Document:

matechexh10_13.htm

    
      
 

    Exhibit 10.13

     

     

    NORTH CAROLINA A&T
STATE UNIVERSITY
MATERIALS MONITORING TECHNOLOGIES, INC.

LICENSE
AGREEMENT

     

    
                This
Agreement is made by and between North Carolina A&T State (hereinafter
referred to as “NCAT”), a constituent institution of the University of North
Carolina System and an educational institution organized under the laws of North
Carolina, and having its principal office at 1601 East Market Street,
Greensboro, North Carolina 27411, and Materials Monitoring Technologies, Inc.
(“hereinafter referred to as “LICENSEE”), a corporation having its principal
place of business at 2109 Palm Avenue, Tampa, Florida
33605.

          WHEREAS,
Dr. Mannur Sundaresan, et al have discovered an invention(s) entitled Sensor
Array System and System
for Damage Location Using a Single Channel Continuous Acoustic Emission
Sensor, and NCAT owns all rights, title, and interest in and to the
invention and the Patent Rights (as hereinafter defined) pertaining to such
invention;
and

          WHEREAS,
NCAT has the right to grant licenses to the foregoing invention, and wishes to
have the invention perfected and marketed at the earliest possible time in order
that products resulting therefrom may be available for public use and benefit;
and

          WHEREAS,
NCAT is willing to grant a license to LICENSEE to the Patent Rights subject to
the terms and conditions set forth
herein;

          NOW,
THEREFORE, in consideration of the premises and the mutual covenants set forth
herein, and for good and valuable consideration, the receipt and sufficiency of
which is acknowledged, the parties hereto, intending to be legally bound, agree
as follows:

       

    

    
      ARTICLE
1 - DEFINITIONS

       

      1.01
-     “Patent Rights” means the United States patent
applications identified below and any patent now issued or here­after
issuing on any such patent applications, as well as continuations, divisions,
continuations-in-part to the extent the claims are directed to subject matter
specifically described in US
Patents 6,399,939 and 7,075,424, or reissues thereof.

       

      1.02
-     “Field” or “Field of Use” means the structural
health monitoring of bridges and railroads application of the Subject
Technology.

       

      1.03
-     “Licensed Product” means any product, process or
use thereof (a) which is dominated by an unexpired claim contained in the Patent
Rights in the country in which the Licensed Product(s) is made, used, sold or
transferred and/or (b) which is manufactured by using a process which is
dominated by an unexpired claim contained 

    

     

    
      
         

      

      
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in the Patent Rights in
the country in which the Licensed Product(s) is made, used, sold or
transferred.

1.04 -     “Net Sales” means
LICENSEE’s gross receipts for the sale, use and transfer of Licensed Products,
less the sum of the following:

    

    
      
        (a)     Discounts
    allowed in amounts customary in the
    trade;

(b)     Sales, tariff duties and/or
    use taxes directly imposed and with reference to particular
    sales;

(c)     Outbound transportation
    prepaid or allowed; and

(d)     Amounts
    allowed or credited on returns.

      

    

    No deductions
may be made for commissions paid to individuals whether they be independent
sales agents or regularly employed by LICENSEE and on its payroll, nor for the
cost of collec­tions.  Licensed Products are considered “sold” when
billed out or invoiced. Net Sales in the case of Licensed Products used or
transferred by LICENSEE means the fair market value of Licensed Products as if
they were sold to an unrelated third party in similar quantities.

1.05
-     “Affiliate” or “Affiliates” means (i) any
corporation, company or other entity in which LICENSEE owns or controls at least
ten percent (10%) of the stock entitled to vote in elec­tion of members of
the Board of Directors; or (ii) any corporation, company or other entity which
owns or controls at least ten percent (10%) of the stock of
LICENSEE.

     

    1.06
-     “Effective Date” means August
2, 2006.

    
      ARTICLE
2 - LICENSE

       

    

    2.01
-     NCAT grants to LICENSEE and LICENSEE accepts from
NCAT, upon the terms and conditions herein specified, an exclusive license to
make, have made, use and sell Licensed Products, with the right to
sublicense.  Such license is worldwide and remains in effect, on a country
by country basis, until the full end of the term or terms for which Patent
Rights are issued, unless sooner terminated as hereinafter provided. The
foregoing notwith­standing, LICENSEE’s rights and license are subject to the
rights of the U.S. Government pursuant to any funding agreement between NCAT and
the Government. 

     

    2.02
-     LICENSEE may grant sublicenses and extend any
license granted to LICENSEE to its Affiliates.  Any such sublicenses or
extensions are subject to the terms of this Agreement and may be no less
favorable to NCAT than is this license.  A copy of each sublicense must be
provided to NCAT no later than 45 days after execution date.  LICENSEE
agrees to be responsible for the performance hereunder by its Affiliates and
sublicensees, if any. If this Agreement is terminated for any reason, LICENSEE
agrees to assign all such sublicenses directly to NCAT.

    
 

    
      
         

      

      
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2.03
-     NCAT shall have the right to practice the
Invention(s) and use the Technology for its own bona fide research, including
sponsored research and Small Business Innovative Research (SBIR)
collaborations.  NCAT shall have the right to publish any information
included in under this invention with reasonably notice to LICENSEE.  

    
    

     

    2.04
-     The license granted hereunder does not confer any
rights upon LICENSEE by implication, estoppel or otherwise as to any technology
not part of the Patent Rights licensed hereunder. 

     

    2.05
-     LICENSEE agrees that any products constituting
Licensed Products or produced through the use of Licensed Products will be
manufactured substantially in the United States to the extent required by 35
U.S.C. Sec. 204, if such statute is applicable.

     

    
      ARTICLE
3 - DUE DILIGENCE

    

    
      3.01
-     LICENSEE must diligently pursue the development
of Licensed Products. This will include manufacturing or producing a Licensed
Product for testing, development, and sale, and also seeking required
governmental approvals, if appli­cable, of such Licensed Product.  In
addition to this general commitment to diligence, LICENSEE agrees to the
following diligence requirements:

    

    
      
        
          (a)     Licensee
    will support a program of collaborative research under the direction of
    Dr.
    Mannur Sundaresan.  This program shall be governed by a separate
    Development Agreement between the
    parties.

(b)     Within three (3) months
    from the Effective Date of this Agreement, LICENSEE shall deliver to NCAT a
    report showing LICENSEE’s plans for commercializing the Subject
    Technology.

(c)     LICENSEE must
    commercialize Licensed Products according to the following
    schedule:

        

        
          
            (1)      
                 
      days after a working prototype is developed, Licensee will offer
      the product for commercial
  sale. 

          

        

      

    

    3.02
-     LICENSEE will use its best efforts to have the
Subject Technology cleared for marketing in those countries in which LICENSEE
intends to sell Licensed Products by the responsible government agencies
requiring such clearance.  To accomplish such clearances at the earliest
possible date, LICENSEE agrees to file, according to the usual practice of
LICENSEE, any necessary data with such government agencies.  Should
LICENSEE terminate this Agreement, LICENSEE agrees to assign its full interest
and title in such market clearance application, including all data relating
thereto, to NCAT at no cost to NCAT.

    
      
         

      

      
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3.03
-     Failure by LICENSEE to comply with the provisions
of this Article 3 results in NCAT having the right, at its option, to convert
any exclusive license to a non-exclusive license, or to cancel the license upon
thirty (30) days notice, and to require a reversion of rights to all relevant
materials, research information and technology, including Patent Rights,
transferred to LICENSEE by NCAT.  The LICENSEE will have the opportunity to
cure the failure to comply within thirty (30) days of receipt of notice. 
If the failure to comply is not cured within that time, the termination will be
effective as of the thirtieth (30th) day after receipt of
notice.

    
      ARTICLE
4 - LICENSE FEE, ROYALTIES, RECORDS, AND
REPORTS

    

    
      4.01
-     In partial consideration for the license granted
in this Agreement, LICENSEE must pay to NCAT a license fee of Seventy-nine
thousand dollars ($79,000.00)
which is due and payable to NCAT at the execution of this agreement. The license
fee is non-refundable and is not creditable against any future payments or
royalties.

4.02 -     For as long as this
license is in effect, LICENSEE must pay to NCAT a royalty of three
and one half percent (3.5%)
of Net Sales of Licensed Products by LICENSEE, its Affiliates and/or
sublicensees. In the case of sublicenses, LICENSEE must also pay to NCAT twenty-five
percent (25%) of any income, revenue or other financial consideration (e.g.
advance payments, license issue fees, license maintenance fees, option fees,
equity, etc.) received by LICENSEE from its sublicensees, except for income,
revenue or other financial consideration which is received directly as a running
royalty on actual sales of Licensed Product.

4.03
-     LICENSEE must pay to NCAT minimum annual
royalties beginning August 2, 2009. 
The minimum annual royalty payments must be made according to the following
schedule:

       

      
        	 	For the Year
      Beginning 	 	Amount
	 	 	 	 
	 	August 2,
      2007	 	$  0.00  
	 	August 2,
      2008	 	$  0.00
	 	August 2,
      2009	 	$30,000
	 	August 2,
      2010 	 	$30,000
	 	August 2,
      2011 (and each August 2 thereafter)	 	$50,000

      

                                                                                                                                                                                        
Payment
of the specified minimum annual royalty payments shall be made within sixty (60)
days following each of the dates above specified, consistent with the reporting
and payment require­ments set forth in 4.04 hereof. 

4.04
-     LICENSEE will render to NCAT on a quarterly basis
a written account of the Net Sales of Licensed Products as of July 1, October 1,
January 1, and April 1 of 

      
 

      
        
           

        

        
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      each calendar
year.  The reports of Net Sales and the royalty payment due NCAT thereon
shall be due and payable within sixty (60) days following the applicable
date.  LICENSEE shall make such reports even if there have been no Net
Sales or if no royalties are due to NCAT for a particular quarter. 
LICENSEE’s reports shall include at least the following:

    

    
      
        (a)     All
    Licensed Products manufactured and
    sold.

(b)       Gross receipts for
    Licensed Products sold.

(c)       
    Accounting for all sub-licensing
    revenues.

(d)       Deductions
    applicable as provided in section
    1.05. 

(e)       Total sales made
    to U.S. Government Agencies which may require no royalty
    payment.

(f)         Total
    royalties due to NCAT.

(g)       Names
    and addresses of all sub-licensees of
LICENSEE.

      

    

    4.05
-     LICENSEE and its Affiliates will keep full, true,
and accurate books of accounts and other records containing all particulars
which may be necessary to ascertain and verify properly such Net Sales. 
Upon NCAT’s request, LICENSEE and its Affiliates will permit an independent
Certified Public Accountant selected by NCAT (except one to whom LICENSEE has
some reason­able objection) to have access during ordinary business hours to
such of LICENSEE’s or its Affiliates’ records as may be necessary to determine,
in respect of any three (3) month period ending not more than five (5) years
prior to the date of such request, the correctness of any report made under this
Agreement.  Nothing herein limits the authority of the State Auditor of
North Carolina.

4.06 -     All payments made as
a result of this Agreement will be paid in United States dollars in Greensboro,
North Carolina, or at such other place as NCAT may reasonably designate
consistent with the laws and regulations controlling in any foreign
country.  If any currency con­version shall be required in connection
with the payment of royalties hereunder, such conversion shall be made by using
the exchange rate prevailing at the Chase Manhattan Bank (N.A.) on the last
business day of the calendar quarterly reporting period to which such royalty
payments relate.

     

    4.07
-     The royalty payments set forth in this Agreement,
if overdue, will bear interest until payment at a per annum rate of four percent
(4%) above the prime rate in effect at the Chase Manhattan Bank (N.A.) on the
due date.  However, in no event shall any penalties hereunder exceed
eighteen percent (18%) per annum (or 1.5 % per
month). 

    
      
         

      

      
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    ARTICLE
5 - PATENTS

     

    5.01
-     NCAT may select patent counsel and have sole
responsibility for filing, prosecuting and maintaining appropriate U.S. and
foreign patent application(s) on the Subject Technology in the name of NCAT, and
all expenses of such protection shall be paid by LICENSEE.  LICENSEE also
agrees to reimburse NCAT for unreimbursed out-of-pocket patent costs incurred
through the Effective Date.  NCAT will keep Licensee advised as to the
prosecution of such applications by forwarding to LICENSEE copies of all
official correspondence relating thereto.  LICENSEE agrees to cooperate
with NCAT in the prosecution of patent application(s) to insure that such
applications reflect, to the best of NCAT’s and LICENSEE’s knowledge, all items
of commercial, scientific and technical interest and importance.  All final
decisions with respect to the prosecution of said patent application(s) are
reserved to NCAT.

     

    5.02
-     LICENSEE may designate the foreign countries, if
any, in which LICENSEE desires patent protection, and NCAT agrees to file,
prosecute and maintain appropriate applications in such countries. 
LICENSEE shall pay all expenses with regard to such foreign patent
protection.  NCAT may elect to seek patent protection in countries not so
designated by LICENSEE, in which case NCAT shall be responsible for all expenses
attendant thereto; however, in such instances, LICENSEE shall forfeit its rights
under this license agreement as to such countries.

     

    5.03
-     For each country in which Licensed Products will
be sold, LICENSEE agrees to mark all Licensed Products it commercializes with
the applicable patent number.

     

    
      ARTICLE
6 - GOVERNMENT CLEARANCE, PUBLICATION, OTHER USE,
EXPORT,
DUTIES 

       

      6.01
-     LICENSEE agrees that the right of publication of
the Patent Rights resides in the inventor and other staff of NCAT.  NCAT
will use its reasonable best efforts to provide a copy of each publication at
the time of submission for pre-publication review, or in any event not less than
thirty (30) days prior to the expected date of publication.  Such review
will be in no way construed as a right to restrict such
publication. 

    

    
       

      6.02
-     It is agreed that, notwithstanding any provisions
herein, NCAT is free to use the Patent Rights for its educational, teaching, and
research purposes without restriction and without payment of royalties or other
fees.

       

      6.03
-     This Agreement is subject to, and LICENSEE will
comply with, all of the United States laws and regulations controlling the
export of technical data, computer software, laboratory prototypes, and other
commodities and technology which may be applicable.

       

      6.04
-     LICENSEE is solely responsible for the payment
and discharge of any taxes or duties relating to any transaction of LICENSEE,
its 

    

    
      
         

      

      
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    employees,
contractors, agents, or sub-licensees, in connection with the manufacture, use,
or sale in any country of Licensed Product(s).

     

    ARTICLE
7 - DURATION AND TERMINATION

     

    7.01
-     This Agreement becomes effective upon the
Effective Date and, unless sooner terminated in accordance with any of the
provisions herein, remains in full force and effect for the life of the
last-to-expire of the patents included in the Patent Rights.

     

    7.02
-     In the event an order for relief is entered
against LICENSEE under the Federal Bankruptcy Code, or an order appointing a
receiver for substantially all of LICENSEE’s assets is entered by a court of
competent jurisdiction, or LICENSEE makes an assignment for the benefit of
creditors, or a levy of execution is made upon substantially all of the assets
of LICENSEE and such levy is not quashed or dismissed within thirty (30) days,
this Agreement automatically terminates effective on the date of such order or
assignment or, in the case of such levy, the expira­tion of such thirty day
period; provided, however, that such termination will not impair or prejudice
any right of remedy that NCAT might have under this Agreement.

     

    7.03
-     LICENSEE may terminate this Agreement by giving
NCAT written notice at least ninety (90) days prior to such termination, and
thereupon terminate the manufacture, use, or sale of Licensed
Products.

     

    7.04
-     Should LICENSEE fail to pay NCAT royalties and/or
fees, due and payable hereunder, NCAT may terminate this Agreement on thirty
(30) days’ notice, unless LICENSEE pays NCAT, within the thirty (30) day period,
all such royalties, fees, and interest due and payable.  Upon the
expiration of the thirty (30) day period, if LICENSEE has not paid all such
royalties and interest due and payable, the rights, privileges and license
granted hereunder shall terminate.

     

    7.05
-     Either party may immediately terminate this
Agreement for fraud, willful mis­conduct, or illegal conduct of the other
party upon written notice of same to that other party.  Except as provided
above, if either party fails to fulfill any of its obligations under this
Agreement, the non-breaching party may terminate this Agreement by providing
written notice to the breaching party, as provided below.  Such notice must
contain a full description of the event or occurrence constituting a breach of
the Agreement.  The party receiving notice of the breach will have the
opportunity to cure that breach within thirty (30) days of receipt of
notice.  If the breach is not cured within that time, the termination will
be effective as of the thirtieth (30th) day after receipt of notice.  A
party’s ability to cure a breach will apply only to the first two (2) breaches
properly noticed under the terms of this Agreement, regardless of the nature of
those breaches.  Any subsequent breach by that party will entitle the other
party to terminate this Agreement upon proper notice, with no opportunity to
cure.

     

    7.06
-     If at any time prior to the first commercial sale
of a Licensed Product under this Agreement LICENSEE ceases to pursue commercial
development of Licensed Products or ceases practicing under the Patent Rights as
contemplated 

    
      
         

      

      
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    herein,
LICENSEE must notify NCAT, and this Agreement automatically terminates without
obligation on the part of NCAT to refund any of the fees or royalties which may
have been paid by LICENSEE prior to such termination. 

     

    7.07
-     Upon the termination of this Agreement pursuant
to Article 7.03, LICENSEE may notify NCAT of the amount of Licensed Products
that LICENSEE has on hand and LICENSEE may then sell that amount of Licensed
Products, but no more; provided, however, that LICENSEE pay NCAT any fees,
royalties or other financial consideration as provided for in this
Agreement.

     

    ARTICLE
8 - INFRINGEMENT OF THIRD-PARTY RIGHTS

     

    8.01
-     In the event that NCAT or LICENSEE is charged
with infringement of a patent by a third party or is made a party in a civil
action as a result of LICENSEE’s or a sub-licensee’s practice of the Patent
Rights under this Agreement, LICENSEE:

    
      
        (a)     must
    defend and/or settle any such claim of infringement or civil
    action;

(b)     must assume all costs,
    expenses, damages, and other obligations for payments incurred as a
    consequence of such charges of infringement and/or civil
    action;

(c)     must indemnify and hold NCAT
    harmless from any and all damages, losses, liability, and costs resulting
    from a charge of infringement or civil action which shall be brought against
    NCAT and attributable to technology added to, incorporated into or sold with
    a Licensed Product by LICENSEE or a sub-licensee or to manufacturing
    processes utilized by LICENSEE or a sub-licensee;
    and

(d)     may,  if such claim of
    infringement or civil action shall be based on patent claims contained in
    any pending or issued patent included in the Patent Rights, terminate this
    Agreement effective immediately upon NCAT’s receipt of written notice of
    termination, and LICENSEE shall have no further liability for claims and/or
    damages arising subsequent to said date of termination unless LICENSEE is
    exercising its license under Section 7.07, in which case LICENSEE's
    liability and obligations under this Article shall continue as long as
    license granted in Section 7.07 is in
effect.

      

    

    8.02
-     NCAT will give LICENSEE assistance, at LICENSEE’s
expense, in the defense of any such infringement charge or lawsuit, as may be
reasonably required. 

    
      
         

      

      
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    ARTICLE
9 - INFRINGEMENT OF NCAT’s PATENT RIGHTS 
BY THIRD
PARTIES

     

    9.01
-     Each Party to this Agreement is obligated to
inform the other promptly in writing of any alleged infringement of which it
becomes aware and of any available evidence of infringement by a third party of
any patents within the Patent Rights.

     

    9.02
-     If during the term of this Agreement LICENSEE
becomes aware of any alleged infringement by a third party, LICENSEE shall have
the right, but not the obligation, to either:

    
      
        (a)      
    settle the infringement suit by sub-licensing the alleged infringer or by
    other means; or

(b)       prosecute at
    its own expense any infringement of the Patent Rights.  In the event
    LICENSEE prosecutes such infringement, LICENSEE may, for such purposes,
    request to use the name of NCAT as party plaintiff.  Subject to the
    approval of the Board of Governors of the University of North Carolina, NCAT
    may agree to become a party plaintiff, and costs associated therewith shall
    be borne by LICENSEE. 

      

    

    9.03
-     In the event that LICENSEE undertakes the
enforcement and/or defense of the Patent Rights by litigation, including any
declaratory judgment action, the total cost of any such action commenced or
defended solely by LICENSEE shall be borne by LICENSEE.  Any recovery of
damages by LICENSEE as a result of such action shall be applied first in
satisfaction of any unreimbursed expenses and attorneys’ fees of LICENSEE
relating to the action, and second in satisfaction of unreimbursed legal
expenses and attorneys’ fees of NCAT, if any, relating to the action.  The
balance remaining from any such recovery will be distributed to LICENSEE,
provided that LICENSEE must pay to NCAT such royalties and fees, and any
directly associated damages,  as would otherwise be applicable under
Article 4 hereof for that portion of LICENSEE’s recovery attributable to lost
sales or revenues.  LICENSEE is entitled to settle any such litigation by
agreement, consent, judgment, voluntary dismissal, or otherwise, with the
consent of NCAT, which consent shall not be withheld unreasonably.

9.04
-     In the event LICENSEE does not undertake action
to prevent the infringing activity within three (3) months of having been made
aware and notified thereof, NCAT shall have the right, but shall not be
obligated, to prosecute at its own expense any such infringements of the Patent
Rights and, in furtherance of such right, NCAT may use the name of LICENSEE as a
party plaintiff in any such suit without expense to LICENSEE.  The total
cost of any such infringement action commenced or defended solely by NCAT shall
be borne by NCAT.  Any recovery of damages by NCAT for any infringement
shall be applied first in satisfaction of any unreimbursed expenses and
attorneys’ fees of NCAT relating to the suit, and second toward reimbursement of
LICENSEE’s reasonable expenses, including reasonable attorneys’ fees, relating
to the suit.  The balance remaining from any such recovery shall be
distributed to NCAT.

    
 

    
      
         

      

      
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    9.05
-     In any infringement suit instituted by either
party to enforce the Patent Rights pursuant to this Agreement, the other party
hereto shall, at the request and expense of the party initiating such suit,
cooperate in all respects and, to the extent possible, have its employees
testify when requested and make available relevant records, papers, information,
samples, specimens, and the like. 

     

    9.06
-     LICENSEE has the sole right in accordance with
the terms and conditions herein to sub-license any alleged infringer under the
Patent Rights for future infringements.

     

    9.07
-     Any of the foregoing notwithstanding, if at any
time during the term of this Agreement any of the Patent Rights are held invalid
or unenforceable in a decision which is not appealable or is not appealed within
the time allowed, LICENSEE shall have no further obligations to NCAT with
respect to its future use or sale of any product or process covered solely by
such Patent Rights, including the obligation of paying royalties. 
Nevertheless, LICENSEE shall not have a damage claim or a claim for refund or
reimbursement against NCAT.

     

    
      ARTICLE
10 - INDEMNITY, INSURANCE, REPRESENTATIONS

       

    

    
      10.01
-     LICENSEE must indemnify, defend and hold NCAT,
its trustees, officers, employees and affiliates, harmless against all claims
and expenses, including legal expenses and reasonable attorneys’ fees, arising
out of the death or injury to any person or persons or out of any damage to
property and against any other claim, pro­ceeding, demand, expense and
liability of any kind whatsoever resulting from utilization of the Patent Rights
in the production, manufacture, sales, use, lease, consumption or advertisement
of the Licensed Products by LICENSEE, its Affiliates  and its sub-licensees
or arising from any obligations of LICENSEE hereunder, except for any claims or
expenses arising out of the negligence or willful misconduct of NCAT or its
officers, agents or employees.  The parties acknowledge that NCAT’s
liability under this paragraph shall be subject to the limitations of the North
Carolina Tort Claims Act (N.C. General Statutes Section 143-291 et.
seq.).

       

      10.02
-     LICENSEE must maintain reasonable levels of
product liability insurance as soon as it has commercialized Licensed
Products.  NCAT shall have the right to require such insurance policies or
certificates of insurance, at NCAT's discretion, to be made available for NCAT’s
inspection.

       

      10.03
-     NCAT MAKES NO REPRESENTATIONS AND EXTENDS NO
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND
VALIDITY OF PATENT RIGHTS CLAIMS ISSUED OR PENDING. FURTHER, NCAT MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED,  THAT THE USE OF INVENTION WILL NOT INFRINGE ANY PATENT OR OTHER
PROPRIETARY RIGHT OF A THIRD PARTY.

      
        
           

        

        
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        ARTICLE
11 - GOVERNING LAW

      

    

     

    11.01
-     This Agreement is entered into in the State of
North Carolina and is interpreted in accordance with and its performance
governed by the laws of the State of North Carolina.

     

    
      ARTICLE
12 - NON-ASSIGNABILITY

    

     

    12.01
-     This Agreement may not be assigned by LICENSEE
except in connection with the sale or other transfer of LICENSEE’s entire
business or that part of LICENSEE’s business to which this license
relates.  LICENSEE shall give NCAT thirty (30) days prior written notice of
such assignment or transfer.  Any other assignment of this Agreement
without the prior written consent of NCAT shall be void.

     

    
      ARTICLE
13 - NOTICES

       

    

    13.01
-     It shall be a sufficient giving of any notice,
payment, request, report, statement, disclosure or other communication
hereunder, if the party giving the same shall deposit a copy thereof in the Post
Office in certified mail, postage prepaid, addressed to the other party at its
address hereinafter set forth or at such other address as the other party shall
have theretofore in writing designated:

     

     

    
      	 	NCAT 	 	LICENSEE
	 	 	 	 
	 	M. Douglas
      Speight 	 	_________________________________
	 	Director	 	_________________________________
	 	Office of
      Technology Transfer 	 	_________________________________
	 	North
      Carolina A&T State University	 	_________________________________
	 	1601 East
      Market Street 	 	_________________________________
	 	Suite 420,
      Fort IRC	 	_________________________________
	 	Greensboro,
      NC  27411	 	_________________________________

    

     

    The date of
giving any such notice, request, report, statement, disclosure or other
communication, and the date of making any payment hereunder required (provided
such payment is received), shall be the date of the U.S. postmark of such
envelope if marked or actual date of receipt if delivered
otherwise.

     

    
      ARTICLE
14 - NON-USE OF NAMES

       

    

    
      14.01
-     LICENSEE may not use the name of NCAT, or any
trademark, trade device, service mark, symbol, or any abbreviation, contraction,
or simulation thereof, owned by NCAT, nor the names of any of its employees, or
any adaptation thereof, in any advertising, promotional, or sales literature
without prior written consent obtained from an authorized officer of NCAT in
each case, except that LICENSEE may state that 

      
        
           

        

        
          - Page 11
-

          
            
 

        

        
           

        

      

       

      it is licensed
by NCAT under one or more of the patents and/or patent applications comprising
the Patent Rights.  Failure by LICENSEE to comply with this restriction
shall be deemed a material breach of this Agreement pursuant to section
7.05.  Such material breach shall be deemed cured if the offending use is
terminated within ninety (90) days of LICENSEE’s receipt of a written notice
from NCAT.

    

    
      ARTICLE
15 - SEVERANCE

       

    

    15.01
-     Each clause of this Agreement is a distinct and
severable clause and if any clause is deemed illegal, void, or unenforceable,
the validity, legality, or enforceability of any other clause or portion of this
Agreement will not be affected thereby.

    
      ARTICLE
16 - ENTIRE AGREEMENT

    

     

    16.01
-     This Agreement, including any schedules or other
attachments that are incorporated herein by reference, contain the entire
agreement between the parties as to its subject matter.  This Agreement
merges all prior discussions between the parties and neither party shall be
bound by conditions, definitions, warranties, understanding, or representations
concerning such subject matter except as provided in this Agreement or as may be
specified later in writing and signed by the properly authorized representatives
of the parties.  This Agreement can be modified or amended only by written
agreement duly signed by persons authorized to sign agreements on behalf of the
parties.

     

    
      ARTICLE
17 - WAIVER

       

    

    17.01
-     The failure of a party in any instance to insist
upon the strict performance of the terms of this Agreement shall not be
construed to be a waiver or relinquishment of any of the terms of this
Agreement, either at the time of the party’s failure to insist upon strict
performance or at any time in the future, and such term or terms shall continue
in full force and effect.

     

    
      ARTICLE
18 - TITLES

       

    

    18.01
-     All titles and article headings contained in this
Agreement are inserted only as a matter of convenience and reference.  They
do not define, limit, extend, or describe the scope of this Agreement or the
intent of any of its provisions.

     

    
      ARTICLE
19 - SURVIVAL OF TERMS

       

    

    19.01
-     The provisions of Articles 1, 4, 8, 10, 11, 13,
14 and 19 shall survive the expiration or termination of this
Agreement.

    
      
         

      

      
        - Page 12
-

        
          
 

      

      
         

      

    

     

              IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the
dates set forth below.

NORTH
CAROLINA A&T STATE UNIVERSITY

By:    
/s/ N.
Radhakrishnan                    

           
N. Radhakrishnan

Title:
Vice Chancellor for Research and Economic Development

Date: August
18,
2006                             

MATERIALS
MONITORING TECHNOLOGIES INC. 

By:    
/s/ Jennifer
Willis                           

Title:  
Vice
President                                

Date: August
18,
2006                                

     

     

     

     

    
      
         

      

      
        - Page 13
-matechexh10_14.htm

    
      

    

    Exhibit
10.14

     

     

    AMENDMENT DATED OCTOBER 27, 2006

    TO

    CLASS A SENIOR SECURED CONVERTIBLE DEBENTURE

    
 

    
      	
              ORIGINAL ISSUANCE DATE

            	
              September 23, 2003

            
	
              CONVERTIBLE DEBENTURE DUE

            	
              December 31, 2008 (as amended)

            
	
              AMOUNT DUE AS OF OCTOBER 15, 2006

            	
              $323,707.63

            

    

    

    WHEREAS, Material
Technologies, Inc., a Delaware corporation (the “Company”) entered and executed
that certain Class A Senior Secured Convertible Debenture, dated September 23,
2003 (the “Debenture”), in favor of Palisades Capital, LLC or
registered assigns (the “Holder”).

    

    WHEREAS, the Company
and Holder have agreed to amend the Debenture as set forth herein, with all
other terms remaining in full force and effect.  Capitalized terms
used herein shall have the same meaning as in the Debenture.

     

    NOW THEREFORE, the parties hereby agree as
follows:

    

    
      	
                

            	
              1.

            	
              The Maturity Date shall be extended to December 31,
      2008.

            

    

    

    
      	
                

            	
              2.

            	
              Section 3.1(a) of the Debenture is hereby amended and restated
      to read as follows:

            

    

    

    The Holder of this Debenture shall have the right, at its option, to
convert this Debenture into shares of Common Stock at any time following March
30, 2004.  The number of shares of Common Stock issuable upon the
conversion of this Debenture is determined pursuant to Section 3.2 and rounding
the result to the nearest whole share.  At any time after delivery by
Holder to the Company of a Notice of Intent to Convert, the Company shall not
have the right to pre-pay the balance due on the Debenture.  The
Holder of this Debenture may not convert any portion of this Debenture only to
the extent the issuance of the shares upon such conversion would cause the
Holder to beneficially own more than 4.99% of the issued and outstanding common
stock of the Company upon the date of such conversion.  The Company
will accept and rely upon the Holder’s written representation that the issuance
will not cause the holder to beneficially own more than 4.99% of the issued and
outstanding common stock of the Company.

    

    
      	
                

            	
              3.

            	
              The seventy five (75) day period referred to in Section 3.1(b)
      of the Debenture is hereby amended to be five (5) days after receipt of
      notice by the Company.

            

    

    

    
      	
                

            	
              4.

            	
              Section 3.2(a) is hereby amended and restated to read as
      follows:

            

    

    

    Subject to Section 3.1, upon the Company’s receipt of a facsimile or
original of Holder’s duly completed and signed Notice of Conversion (a copy of
which is attached hereto as Exhibit A), the Company shall instruct the escrow
agent pursuant to that certain Escrow Agreement of even date herewith to
transfer to the Holder that number of shares of Common Stock into which the
Debentures are convertible in accordance with the provisions regarding
conversion.

    

    
      
        
            

        

        
          1

          
            

          

        

        
            

        

      

    

    

    
      	
                

            	
              5.

            	
              Section 3.2(b) is amended to add the words “or if less than the
      total remaining balance of the Debenture is being converted” after the
      word “destroyed” in the
parenthetical.

            

    

    

    
      	
                

            	
              6.

            	
              The Company has informed the Holder that it is considering
      completing a reverse split of its common stock.  The Company
      acknowledges that the conversion price of the Debenture shall not be
      effected by any such reverse split, and that after giving effect to such
      reverse split, the conversion price shall remain the lesser of (i) 50% of
      the averaged ten closing prices for the Company’s Common Stock for the ten
      (10) trading days immediately preceding the Conversion Date or (ii)
      $0.10.

            

    

    

    
      	
                

            	
              7.

            	
              Section 6.3(d) is amended and restated to read: “The Company
      shall not increase the compensation paid or payable to any of its officers
      or directors by more than five percent (5%) in any one calendar year,
      except that Robert M. Bernstein’s compensation may be increased to a
      maximum of $250,000 per year starting with the 2007 calendar
      year.”

            

    

    

    
      	
                

            	
              8.

            	
              The Company has informed the Holder that it intends to issue up
      to 70 million post-split shares of Class A common stock to Robert M.
      Bernstein, or his designees or assigns, after the effectiveness of a
      reverse split of its common stock, to induce Mr. Bernstein to enter into a
      new employment agreement with the Company and to release the Company from
      any claims that may be owed to Mr.
Bernstein.

            

    

    

    
      	
                

            	
              a.

            	
              With respect to all shares issued to Mr. Bernstein, the Company
      agrees that the Company shall require Mr. Bernstein to execute the
      Stockholder Lockup Agreement attached hereto as Exhibit A, and
      the Company shall not waive or modify any of the provisions of the
      Stockholder Lockup Agreement in connection with such shares of Class A
      Common Stock issued to Robert M. Bernstein, or any transferee or assignee
      of such shares, and shall not permit any of such shares to be transferred
      without legend at any time prior to the date which is three years
      from the date thereof, except that the Company shall have the right to
      terminate any such Stockholder Lockup Agreement and restriction in the
      event this Debenture is paid in full or converted in full by the
      Holder.

            

    

     

    
      	 	 	The Company will place a legend on each certificate of the
      shares issued to Mr. Bernstein or his designees or assignees stating “this
      certificate may not be transferred until October 27, 2009” and such legend
      shall not be removed from such certificate except in accordance with the
      Stockholder Lockup Agreement.  In the event Mr. Bernstein
      transfers any of the shares represented by such certificate, such legend
      shall be placed on each certificate representing such shares, and any
      transferee, and any subsequent transferee, shall agree to be bound by such
      provision until the termination of the Stockholder Lockup
    Agreement.
	 	 	 
	
                

            	
              9.

            	
              The following is added to the Debenture, after Section
      6.3(g):

            

    

    

    
      	
                

            	
              a.

            	
              (h).

            	
              Except for the stock split contemplated above, the Company will
      not permit any split or combination of the common stock of the Company,
      and shall not declare

            

    

    

    
      
        
            

        

        
          2

          
            

          

        

        
            

        

      

    

    

    
      	
                

            	
              or pay any dividend (stock, cash or any other distribution) on
      its common or preferred stock, without the written consent of the
      Holder.

            

    

    

    
      	
                

            	
              b.

            	
              (i)

            	
              The Company shall not issue any shares of its common stock which
      are registered on a registration statement on Form S-8 (a “Form S-8”)
      without the written consent of the Holder, except if each and every of the
      following conditions are met:

            

    

    

    
      	
                

            	
              i.

            	
              The shares are issued as compensation for bonafide consulting
      services, pursuant to a written consulting agreement containing each and
      every understanding and term of the agreement between the consultant and
      the Company, and such shares are lawfully issuable under the rules and
      regulations relating to the use of Form
S-8;

            

    

    

    
      	
                

            	
              ii.

            	
              The Company has provided to its securities counsel copies of all
      agreements with the consultant and each and every recipient of shares that
      have been registered on the Form S-8, has fully explained to such counsel
      in writing all of the services to be provided by such consultant and any
      person, entity or business affiliated in any way with such consultant, and
      the Company has received the written opinion of such counsel that the
      issuance of shares registered on the Form S-8 to such consultant complies
      in all respects with applicable securities laws, including, without
      limitation, those rules and regulations relating to the use of
      registration statements on Form S-8 and the issuance of shares registered
      thereon;

            

    

    

    
      	
                

            	
              iii.

            	
              The issuance of the shares registered on the Form S-8 will not
      exceed an amount equal to $75,000 per month, beginning with November 2006,
      divided by the average closing price of the Company’s common stock for the
      month prior to such issuance (after giving effect to any split of the
      Company’s common stock (forward or
reverse);

            

    

    

    
      	
                

            	
              iv.

            	
              Any person who receives such shares shall agree not to sell more
      than (i) 1/20th
      of 20% of the total volume of the Company’s shares traded during the month
      prior to the issuance of such shares (the “Prior Month’s Volume”) in any
      single trading day, non-cumulative, or (ii) 20% of the Prior Months Volume
      in any single thirty day period.  For example, if the Prior
      Month’s Volume is 1,000,000 shares, the daily trading limit would be
      10,000 shares, and the monthly trading limit would be 200,000
      shares.  In the event such person breaches this limitation, it
      will be an Event of Default under the
Debenture.

            

    

    

    
      	
                

            	
              10.

            	
              Any default under this Debenture, or any of the debentures
      executed on the same date as this Debenture, as amended by an amendment
      dated as of the same date as this Agreement, and any default under or
      breach of that certain Settlement Agreement and General Release dated as
      of the same date hereof, shall be an Event of Default under this
      Debenture.

            

    

    

    
      
        
            

        

        
          3

          
            

          

        

        
            

        

      

    

     

    
      
        	 	11.	To induce the Holder to extend the Maturity Date of the
      Debenture, the Company hereby agrees to pay an extension fee and a
      settlement for delayed delivery of conversion shares of an aggregate of
      $102,223, and hereby confirms that the balance of the Debenture as of
      October 15, 2006, is agreed to be $323,707.63, which includes all
      advances, accrued interest and the above fee to date.
	 	 	 
	 	 	To further induce the Debenture Holder to enter into this
      Agreement, the Company shall execute and deliver to the Holder a
      seven-year warrant to purchase 4,000,000 shares of post-split common
      stock, at a purchase price of the lesser of (i) $0.001 per share, or (ii)
      fifty percent (50%) of market price, which warrants shall contain a
      cashless exercise provision and piggy-back registration rights; provided,
      that the maximum number of shares that the Company shall be required to
      register on any one registration statement shall not exceed thirty percent
      (30%) of the total number of shares of common stock registered for other
      parties on such registration statement.  All other terms of the
      Debenture, as amended to date, shall remain the
same.

      

    

     

    IN WITNESS WHEREOF, the Company has duly executed this Debenture as of
the date first written above.

    
 

    
      	
              MATERIAL TECHNOLOGIES, INC.

              a Delaware corporation

            	
              PALISADES CAPITAL, LLC

            
	 	 
	 	 
	By:  /s/ Robert
      M. Bernstein	By:  /s/ Reid
      Breitman
	      Robert M. Bernstein	      Reid Breitman
	      Chairman and CEO	     
President

    

     

     

     

     

     

     

    

    
      
        
            

        

        
          4

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