agents shall solicit business from any of Shanghai Gold’s existing
customers of the Products or otherwise market the Products without Axis’s prior
consent.

    

    2.2(a)      Exclusive
Manufacturing Rights. During the term of this Agreement, neither Axis nor
its employees or agents shall purchase the Products from any manufacturer other
than Shanghai Gold. During the term of this Agreement, neither Axis nor its
employees or agents shall solicit manufacturing services of the Products by any
manufacturer other than Shanghai Gold without Shanghai Gold’s prior
consent.

    

    2.3           Minimum
Commitments. During the initial five—year term of this Agreement and each
renewal term thereafter, Axis expects to purchase from Manufacturer, and
Manufacturer shall supply to Axis, an amount of Products valued at no less than
$ 1,500,000.00 (U.S. dollars) annually, based on the prices then in effect for
the Products. At the request of Manufacturer, Axis shall prepare and submit to
Manufacturer periodic forecasts of Product orders and requirements estimates for
the Products. On the basis of such forecasts and Manufacturer’s performance
under the Agreement, the parties shall periodically reassess the reasonableness
of the minimum commitment. By mutual written consent, the parties may establish
a new minimum commitment for any annual term, calendar quarter or other period
in which the Agreement is in effect.

    

    2.4           Independent
Contractors. The parties agree that, in the performance of this Agreement
they are and shall be independent contractors. Nothing herein shall be construed
to constitute either party as the agent of the other party for any purpose
whatsoever, and neither party shall bind or attempt to bind the other party to
any contract or the performance of any obligation or represent to any third
party that it has any right to enter into any binding obligation on the other
party’s behalf.

    

    
      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
3

    

    PROCESSING
MID MANUFACTURE OF PRODUCTS

    

    3.1           Product
Specifications. Unless already in possession of Manufacturer, Axis shall
promptly deliver to Manufacturer, or grant Manufacturer access to, copies of all
data and documents embodying the product specifications required to permit
Manufacturer to manufacture the Products. If the product specifications are
improved, enhanced or otherwise revised by Axis or Shanghai Gold during the
effective period of this Agreement, Axis or Shanghai Gold shall promptly provide
each other a data package, which shall include all such revised product
specifications. Thereafter, Manufacturer shall utilize all such revised product
specifications. Thereafter, Manufacturer shall utilize all such revised product
specifications in the manufacture of Products.

    

    3.2           Sourcing
of Parts, Components and Materials. Manufacturer shall purchase all
parts, components and materials necessary to manufacture the Products ordered by
Axis hereunder. Individual product labeling, coding, and packaging shall be
provided by Manufacturer per Axis’ s specifications.

    

    3.3           Production.
The product specifications to be supplied by Axis or Shanghai Gold hereunder
shall include data, know-how and other technical information concerning
manufacturing procedures that have been used by Shanghai Gold or its
representatives to manufacture the Products. Manufacturer may adopt any existing
manufacturing processes or establish its own new production methods; provided,
however, that Manufacturer shall employ proper equipment, machinery and
production methods to ensure that the Products will at all times meet the
production specifications.

    

    3.4           Monitoring
of Production. Upon reasonable notice and during Manufacturer’s regular
hours of business, Axis (or its representatives) shall have the right to (a)
examine Manufacturer’s purchasing records to determine whether parts, components
and materials acquired for use in the Products have been purchased from approved
vendors; (b) inspect work in progress to determine the adequacy of production
methods and equipment employed by Manufacturer, and (c) conduct spot inspections
of finished Products to verify that the Products have been manufactured in
accordance with the product specifications. All representatives of Axis
conducting such inspections shall comply with all applicable safety and security
rules of Manufacturer.

    

    3.5           Testing.
The finished Products shall be tested by Manufacturer in accordance with
procedures established by the parties from time to time. Axis shall assume
responsibility for all required testing for code compliance and certification
standards to promote and sell the product. Axis and Shanghai Gold shall design
or contract all product tests and testing equipment and shall provide each other
with all technical instruction and information necessary for the performance of
Product testing.

    

    
      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
4

    

    ORDER
PROCEDURE AND SHIPMENT

    

    4.1           Purchase
Orders. All purchase orders shall be placed by Axis in writing and shall
be subject to the terms and conditions set forth in this Agreement. Manufacturer
shall acknowledge the receipt of and accept Axis’s purchase orders within ten
(10) calendar days of receipt. Axis acknowledges that Manufacturer is producing
Products solely at the order and direction of Axis and that, therefore, all
purchase orders shall be non-cancelable.

    

    4.2           Delivery
Schedule and Inventory. Manufacturer shall use its best efforts to fill
all purchase orders of Axis within sixty (60) calendar days after the receipt of
Axis’s purchase orders.

    

    4.3           Shipment.
Manufacturer shall ship the Products in accordance with Axis’s instructions to
the destination specified by Axis. Title to the Products and risk of loss shall
pass from Manufacturer to Axis f.o.b. Manufacturer’s facility in Los Angeles,
California, U.S.A. or at such other point of delivery designated in Axis’s
purchase order. All freight and insurance charges and other costs, expenses,
fees, duties, imposts, value—added taxes and charges of whatever kind or nature
arising from the shipment of the Products to the destination specified by Axis
shall be for Shanghai Gold’s sole account.

    

    

    ARTICLE
5

    

    PAYMENT
OF OBLIGATIONS OF AXIS

    

    5.1           Purchase
Price. Axis shall purchase the Products at the prices set forth in
Appendix A to this Agreement which may be amended by agreement of the parties
from time to time. The parties acknowledge and agree that the prices set forth
in Appendix A are intended to provide Manufacturer with a reasonable margin on
profit on its manufacturing costs incurred in producing the Products and
reimbursement for all non- recoverable national, provincial, municipal and other
taxes (including sales, use, property or similar taxes assessable on or with
respect to the Products or parts, materials and components thereof, but
excluding taxes on the net income of Manufacturer), and all customs duties,
imposts and similar charges incurred by Manufacturer in acquiring parts,
materials and components of the Products.

    

    5.2           Currency.
Manufacturer shall invoice the purchase prices payable by Axis in United States
of America dollars and Axis shall make payments in such currency.

    

    
      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

    

    

    5.3           Due
Dates and Interest. Axis shall pay the total purchase price for each
order per agreement between Shanghai Gold and Axis. Axis’s obligation to make
payment to Manufacturer shall not be suspended by the failure of Axis’s
customers to pay Axis for any shipment of Products. By. mutual written consent,
the parties may establish payment due dates and interest for any annual term,
calendar quarter or other period in which the Agreement is in
effect.

    

    5.4           Reporting.
At all times during the term of this Agreement, Manufacturer shall maintain at
its principal place of business full, complete and accurate books of account and
records with regard to its activities under this Agreement, and to maintain
compliance and certification to ISO 9002 standards. Upon reasonable advance
notice, Manufacturer shall grant Axis access during regular business hours to
Manufacturer’s books and records in order to allow Axis to verify, at its own
expense, Manufacturer’s compliance with its obligations under this
Agreement.

    

    

    ARTICLE
6

    

    WARRANTIES
AND LIABILITIES

    

    6.1.           Warranties.
Manufacturer warrants that the Products, at the time of their delivery to the
common carrier designated by Shanghai Gold or Axis will conform to the product
specifications. Manufacturer shall promptly replace, at its own expense, any
quantity exceeding one (1) percent of the total number of ballasts supplied on
the related purchase order of defective or non-conforming Products supplied to
Axis, provided Axis shall notify Manufacturer in writing upon discovery of any
defect or non—conformity and provide Manufacturer a reasonable period of time in
which to evaluate Axis’s claim. Axis is solely responsible for any replacement
labor costs relative to warranty claims and defective products. MANUFACTURER’S OBLIGATION TO REPLACE
NON-CONFORMING PRODUCTS AS PROVIDED IN THIS ARTICLE 6.1 IS THE SOLE AND
EXCLUSIVE WARRANTY MADE BY MANUFACTURER WITH RESPECT TO THE PRODUCTS. ANY AND
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED BY LAW, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR
NON-INFRINGEMENT ARE HEREBY SPECIFICALLY EXCLUDED. UNDER NO CIRCUMSTANCES SHALL
MANUFACTURER BE LIABLE FOR ANY DAMAGES INCLUDING, WITHOUT DAMAGES, RESULTING
FROM, OR ATTRIBUTABLE TO, THE FAILURE OF ANY OF THE PRODUCTS TO CONFORM TO THE
PRODUCT SPECIFICATIONS, UNLESS SUCH DAMAGES RESULT FROM MANUFACTURER’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, PERSONAL INJURY, CONCEALED DEFECTS THAT ARE
NOT TEE RESULT OF DEFECTIVE PRODUCTS SUPPLIED BY SHANGHAI GOLD, OR ACTS WHICH
VIOLATE THE PUBLIC OFFER AND GOOD MORALS OF AXIS

    

    6.2           Insurance.
Axis shall obtain and maintain during the term of this Agreement product
liability insurance with respect to all casualties including, but not limited
to, bodily harm and death caused by any defective Products. Such insurance shall
be adequate in scope and coverage considering the potential liability exposure
and shall include Manufacturer as an insured party.

    

    
      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
7

    

    INTELLECTUAL
PROPERTY RIGHTS

    

    7.1           Ownership.
Manufacturer acknowledges Axis and its affiliates’ exclusive right, title and
interest in and to the intellectual property rights to all of North America and
will not at any time do, or cause to be done, any act or thing impairing said
rights. Manufacturer agrees that the intellectual property rights of Axis and
its affiliates shall remain the exclusive property of such parties and that,
except as specifically provided hereunder, Manufacturer shall not acquire any
rights or interest in the intellectual property rights in North
America.

    

    7.2           Infringement.
Axis represents and warrants to Manufacturer that it has no knowledge of any
claim that the performance by Manufacturer of its obligations under this
Agreement will result in the infringement of any third party right.

    

    7.3           Cooperation.
Manufacturer shall promptly notify Axis (1) of any claims or objections that the
performance of its obligations under this Agreement may or will infringe any
third party rights; and (2) of any and all infringements, imitations, illegal
use or misuse by any person or entity of the intellectual property rights which
come to its attention; provided, however, that Manufacturer will not take any
legal action relating to the protection of the intellectual property rights
without the prior written approval of Axis; provided further that Manufacturer
shall render Axis all reasonable assistance in connection with any matter
pertaining to the protection of the intellectual property rights whether in the
courts, administrative agencies or otherwise.

    

    7.4           Improvements
and Modifications. Manufacturer agrees that any and all improvements and
modifications to the intellectual property rights or the product specifications
will be deemed part of the intellectual property rights or product
specifications to be used by Manufacturer in the manufacture of Products and
will constitute the property of Axis or an affiliate. At the request of Axis,
Manufacturer will execute such documents and take such other steps as may be
required to perfect and protect Axis’s or an affiliate’s proprietary rights in
and to such improvements and modifications including those improvements and
modifications that may be developed at Manufacturer’s facility during the term
of this Agreement which shall be the property of Axis or an
affiliate.

    

    
      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
8

    

    CONFIDENTIAL
INFORMATION

    

    8.1           Ownership.
Axis and Shanghai Gold, at their sole discretion, shall disclose to each other
certain confidential information to enable Manufacturer to perform its
obligations under this Agreement. Without obtaining each other’s prior written
consent, Axis or Manufacturer shall neither copy nor duplicate any such
confidential information by any means or technique. All files, lists, records,
documents, drawings, specifications, equipment and tapes delivered to or
received from Manufacturer which incorporate or refer to all or a portion of the
confidential information shall remain the sole property of Axis and Shanghai
Gold, and Manufacturer and Axis shall have possession of such property solely on
a loan for use basis. Manufacturer shall return to Axis, and Axis shall return
to Manufacturer, any and all documents of any type which contain confidential
information and shall destroy any copies thereof upon the termination of this
Agreement except that Manufacturer and Axis may retain such records pertaining
to Products manufactured for Axis as may be required under any applicable laws
and/or regulations. All intellectual property rights will remain unchanged upon
the termination of this Agreement, unless otherwise mutually agreed upon in
writing by Axis and Shanghai Gold.

    

    8.2           Confidentiality.
Manufacturer shall keep all confidential information segregated from other
materials in its control so as to maintain the confidentiality of Axis and
Shanghai Gold’s materials and shall not allow any samples of those materials to
be used or examined by any person not under its direct supervisory control for
any purpose. Manufacturer shall neither disclose nor facilitate disclosure of
the confidential information except to its representatives with a need to know
and shall not otherwise exploit and/or jeopardize the secrecy and value of the
confidential information. Manufacturer shall establish appropriate employment
policies.

    

    8.3           Exceptions.
The provisions of this Article 8 shall not apply to data and information
supplied by Axis if they (1) were already known by Manufacturer, prior to
disclosure; (2) have come into the public domain without breach of confidence by
the Manufacturer, its representatives or any other person; (3) were received by
the Manufacturer from a third party without restrictions on their use in favor
of the disclosing party; or (4) are required to be disclosed pursuant to any
statutory requirements or court order; provided, however, that Manufacturer
shall have the burden of establishing any of the above exceptions.

    

    
      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
9

    

    INDEMNIFICATION

    

    9.1           By
Shanghai Gold: Shanghai Gold agrees to defend, indemnify and hold Axis
harmless against any and all actions, claims, losses, liabilities and damages
(collectively referred to as “Claims” and including, but not limited to, any
special, incidental or consequential damages such as economic losses, legal
expenses, reasonable attorneys’ fees and liability for property damage, bodily
injury and death), incurred by Axis, its suppliers, agents, employees and/or
contractors or by any other third party if such Claims result from, arise out of
or in connection with:

    

    (a)       
    Design Defects. Any defect of the Products caused
by their faulty design or inaccurate or incomplete Product
specifications;

    

    (b)       
    Violation of Laws. Any violation by Shanghai Gold
of the laws and regulations applicable to the manufacture and sale of the
Products;

    

    (c)       
    Acts and Omissions. Any fault or intentional or
negligent act or omission by Shanghai Gold or its employees; and

    

    (d)       
    Intellectual Property Law. Any infringement of
third party rights based on the distribution and sale of the
Products.

    

    9.1(a) By Axis: Axis agrees to
defend, indemnify and hold Shanghai Gold harmless against any and all actions,
claims, losses, liabilities and damages (collectively referred to as “Claims”
and including, but not limited to, any special, incidental or consequential
damages such as economic losses, legal expenses, reasonable attorneys’ fees and
liability for property damage, bodily injury and death), incurred by Shanghai
Gold, its suppliers, agents, employees and/or contractors or by any other third
party if such Claims result from, arise out of or in connection
with:

    

    (a)      
     Violation of Laws. Any violation by Axis of
the laws and regulations applicable to the manufacture and sale of the
Products;

    

    (b)       
    Acts and Omissions. Any fault or intentional or
negligent act or omission by Axis or its employees; and

    

    (c)       
    Intellectual Property Law. Any infringement of
third party rights based on the distribution and sale of the
Products.

    

    
      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

    

    

    9.2           Defense
of Claims. If any claims shall be brought against either party as to
which this indemnification applies, each party shall, as soon as reasonably
practicable, inform the other thereof and the indemnifying party and/or its
insurers shall assume direction and control of the defense against such claim
including, without limitation, the settlement thereof at the sole option of the
indemnifying party or its insurer. Either party may, at its option and expense,
have its own counsel participate in any proceeding which is under the direction
and control of the indemnifying party. The indemnified party shall cooperate
with the indemnifying party and its insurer fn the disposition of any such
matters.

    

    

    ARTICLE
10

    

    COMPLIANCE
WITH GOVERNING LAW

    

    10.1         General
Compliance. Each party shall at all times and at its own expense (a)
strictly comply with all applicable laws, rules, regulations and governmental
orders, now or hereafter in effect, relating to its performance of this
Agreement; (b) pay all fees and other charges required by such laws, rules,
regulations and orders; and Cc) maintain in full force and effect all licenses,
permits, authorizations, registration and qualifications from all applicable
governmental departments and agencies to the extent necessary to perform its
obligations hereunder.

    

    10.2         U.S.
Export Control Requirements. Without limiting the generality of Article
10.1 hereof, the parties specifically acknowledge that each Product and all
technical data (as defined in 15 C.F.R. Part 779 of the Export Administration
Regulations) related to each Product (the “technical data”) are subject to the
United States export controls, pursuant to the Export Administration
Regulations, 15 C.F.R.R. Parts 768—799. The parties shall comply strictly with
all requirements of the Export Administration Regulations and all licenses and
authorizations issued thereunder with respect to the export and/or re-export of
each Product and all technical data and shall fully cooperate with each other in
securing the necessary export licenses and authorizations required
thereby.

    

    
      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
11

    

    TERM
AND TERMINATION

    

    11.1         Term.
This Agreement shall enter into full force and effect as of the date of signing
and shall remain in effect for a period of five (5) years unless terminated in
accordance with this Article 11. This Agreement shall be automatically renewed
for successive periods of one (1) year, unless one of the parties hereto
provides the other party with written notice of non—renewal at least ninety (90)
calendar days prior to the end of the initial term of this Agreement of any
renewal term thereof.

    

    11.2         Termination.
This Agreement may be terminated in the following circumstances:

    

    (a)         
  Axis may terminate this Agreement immediately upon notice of
termination to Manufacturer if Manufacturer breaches or defaults under any of
its obligations set forth in Articles 7 or 8 hereof.

    

    (b)         
  Shanghai Gold may terminate this Agreement immediately upon
notice of termination to Axis if Axis breaches or defaults under any of its
obligations set forth in Articles 7 or 8 hereof.

    

    (c)         
  In the event of any other material breach of, or material default
under, this Agreement by Axis or Manufacturer, the non—breaching or
non—defaulting party shall give the other party notice of such breach or
default, specifically delineating the nature of such breach or default and the
action required to cure it. The other party shall have a period of ninety (90)
days from the date of receipt of such notice within which to cure the breach or
default. In the event of failure to cure, this Agreement may be terminated by
notice of the non—breaching or non—defaulting party’s election to terminate to
the other party.

    

    (d)        
   Axis or Shanghai Gold, upon mutual agreement only, may
terminate this Agreement at any time, without cause, upon ninety (90) days
notice of termination to each other.

    

    
      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
12

    

    CONSEQUENCES
OF TERMINATION

    

    12.1         Termination
of Product Manufacturing. Upon termination of this Agreement for any
reason, Manufacturer shall immediately terminate production of the Products and
all use of the product specifications and intellectual property rights, unless
otherwise allowed in writing from Axis.

    

    12.2         Confidential
Information. Upon the termination of this Agreement for any reason,
Manufacturer shall, at the request of Axis, promptly return to Axis or its
designated representative or otherwise dispose of as Axis may instruct, all
materials that contain confidential information in written, recorded or other
tangible form (other than correspondence between Axis and Manufacturer) which
Manufacturer may have in its possession, custody or under its direct or indirect
control.

    

    12.3         Outstanding
Payments. The termination of this Agreement shall not release Axis from
its obligation to pay any sums then owing to Manufacturer or from the
obligations to perform any other duty or to discharge any other liability that
has been incurred prior thereto. Subject to the foregoing, however, neither
party shall, by reason of the expiration or termination of this Agreement, be
liable to the other for compensation or damages on account of the loss of
present or prospective profits on sales or anticipated sales, or expenditures,
investments or commitments made in connection therewith. Manufacturer hereby
waives all rights to compensation which Manufacturer might otherwise be entitled
to receive under applicable law upon expiration or termination of this
Agreement.

    

    12.4         General
Effect. Notwithstanding the termination of this Agreement, Manufacturer
shall continue to abide by the terms of its obligations under Article 7, 8, 9
and 10 herein.

    

    

    ARTICLE
13

    

    GENERAL
PROVISIONS

    

    13.1         Non—Transferability.
Except as specifically provided in

    this
Agreement, Manufacturer shall not assign any of its rights or delegate any of
its duties under this Agreement without the prior written consent of Axis. In
the event that either party is purchased by another party, all provisions under
the terms of this agreement shall remain in effect.

    

    13.2         Entire
Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements, understandings and communications
between the parties with respect to the subject matter hereof. No modifications
or amendment of this Agreement shall be binding upon a party unless in writing
and executed by a duly authorized representative of that party.

    

    
      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

    

    

    13.3         Waiver.
The failure of either party to assert any of its rights hereunder including, but
not limited to, the right to terminate this Agreement for cause, shall not be
deemed to constitute a waiver by that party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.

    

    13.4         Force
Majeure. If either party is unable to fulfill any of its obligations
under this Agreement because of any natural calamity, act of God, labor
difficulty, act of public enemy, war, riot, embargo, rebellion, invasion,
insurrection, disruption of utilities, act or omission of government of similar
cause beyond the reasonable control of such party, other than an obligation to
pay money (collective, “Force Majeure Event”), the party so affected shall
immediately notify the other party and shall do everything possible to resume
performance. Upon the other party’s receipt of such notice, the obligations of
the party affected by such Force Majeure Event shall be suspended until
performance can be resumed.

    

     If
the period of non-performance exceeds ninety (90) days from the receipt of such
notice, either party may terminate this Agreement upon notice to the other
party. Termination pursuant to this Article 13.4 shall not be deemed a breach
of, or default under, this Agreement by either party, but shall not extinguish
any rights accrued or obligations owed prior to the occurrence of the Force
Majeure Event.

    

    13.5         Notices.
Unless specified to the contrary by the parties, all notices, purchase orders,
statements and other communications between the parties shall be sent by
registered mail, postage prepaid and return receipt requested, or by facsimile,
addressed as follows:

    

    
      	
              If
      to Axis Technologies:

            	
              Axis
      Technologies Inc.

            
	 
      	
              2055
      5. Folsom Street

            
	 
      	
              Lincoln,
      NE 68522

            

    

    

    

    
      	 
      	
              Phone:

            	
              402
      476—6006

            
	 
      	
              Facsimile:

            	
              866
      458—9881

            
	 
      	
              Email:

            	
              info@axistechnologyinc.com

            
	 
      	
              Attention:

            	
              Mr.
      Jim Erickson

            
	 
      	 
      	
              Mr.
      Kip Hirschbach

            
	 
      	 
      	
              Mr.
      Mark Gruenewald

            
	 
      	 
      	 
      
	
              If
      to Manufacturer:

            	
              Shanghai
      Gold Lighting Co. Ltd.

            
	 
      	 
      	
              NO.
      218 Minhe Road

            
	 
      	 
      	
              Shanghai,
      PRC 200070

            
	 
      	 
      	 
      
	 
      	
              Facsimile:

            	
              86—21—65104686

            
	 
      	
              Attention:

            	
              Mr.
      Zheng Di

            

    

    

    All
notices, purchase orders, statements and other communications shall be deemed
received: (1) if sent by registered mail ten days after the date of mailing; and
(2) if sent by facsimile 24 hours after the date and time of
transmission.

    

    
      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

    

    

    ARTICLE
14

    

    GOVERNING
LAW AND DISPUTE RESOLUTION

    

    This
Agreement shall be governed by and interpreted in accordance with the laws of
California excluding its rules governing conflicts of laws. All disputes arising
out of or in connection with this Agreement shall be submitted to the State of
California, which shall have jurisdiction to adjudicate such disputes. Axis and
Manufacturer hereby expressly consent to the jurisdiction of such
court.

    

    The
prevailing party in any legal proceeding brought by one party against the other
and arising out of or in connection with this Agreement shall be entitled to
recover its legal expenses including court costs and reasonable attorneys’ fees
incurred in such proceeding.

    

    IN
WITNESS HEREOF, the parties have caused this Agreement to be executed by their
duly authorized representatives on this _________ day of ___________________,
19___.

    

    
      	 
      	 
      	 
      	 
      

    

    

    

    
      	
              By
      Axis Technologies Inc.

            	
              By
      Shanghai Gold Lighting Co. Ltd.

            
	 
      	 
      	 
      	 
      
	
              /s/
      Jim Erickson

            	 
      	/s/
      Zheng Di	 
      
	
              Jim Erickson

            	 
      	
              Zheng Di, Director & General
      Mgr.

            	 
      
	 
      	 
      	 
      	 
      
	
              /s/ Kip Hirschbach

            	 
      	 
      	 
      
	
              Kip
      Hirschbach

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              /s/ Mark Gruenewald

            	 
      	 
      	 
      
	
              Mark
      Gruenewald

            	 
      	 
      	 
      

    

     

     

    -14-

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