Document:

Unassociated Document

    Exhibit
      10.2

     

    

     

    LICENSE
      AGREEMENT

     

    This
      LICENSE AGREEMENT (this “Agreement”),
      dated
      as of June 30, 2005 (the “Effective
      Date”),
      is
      entered into by and between Biophan Technologies, Inc. a corporation organized
      under the laws of Nevada (“Biophan”)
      and
      Boston Scientific Scimed, Inc., a corporation organized under the laws of
      Delaware (“BSS”)
      (each,
      a “Party”,
      and
      collectively the “Parties”).

     

    RECITALS

     

    WHEREAS,
      Biophan is the owner or licensee of certain intellectual property and BSS
      desires to obtain a license to such intellectual property and Biophan desires
      to
      grant BSS such a license;

     

    WHEREAS,
      the Parties are also parties to that certain Investment Agreement dated June
      30,
      2005 (the “Investment
      Agreement
      (collectively with this Agreement, the “Transaction
      Documents”);
      and

     

    WHEREAS,
      pursuant to the transactions contemplated by the Transaction Documents; the
      Parties agreed to enter into this Agreement.

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual representations,
      agreements and covenants set forth herein, and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      Parties agree as follows:

     

    I. DEFINITIONS

     

    1.01 General.
      As used
      herein, the following terms shall have the following meanings:

     

    “Affiliate”
      means,
      with respect to any specified Person, any Person that, directly or indirectly,
      through one or more intermediaries, controls, is controlled by, or is under
      common control with such specified Person.

     

    “AMP
      License”
      means
      the AMP-Biophan License Agreement dated as of February 24,
      2005, the
      Addendum to and Ratification of the AMP-Biophan License Agreement dated as
      of
      February 24, 2005 and any other agreements relating to either of the
      foregoing.

     

    “Annual
      License Maintenance Payments”
      shall
      have the meaning as set forth in Section 6.02.

     

    “Bankruptcy
      Code”
      shall
      have the meaning as set forth in Section 12.12.

     

    “Biophan
      Indemnitee”
      means
      Biophan, its Affiliates, and each of their respective directors, officers,
      employees, agents, successors and assigns.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Biophan
      IP”
      means
      (i) all Intellectual Property Controlled by Biophan as of the Effective Date,
      (ii) all Intellectual Property licensed to Biophan under the Existing License
      Agreements at any time during the Term and (iii) any improvements, modifications
      or derivative works of (i) or (ii) Controlled by Biophan at any time during
      the
      Term, but excluding Third Party IP; for the avoidance of doubt, Biophan IP
      includes but is not limited to Biophan Patents.

     

    “Biophan
      Licensors”
      means
      those Persons who own Biophan IP and have licensed such Biophan IP to Biophan
      pursuant to Existing License Agreements.

     

    “Biophan
      Licensor Consents”
      means
      those acknowledgements and waivers set forth in Exhibit
      D
      which
      are to be executed by Biophan Licensors and delivered to BSS no later than
      ninety (90) days after the Effective Date.

     

    “Biophan
      Patents”
      means
      (i) all Patents Controlled by Biophan as of the Effective Date, including but
      not limited to those patents and applications set forth in Exhibit A,
      (ii)
      all Patents licensed to Biophan under the Existing License Agreements at any
      time during the Term and (iii) all Patents Controlled by Biophan at any time
      during the Term, but excluding Third Party IP, claiming any improvements,
      modifications or derivative works of the inventions claimed in (i) or (ii).
      Biophan Patents does not include any Patents covering Joint Inventions and
      jointly owned by the Parties.

     

    “Biophan
      Proceeding”
      shall
      have the meaning as set forth in Section 5.04(c).

     

    “BSS
      Designee”
      means
      Larry Neumann or such other person(s) that BSS identifies in writing to
      Biophan.

     

    “BSS
      Indemnitee”
      means
      BSS, its Affiliates, and each of their respective directors, officers,
      employees, agents, successors and assigns.

     

    “BSS
      Proceeding”
      shall
      have the meaning as set forth in Section 5.04(b).

     

    “BSS
      Sublicensees”
      means
      Persons to whom BSS, pursuant to a written sublicense agreement, sublicenses
      any
      or all of its rights under this Agreement.

     

    “Confidential
      Information”
      means
      (i) all proprietary information and materials, disclosed by one Party to the
      other Party, irrespective of the manner in which a Party disclosed such
      information, in furtherance of this Agreement, including inventions, data and
      information related to clinical trials and protocols, substances, formulations,
      techniques, methodology, equipment, data, reports, correspondence, trade
      secrets, know-how, manufacturing documentation and sources of supply and (ii)
      the terms of this Agreement (which shall be deemed Confidential Information
      of
      both Parties.)

     

    “Control”
      or
“Controlled”
      means
      with respect to any Know-How, Patent or other intellectual property right,
      the
      legal authority or right (whether by ownership, license or otherwise) to grant
      access, a license or a sublicense of or under such Know-How, Patent, or
      intellectual property right in accordance with the terms of this
      Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Disclosing
      Party”
      means,
      with respect to any Confidential Information, the Party that provides, directly
      or indirectly, its Confidential Information to the Receiving Party.

     

    [...]

     

    “Exclusive
      Products”
      means
[...]
      (“Exclusive
      Products Category 1”);
      (ii)
      products and services of and/or for embolic protection devices, aneurysm coils
      and all other vascular implants (other than [...])
      (“Exclusive
      Products Category 2);
      and
      (iii) [...]
      (“Exclusive
      Products Category 3”),
      as
      depicted in the chart at Exhibit
      C.

     

    “Exclusive
      Products Category”
      means
      any one or more of Exclusive Products Categories 1 to 3, as
      applicable.

     

    “Existing
      License Agreements”
      means
      those license agreements entered into by and between Biophan and other Persons
      regarding Biophan’s use of and license to Biophan IP owned by such other Person,
      as set forth in Exhibit
      B.

     

    “FDA”
      means
      the United States Food and Drug Administration.

     

    “Field”
      means
      systems, devices, components, compositions and processes for magnetic resonance
      imaging, including without limitation for providing or enhancing (a) safety,
      effectiveness, image quality and/or image compatibility or (b) the visualization
      of medical devices in
      vivo.

     

    “Future
      Sums”
      shall
      have the meaning set forth in Section 5.04(f).

     

    “Intellectual
      Property”
      means
      (a) Patents, (b) copyrights, (c) Know-How, and (d) registrations and
      applications for registration of any of the foregoing.

     

    “Inventions”
      means
      findings, discoveries, inventions, additions, modifications, formulations,
      variations, enhancements, refinements or derivative works.

     

    “Investment
      Agreement”
      shall
      have the meaning as set forth in the Recitals.

     

    “JHU”
      shall
      have the meaning as set forth in Section 2.04.

     

    “Joint
      Invention”
      shall
      have the meaning as set forth in Section 4.02(b).

     

    “Know-How”
      means
      all formulae, procedures, trade secrets, know-how, technology, plans, methods,
      processes, specifications, models, protocols, techniques, technical or
      confidential information and data (including, without limitation, formulae,
      experimentation, design, testing, manufacturing and regulatory data, and
      products compositions and procedures), and patentable and unpatentable
      Inventions that are not disclosed in a published patent application or issued
      patent.

     

    “Law”
      means
      any United States or non-United States federal, national, supranational, state,
      provincial, local or similar statute, law, ordinance, regulation, rule, code,
      order requirement or rule of law, to the extent applicable.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Licensed
      Products”
      means
      Exclusive Products and Non-Exclusive Products which would, but for the licenses
      granted hereunder, infringe a Valid Claim in existence in the country of sale
      of
      such Exclusive Product or Non-Exclusive Product.

     

    “Losses”
      means
      any losses, liabilities, claims asserted, awards, interest, judgments,
      penalties, expenses (including, without limitation, reasonable attorney’s fees
      and expenses), costs and damages.

     

    “Market
      Launch”
      means
      with respect to a Licensed Product, the date on which the first commercial
      sale
      of such Licensed Product is made by or on behalf of BSS in the United
      States.

     

    “Milestone
      Payments”
      shall
      have the meaning set forth in Section 6.03.

     

    “Net
      Sales”
      means
      gross revenues received from the sale by BSS or its Affiliates of Licensed
      Products to third parties, less (i) trade and/or quantity discounts actually
      allowed; (ii) sales, value added or other excise taxes and import duties of
      a
      similar nature; (iii) amounts repaid or credited by reason of purchase
      chargebacks or rebates; (iv) customer returns; (v) other similar customary
      adjustments or allowances actually given to a customer in the normal course
      of
      business of BSS; and (vi) transportation, insurance and postage charges if
      paid
      by BSS and invoiced by BSS as a separate item. As between or among BSS and
      its
      Affiliates, the gross revenues are determined by reference to the first sale
      to
      a non-Affiliate of BSS.

     

    “New
      Biophan IP”
      shall
      have the meaning set forth in Section 2.05.

     

    [...]

     

    “Non-Exclusive
      Products”
      means
      (i) [...]
      (“Non-Exclusive
      Products Category 1”);
      (ii) products and services of and/or for interventional guidewires for
      use
      in all applications (“Non-Exclusive
      Products Category 2);
      (iii)
      products and services of and/or for interventional vascular catheters (< 6
      hours), including for PTCA, predilation, etc. (“Non-Exclusive
      Products Category 3”);
      (iv)
      products and services of and/or for indwelling vascular catheters (> 6
      hours), including for CVCC, PICC, etc. (“Non-Exclusive
      Products Category 4”);
      (v)
      products and services of and/or for pacemakers, including leads (“Non-Exclusive
      Products Category 5”);
      (vi)
      products and services of and/or for implantable cardiac defibrillators and
      related devices, including their leads (“Non-Exclusive
      Products Category 6”);
      (vii)
[...]
      (“Non-Exclusive
      Products Category 7”);
      and
      (viii) products and services of and/or for applications for neuro stimulation,
      [...]
      (“Non-Exclusive
      Products Category 8”),
      as
      depicted in the chart at Exhibit
      C.

     

    “Non-Exclusive
      Products Category”
      means
      any one or more of Non-Exclusive Products Categories 1 to 8, as applicable.
      

     

    “Past
      Damages”
      shall
      have the meaning set forth in Section 5.04(f).

     

    “Patents”
      means
      all United States and foreign patents and patent applications, utility models,
      provisionals, divisionals, continuations, continuations-in-part, reissues,
      reexaminations or extensions thereof.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Person”
      means
      an individual, partnership, joint venture, corporation, limited liability
      company, trust, unincorporated organization or other entity (including, without
      limitation, any “group” within the meaning of Sections 13(d) and 14(d)(2)
      of the Securities Exchange Act of 1934).

     

    “Prepayment
      Credit”
      shall
      have the meaning set forth in Section 6.05.

     

    “Receiving
      Party”
      means,
      with respect to any Confidential Information, the Party that receives such
      Confidential Information from the Disclosing Party.

     

    “Regulatory
      Authority”
      means
      any national, supra-national, regional, state or local regulatory agency,
      department, bureau, commission counsel or other governmental entity or foreign
      equivalent. For purposes of clarity, the term “Regulatory Authority” as used in
      this Agreement includes the FDA.

     

    “Regulatory
      Filings”
      means
      the preparation and filing of all applicable documents with a Regulatory
      Authority, and obtaining all necessary regulatory, reimbursement and pricing
      approvals worldwide.

     

    “Representative”
      means,
      as to a Party, such Party’s Affiliates and its and their directors, officers,
      employees, agents, and advisors (including counsel and
      accountants).

     

    “Royalties”
      shall
      have the meaning as set forth in Section 6.04.

     

    “Royalty
      Credit”
      shall
      have the meaning set forth in Section 6.05.

     

    “Tangible
      Materials”
      means
      any and all tangible embodiments, whether in electronic or other form, of the
      Biophan IP that are in Biophan’s possession or control at any time during the
      Term.

     

    “Term”
      shall
      have the meaning as set forth in Section 11.01.

     

    “Third
      Party Improvements”
      shall
      have the meaning as set forth in Section 2.03.

     

    “Third
      Party IP”
      means
      Intellectual Property owned or licensable by a third party who is not a Biophan
      employee and is licensed or otherwise transferred to Biophan by an agreement
      signed after the Effective Date.

     

    “Transaction
      Documents”
      shall
      have the meaning as set forth in the Recitals.

     

    “Valid
      Claim”
      means a
      claim of any issued and unexpired Biophan Patent which claim has not been (i)
      permanently lapsed, (ii) permanently or irrevocably abandoned, or (iii) held
      permanently revoked, unenforceable or invalid by a decision of a court or other
      appropriate body of competent jurisdiction, unappealable or unappealed within
      the time allowed for appeal, and/or (iv) disclaimed or otherwise admitted to
      be
      invalid or unenforceable through reissue, re-examination, opposition, nullity
      action, or invalidation suit response.

     

    [...]

     

    
      
        
        

      

      
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    II. LICENSE

     

    2.01 License
      Grants.

     

    (a) Exclusive
      License.
      Subject
      to the terms and conditions of this Agreement, Biophan hereby grants BSS and
      its
      Affiliates an exclusive, worldwide, sublicensable license in and to Biophan
      IP
      to (i) use, make, have made, sell, offer to sell, import, modify, distribute,
      perform and otherwise exploit the Exclusive Products and (ii) enforce such
      Biophan
      IP against other Persons and collect past, present and future damages from
      any
      other Person’s infringement or misappropriation of Biophan IP as set forth in
      Section 5.02, but all of the foregoing rights and licenses are limited to the
      Field.

     

    (b) Non-Exclusive
      License.
      Subject
      to the terms and conditions of this Agreement, Biophan hereby grants BSS and
      its
      Affiliates a non-exclusive, worldwide license in and to Biophan IP to use,
      make,
      have made, sell, offer to sell, import, modify, distribute, perform and
      otherwise exploit the Non-Exclusive Products, but all of the foregoing rights
      and licenses are limited to the Field.

     

    (c) Retained
      R&D Rights.
      Notwithstanding the license grants in paragraphs (a) and (b) above, Biophan
      retains the rights for itself, its Affiliates, its licensors under Existing
      License Agreements and its consultants, to use the Biophan IP solely for the
      purposes of (i) Biophan’s research and development of Exclusive Products; and
      (ii) Biophan’s research, development and licensing of (A) Non-Exclusive Products
      and (B) products that are neither Exclusive Products nor Non-Exclusive
      Products.

     

    (d) Government
      Rights.
      Notwithstanding the license grant in paragraph (a) above, to the extent any
      Biophan Patents was developed with the support of funding from the U.S. federal
      government, the U.S. federal government retains a royalty-free, non-exclusive,
      non-transferable license to practice any government funded invention claimed
      in
      such Biophan Patents as set forth in 35 U.S.C. §§ 202-211, and the regulations
      promulgated thereunder, as amended, or in any successor statutes or
      regulations.

     

    (e) 
      [...]

     

    2.02 Biophan
      Obligations to Biophan Licensors.
      During
      the Term of this Agreement, Biophan shall maintain as valid and in full force
      and effect all Existing License Agreements and continue to perform all
      obligations of Biophan as required under the Existing License Agreements.
      Biophan may not terminate or amend any Existing License Agreements without
      the
      prior, written consent of BSS. In the event Biophan receives a notice of breach
      of any Existing License Agreement from any Biophan Licensor, Biophan shall
      promptly notify BSS and provide BSS with Biophan’s plan to cure such
      breach.

     

    2.03 Biophan
      Agreements with Consultants.
      If,
      after the Effective Date, Biophan enters into any agreement with a consultant
      for the development of improvements to the Inventions covered by the Biophan
      Patents (collectively “Third
      Party Improvements”),
      Biophan shall use best efforts, consistent with prudent business practices,
      to
      attempt to obtain (i) ownership of or licenses to any such Third Party
      Improvements and (ii) the right to license or sublicense such Third Party
      Improvements to BSS in accordance with the terms of this Agreement and without
      requiring any additional payment from BSS under Sections 6.04 or 6.05. It is
      understood by BSS that there is no assurance that these efforts will succeed;
      however
      if
      Biophan does obtain the rights described in (i) and (ii) above, then such Third
      Party Improvements (including all Intellectual Property therein) shall be
      licensed to BSS in accordance with the terms of this Agreement and the
      definitions of Biophan Patents and Biophan IP shall be amended to include such
      Third Party Improvements (and all Intellectual Property therein).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    2.04 Survival
      of Sublicenses to BSS.
      In the
      event any Existing License Agreement is terminated, the sublicense (of the
      applicable Biophan IP) to BSS shall remain valid and in full force and effect
      as
      set forth in the applicable Biophan Licensor Consent. Without limiting the
      foregoing, in the event of termination of Biophan’s license with The John
      Hopkins University (“JHU”),
      BSS
      may elect to continue its sublicense by advising JHU in writing, within sixty
      (60) days of BSS’s receipt of written notice of such termination, of its
      election, and of its agreement to assume in respect to JHU all the relevant
      obligations (including obligations for payment) contained in this
      Agreement.

     

    2.05 Right
      of First Negotiation.
      If, at
      any time during the Term, Biophan acquires Control of Intellectual Property
      in
      the Field and directed to Exclusive or Non-Exclusive Products not licensed
      to
      BSS [...]
      (collectively, the “New
      Biophan IP”),
      Biophan shall promptly notify the BSS Designee of such acquisition. Biophan’s
      notification of BSS shall be in writing and shall set forth sufficient detail
      to
      allow BSS to determine whether BSS is interested in obtaining a license to
      such
      New Biophan IP. BSS shall have [...]
      to
      notify
      Biophan of BSS’s interest in such New Biophan IP and whether BSS is interested
      in such New Biophan IP in respect of Exclusive Products or Non-Exclusive
      Products. Upon such notification by BSS, the Parties shall negotiate diligently
      and in good faith the terms under which BSS would acquire a license (or
      sublicense) to such New Biophan IP. In the event (i) BSS notifies Biophan
      that BSS is not interested in obtaining a license to such New Biophan IP (or
      BSS
      fails to respond to Biophan in the allotted [...]
      time
      period) or (ii) the Parties have not been able to agree to terms regarding
      the licensing (or sublicensing) to BSS of such New Biophan IP within
[...]
      from
      BSS’s notice to Biophan, Biophan shall be free to license (or sublicense) such
      New Biophan IP to another Person.

     

    2.06 Limitation
      on Right to Sublicense.
      Nothwithstanding any other provision of this Agreement to the contrary, BSS
      may
      not grant any sublicenses to any Biophan IP until all of the following have
      occurred: (i) BSS shall have paid to Biophan the license fee payable pursuant
      to
      Section 6.01, and (ii) BSS shall have paid to Biophan the full purchase price
      for the Shares (as such term is defined in the Investment
      Agreement).

     

    III. TECHNOLOGY
      TRANSFER

     

    3.01 Further
      Research and Development of Exclusive and Non-Exclusive Products.
      If BSS
      wishes Biophan to continue or expand its research efforts, then BSS and Biophan
      may negotiate and enter into a suitable written development agreement providing
      for such development, including terms for payments, task descriptions and
      milestones, as applicable.

     

    3.02 Delivery
      of Tangible Materials to BSS.
      During
      the Term of this Agreement, and within ten (10) business days after any written
      request from BSS, Biophan shall deliver copies of any and all Tangible Materials
      to BSS for BSS’s (and its Affiliates’) use in accordance with the terms and
      conditions of this Agreement.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    3.03 Use
      of
      Know-How.
      Biophan
      may use any Know-How learned from BSS in products other than Exclusive
      Products.

     

    IV. INTELLECTUAL
      PROPERTY OWNERSHIP

     

    4.01 Pre-Existing
      Rights.
      Each
      Party acknowledges that any and all Intellectual Property of the other Party
      existing as of the Effective Date is and shall continue to be owned by such
      other Party subject only to the licenses granted herein. Notwithstanding any
      other provision of this Agreement to the contrary, nothing shall be construed
      herein as transferring any Party’s ownership interest in such intellectual
      property to the other Party.

     

    4.02 New
      Intellectual Property.

     

    (a) As
      between the Parties, each Party shall own all right, title and interest in
      and
      to any and all Inventions conceived, discovered or reduced to practice solely
      by
      such Party and all Intellectual Property therein.

     

    (b) If
      the
      Parties jointly conceive, discover or reduce to practice any patentable
      Invention (“Joint
      Invention”),
      all
      rights in and to the Joint Invention shall be jointly owned by both Parties,
      provided that Biophan may not use or license any Joint Invention (or any rights
      therein) in or for use in Exclusive Products without the prior, written consent
      of BSS.

     

    (c) [...]

     

    4.03 Patent
      Marking.
      BSS
      shall give Biophan at least thirty (30) days written notice prior to a Market
      Launch of any Licensed Product and Biophan shall notify BSS, in writing within
      ten (10) days of receipt of BSS’s notice, any patent markings required to be
      placed on such Licensed Product, which BSS shall suitably place on the labeling
      or packaging for all applicable Licensed Products.

     

    V. INTELLECTUAL
      PROPERTY PROTECTION

     

    5.01 Prosecution
      and Maintenance of Biophan Patents.
      Biophan
      shall be responsible for and perform all preparations, filings, prosecution,
      maintenance, recordings and other acts, and pay all required fees and taxes,
      with respect to Biophan Patents. Without limiting the foregoing, (i) Biophan
      shall be obligated to take any and all reasonable actions necessary to prosecute
      and maintain the Biophan Patents including the filing of continuation
      applications and continuation-in-part applications; and (ii) Biophan may not
      abandon or fail to maintain any Biophan Patents without the prior, written
      consent of BSS, which shall not be withheld unreasonably. If Biophan desires
      to
      abandon or fail to maintain any Biophan Patent, Biophan shall provide BSS at
      least one hundred eighty (180) days written notice prior to any such abandonment
      of failure to maintain and an explanation of why Biophan believes such Biophan
      Patent should no longer be pursued or maintained. Biophan shall provide BSS
      an
      opportunity to review all filings (including office actions) in respect of
      Biophan Patents prior to filing with the Patent and Trademark Office or other
      applicable foreign patent office. Biophan shall consider in good faith all
      comments provided by BSS and use reasonable efforts to address concerns and
      issues raised by BSS in respect of any such proposed filings.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    5.02 Prosecution
      and Maintenance of Jointly Owned Patents.
      With
      respect to Patents jointly owned by both Parties, BSS shall be responsible
      for
      the preparation, filing, prosecution and maintenance of such Patents. Upon
      Biophan’s written request, BSS shall provide Biophan (i) a status update on any
      jointly owned Patents; and (ii) an opportunity to review and comment on any
      then
      pending office actions, which comments, if provided to BSS in a timely manner,
      will be considered by BSS in good faith when BSS]prepares a response to such
      office action.

     

    5.03 Joint
      Inventions.
      Patents
      or patent applications covering Joint Inventions will be deemed to be made
      as a
      result of activities under and subject to the CREATE Act, 35 U.S.C.
§ 103(c).

     

    5.04 Infringement
      of Biophan IP.

     

    (a) In
      the
      event that either Party obtains knowledge of any actual or threatened
      infringement or misappropriation by another Person of any of the Biophan IP,
      such Party shall notify the other Party in writing promptly of such actual
      or
      threatened infringement or misappropriation and provide the other Party with
      any
      available evidence of such actual or threatened infringement or
      misappropriation.

     

    (b) To
      the
      extent permitted by any applicable Existing License Agreement, BSS, at its
      expense and sole discretion, shall have the first right to commence, prosecute
      and settle or otherwise compromise any dispute, action, suit or proceeding
      involving or against any other Person believed to have infringed or
      misappropriated any Biophan IP by such Person’s use, manufacture or sale of a
      product or service that is similar to or competes with any Exclusive Product
      (“BSS
      Proceeding”).
      Biophan will assist BSS in any BSS Proceeding to the extent necessary, including
      joining as a party if necessary and/or requiring the relevant Biophan Licensor
      to join as a party if necessary. In the event that BSS institutes a BSS
      Proceeding, Biophan shall, to the extent permitted by applicable Law, also
      have
      the right to, at its own cost, join or intervene in such BSS Proceeding. No
      settlement, consent judgment or other voluntary final disposition of any BSS
      Proceeding brought pursuant to this Section 5.04(b) may be entered into
      by
      either Party without the prior, written consent of the other Party, which
      consent shall not be unreasonably withheld or delayed. In the event BSS does
      not
      institute a BSS Proceeding to obtain a discontinuance of or remedy for such
      actual or threatened infringement or misappropriation of the Biophan IP within
      sixty (60) days of the date of receipt by BSS of any written demand from
      Biophan, then Biophan, may, to the extent permitted by applicable Law, institute
      a proceeding with respect to the actual or threatened infringement or
      misappropriation at its own expense. If required by Law, BSS shall permit any
      action under this Section 5.04(b) to be brought in its name, including
      being joined as party-plaintiffs.

     

    (c) To
      the
      extent permitted by any applicable Existing License Agreement, Biophan, at
      its
      expense and sole discretion, shall have the first right to commence, prosecute
      and settle or otherwise compromise any dispute, action, suit or proceeding
      involving or against any other Person believed to have infringed or
      misappropriated any Biophan IP by such Person’s use, manufacture or sale of a
      product or service that is similar to or competes with any Non-Exclusive Product
      (“Biophan
      Proceeding”).
      BSS
      will assist Biophan in any Biophan Proceeding to the extent necessary, including
      joining as a party if necessary. In the event that Biophan institutes a Biophan
      Proceeding, BSS shall, to the extent permitted by applicable Law, also have
      the
      right to, at its own cost, join or intervene in such Biophan Proceeding. In
      the
      event Biophan does not institute a Biophan Proceeding to obtain a discontinuance
      of or remedy for such actual or threatened infringement or misappropriation
      of
      the Biophan IP within sixty (60) days of the date of receipt by Biophan of
      any
      written demand from BSS, then BSS may, to the extent permitted by applicable
      Law, institute a proceeding with respect to the actual or threatened
      infringement or misappropriation at its own expense. If required by Law, Biophan
      shall permit any action under this Section 5.04(c) to be brought in
      its
      name, including being joined as party-plaintiffs.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (d) With
      respect to any dispute, action, suit or proceeding (other than a BSS Proceeding
      or Biophan Proceeding) brought by any Person challenging the validity or
      enforceability any Biophan IP, unless otherwise agreed by the Parties, Biophan
      shall defend such Biophan IP at its own cost and expense, provided,
      however
      that (i)
      Biophan shall promptly notify BSS of any such dispute, (ii) Biophan shall keep
      BSS apprised of the status of and major developments in such dispute and (ii)
      BSS shall have the right to, at its own cost and expense, participate in the
      dispute, action, suit or proceeding.

     

    (e) In
      the
      event a Party initiates a proceeding pursuant to this Section 5.04 the
      other Party shall cooperate fully, including, if required to bring such action,
      the furnishing of a power of attorney, and the Parties will work together to
      coordinate efforts with respect to any such proceeding.

     

    (f) Any
      recovery from any proceeding instituted pursuant to this Section 5.04 shall
      first be applied in satisfaction of out-of-pocket expenses and fees, including
      attorneys’ fees and expenses, incurred by the Parties (in the event the recovery
      is less than the Parties’ out-of-pocket expenses and fees, the recovery shall be
      apportioned pro
      rata
      based on
      the Parties’ respective out-of-pocket expenses and fees incurred for the
      lawsuit).
      Unless
      otherwise agreed by the Parties in writing, the remainder of any such recovery
      (including
      any future payments, royalties and license fees) shall
      be
      categorized as either (i) damages for past infringements (“Past
      Damages”)
      or
      (ii) fees (however established, whether as lump sum payments, installments,
      milestone payments, minimums or running royalties, for example) for any and
      all
      future uses of Biophan IP (“Future
      Sums”)
      and
      distributed as follows:

     

    (i) Past
      Damages shall be retained by the Party responsible for instituting the
      Proceeding and, if both Parties participate in funding the Proceeding, the
      recovery shall be divided between the Parties on a pro
      rata
      basis
      based on percentage of out-of-pocket fees and expenses paid by each Party;
      

     

    (ii) With
      respect to BSS Proceedings, Future Sums shall be considered Sublicensing Revenue
      and divided between BSS and Biophan, pursuant to Section 6.05; and

     

    (iii) With
      respect to Biophan Proceedings in which BSS participated, Future Sums shall
      be
      retained by Biophan.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    VI. PAYMENTS

     

    6.01 Upfront
      License Fee.
      On or
      before the later of (i) ten
      (10)
      days after the Effective Date
      or (ii)
      five (5) business days after BSS shall have completed its due diligence
      regarding the AMP License and has concluded, in its sole discretion, that it
      desires to proceed with the transaction,
      in
      consideration for the licenses granted to BSS under Article II, BSS shall pay
      to
      Biophan a one-time payment of USD$750,000.

     

    6.02 Annual
      License Maintenance Payments.
      In
      consideration for the licenses granted to BSS under Article II, BSS shall pay
      to
      Biophan the following payments (“Annual
      License Maintenance Payments”):

     

    (a) [...]
      for
      the
      exclusive license in respect of all Licensed Products within Exclusive Products
      Category 1;

     

    (b) [...]
      for
      the
      exclusive license in respect of all Licensed Products within Exclusive Products
      Category 2;

     

    (c) 
      [...]
for
      the
      exclusive license in respect of all Licensed Products within Exclusive Products
      Category 3;

     

    (d) [...]
      for
      the
      non-exclusive license in respect of all Non-Exclusive Products; provided,
      however,
      that,
      if BSS relinquishes a Non-Exclusive Products Category(ies), the [...]
      amount
      may be proportionally reduced by the ratio that the payment listed below as
      to
      the relinquished Non-Exclusive Products Category(ies) bears to the total
      payments listed below for all Non-Exclusive Products
      Category(ies):]

     

    (i) Non-Exclusive
      Products Category 1: [...]

     

    (ii) Non-Exclusive
      Products Category 2: [...]

     

    (iii) Non-Exclusive
      Products Category 3: [...]

     

    (iv) Non-Exclusive
      Products Category 4: [...]

     

    (v) Non-Exclusive
      Products Category 5: [...]

     

    (vi) Non-Exclusive
      Products Category 6: [...]

     

    (vii) Non-Exclusive
      Products Category 7: [...]

     

    (viii) Non-Exclusive
      Products Category 8: [...]

     

    Beginning
      in the year 2006, BSS shall make such Annual License Maintenance Payments no
      later than January 1 of each year in which BSS desires to retain a license
      in
      respect of such Licensed Products. A failure by BSS to make any required Annual
      License Maintenance Payment shall not be deemed a breach of this Agreement
      and
      in the event BSS fails to make any specific Annual License Maintenance Payment
      for a given year, (i) BSS shall be deemed to no longer be licensed with respect
      to such Licensed Product; and (ii) the definition of the terms Exclusive Product
      and/or Non-Exclusive Product are hereby revised accordingly. For the avoidance
      of doubt, no Annual License Maintenance Payments are due for the year
      2005.

     

    
      
        
        

      

      
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    6.03 Milestone
      Payments.
      In
      partial consideration for the licenses granted to BSS under Article II, BSS
      shall pay to Biophan the following one-time payments (“Milestone
      Payments”)
      upon
      the first Market Launch within each specified category:

     

    
      	
              Exclusive
                Products Category 1

               

            	
              USD$3,000,000

               

            
	
              Exclusive
                Products Category 2

               

            	
              [...]

               

            
	
              Exclusive
                Products Category 3

               

            	
              USD$750,000

               

            
	
              Non-Exclusive
                Products Category 1

               

            	
              USD$150,000

               

            
	
              Non-Exclusive
                Products Category 2

               

            	
              [...]

               

            
	
              Non-Exclusive
                Products Category 3

               

            	
              [...]

               

            
	
              Non-Exclusive
                Products Category 4

               

            	
              [...]

               

            
	
              Non-Exclusive
                Products Category 5

               

            	
              [...]

               

            
	
              Non-Exclusive
                Products Category 6

               

            	
              [...]

               

            
	
              Non-Exclusive
                Products Category 7

               

            	
              USD$500,000

               

            
	
              Non-Exclusive
                Products Category 8

               

            	
              [...]

               

            

    

    

     

    6.04 Royalties.
      Subject
      to Section 6.05, BSS shall pay Biophan royalties for Licensed Products sold
      by
      BSS or its Affiliates as set forth below (“Royalties”): 

     

    
      	
              Exclusive
                Products Category 1

               

            	
              3%
                of Net Sales if [...];
                4% of Net Sales if [...]

               

            
	
              Exclusive
                Products Category 2

               

            	
              [...]

               

            
	
              Exclusive
                Products Category 3

               

            	
              4%
                of Net Sales

               

            
	
              Non-Exclusive
                Products Category 1

               

            	
              5%
                of Net Sales

               

            
	
              Non-Exclusive
                Products Category 2

               

            	
              [...]%
                of
                Net Sales

               

            
	
              Non-Exclusive
                Products Category 3

               

            	
              [...]%
                of Net Sales

               

            
	
              Non-Exclusive
                Products Category 4

               

            	
              [...]%
                of Net Sales

               

            
	
              Non-Exclusive
                Products Category 5

               

            	
              [...]%
                of Net Sales

               

            
	
              Non-Exclusive
                Products Category 6

               

            	
              [...]%
                of Net Sales

               

            
	
              Non-Exclusive
                Products Category 7

               

            	
              3%
                of Net Sales

               

            
	
              Non-Exclusive
                Products Category 8

               

            	
              [...]%
                of Net Sales

               

            

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    In
      the
      event BSS is obligated to make patent license royalty payments to another
      Person(s) in respect of any feature(s) of Licensed Product(s) where such
      features are covered by one or more Valid Claims, the applicable Royalty for
      that Licensed Product shall be reduced by the amount of the royalty payments
      due
      to such other Person(s), provided,
      however,
      that
      the Royalty otherwise payable to Biophan with respect to the applicable Licensed
      Product(s) shall not be reduced by more than [...]

     

    6.05 Sublicensing
      Revenue.
      If BSS
      or any Affiliate of BSS sublicenses Biophan IP to a BSS Sublicensee, BSS shall
      pay to Biophan [...]
      of
      all
      the royalties, license fees, milestone payments, lump sum license payments
      and
      other similar cash payments which are (i) attributable to the sublicense of
      the
      Biophan IP as opposed to any other third party Intellectual Property and (ii)
      received by BSS (or its Affiliate) from such BSS Sublicensee in respect of
      Licensed Products sold by such BSS Sublicensee. Notwithstanding
      the foregoing, the
      royalty
payable
      to Biophan shall
      not
      be less than [...]
      of
      the
Net
      Sales
      (using the definition herein, mutatis
      mutandis)
      by the
BSS
      Sublicensee.

     

    6.06 Payments.
      Royalties shall be paid by BSS to Biophan on a quarterly basis, no later than
      thirty (30) days after the end of each calendar quarter, with an annual
      reconciliation to be made by BSS at the same time as the payment is made in
      respect of the fourth quarter of each calendar year to reflect any adjustments
      made to Net Sales during such year. If any amount collected or owed is stated
      in
      a currency other than United States Dollars, then, for purposes of calculating
      the amount due Biophan hereunder, such amount shall be converted into United
      States Dol[lars
      at
      the exchange rate between those two currencies published by Bloomberg for the
      last business day of the applicable calendar quarter for which such payments
      are
      being paid. If no such exchange rate for a currency in a country has been quoted
      by Bloomberg during the twelve (12) month period preceding the date on which
      such amount becomes due to Biophan under this Agreement, such amount payable
      for
      the country per unit of Licensed Product shall be the average amount most
      recently paid by BSS for each unit of the Licensed Product in the country with
      the largest sales volume of the applicable Licensed Product for which a currency
      conversion to United States Dollars is published by Bloomberg.

     

    6.07 [...]
      

     

    6.08 No
      Other Payment Obligations.
      Except
      as expressly set forth in this Article VI, BSS shall not be obligated
      to
      make any payments to Biophan in respect of the licenses granted in
      Article II, including but not limited to royalties, fees and other payments
      due to Biophan Licensors under Existing License Agreements in respect of Net
      Sales by BSS or its Affiliates.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    6.09 Biophan
      Audit Rights.
      BSS
      shall maintain accurate records and books of account sufficient to substantiate
      the Royalties paid to Biophan, including records of the quantities of Licensed
      Products sold. Upon reasonable notice to BSS, Biophan shall have the right
      to
      conduct an audit, not more than once per calendar year, through an independent
      accounting firm reasonably acceptable to BSS, of the calculation of Net Sales
      of
      Licensed Products and to examine the records and books of accounts of BSS in
      connection therewith. If such audit determines that payments are due to Biophan,
      BSS shall pay Biophan any such additional amounts within thirty (30) days of
      the
      date on which such auditor’s written report is delivered to BSS and Biophan. If
      such audit determines that BSS has overpaid Royalties to Biophan, Biophan shall
      return such overpayment to BSS within thirty (30) days of the date on which
      such
      auditor’s written report is delivered to BSS and Biophan. Biophan shall bear the
      full cost and expense of such audit, unless a discrepancy in excess of five
      percent (5%) in favor of Biophan is discovered, in which case BSS shall bear
      the
      full cost and expense of such audit.

     

    6.10 Deductions.
      Any
      amounts which BSS is required by Law to withhold with respect to monies payable
      to Biophan under this Agreement shall be deducted from the amount of such
      payments and paid to the relevant competent taxing authority. BSS shall provide
      Biophan with a certificate or other documentary evidence to enable Biophan
      to
      support a claim for a refund or foreign tax credit with respect to any such
      tax
      so withheld or deducted by BSS. BSS and Biophan will reasonably cooperate in
      completing and filing documents required under the provisions of any applicable
      tax treaty or under any other applicable law, in order to enable BSS to make
      such payments to Biophan without any deduction or withholding, if possible.
      Any
      amounts which BSS deducts or withholds pursuant to this Section
      6.10
      shall be
      treated as having been paid to Biophan for purposes of this
      Agreement.

     

    VII. REPRESENTATIONS
      AND WARRANTIES

     

    7.01 Mutual
      Representations and Warranties.
      Each
      Party hereby represents and warrants to the other Party as follows:

     

    (a) The
      execution, delivery and performance of this Agreement by such Party has been
      duly authorized by all necessary action on the part of such Party.

     

    (b) This
      Agreement has been duly executed and delivered by such Party and assuming due
      authorization, execution and delivery by the other Party, constitutes a legal,
      valid and binding obligation of such Party, enforceable against such Party
      in
      accordance with its terms, subject to (i) the effect of any applicable
      bankruptcy, insolvency, reorganization, moratorium and other similar laws
      relating to or affecting creditors’ rights and remedies generally, and (ii) the
      effect of general equitable principles, regardless of whether asserted in a
      proceeding in equity or at law.

     

    (c) Such
      Party’s execution, delivery and performance of this Agreement and the
      consummation of the transaction contemplated hereby does not and will not (i)
      violate, conflict with or result in the breach of any provision of the
      certificate of incorporation or by-laws (or similar organizational documents)
      of
      such Party, (ii) conflict with or violate any Law or governmental order
      applicable to such Party or its assets, properties or businesses, or (iii)
      conflict with, result in any breach of, constitute a default (or event which
      with the giving of notice or lapse of time, or both, would be come a default)
      under, require any consent under, or give to other any rights of termination,
      amendment, acceleration, suspension, revocation or cancellation of, or result
      in
      the creation of any encumbrance on any of its outstanding shares of common
      stock
      or preferred stock or any of the assets or properties of such Party pursuant
      to,
      any note, bond, mortgage or indenture, contract, agreement, lease, sublease,
      license, permit, franchise or other instrument or arrangement to which it is
      a
      party or by which any of such Party’s shares of common stock or preferred stock
      or any of the Party’s assets or properties is bound or affected.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (d) It
      is not
      a party to any litigation relating to, or that could reasonably be expected
      to
      affect, its ability to perform its obligations under this
      Agreement.

     

    7.02 Biophan
      Representations and Warranties.
      Biophan
      hereby represents and warrants to BSS as follows:

     

    (a) Biophan
      is the sole and exclusive owner of the entire right, title and interest in
      and
      to, or holds an exclusive license under, the Biophan IP, free and clear of
      all
      liens and encumbrances, and Biophan is entitled to use and license (or
      sublicense) the Biophan IP in accordance with the terms and conditions of this
      Agreement and without incurring any obligation to any other Person (except
      with
      respect to the payment of royalties and/or license fees as set forth in the
      Existing License Agreements).

     

    (b) The
      Biophan IP is not subject to any outstanding consent, settlement, decree, order,
      injunction, judgment or ruling that would impair the validity or enforceability
      of any such Biophan IP and to the knowledge of Biophan, with no investigation
      having been made or required to be made, the Biophan IP is valid and
      enforceable.

     

    (c) To
      the
      knowledge of Biophan, with no investigation having been made or required to
      be
      made, the use of the Biophan IP and the making, using, selling, offering for
      sale, exporting or importing of the Licensed Products does not and will not
      infringe, misappropriate, dilute or otherwise violate the Intellectual Property
      or other rights of any Person.

     

    (d) Biophan
      has not granted any other Person, other than BSS, a license to or under any
      of
      the Biophan IP with respect to the manufacture, development, use, sale, export
      or import of Exclusive Products, except as reserved in Section
      2.01(c).

     

    (e) Biophan
      has all necessary rights to grant the rights and licenses granted in this
      Agreement, including, without limitation, all necessary consents and approvals
      from the Biophan Licensors.

     

    (f) The
      provisions of this Agreement are consistent with the provisions of the Existing
      License Agreements and there are no provisions required under any Existing
      License Agreement to be contained herein that are not contained
      herein.

     

    (g) The
      performance by Biophan and BSS of their obligations under this Agreement and
      the
      exercise by Biophan and BSS of their rights under this Agreement will not result
      in breach of any provisions of the Existing License Agreements.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    7.03 DISCLAIMER.
      EXCEPT
      AS EXPLICITLY PROVIDED IN THIS ARTICLE, NEITHER PARTY MAKES ANY REPRESENTATIONS
      OR WARRANTIES OF ANY KIND, EXPRESS, IMPLIED, OR STATUTORY, AND THE PARTIES
      EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY
      WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     

    7.04 Biophan
      Indemnification.
      Biophan
      hereby agrees to indemnify and hold harmless BSS Indemnitees from and against
      all Losses incurred by them arising from any action made, brought or threatened
      against any of the BSS Indemnitees by a third party as a result of (a) any
      negligent or willful act or omission of Biophan in relation to its obligations
      under this Agreement, (b) the breach of any representation or warranty, covenant
      or agreement by Biophan contained in this Agreement, or (c) any allegation
      that
      the use of the Biophan IP infringes or misappropriates any Person’s Intellectual
      Property (excluding Patents).

     

    7.05 BSS
      Indemnity to Biophan.
      BSS
      agrees to indemnify, defend and hold harmless each Biophan Indemnitee from
      and
      against any and all Losses incurred by them arising from any Action made,
      brought or threatened against any of the Biophan Indemnitees by a third party
      as
      a result of (a) any negligent or willful act or omission of BSS in relation
      to
      its obligations under this Agreement, (b) the breach of any representation
      or
      warranty, covenant or agreement by BSS contained in this Agreement
      or (c)
      any product liability claim with respect to a Licensed Product sold by or on
      behalf of BSS or a BSS Affiliate.

     

    7.06 Special
      Damages.
      EXCEPT
      WITH RESPECT TO OBLIGATIONS UNDER SECTIONS 7.04 AND 7.05, IN NO EVENT
      SHALL
      EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
      DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT.

     

    7.07 Breach
      of Section 7.02(d).
      If
      Biophan has breached the representation and warranty set forth in Section
      7.02(d) with respect to an Exclusive Product (and such Exclusive Product is
      not
      otherwise covered by a Valid Claim) and the breach is not cured within sixty
      (60) days from Biophan’s receipt of notice of such breach, in addition to any
      and all other remedies BSS has, BSS shall be relieved of all obligations to
      pay
      Royalties, Milestone Payments and Annual Minimum Payments in respect of the
      relevant Exclusive Product and BSS retains a perpetual, worldwide,
      sublicensable, exclusive (subject only to the license(s) granted by Biophan
      to
      Person(s) prior to the Effective Date) license in respect of such Exclusive
      Product.

     

    VIII. INSURANCE

     

    8.01 Insurance.
      BSS
      shall maintain in full force and effect at all times commercial general
      liability insurance, including contractual liability and products liability
      insurance, covering the marketing, sale, distribution, use and performance
      of
      Licensed Products in an amount of at least [...]
      per
      occurrence and [...]
      in
      the
      aggregate. Such insurance (i) shall be issued by an insurer licensed in the
      State of New York or an insurer pre-approved by Biophan, such approval not
      to be
      unreasonably withheld, (ii) shall be endorsed to include product liability
      coverage, and (iii) shall require thirty (30) days’ written notice to Biophan
      before cancellation or material change. BSS shall, upon request, provide Biophan
      with Certificates of Insurance. BSS shall maintain such insurance five (5)
      years
      after any termination of this Agreement.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    IX. CONFIDENTIALITY

     

    9.01 Confidentiality.
      The
      Receiving Party shall maintain Confidential Information in confidence, and
      shall
      not disclose, divulge or otherwise communicate such Confidential Information
      to
      others, or use it for any purpose, except pursuant to, and in order to carry
      out, the terms and objectives of this Agreement. The Receiving Party hereby
      shall exercise every reasonable precaution to prevent and restrain the
      unauthorized disclosure of such Confidential Information. Upon termination
      or
      expiration of this Agreement, each Party shall at the Disclosing Party’s
      request, either return to the Disclosing Party or destroy (and certify to the
      destruction of), all Confidential Information of the Disclosing Party in its
      possession.

     

    9.02 Release
      from Restrictions.
      The
      provisions of Section 9.01 shall not apply to and terminate with respect
      to
      any Confidential Information disclosed hereunder that:

     

    (a) is
      lawfully disclosed to the Receiving Party by an independent, unaffiliated third
      party rightfully in possession of the Confidential Information and under no
      confidentiality or fiduciary obligation to the Disclosing Party not to make
      disclosure;

     

    (b) is
      or
      becomes published or generally known to the public through no fault or omission
      on the part of the Receiving Party;

     

    (c) is
      developed independently by the Receiving Party without use of the Confidential
      Information of the Disclosing Party;

     

    (d) is
      legally required to be disclosed to a Regulatory Authority or is otherwise
      required or compelled to be disclosed; provided,
      however,
      that:

     

    (i) the
      Receiving Party shall provide prompt written notice of such requirement to
      the
      Disclosing Party so that the Disclosing Party may seek a protective order or
      other remedy; and provided further that the Receiving Party shall be permitted
      to furnish only that portion of such Confidential Information that is legally
      required to be provided and the Receiving Party shall exercise reasonable
      efforts to obtain assurances that confidential treatment shall be accorded
      such
      information; and

     

    (ii) the
      Receiving Party shall continue to treat such Confidential Information as
      confidential pursuant to Section 9.01 unless and until such Confidential
      Information becomes published or generally known to the public through no fault
      or omission on the part of the Receiving Party.

     

    X. DISPUTES

     

    10.01 Dispute
      Resolution.

     

    (a) Internal
      Resolution Process.
      In the
      event of any dispute, controversy or claim arising out of or relating to this
      Agreement, the Parties shall attempt in good faith to resolve such dispute
      promptly. In the event that the Parties cannot resolve a dispute, controversy
      or
      claim arising out of or relating to this Agreement within a reasonable period
      of
      time, such dispute, controversy or claim may,
      upon
      mutual agreement of the Parties, be submitted to non-binding arbitration
      pursuant to Section 10.01(b), provided,
      however
      that
      disputes regarding alleged non-payment of fees or Royalties by BSS must
      be
      submitted to arbitration pursuant to Section 10.01(b) prior to the filing of
      any
      court action by a Party.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (b) Arbitration.
      Arbitration of any dispute, controversy or claim is to be administered by the
      American Arbitration Association and is to be conducted in accordance with
      the
      Commercial Arbitration Rules of the American Arbitration Association. Any
      arbitration is to be held before one arbitrator at a location mutually agreed
      to
      by the Parties. No later than ten (10) business days after the Parties’ decision
      to arbitrate, the Parties shall jointly select a neutral arbitrator. If the
      Parties fail to select an arbitrator on or before the tenth (10th) day, either
      Party is entitled to request the American Arbitration Association to appoint
      a
      neutral arbitrator in accordance with its rules. Each Party will cooperate
      to
      provide information reasonably requested by the other. The arbitration hearing
      will be held within ninety (90) days after a demand for arbitration is filed.
      The decision of the arbitrator shall be in the form of a written, reasoned
      opinion, but will be non-binding upon the Parties and any arbitration shall
      not
      prejudice either Party’s right to pursue a judicial remedy with respect to any
      dispute, controversy or claim. Each Party shall be responsible for costs
      incurred in connection with any arbitration but the arbitrator’s fees and other
      costs of the administration of the arbitration shall be equally shared by both
      Parties.

     

    XI. TERM
      AND TERMINATION

     

    11.01 Term.
      This
      Agreement shall continue in effect unless and until terminated in accordance
      with the provisions of this Article XI (“Term”).

     

    11.02 Termination
      by Biophan.

     

    (a) Biophan
      may terminate this Agreement if BSS is in material breach of any provision
      contained in this Agreement which breach would result in a material adverse
      effect on Biophan and such breach shall not have been remedied within sixty
      (60)
      days after receipt of written notice from Biophan specifying (i) such breach
      and
      (ii) intention to terminate if such breach is not cured within sixty (60)
      days.

     

    (b) BSS’s
      license rights with respect to any Licensed Product may be terminated by Biophan
      if BSS fails to pay Royalties in respect of such Licensed Product within thirty
      (30) days of:

     

    (i) Receipt
      by BSS of written notice from Biophan regarding such nonpayment provided that
      BSS has not requested resolution of this issue of nonpayment in accordance
      with
      Section 10.01(b) within (or prior to) such thirty (30) day period;
      or

     

    (ii) Receipt
      by BSS of a written arbitration decision pursuant to Section 10.01(b) advising
      that BSS has failed to pay any amounts deemed to be owed to Biophan by
      BSS.

     

    (c) Biophan
      may terminate this Agreement by written notice to BSS if BSS shall not have
      (i)
      paid to Biophan the license fee payable pursuant to Section 6.01 and
      (ii)
      paid to Biophan the full purchase price for the Shares (as such term is defined
      in the Investment Agreement) on or before August 15, 2005.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    11.03 Termination
      by BSS.

     

    (a) BSS
      may
      terminate this Agreement at any time upon ninety (90) days prior written notice
      to Biophan.

     

    (b) BSS
      may
      terminate this Agreement if Biophan is in material breach of any provision
      contained in this Agreement and such breach shall not have been remedied within
      sixty (60) days after receipt of written notice from BSS specifying (i) such
      breach and (ii) intention to terminate if such breach is not cured within sixty
      (60) days

     

    (c) BSS
      may
      terminate this Agreement if (i) executed copies of all Biophan Licensor Consents
      are not received by BSS within ninety (90) days after the Effective Date or
      (ii)
      if by August 15, 2005, BSS is not satisfied with the results of its diligence
      of
      the AMP License and decides not to proceed with the transaction. Upon any
      termination by BSS pursuant to this Section
      10.03(c), Biophan shall promptly refund to BSS any and all amounts paid by
      BSS
      hereunder, including without limitation the payment set forth in Section
      6.01.

     

    11.04 Termination
      for Bankruptcy.
      This
      Agreement may be terminated by a Party if the other Party should commence any
      case, proceeding or action (i) under any existing or future Law of any
      jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
      reorganization or relief of debtors, seeking to have an order for relief entered
      with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or
      seeking reorganization, arrangement, adjustment, winding up, liquidation,
      dissolution, composition or other relief with respect to it or its debts or
      (ii)
      seeking appointment of a receiver, trustee, custodian or other similar official
      for it or for all or any substantial part of its assets; or, there shall be
      commenced against the other Party any such case, proceeding or other action
      which results in the entry of an order for relief or any such adjudication
      or
      appointment which remains undismissed, undischarged or unbonded for a period
      of
      third (30) days.

     

    11.05 Effect
      of Termination.

     

    (a) Upon
      any
      termination of this Agreement, any BSS Sublicensees shall have the right to
      retain a license to the Biophan IP by entering into a license agreement directly
      with Biophan which contains terms substantially similar to the terms contained
      in the relevant sublicense agreement between BSS and such BSS
      Sublicensee.

     

    (b) Upon
      any
      termination of this Agreement, in addition to any clause which by its express
      term survives termination, the respective rights and obligations of the Parties
      under the provisions of Sections 4.01, 4.02(a), 4.02(b), 8.01 and 11.05 and
      Articles VII and IX shall also survive any termination of this
      Agreement.

     

    (c) Termination
      of this Agreement shall not affect either Party’s right to recover accrued but
      unpaid Royalties or fees or reimbursement for patent expenses incurred pursuant
      to Articles V and VI prior to termination.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    XII. MISCELLANEOUS

     

    12.01 Notices.
      All
      notices, requests, claims, demands and other communications hereunder shall
      be
      in writing and shall be given or made (and shall be deemed to have been duly
      given or made upon receipt) by delivery in person, by an internationally
      recognized overnight courier service, by telecopy or registered or certified
      mail (postage prepaid, return receipt requested) to the respective Parties
      at
      the following addresses (or at such other address for a Party as shall be
      specified in a notice given in accordance with this
      Section 12.01):

     

    (a) if
      to
      Biophan:

     

    Michael
      Weiner

    Chief
      Executive Officer

    150
      Lucius Gordon Drive, Suite 215

    West
      Henrietta, New York 14586

     

    (b) if
      to
      BSS:

     

    Larry
      Neumann

    Vice
      President, Business Development

    One
      Boston Scientific Place

    Natick,
      MA 01760

    12.02 Headings.
      The
      descriptive headings contained in this Agreement are for convenience of
      reference only and shall not affect in any way the meaning or interpretation
      of
      the Agreement.

     

    12.03 Severability.
      If any
      term or other provision of this Agreement is held or deemed invalid, illegal
      or
      incapable of being enforced by any Law or public policy, all other terms and
      provisions of this Agreement shall nevertheless remain in full force and effect
      for so long as the economic or legal substance of the transactions contemplated
      by this Agreement is not affected in any manner materially adverse to any Party.
      Upon such determination that any term or other provision is invalid, illegal
      or
      incapable of being enforced, the Parties shall negotiate in good faith to modify
      this Agreement so as to effect the original intent of the Parties as closely
      as
      possible in an acceptable manner in order that the transactions contemplated
      by
      this Agreement are consummated as originally contemplated to the greatest extent
      possible.

     

    12.04 Entire
      Agreement.
      The
      Transaction Documents constitute the entire agreement of the Parties with
      respect to the subject matter thereof and supersede all prior agreements and
      undertakings, both written and oral, among the Parties with respect to the
      subject matter thereof.

     

    12.05 Assignment.
      This
      Agreement shall be binding upon and inure to the benefit of the Parties hereto
      and their respective successors and permitted assigns. Neither Party may assign
      this Agreement without the prior written consent of the other Party;
provided,
      however,
      that
      BSS may assign this Agreement to an Affiliate or in connection with a sale
      or
      transfer of all or substantially all of BSS’s assets to which this Agreement
      pertains, without the approval of Biophan and provided that the assignee agrees
      to be bound by the terms and conditions of this Agreement. No assignment by
      either Party permitted hereunder shall relieve the applicable Party of its
      obligations under this Agreement.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    12.06 Change
      of Control.
      In the
      event of a change of control of Biophan or BSS, this Agreement and all rights
      and obligations of each Party shall survive such change of control
      unaffected. 

     

    12.07 No
      Third Party Beneficiaries.
      This
      Agreement shall be binding upon and inure solely to the benefit of the Parties
      and their permitted assigns, and nothing herein, express or implied, is intended
      to or shall confer upon any other Person any legal or equitable right, benefit
      or remedy of any nature whatsoever.

     

    12.08 Amendment.
      This
      Agreement may not be amended or modified except by an instrument in writing
      signed by authorized representatives of Biophan and BSS. In the event any
      Biophan Licensor requests that Biophan amend the terms of this Agreement in
      order to comply with the terms of the license agreements entered into by Biophan
      and such Biophan Licensor, Biophan and BSS shall discuss in good faith the
      amending of this Agreement to incorporate the requested amendment.

     

    12.09 Governing
      Law and Venue.
      This
      Agreement shall be governed by, and construed in accordance with, the Laws
      of
      the State of New York without regard to conflicts of law principles. The Parties
      unconditionally and irrevocably agree and consent to the exclusive jurisdiction
      of the federal and state courts located in the state of New York and waive
      any
      objection with respect thereto, for the purpose of any action, suit or
      proceeding arising out of or relating to this Agreement or the transactions
      contemplated hereby, and further agree not to commence any such action, suit
      or
      proceeding except in any such court.

     

    12.10 Counterparts.
      This
      Agreement may be executed and delivered (including by facsimile transmission)
      in
      one or more counterparts, and by the different Parties in separate counterparts,
      each of which when executed shall be deemed to be an original, but all of which
      taken together shall constitute one and the same agreement. Delivery of an
      executed counterpart of a signature page to this Agreement by facsimile shall
      be
      effective as delivery of a manually executed counterpart of this
      Agreement.

     

    12.11 No
      Waiver.
      The
      failure of either Party to enforce at any time for any period the provisions
      of
      or any rights deriving from this Agreement shall not be construed to be a waiver
      of such provisions or rights or the right of such Party thereafter to enforce
      such provisions. No waiver of any rights under this Agreement will be effective
      unless in writing signed by the party to be charged.

     

    12.12 Statement
      of Intent With Respect to Bankruptcy.
      The
      Parties intend that all rights and licenses granted under this Agreement with
      respect to Biophan IP are, and shall otherwise be deemed to be, for purposes
      of
      Section 365(n) of the United States Bankruptcy Code, 111 U.S.C. § 101
et
      seq.
      (“Bankruptcy
      Code”),
      licenses of rights to “intellectual property” as defined in the Bankruptcy Code.
      The Parties agree that BSS, as a licensee of intellectual property, shall retain
      and may fully exercise all of its rights and elections under the Bankruptcy
      Code.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    12.13 Registration
      and Filing of this Agreement.

     

    (a) Notwithstanding
      Article IX, to the extent that a Party concludes in good faith that
      it is
      required to file or register this Agreement or a notification thereof with
      any
      governmental authority, including, without limitation, the U.S. Securities
      and
      Exchange Commission, the Competition Directorate of the Commission of the
      European Communities, the U.S. Department of Justice or the U.S. Federal Trade
      Commission such Party shall inform the other Party thereof, and both Parties
      shall cooperate, each at its own expense, in such filing or notification and
      shall execute all documents reasonably required in connection therewith. In
      such
      filing or registration, the Parties shall request confidential treatment of
      sensitive provisions of the Agreement, to the extent permitted by Law. The
      Parties shall promptly inform each other as to the activities or inquiries
      of
      any such governmental authority relating to this Agreement and shall cooperate
      to respond to any request for further information on a timely
      basis.

     

    (b) Notwithstanding
      Article IX, upon BSS’s request, Biophan shall promptly execute and file a
      document substantially in the form attached hereto at Exhibit E with any
      governmental or administrative agency (including but not limited to the U.S.
      Patent and Trademark Office) as requested by BSS.

     

    12.14 No
      Presumption.
      The
      Parties acknowledge that each Party has been represented by counsel in
      connection with this Agreement and the transactions contemplated by this
      Agreement. Accordingly, any applicable Law that would require interpretation
      of
      any claimed ambiguities in this Agreement against the Party that drafted it
      has
      no application and is expressly waived. If any claim is made by a Party relating
      to any conflict, omission or ambiguity in the provisions of this Agreement,
      no
      presumption or burden of proof or persuasion will be implied because this
      Agreement was prepared by or at the request of any Party or its
      counsel.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, Biophan and BSS have caused this Agreement to be executed
      as of
      the date first written above by their respective officers thereunto duly
      authorized.

     

     

    BIOPHAN
      TECHNOLOGIES, INC.

     

    By: 
      /s/
      Robert J.
      Wood                 

    Name:
      Robert J. Wood

    Title:
      Chief Financial Officer

     

    

     

    BOSTON
      SCIENTIFIC SCIMED, INC.

     

    By: 
      /s/
      Lawrence C. Best
                      

    Name:
      Lawrence C. Best 

    Title:
      Vice President 

    and
      Chief
      Financial Officer

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    EXHIBIT A

     

    BIOPHAN
      PATENTS

     

    

      
        	
                Asset
                  # 

              	
                Docket
                  #

              	
                Assignee

              	
                Invention

              	
                Inventors

              	
                Applic/SN

              	
                Type

              	
                Pub
                  #/Date

              	
                Patent
                  No. if Issued

              	
                Independent
                  Claims & Primary Dependent Claims

              	
                Copy

              	
                General
                  Area of Market Application

              
	 1	
                ***

              	
                BTI

              	
                An
                  Electromagnetic Interference Immune Tissue Invasive System (EMI-Proof
                  & Biocompatible Tissue-Invasive Transducer Shield) (Contains
                  Anti-Antenna Geometry.)

              	
                 

              	
                10/077,906,
                  2/19/2002

              	
                Utility

              	
                Projected
                  4/15/03

              	
                6,829,509,
                  12/7/2004 M.Fees 12/7/2007 12/7/2011, 12/7/2015

              	
                
                  ***

                

              	
                
                  ***

                

              	
                
                  ***

                

              
	 2	 	
                BTI

              	
                Medical
                  Device with an Electrically Conductive Anti-Antenna Geometrical
                  Shaped
                  Member 

              	
                 

              	
                Filed
                  10/22/04

              	
                Div

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 3	 	
                BTI

              	
                Device
                  & Method for Preventing Magnetic-Resonance Imaging Induced
                  Damage

              	
                 

              	
                10/795,746,
                  3/8/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 4	 	
                BTI

              	
                Device
                  & Method for Preventing Magnetic-Resonance Imaging Induced
                  Damage

              	
                 

              	
                10/795,744,
                  3/8/2004

              	
                Utility

              	
                US-2004-0251042-A1,
                  12/16/2004

              	
                 

              	
                 

              	
                 

              	
                 

              
	 5	 	
                BTI

              	
                Device
                  & Method for Preventing Magnetic-Resonance Imaging Induced
                  Damage

              	
                 

              	
                10/795,747,
                  3/8/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 6	 	
                BTI

              	
                Device
                  & Method for Preventing Magnetic-Resonance Imaging Induced
                  Damage

              	
                 

              	
                10/795,742,
                  3/8/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 7	 	
                BTI

              	
                Device
                  & Method for Preventing Magnetic-Resonance Imaging Induced
                  Damage

              	
                 

              	
                10/795,743,
                  3/8/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 8	 	
                BTI

              	
                Device
                  & Method for Preventing Magnetic-Resonance Imaging Induced
                  Damage

              	
                 

              	
                10/795,741,
                  3/8/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 9	 	
                BTI

              	
                Magnetic
                  Resonance Imaging Interference Immune Device

              	
                 

              	
                10/780,261,
                  2/17/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 10	 	
                BTI

              	
                Magnetic
                  Resonance Imaging Interference Immune Device

              	
                 

              	
                10/886,743
                  7/8/2004

              	
                CIP

              	
                Projected
                  12/30/2004

              	
                 

              	
                 

              	
                 

              	
                 

              
	 11	 	
                BTI

              	
                Magnetic
                  Resonance Imaging Interference Immune Device

              	
                 

              	
                10/887,533
                  7/8/2004

              	
                CIP

              	
                Projected
                  12/30/2004

              	
                 

              	
                 

              	
                 

              	
                 

              
	 12	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/922,359,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 13	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/923,292,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 14	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/923,293,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 15	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/923,411,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 16	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/922,338,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 17	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/923,294,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 18	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/922,335,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 19	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/922,771,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 20	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device and Method of Making Thereof

              	
                 

              	
                10/922,333,
                  8/20/2004

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 21	 	
                BTI

              	
                Electromagnetic
                  Radiation Transparent Device

              	
                 

              	
                60/603,476,
                  8/20/2004

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 22	 	
                BTI

              	
                Magnetic
                  Resonance Imaging Interference Immune Device

              	
                 

              	
                60/619,098
                  10/15/04

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 23	 	
                BTI

              	
                MRI-Compatible
                  Implantable Device

              	
                 

              	
                09/921,066,
                  8/2/2001

              	
                Utility

              	
                US-2003-0036776-A1;
                  2/20/2003

              	
                Allowed
                  5/20/04

              	
                 

              	
                 

              	
                 

              
	 24	 	
                BTI

              	
                MRI-Compatible
                  Implantable Device

              	
                 

              	
                10/946,026
                  9/21/2004

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 25	 	
                BTI

              	
                Implantable
                  MRI Imagable Medical Device

              	
                 

              	
                60/627,716
                  11/12/2004

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 26	 	
                Nanoset

              	
                Process
                  for Preparing a Coated Substrate

              	
                 

              	
                08/393,545,
                  2/21/1995

              	
                Utility

              	
                 

              	
                5,540,959,
                  7/30/1996, M.Fee due: 11/30/1999, 11/10/2003; 11/30/2007 

              	
                 

              	
                 

              	
                 

              
	 27	 	
                Nanoset

              	
                Magnetically
                  Shielded Conductor

              	
                 

              	
                10/054,407
                  1/22/2002

              	
                Utility

              	
                 

              	
                6,506,972,
                  1/14/2003.
                  M.Fees due: 1/14/2006, 1/14/2010, 1/14/2014

              	
                 

              	
                 

              	
                 

              
	 28	 	
                Nanoset

              	
                Magnetically
                  Shielded Conductor

              	
                 

              	
                10/090,553,
                  3/4/2002

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 29	 	
                Nanoset

              	
                Magnetically
                  Shielded Conductor

              	
                 

              	
                10/229,183,
                  8/26/2002

              	
                CIP

              	
                 

              	
                Allowed
                  12/17/2004

              	
                 

              	
                 

              	
                 

              
	 30	 	
                Nanoset

              	
                Magnetically
                  Shielded Conductor

              	
                 

              	
                10/242,969,
                  9/13/2002

              	
                CIP

              	
                 

              	
                Allowed
                  9/13/2004

              	
                 

              	
                 

              	
                 

              
	 31	 	
                Nanoset

              	
                Magnetically
                  Shielded Assembly

              	
                 

              	
                10/260,247,
                  9/30/2002

              	
                CIP

              	
                 

              	
                6,673,999,
                  1/7/2004 M.Fees due: 1/7/2007, 1/7/2011, 1/7/2015 

              	
                 

              	
                 

              	
                 

              
	 32	 	
                Nanoset

              	
                Magnetically
                  Shielded Assembly

              	
                 

              	
                10/303,264,
                  11/25/2002

              	
                CIP

              	
                 

              	
                6,713,671,
                  3/30/2004 M.Fees due: 3/30/2007, 3/30/2011, 3/30/2015

              	
                 

              	
                 

              	
                 

              
	 33	 	
                Nanoset

              	
                Magnetically
                  Shielded Assembly

              	
                 

              	
                10/810,916,
                  3/26/2004

              	
                CIP

              	
                US-2004/0211580-A1,
                  10/28/2004

              	
                Allowed
                  9/15/04

              	
                 

              	
                 

              	
                 

              
	 34	 	
                Nanoset

              	
                Implantable
                  Shielded Medical Device

              	
                 

              	
                10/313,847,
                  12/7/2002

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 35	 	
                Nanoset

              	
                Magnetic
                  Resonance Imaging Coated Assembly

              	
                 

              	
                10/384,288,
                  3/7/2003

              	
                Utility

              	
                 

              	
                6,765,144,
                  7/20/2004, M.Fees due: 7/20/2007, 7/20/2011, 7/20/2015

              	
                 

              	
                 

              	
                 

              
	 36	 	
                Nanoset

              	
                Magnetic
                  Resonance Imaging Coated Assembly

              	
                 

              	
                10/838,116
                  5/3/2004

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 37	 	
                Nanoset

              	
                Nanomagnetic
                  Shielding Assembly

              	
                 

              	
                10/273,738,
                  10/18/2002

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 38	 	
                Nanoset

              	
                Process
                  for Imaging a Stent

              	
                 

              	
                60/542,270,
                  2/5/2004

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 39	 	
                Nanoset

              	
                Nanomagnetically
                  Shielded Substrate

              	
                 

              	
                10/324,773,
                  12/18/2002

              	
                Utility

              	
                 

              	
                Allowed
                  9/22/04

              	
                 

              	
                 

              	
                 

              
	 40	 	
                Nanoset

              	
                Magnetically
                  Shielded Assembly

              	
                 

              	
                10/366,082,
                  2/12/2003

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 41	 	
                Nanoset

              	
                Protective
                  Assembly

              	
                 

              	
                10/373,377,
                  2/24/2003

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 42	 	
                Nanoset

              	
                Nanomagnetic
                  Composition

              	
                 

              	
                10/409,505.
                  4/8/2003

              	
                CIP

              	
                 

              	
                Allowed
                  7/1/2004

              	
                 

              	
                 

              	
                 

              
	 43	 	
                Nanoset

              	
                Nanoelectrical
                  Compositions

              	
                 

              	
                10/747,472,
                  12/29/2003

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 44	 	
                Nanoset

              	
                Magnetically
                  Shielded Assembly

              	
                 

              	
                10/780,045
                  2/17/2004

              	
                CIP

              	
                US-2004-0230271-A1,
                  11/18/2004

              	
                 

              	
                 

              	
                 

              	
                 

              
	 45	 	
                Nanoset

              	
                Magnetically
                  Shielded Assembly

              	
                 

              	
                10/786,198
                  2/25/2004

              	
                CIP

              	
                US-2004-0249428-A1,
                  12/9/2004

              	
                 

              	
                 

              	
                 

              	
                 

              
	 46	 	
                Nanoset

              	
                Novel
                  Nanomagnetic Particles

              	
                 

              	
                10/808,618,
                  3/24/2004

              	
                CIP

              	
                Projected
                  10/21/04

              	
                 

              	
                 

              	
                 

              	
                 

              
	 47	 	
                Nanoset

              	
                Coated
                  Object & the Imaging Properties Thereof

              	
                 

              	
                60/578,773,
                  6/10/2004

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 48	 	
                Nanoset

              	
                Medical
                  Device with Low Magnetic Susceptibility

              	
                 

              	
                10/887,521,
                  7/7/2004

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 49	 	
                Nanoset

              	
                Medical
                  Device with Low Magnetic Susceptibility

              	
                 

              	
                10/914,
                  691. 8/9/2004

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 50	 	
                Nanoset

              	
                Medical
                  Device with Multiple Coating Layers

              	
                 

              	
                10/923,579,
                  8/20/2004

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 51	 	
                Nanoset

              	
                Implantable
                  Medical Device

              	
                 

              	
                10/950,148
                  9/24/2004

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 52	 	
                Nanoset

              	
                Material
                  to Enable Magnetic Resonance Imaging of Implantable Medical
                  Devices

              	
                 

              	
                Filed
                  9/15/04

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 53	 	
                Nanoset

              	
                Stent
                  & MRI Imaging Process (Errors in title)

              	
                 

              	
                10/974,412,
                  10/27/04

              	
                CIP
                  

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 54	 	
                Nanoset

              	
                Markers
                  for Visualizing Intervential Medical Devices 

              	
                 

              	
                Filed
                  11/29/04

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 55	 	
                License
                  Agreement (Deborah Chung)

              	
                Metal
                  Filaments for Electromagnetic Interference Shielding

              	
                 

              	
                 

              	
                Utility

              	
                 

              	
                5,827,997

              	
                 

              	
                 

              	
                 

              
	 56	 	
                License
                  Agreement (Johns Hopkins)

              	
                ECG
                  Amplifier & Cardiac Pacemaker for Use During Magnetic Resonance
                  Imaging

              	
                 

              	
                 

              	
                 

              	
                 

              	
                5,217,010

              	
                 

              	
                 

              	
                 

              
	 57	 	
                BTI

              	
                An
                  Electromagnetic Interference Immune Tissue Invasive System

              	
                 

              	
                US-2005-0090886
                  A1, 4/28/2005

              	
                Div

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 58	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 59	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 60	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 61	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 62	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 63	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 64	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 65	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 66	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 67	 	
                BTI

              	
                Electromagnetic
                  Interference Immune Pacing/Defibrillation Lead

              	 	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 68	 	
                BTI

              	
                Magnetic
                  Resonance Imaging Interference Immune Device

              	
                 

              	
                 

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 69	 	
                BTI

              	
                Electromagnetic
                  Resonant Circuit Sleeve for Implantable Medical Device

              	
                 

              	
                 

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 70	 	
                BTI

              	
                Device
                  Compatible with Magnetic Resonance Imaging

              	
                 

              	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 71	 	
                BTI
                  & Nanoset

              	
                Stent
                  & MR Imaging Process & Device

              	
                 

              	
                 

              	
                Utility

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 72	 	
                Nanoset

              	
                Coated
                  Stent Assembly & Coating Materials

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 73	 	
                Nanoset

              	
                Magnetically
                  Shielded Conductor

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 74	 	
                Nanoset

              	
                Coated
                  Stent & MR Imaging Thereof

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 75	 	
                Nanoset

              	
                Coated
                  Substrate Assembly

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 76	 	
                Nanoset

              	
                Cylindrical
                  Sputtering Apparatus

              	
                 

              	
                 

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 77	 	
                Nanoset

              	
                Coated
                  Substrate Assembly

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 78	 	
                Nanoset

              	
                Magnetically
                  Shielded Conductor

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 79	 	
                Nanoset

              	
                MRI
                  Imageable Medical Device

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 80	 	
                Nanoset

              	
                MRI
                  Imageable Medical Device

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 81	 	
                Nanoset

              	
                Medical
                  Device with a Marker

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 82	 	
                Nanoset

              	
                Novel
                  Composition

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 83	 	
                Nanoset

              	
                Medical
                  Device

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 84	 	
                Nanoset

              	
                Medical
                  Device

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 85	 	
                Nanoset

              	
                Process
                  for Coating a Substrate

              	
                 

              	
                 

              	
                CIP

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 86	 	
                Nanoset

              	
                Medical
                  Device

              	
                 

              	
                 

              	
                Prov

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 87	 	
                Simag
                  GmbH

              	
                Stent
                  & MR Imaging Process for the Imaging & the Determination of the
                  Position of a Stent

              	
                 

              	
                 

              	
                Utility

              	
                 

              	
                6,280,385
                  8/28/2001

              	
                 

              	
                 

              	
                 

              
	 88	 	
                Simag
                  GmbH

              	
                MR
                  Imaging Method & Medical Device for Use in Method

              	
                 

              	
                 

              	
                Utility

              	
                 

              	
                6,847,837
                  1/25/2005

              	
                 

              	
                 

              	
                 

              
	 89	 	
                Simag
                  GmbH

              	
                Magnetic
                  Resonance Apparatus & Method for Determing the Location of a
                  Postionable Object in a Subject

              	
                 

              	
                 

              	
                Utility

              	
                 

              	
                6,023,636
                  2/8/2002

              	
                 

              	
                 

              	
                 

              
	 90	 	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 91	 	
                BTI

              	
                Biophan

              	
                 

              	
                 

              	
                Applic.

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	 92	 	
                BTI

              	
                Biophan

              	
                 

              	
                 

              	
                Applic.

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              

      

       

      
        	
                Note:
                  patents assigned to Nanoset and Simag GmbH are under exclusive
                  license to
                  Biophan for medical applications. 

              	 	 

      

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      B

     

    EXISTING
      LICENSE AGREEMENTS

     

    
      	
              (i)

            	
              AMP-Biophan
                License Agreement dated February 24,
                2005

            

    

     

    
      	
              (ii)

            	
              License
                Agreement between The Johns Hopkins University and Biophan dated
                May 17,
                2002.

            

    

     

    
      	
              (iii)

            	
              License
                Agreement between Deborah L. Chung and Xiaoping Shui and Biophan
                dated
                April 5, 2002.

            

    

     

    
      	
              (iv)

            	
              License
                Agreement between Nanoset, LLC and Biophan dated January 15,
                2004.

            

    

     

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      C

     

    
      	
              Exclusive
                Products Category

               

            	
              Product/Services
                Category

               

            	
              Royalty

               

            
	
              1

               

            	
              [...]

               

            	
              3.0%
                [...]

               

              4%
                [...]

               

            
	
              2

               

            	
              Embolic
                protection devices, aneurysm coils and all other vascular implants
                (other
                than [...])

               

            	
              [...]

               

            
	
              3 

               

            	
              [...]

               

            	
              4.0%

               

            

    

    

    
      
        	
                Non-Exclusive
                  Products Category

                 

              	
                Product/Services
                  Category

                 

              	
                Royalty

                 

              
	
                1

                 

              	
                [...]

                 

              	
                5.0%

                 

              
	
                2

                 

              	
                Interventional
                  guidewires (for use in all applications)

                 

              	
                [...]

                 

              
	
                3

                 

              	
                Interventional
                  vascular catheters (<6 hours), including PTCA, predilation,
                  etc.

                 

              	
                [...]

                 

              
	
                4

                 

              	
                Indwelling
                  vascular catheters (>6 hours), including CVC, PICC, etc.

                 

              	
                [...]

                 

              
	
                5

                 

              	
                Pacemakers,
                  including leads

                 

              	
                [...]

                 

              
	
                6

                 

              	
                Implantable
                  cardiac defibrillators and related devices, including their
                  leads

                 

              	
                [...]

                 

              
	
                7

                 

              	
                [...]

                 

              	
                3.0%

                 

              
	
                8

                 

              	
                Neuro
                  stimulation [...]

                 

              	
                [...]

                 

              

      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      D

     

    aMRIs
      Patent GmbH and aMRIs Patente GmbH & Co. KG Acknowledgement and
      Waiver

     

    aMRIs
      Patent GmbH (“AMP”)
      and
      aMRIs Patente GmbH & Co. KG (“KG”) are aware that Biophan Technologies, Inc.
      (“Biophan”)
      and
      Boston Scientific Scimed (“BSS”)
      are
      entering into a transaction under which, among other things, Biophan is
      sublicensing its rights under the AMP-Biophan License Agreement entered into
      by
      AMP and Biophan on February 24, 2005 (the “Agreement”)
      to
      BSS.

     

    The
      completion of the aforementioned transaction is dependent on BSS’s receipt of
      this signed acknowledgement and waiver from AMP.

     

    With
      respect to the sublicense between Biophan and BSS, AMP and KG each hereby
      expressly and irrevocably waives (i) the requirement under Section 2.2 of the
      Agreement that “Sublicenses shall require reasonable due diligence in
      development and commercialization of Licensed Products and Services”; (ii) the
      indemnification requirement under Section 9.1 of the Agreement; and (iii) the
      insurance requirement under Section 9.3 of the Agreement. 

     

    AMP
      and
      KG each acknowledges that to its knowledge, the Agreement is valid and in full,
      force and effect.

     

    AMP
      and
      KG each acknowledges that it is not aware of any breach of the Agreement by
      Biophan.

     

    AMP
      and
      KG each acknowledges that Biophan has the right to sublicense its rights under
      the Agreement to BSS (and hereby consents to such sublicense) and in the event
      the Agreement is terminated, the sublicense to BSS will remain valid and in
      full, force and effect in accordance with Sections 2.2 and 11.4 of the
      Agreement.

     

    Dated:
      June
      ,2005

     

    aMRIS
      Patente GmbH

     

    By__________________________

     

    Michael
      Friebe, Ph.D.

     

    Title: ______________________

     

    

     

    aMRIS
      Patente GmbH and Co. KG

     

    By__________________________

     

    Michael
      Friebe, Ph.D.

     

    Title:_________________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      Johns Hopkins University Acknowledgement

     

    The
      Johns
      Hopkins University (“JHU”)
      is
      aware that Biophan Technologies, Inc. (“Biophan”)
      and
      Boston Scientific Scimed (“BSS”)
      are
      entering into a transaction under which, among other things, Biophan is
      sublicensing its rights under the License Agreement entered into by JHU and
      Biophan on May 17, 2002 (the “Agreement”)
      to
      BSS.

     

    The
      completion of the aforementioned transaction is dependent on BSS’s receipt of
      this signed acknowledgement from JHU.

     

    JHU
      acknowledges that to its knowledge, the Agreement is valid and in full, force
      and effect.

     

    JHU
      acknowledges that it is not aware of any breach of the Agreement by
      Biophan.

     

    JHU
      acknowledges that Biophan has the right to sublicense its rights under the
      Agreement to BSS and in the event the Agreement is terminated, the sublicense
      to
      BSS will remain valid and in full, force and effect provided that BSS complies
      with Section 6.6 of the Agreement.

     

    

     

    Date:_______________

     

    

     

    ____________________________

     

    Name:
       ______________________

     

    Title: ______________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

Chung/Shui Acknowledgement

    

     

    Deborah
      L. Chung and Xiaoping Shui (collectively “Licensor”)
      are
      aware that Biophan Technologies, Inc. (“Biophan”)
      and
      Boston Scientific Scimed (“BSS”)
      are
      entering into a transaction under which, among other things, Biophan is
      sublicensing its rights under the License Agreement entered into by Licensor
      and
      Biophan on April 5, 2002 (the “Agreement”)
      to
      BSS.

     

    The
      completion of the aforementioned transaction is dependent on BSS’s receipt of
      this signed acknowledgement from Licensor.

     

    Licensor
      acknowledges that to its knowledge, the Agreement is valid and in full, force
      and effect.

     

    Licensor
      acknowledges that it is not aware of any breach of the Agreement by
      Biophan.

     

    Licensor
      acknowledges that Biophan has the right to sublicense its rights under the
      Agreement to BSS and in the event the Agreement is terminated, the sublicense
      to
      BSS will remain valid and in full, force and effect in accordance with Section
      6.02 of the Agreement.

     

    

     

    Date:_______________    Date:_______________

     

    

     

    ____________________________   ____________________________

     

    Name:
       ______________________   Name:
       ______________________

     

    Title: ______________________   Title: ______________________

     

    Nanoset,
      LLC Acknowledgement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Nanoset,
      LLC (“Nanoset”)
      is
      aware that Biophan Technologies, Inc. (“Biophan”)
      and
      Boston Scientific Scimed (“BSS”)
      are
      entering into a transaction under which, among other things, Biophan is
      sublicensing certain of its rights under the License Agreement entered into
      by
      Nanoset and Biophan on January 15, 2004 (the “Agreement”)
      to
      BSS.

     

    The
      completion of the aforementioned transaction is dependent on BSS’s receipt of
      this signed acknowledgement from Nanoset.

     

    Nanoset
      acknowledges that to its knowledge, the Agreement is valid and in full, force
      and effect.

     

    Nanoset
      acknowledges that it is not aware of any breach of the Agreement by
      Biophan.

     

    Nanoset
      acknowledges that Biophan has the right to sublicense its rights under the
      Agreement to BSS and in the event the Agreement is terminated, the sublicense
      to
      BSS will remain valid and in full, force and effect provided that BSS assumes
      the relevant obligations of Biophan in the Agreement.

     

    

     

    Date:_______________

     

    ____________________________

     

    Name:
       ______________________

     

    Title: ______________________

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      E

     

    Exclusive
      License Acknowledgement

     

    

     

    WHEREAS
      pursuant to that certain License Agreement dated ______________ (the
“License
      Agreement”)
      Biophan Technologies, Inc., a corporation organized under the laws of Nevada
      (“Biophan”)
      granted to Boston Scientific Scimed, a corporation organized under the laws
      of
      Delaware (“BSS”)
      (each,
      a “Party”,
      and
      collectively the “Parties”),
      inter
      alia,
      an
      exclusive license to certain patents.

     

    WHEREAS
      the Parties have agreed to execute this Exclusive License
      Acknowledgement.

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual representations,
      agreements and covenants set forth in the License Agreement, and for other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Parties agree and acknowledge as follows:

     

    Section
      1.01 Definitions.

     

    Capitalized
      terms used herein but not defined herein shall have the meaning set forth in
      the
      License Agreement.

     

    Section
      1.02 Acknowledgement. 

     

    Pursuant
      to the terms and conditions of the License Agreement, Biophan granted to BSS,
      inter
      alia,
      an
      exclusive license to the Patents listed in Schedule A hereto.

     

     

    

     

    BIOPHAN
      TECHNOLOGIES, INC.

     

    By
      

    Name:
      

    Title:
      

     

    BOSTON
      SCIENTIFIC SCIMED

     

    By
      

    Name:

    Title:Exhibit 4.1
-----------

                             GRANTOR TRUST AGREEMENT

         This Grantor Trust Agreement (this "Agreement") made as of the 31st day
of August 2005, by and between ATC HEALTHCARE, INC., a Delaware corporation (the
"Company") and DAVID J. HIRSCH as the Trustee under this Agreement ("Trustee").

                                   WITNESSETH

         WHEREAS, each of Stuart Savitsky, Shabsi Schreier and Steven Wiener
(each individually referred to as a "Noteholder" and collectively as, the
"Noteholders") previously sold assets to the Company and received certain debt
obligations as partial consideration for such asset sale and which debt
obligations are currently evidenced by Subordinated Promissory Notes of the
Company's subsidiaries, ATC Healthcare Services, Inc. and ATC Staffing Services,
Inc., dated April 22, 2005, each in the principal amount of Two Million Seven
Hundred Thousand Dollars ($2,700,000), for an aggregate principal amount of
Eight Million One Hundred Thousand Dollars ($8,100,000) (individually, a "Note"
and collectively, the "Notes"); and

         WHEREAS, the Company and the Noteholders desire that the Noteholders
cancel the Notes in exchange for an unfunded promise by the Company to cause to
be issued in their names Series B Preferred Stock of the Company under
conditions and at times as set forth in an Agreement dated as of an even date
herewith by and among the Company and each of the Noteholders (referred to as
the "Agreement"); and

         WHEREAS, Company wishes to establish a grantor trust (the "Trust") and
to contribute to the Trust assets comprised of shares of the Company's newly
issued 5% Convertible Series B Preferred Stock (the "Series B Preferred Stock")
that shall be held therein, subject to the claims of Company's creditors in the
event of Company's Insolvency, as herein defined, until paid to the Noteholders
and their beneficiaries in a manner and at times as specified in the Agreement;

         WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Agreement as an unfunded promise maintained for the purpose of providing
installment payments in consideration of the Noteholders previous sale of assets
to the Company; and

         WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Agreement;

         NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:

Section 1.        Establishment Of Trust

         (a) The Company hereby deposits with Trustee in trust an aggregate of
Four Thousand Fifty (4,050) shares of the Company's Series B Preferred Stock,
with a base liquidation value of Two Thousand Dollars ($2,000) per share (the
"Shares") evidenced by a certificate or certificates for such Shares in the name
of the Trust, which Shares shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.

         (b) The Trust hereby established shall be irrevocable.

<PAGE>

         (c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.

         (d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of the Company and shall be used exclusively
for the uses and purposes of Noteholders and general creditors as herein set
forth. Noteholders and their beneficiaries shall have no preferred claim on, or
any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Agreement and this Trust Agreement shall be mere unsecured
contractual rights of Noteholders and their beneficiaries against the Company.
Any assets held by the Trust will be subject to the claims of the Company's
general creditors under federal and state law in the event of Insolvency, as
defined in Section 3(a) herein.

         (e) Neither Trustee nor any Noteholder or beneficiary shall have any
right to compel additional deposits.

Section 2.   Release of Shares to Noteholders and Their Beneficiaries.

         (a) The Trustee shall release from the Trust the number of Shares (the
"Share Releases") in respect of each Noteholder that are to be released from the
Trust and issued in the name of each Noteholder (and/or his or her
beneficiaries), as set forth on Exhibit A attached hereto. Except as otherwise
provided herein, Trustee shall make payments and releases of the Shares to the
Noteholders and their beneficiaries in accordance with each Agreement and
Exhibit A hereto. The Trustee shall make provision for the reporting and
withholding of any federal, state or local taxes that may be required to be
withheld with respect to the Share Releases pursuant to the terms of the
Agreement and shall pay amounts withheld to the appropriate taxing authorities
or determine that the amounts have been reported, withheld and paid by the
Company.

         (b) The entitlement of a Noteholder or his or her beneficiaries to
Share Releases as determined under the Agreement and any claim for Share
Releases shall be considered and reviewed under the procedures set out in the
Agreement.

         (c) The Company authorizes Share Releases directly to Noteholders or
their beneficiaries as they become due under the terms of the Agreement. Company
shall notify Trustee to make Share Releases directly prior to the time any
Shares are required to be issued and paid to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make Share Releases in accordance with the terms
of the Agreement, the Company shall issue the balance of any Series B Preferred
Stock relating to each Share Release as it falls due. Trustee shall notify the
Company where principal and earnings are not sufficient.

Section 3.   Trustee Responsibility Regarding Payments to Trust Beneficiary When
             Company Is Insolvent.

         (a) Trustee shall cease Share Releases to Noteholders and their
beneficiaries if the Company is Insolvent. The Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) the Company is unable to
pay its debts as they become due, or (ii) the Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.

         (b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of the Company under federal and state law as set
forth below.

<PAGE>

                  (1) The Board of Directors and the Chief Executive Officer of
         the Company shall have the duty to inform Trustee in writing of the
         Company's Insolvency. If a person claiming to be a creditor of the
         Company alleges in writing to Trustee that the Company has become
         Insolvent, Trustee shall determine whether the Company is Insolvent
         and, pending the determination, Trustee shall discontinue Share
         Releases or other payments to Noteholders or their beneficiaries.

                  (2) Unless Trustee has actual knowledge of the Company's
         Insolvency, or has received notice from the Company or a person
         claiming to be a creditor alleging that the Company is Insolvent,
         Trustee shall have no duty to inquire whether the Company is Insolvent.
         Trustee may in all events rely on evidence concerning the Company's
         solvency as may be furnished to Trustee and that provides Trustee with
         a reasonable basis for making a determination concerning the Company's
         solvency.

                  (3) If at any time Trustee has determined that the Company is
         Insolvent, Trustee shall discontinue Share Releases or other payments
         to Noteholders or their beneficiaries and shall hold the assets of the
         Trust for the benefit of the Company's general creditors. Nothing in
         this Trust Agreement shall in any way diminish any rights of
         Noteholders or their beneficiaries to pursue their rights as general
         creditors of the Company with respect to Payments due under each
         Agreement or otherwise.

                  (4) Trustee shall resume the Share Releases to Noteholders or
         their beneficiaries in accordance with Section 2 of this Trust
         Agreement only after Trustee has determined that the Company is not
         Insolvent (or is no longer Insolvent).

         (c) Provided that there are sufficient assets, if Trustee discontinues
the Share Releases or other payments from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such share releases or payments, the first share
release or payment following the discontinuance shall include the aggregate
amount of all Share Releases or payments due to Noteholders or their
beneficiaries under the terms of the Agreement for the period of the
discontinuance, less the aggregate amount of any Share Releases or payments made
to Noteholders or their beneficiaries by Company in lieu of the Share Releases
or payments provided for hereunder during any period of discontinuance.

Section 4.   Payments to Company.

         The Company shall have no right or power to direct Trustee to return to
the Company or to divert to others any of the Trust assets, except as provided
in Section 6 hereof, before all Share Releases and other required payments
hereunder have been made to Noteholders and their beneficiaries pursuant to the
terms of the Agreement.

Section 5.   Investment Authority.

         (a) Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by the Company. All rights associated with
assets of the Trust shall be exercised by Trustee or the person designated by
Trustee, and shall in no event be exercisable by or rest with any of the
Noteholders.

Section 6.   Disposition of Income or Redemption Proceeds.

         During the term of this Trust, as may be requested from time to time at
the sole discretion of the Company, all, or any part of the income, including
dividends, and any redemption proceeds received by the Trust, net of expenses
and taxes, shall be returned to the Company.

<PAGE>

Section 7.   Accounting by Trustee.

         Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including specific records as shall be agreed upon in writing between the
Company and Trustee. Within Sixty (60) days following the close of each calendar
year and within Sixty (60) days after the removal or resignation of Trustee,
Trustee shall deliver to the Company a written account of its administration of
the Trust during the year or during the period from the close of the last
preceding year to the date of the removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of the purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of the year or as of the date of the
removal or resignation, as the case may be.

Section 8.   Responsibility of Trustee.

         (a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with the matters would use in the conduct of an enterprise
of a like character and with like aims, provided, however, that Trustee shall
incur no liability to any person for any action taken pursuant to a direction,
request or approval given by the Company which is contemplated by, and in
conformity with, the terms of each Agreement or this Trust and is given in
writing by the Company. In the event of a dispute between the Company and a
party, Trustee may apply to a court of competent jurisdiction to resolve the
dispute.

         (b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
the payments. If the Company does not pay the costs, expenses and liabilities in
a reasonably timely manner, Trustee may obtain payment from the Trust.

         (c) Trustee may consult with legal counsel (who may also be counsel for
the Company generally) with respect to any of its duties or obligations
hereunder.

         (d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.

         (e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against the policy.

         (f) However, notwithstanding the provisions of Section 8(e) above,
Trustee may loan to the Company the proceeds of any borrowing against an
insurance policy held as an asset of the Trust.

         (g) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.

<PAGE>

Section 9.   Compensation and Expenses of Trustee.

         The Company shall pay all administrative and Trustee's fees and
expenses.

Section 10.  Resignation and Removal of Trustee.

         (a) Trustee may resign at any time by written notice to the Company,
which shall be effective Thirty (30) days after receipt of the notice unless the
Company and Trustee agree otherwise.

         (b) Trustee may be removed by the Company on Thirty (30) days notice or
upon shorter notice accepted by Trustee except that upon a Change of Control, as
defined herein, the Company may not remove Trustee for one (1) year.

         (c) If Trustee resigns within one (1) year of a Change of Control, as
defined herein, Trustee shall select a successor Trustee in accordance with the
provisions of Section 11(b) hereof prior to the effective date of Trustee's
resignation.

         (d) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within Thirty (30) days after receipt
of notice of resignation, removal or transfer, unless the Company extends the
time limit.

         (e) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this section. If no appointment has been
made, Trustee may apply to a court of competent jurisdiction for appointment of
a successor or for instructions. All expenses of Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.

Section 11.  Appointment of Successor.

         (a) If Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, the Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by the Company or the successor
Trustee to evidence the transfer.

         (b) If Trustee resigns pursuant to the provisions of Section 10(c)
hereof and selects a successor Trustee, Trustee may appoint any third party such
as a bank trust department or other party that may be granted corporate trustee
powers under state law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new Trustee shall
have all the rights and powers of the former Trustee, including ownership rights
in Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the successor Trustee to evidence the transfer.

         (c) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
the Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.

<PAGE>

Section 12.  Amendment or Termination.

         (a) This Trust Agreement may be amended by a written instrument
executed by Trustee and the Company. Notwithstanding the foregoing, no amendment
shall conflict with the terms of the Agreement or shall make the Trust
revocable.

         (b) The Trust shall not terminate until the date on which Noteholders
and their beneficiaries are no longer entitled to Share Releases or other
payments pursuant to the terms of the Agreement and this Trust. Upon termination
of the Trust any assets remaining in the Trust shall be returned to the Company.

         (c) Upon written approval of participants or beneficiaries entitled to
Share Releases or other payments pursuant to the terms of the Agreement and this
Trust, the Company may terminate this Trust prior to the time all Share Releases
or other payments under the Agreement or this Trust have been made. All assets
in the Trust at termination shall be returned to the Company.

Section 13.  Miscellaneous.

         (a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any prohibition, without invalidating the remaining
provisions hereof.

         (b) Share Releases or other payments to Noteholders and their
beneficiaries under this Trust Agreement and the Agreement may not be
anticipated, assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.

         (c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

         (d) For purposes of this Trust, the term "Change of Control" shall be
deemed to occur if any of the following occur:

                  (i) The Company is merged, consolidated or reorganized into or
with another corporation or other entity, and as a result of the merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of the corporation or entity
immediately after the transaction is held in the aggregate by the holders of
Voting Stock immediately prior to the transaction;

                  (ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other entity and, as a
result of the sale or transfer, less than a majority of the combined voting
power of the then-outstanding securities of the other corporation or entity
immediately after the sale or transfer is held in the aggregate by the holders
of the Voting Stock immediately prior to the sale or transfer;

                  (iii) Any person or group of persons (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934) that holds less than 5%
of the Voting Stock of the Company outstanding on the date of the first issuance
of any of the Series B Preferred Stock becomes the beneficial owner of a
majority of the Voting Stock.; or

                  (iv) Neither David Savitsky nor Stephen Savitsky is the
Chairman of the Board, the Chief Executive Officer, the President, or the Chief
Operating Officer of the Company.

<PAGE>

For purposes of this Trust, the term "Voting Stock" means the capital stock of
the Company of any class or series entitled to vote generally in the election of
directors.

Section 14.  Effective Date.

         The effective date of this Trust Agreement shall be August __, 2005.

         IN WITNESS WHEREOF, the parties have caused this Grantor Trust
Agreement to be duly executed as of the day and year first above written.

                                      ATC HEALTHCARE, INC.

                                      By:
                                         ---------------------------------
                                         Andrew C. Reiben,
                                         Senior Vice President

                                      TRUSTEE

                                      -------------------------------

                                      Name: David J. Hirsch

<PAGE>

                                    EXHIBIT A
                                       TO
                             GRANTOR TRUST AGREEMENT

                           Schedule of Share Releases
                           --------------------------

The shares of the Company's Series B Preferred Stock that comprise the principal
of the Trust, shall be released by the Trust to the Noteholders, with the
Company issuing the appropriate stock certificate or certificates evidencing the
ownership of the released Shares by each Noteholder as set forth in the below
chart.

THE FOLLOWING RELEASE SCHEDULE IS SUBJECT TO ACCELERATION AND REDUCTION FOR ANY
REDEMPTIONS PROVIDED FOR UNDER SECTION 1 OF THE AGREEMENT. TO THE EXTENT OF ANY
REDEMPTION PAYMENTS TO NOTEHOLDERS, RELEASE AMOUNTS THAT FOLLOW SHALL BE REDUCED
UNTIL THE AMOUNT OF SHARES THAT OTHERWISE WERE TO BE RELEASED EQUALS THE NUMBER
OF SHARES THAT WERE REDEEMED

AS PROVIDED FOR UNDER SECTION 1 OF THE AGREEMENT, THE FOLLOWING RELEASE SCHEDULE
AS TO EACH NOTEHOLDER IS FURTHER SUBJECT TO ACCELERATION IF THE INTERNAL REVENUE
SERVICE MAKES A FINAL DETERMINATION TO TREAT THE NOTEHOLDER AS HAVING MADE A
DISPOSITION OF HIS INSTALLMENT OBLIGATIONS OR OTHERWISE CHALLENGES THE
NOTEHOLDER'S CONTINUED DEFERRAL OF CAPITAL GAIN INCOME FROM HIS PREVIOUS SALE OF
ASSETS FROM WHICH THE NOTE DERIVED AND ANY SUCH FINAL DETERMINATION OR OTHER
CHALLENGE BY THE INTERNAL REVENUE SERVICE IS UPHELD IF CONTESTED. IN THAT CASE,
THE COMPANY SHALL DIRECT THE IMMEDIATE RELEASE TO EACH NOTEHOLDER OF ANY
REMAINING SERIES B PREFERRED STOCK HELD BY THE TRUST FOR THE BENEFIT OF THAT
NOTEHOLDER

<TABLE>

<S>                                                                           <C>
                                                          Number of Shares of Series B Preferred Stock
                 Share Release Date                             Releases to each of the Noteholders

Third Anniversary of the Effective Date of this         One Hundred Sixty-Six (166) shares to each
Trust Agreement                                         Noteholder

Fourth Anniversary of the Effective Date of this        Eighty-Three (83) shares to each Noteholder
Trust Agreement

Fifth Anniversary of the Effective Date of this         One Hundred Sixty-Six (166) shares to each
Trust Agreement                                         Noteholder

Sixth Anniversary of the Effective Date of this         Eighty-Three (83) shares to each Noteholder
Trust Agreement

Seventh Anniversary of the Effective Date of this       One Hundred Sixty-Six (166) shares to each
Trust Agreement                                         Noteholder

The earlier to occur of (i) the time immediately
prior to the occurrence of a Change of Control of
the Company as such term is defined in the Trust        One-third (1/3rd) of the remaining total of all Shares
Agreement, or (ii) the  Tenth Anniversary of the        held in the Trust to each Noteholder
Effective Date of this Trust Agreement
</TABLE>

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