ASSET PURCHASE AGREEMENT

Exhibit 10.3

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of this 16th day of March 2007 (the “Effective Date”), by and among JMAR Technologies, Inc., a company organized and existing under the laws of the State of Delaware (the “Seller”), and Gatan, Inc., a company organized and existing under the laws of the State of Pennsylvania (the “Buyer”) (Seller and Buyer are together referred to herein as the “Parties”).

WITNESSETH:

WHEREAS, Seller owns or is in lawful possession of property, fixed assets, inventories, work-in-progress, spare parts, records, goodwill, know-how, intellectual property, and other interests used by Seller in, and associated with, the activities and operations of manufacturing, sales and services of the x-ray microscopy business (collectively, “Assets”); and

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to buy from Seller, all such Assets owned by Seller and identified herein in Exhibit A (“Purchased Assets”) and in Exhibit C (“Patents”); and

WHEREAS, Seller desires to confer to Buyer, and Buyer desires to accept from Seller, all such Assets loaned to Seller and identified in Exhibit B (“Loaned Assets”);

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to buy from Seller, all patent material related to the x-ray microscopy (“XRM”), including but not limited to issued patents, patent applications, and provision applications, as further described in Exhibit C (“Patents”);

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants, agreements and other good and valuable consideration of the Parties hereinafter set forth, the Parties hereto, intending to be legally bound, do hereby agree as follows:

Assets

	1.		Seller hereby grants to Buyer all of Seller’s right, title, and interest in the Assets.
	2.		In the event that the consent or approval of a third party is required for such transfer of Assets, or to complete patent applications for such Assets, Seller agrees to use its best efforts to obtain the requisite consent or approval.
	3.		All costs associated with applying for and maintaining patents shall hereinafter be at Buyer’s expense.
	4.		Buyer and Seller agree and acknowledge that the Loaned Assets are the property of the federal government, and were lawfully loaned to Seller. If the Loaned Assets are required to be returned to the federal government within three (3) years of the Effective Date, Buyer may deduct the depreciated replacement value from monies owed to Seller. Such depreciated replacement value shall be calculated by determining the fair market value of a similar replacement product, and linearly depreciating the product beginning on the Effective Date and ending five (5) years thereafter.
	5.		Seller agrees to assist Buyer in obtaining inventor rights and signatures required for transfer of intellectual property and completing patent applications. For work amounting to less than four (4) hours per calendar quarter, no compensation will be due Seller. Seller shall be entitled to reimbursement of reasonable wages and administrative fees for work in excess of four (4) hours that is commissioned or requested by Buyer.

Payments

	1.		Within five (5) business days of execution of the Agreement, Buyer shall pay to Seller $100,000.00.
	2.		Buyer agrees to pay to ship the Assets, plus the reasonable cost of Seller’s employees working on the Assets from the Effective Date until receipt and acceptance of the Assets by Buyer. The following conditions shall apply:

	a.		Seller shall submit invoices to Buyer detailing the reasonable costs associated with the packing and shipment of the Assets, employee wages, and employee travel expenses. No overhead charges of Seller shall be reimbursed by Buyer. Buyer will reimburse Seller up to two (2) weeks of employee wages for packing and shipment work performed prior to the signing of the Agreement.
	b.		Buyer shall reimburse Seller for such reasonable expenses within twenty-one (21) days following receipt of invoices from Seller.
	c.		In no such event shall Buyer be obligated to reimburse Seller or pay any amount in excess of $50,000.00 for the costs and expenses described herein.
	d.		Seller shall use its best efforts to deliver the Assets, including all documentation, drawings, control software and related materials, to Buyer immediately following the Effective Date.

3.

Buyer shall pay to Seller $500,000.00 following the installation and successful operation of the XRM. The following conditions shall apply:

	a.		The criteria for “successful operation” shall be deemed to occur when the microscope acquires an image with at least 80nm resolution for five (5) consecutive business days.
	b.		Seller shall be responsible for establishing successful operation of the XRM at Buyer’s chosen place of business, and Buyer shall cooperate fully in this regard.
	c.		Buyer shall make such payment to Seller following successful operation and within twenty-one (21) days of receipt of Seller’s invoice.

4.

Buyer shall pay to Seller $100,000.00 if and when the XRM reaches the flux and resolution target. The flux and resolution target shall be deemed reached when the XRM can acquire an image with spatial resolution of at least 40nm, and in a separate experiment, demonstrate an average flux of 5 detected soft-x-ray photons/s/pixel, assuming 20um pixels, 1000X magnification and no sample present.

Royalties

	1.		Buyer shall pay to Seller five percent (5%) of the revenue received by Buyer pursuant to completed sales of x-ray microscopes (“Royalties”) for four (4) years (“Royalty Period”) following Buyer’s first sale of an x-ray microscope derived from the Assets to a third-party.
	2.		Buyer shall have no obligation to pay Royalties upon the conclusion of the Royalty Period.
	3.		Buyer shall pay Royalties to Seller annually, in arrears, in January of each year along with supporting documentation.
	4.		Buyer and Seller agree and acknowledge that the intent hereunder is for Seller to earn Royalties for technologies developed to feasibility by Seller. This includes the complete x-ray microscope (source, room temperature stage, microscope optics, camera, acquisition software) sufficient to produce single images, a soft x-ray microscope source based on laser plasma x-ray sources, or a soft x-ray microsc