SPD FILM LICENSE AGREEMENT

 

[EXHIBIT 10.42- Certain portions of this document have been

  omitted in the publicly filed version of this document   pursuant

to   the Registrant's request for confidential treatment and filed

  separately with the Securities and Exchange Commission.

Omitted confidential information is indicated in brackets in this

Exhibit.]

 

                   SPD FILM LICENSE AGREEMENT

                            BETWEEN

                RESEARCH FRONTIERS INCORPORATED

                              AND

                  NIPPON SHEET GLASS CO., LTD.

                               

     This License Agreement ("Agreement") effective as of

September 3, 2004 by and between RESEARCH FRONTIERS

INCORPORATED, a Delaware corporation ("LICENSOR") and

NIPPON SHEET GLASS CO., LTD., a Japanese corporation

(hereinafter called "LICENSEE").   The "Effective Date" of this

Agreement shall be the date which is the last date of formal

execution of this Agreement by duly authorized representatives of

the parties to this Agreement as indicated on the signature page of

this Agreement.

    

                             RECITALS

 

     WHEREAS, LICENSOR has been engaged in research and

development in the application of physicochemical concepts to

Light Valves, and Light Valve Film (both as hereinafter defined)

and of methods and apparatus relating to products incorporating

such concepts (which products, although all of which are not

currently in commercial use, can include, without limitation

thereto, windows for buildings and vehicles, sunvisors, sunroofs,

flat panel displays, eyewear and rear-view mirrors); and is

possessed of and can convey information and know-how for such

products and rights to manufacture, use and sell such products; and

 

     WHEREAS, LICENSEE is interested in buying SPD

Emulsion from other licensed   suppliers of LICENSOR and

manufacturing and selling Light Valve Film (as hereinafter

defined); and

 

     WHEREAS, LICENSEE desires to acquire from LICENSOR,

and LICENSOR desires to grant to LICENSEE, certain rights and

licenses with respect to such technology of LICENSOR;

 

     NOW, THEREFORE, in consideration of the promises and

the mutual covenants herein and for other good and valuable

consideration, the receipt and sufficiency of which are hereby

acknowledged, the parties agree as follows.

 

1     DEFINITIONS.

 

        The following terms when used herein shall have the

respective meanings set forth in this Article 1.

 

"Authorized User" means LICENSOR and/or any other person or

entity listed by LICENSOR on Schedule B hereof who has been

granted permission by LICENSOR to receive Light Valve Film

from LICENSEE under this Agreement.   LICENSEE agrees that

LICENSOR in its sole judgment may amend Schedule B hereof at

any time during the term of this Agreement for any reason by

sending LICENSEE a written notice of such amendment and

specifying the reason for such change.   The persons or entities now

or hereafter listed on Schedule B may not include all of

LICENSOR's current licensees and may include prospective

licensees of LICENSOR, and for legal or practical reasons,

LICENSOR may restrict whether or not Light Valve Film may be

sold, leased or transferred to such person or entity, and/or the

application that such Light Valve Film may be used for by the

recipient.   LICENSEE agrees that it and its permitted sublicensees

hereunder shall cease all sales, leases, or other dispositions of

Light Valve Film to any person or entity whose name is deleted

from Schedule B by LICENSOR, unless and until LICENSOR

consents in writing to the resumption of such sales, leases or other

dispositions (a) immediately upon receipt of any written notice

from LICENSOR that any person or entity is no longer included

on Schedule B, or (b) if either LICENSEE or its permitted

sublicensees becomes aware that any such person or entity listed

on Schedule B or otherwise receiving Light Valve Film is making

any improper use of Light Valve Film, in which case LICENSEE

shall promptly notify LICENSOR of such improper use.

 

"Licensed Territory " means all countries of the world.

 

"Light Valve" means a variable light transmission device

comprising: a cell including cell walls, containing or adapted to

contain an activatable material, described hereinafter, such that a

change in the optical characteristics of the activatable material

affects the characteristics of light absorbed by, transmitted through

and/or reflected from the cell; means incorporated in or on the cell,

or separate therefrom for applying an electric or magnetic field to

the activatable material within the cell; and coatings, (including,

but not limited to, electrodes), spacers, seals, electrical and/or

electronic components, and other elements incorporated in or on

the cell.   The activatable material, which the cell contains or is

adapted to contain, includes in it solid suspended particles, which

when subjected to a suitable electric or magnetic field, orient to

produce a change in the optical characteristics of the device, and

may be either in the form of a liquid suspension, gel, film or other

material.

 

"Light Valve Film" means a film or sheet or more than one thereof

comprising a suspension of particles used or intended for use

solely in or as a Light Valve.   The Light Valve Film shall comprise

either (a) a suspension of particles dispersed throughout a

continuous liquid phase enclosed within one or more rigid or

flexible solid films or sheets, or (b) a discontinuous phase of a

liquid comprising dispersed particles, said discontinuous phase

being dispersed throughout a continuous phase of a rigid or

flexible solid film or sheet.   The Light Valve Film may also

comprise one or more other layers such as, without limitation, a

film, coating or sheet or combination thereof, which may provide

the Light Valve Film with (1) scratch resistance, (2) protection

from ultraviolet radiation, (3) reflection of infrared energy, and/or

(4) electrical conductivity for transmitting an applied electric or

magnetic field to the activatable material.

 

"SPD Emulsion" means any component or components used or

usable in or used or usable to make   a Light Valve Film, including,

but not limited to, particles, particle precursors, coatings,

polymers, liquid suspensions and suspending liquids, or any

combination thereof.

 

"Technical Information" means all useful information relating to

apparatus, methods, processes, practices, formulas, techniques,

procedures, patterns, ingredients, designs and the like including

(by way of example) drawings, written recitations of data,

specifications, parts, lists, assembly procedures, operating and

maintenance manuals, test and other technical reports and the like

owned or controlled by LICENSOR, to the extent they exist, that

relate to the suspensions used or usable for SPD Emulsion or Light

Valve Film and that consist of concepts invented or developed by

LICENSOR and which are deemed significant by LICENSOR.

Know-how of LICENSOR's suppliers and of LICENSOR's other

licensees and their sublicensees under licenses from LICENSOR

shall not be considered Technical Information owned or controlled

by LICENSOR.

 

2     GRANT OF LICENSE.

 

     2.1   License.   During the term of this Agreement, LICENSOR

hereby grants LICENSEE a non-exclusive right and license to use

(a) all of the Technical Information, if any, (subject to Section 8.1

hereof),   furnished by LICENSOR pursuant to this Agreement, and

(b) any invention claimed in (i) any of the unexpired patents now

or hereafter listed on Schedule A attached hereto or (ii) unexpired

patents which issue from pending patent applications now or

hereafter listed in Schedule A, and any continuations,

continuations-in-part, divisions, reissues, reexaminations, or

extensions thereof to make, and to lease, sell, or otherwise dispose

of Light Valve Film manufactured by LICENSEE pursuant to this

Agreement solely to an Authorized User in the Authorized User's

permitted territory and for the applications specified and purpose

permitted on Schedule B hereof.   The license granted pursuant to

this Section 2.1 shall be royalty-free to LICENSEE and its

permitted sublicensees hereunder.   By virtue of the disclosure of

Technical Information and training provided by LICENSOR under

this Agreement, all Light Valve Film sold, leased or otherwise

disposed of by or for LICENSEE hereunder shall be deemed to

have been manufactured at least in part using the Technical

Information provided by LICENSOR. The foregoing license is

only a license with respect to Light Valve Film and nothing

contained in this Agreement shall permit LICENSEE to make, sell,

use (except to manufacture Light Valve Film) or otherwise dispose

of end products incorporating SPD Emulsion or Light Valve Film.

 

     2.2    No Other Rights.   LICENSEE agrees that, except for the

specific licenses granted to it under Section 2.1 hereof, LICENSEE

has not acquired any rights or licenses under this Agreement to use

Light Valve Film or any components thereof made by or for

LICENSEE pursuant to this Agreement except for the purposes of

research and development pursuant to Section 4.1 hereof and as

specifically licensed in Section 2.1 hereof.

 

     2.3   Sublicenses.   LICENSEE shall have the right to grant

non-exclusive sublicenses to any wholly-owned and controlled

subsidiary of LICENSEE, whose obligations to LICENSOR

hereunder LICENSEE hereby guarantees, and which acknowledges

to LICENSOR in writing that it wishes to become a sublicensee

hereunder prior to doing so and agrees to be bound by the terms

and conditions of this Agreement. All sublicenses shall (i) be non-

exclusive, (ii) shall terminate with the termination of the rights and

licenses granted to LICENSEE under Section 2.1 hereof, and be

otherwise limited in accordance with the limitations and

restrictions which are imposed on the rights and licenses granted

to LICENSEE hereunder, (iii) contain confidentiality provisions

no less protective than those contained in Section 12.1 hereof, and

(iv) shall contain such other terms, conditions, and licenses as are

necessary to enable LICENSEE to fulfill its obligations hereunder.

LICENSEE shall send LICENSOR a copy of every sublicense

agreement or other agreement entered into by LICENSEE in

connection with a sublicense hereunder within thirty (30) days of

the execution thereof. LICENSOR may terminate any such

sublicense if there is any change in the ownership or control of a

sublicensee.

 

3     REPORTS AND RECORD-KEEPING.

 

     3.1   Reports.   Within 15 days after the end of each fiscal

quarter, LICENSEE shall send to LICENSOR a quarterly report

setting forth in reasonable detail the quantity of Light Valve Film

manufactured each quarter and the amount of Light Valve Film

sold, leased, disposed of, or delivered by or for LICENSEE and its

sublicensees during such quarter to Authorized Users and samples

provided to third parties, with the amounts sold or otherwise

provided to each Authorized User, including sample recipients,

and their identity clearly broken down. The first report submitted

under this Agreement shall cover the period from the Effective

Date of the Agreement to the end of the first quarter in which Light

Valve Film is produced hereunder.   LICENSEE shall also furnish

to LICENSOR at the same time it becomes available to any third

party, a copy of each brochure, standard price list, advertisement

or other marketing and promotional materials prepared, published

or distributed by LICENSEE or its sublicensees relating to Light

Valve Film.   LICENSOR shall have the right, but not the

obligation, to approve any use by LICENSEE of its name, logo, or

other information about Light Valve Film, and to require the

correction of any inaccurate information.

 

     3.2   Recordkeeping.   LICENSEE shall keep and shall cause

each sublicensee to keep for six (6) years after the date of

submission of each report supported thereby, true and accurate

records, files, data and books of accounts that relate to the

manufacture, sale or other disposition of   Light Valve Film,

reasonably required for the full computation and verification of the

information to be given in the statements herein provided for.

LICENSOR and LICENSEE agree that an independent certified

public accounting firm (selected by LICENSOR from the largest

ten certified public accounting firms in the United States of

America or Japan) may audit such records, files and books of

accounts to determine the accuracy of the statements given by

LICENSEE pursuant to Section 3.1 hereof.   Such an audit shall be

made upon reasonable advance notice to LICENSEE and during

usual business hours.   The cost of the audit shall be borne by

LICENSOR,   unless the audit shall disclose a material breach by

LICENSEE of any term of this Agreement, or an inaccuracy

greater than 2% in any report provided to LICENSOR by

LICENSEE, during the audited period, in which case LICENSEE

shall bear the full cost of such audit.   The results of the audit shall

be kept confidential pursuant to the provisions of Section 12.1

except to the extent required by a party hereto to enforce its rights

hereunder, or which is otherwise required to be disclosed by law

or under generally accepted accounting principles.

 

     3.3 Customer Referrals.   Although LICENSOR is under no

obligation to do so, LICENSOR may from time to time refer

customers to LICENSEE. In the event that such customer

purchases, leases or rents products or services from LICENSEE

other than Light Valve Film, LICENSEE shall include the details

of such transaction in its quarterly report under Section 3.1 hereof,

and shall pay LICENSOR a sales commission equal to 10% of the

amount received from such customer. No such payment shall be

due from LICENSEE to LICENSOR if the referred customer was

already a customer of LICENSEE prior to the date of referral by

LICENSOR and LICENSEE informs LICENSOR of such fact at

the time that the referral by LICENSOR is made.

 

4     OBLIGATIONS OF LICENSOR AND LICENSEE.

 

     4.1   Development of Light Valve Film. LICENSOR and

LICENSEE may cooperate to develop initial specifications for

Light Valve Film.   LICENSEE shall then use its reasonable efforts

to produce Light Valve Film meeting such specifications for the

evaluation and use of LICENSOR and licensees and prospective

licensees of LICENSOR, and for use by LICENSEE but only for

internal research and development. After consultation with

LICENSEE, LICENSOR may at any time propose additional size

or other specifications of the Light Valve Film to be produced

under this Agreement with the disclosure of additional Technical

Information to LICENSEE with respect to such size or other

specifications of Light Valve Film. LICENSEE may use all

commercially reasonable efforts throughout the term of this

Agreement to improve the quality of Light Valve Film.   However,

LICENSEE shall be solely responsible for determining the

specifications for all Light Valve Film, and for any improvements

therein.

 

     4.2   LICENSOR Purchases.   If LICENSEE is able to develop

and manufacture Light Valve Film suitable for use by Authorized

Users, upon request of LICENSOR and with reasonable prior

notice, LICENSEE shall sell and deliver to LICENSOR, Light

Valve Film or components thereof in quantities and prices

mutually agreed upon by LICENSOR and LICENSEE.

LICENSEE acknowledges that LICENSOR and its present and/or

future licensees (or entities who have been granted the option of

entering into license agreements with LICENSOR) may

independently manufacture (or have third parties manufacture for

them) and sell Light Valve Film under the terms of agreements

between them and LICENSOR, or may independently manufacture

and sell Light Valve Film which LICENSOR produces, or has

produced on its behalf.   Nothing contained in this Agreement shall

impose any obligation on LICENSOR or any other parties to

purchase any Light Valve Film from LICENSEE.   Notwithstanding

anything contained herein to the contrary, during the term of this

Agreement LICENSOR may provide Light Valve Film obtained by

LICENSOR pursuant to this Section 4.2 to third parties so long as

LICENSOR does not receive from the recipient for the provision

of such Light Valve Film any monetary payment in excess of

LICENSOR's purchase price plus shipping, administrative,

overhead and related costs to such recipient.

 

     4.3 Compliance.   LICENSEE agrees that, without limitation,

any manufacture, sale, lease, use or other disposition of Light

Valve Film that is not in strict accordance with (1) the provisions

of this Agreement, or (2) restrictions on the type of product, or the

territory in which such product may be, made, used, sold or

otherwise disposed of by or for an Authorized User, or other

provisions or restrictions, which are contained in any other

agreement in force between LICENSOR and an Authorized User

which is   known to LICENSEE which relates to Light Valves or

Light Valve Film, shall be deemed a material breach of this

Agreement.

 

     4.4   End Users.   LICENSEE agrees to require all direct

recipients of Light Valve Film to whom Light Valve Film is sold,

leased, or otherwise disposed of by LICENSEE or its sublicensees,

to look only to LICENSEE and not to LICENSOR or its affiliates

for any claims, warranties, or liability relating to such Light Valve

Film.   LICENSEE agrees to take all steps to reasonably assure

itself that Light Valve Film sold, leased or otherwise disposed of

by or for LICENSEE is being used for permitted application and

territory only.   If a party which is not then listed on Schedule B

hereto wishes to obtain samples of Light Valve Film or to purchase

Light Valve Film from LICENSEE, LICENSEE shall notify

LICENSOR and shall refer such party to LICENSOR.   If such

party enters into a suitable agreement with LICENSOR,

LICENSOR shall inform LICENSEE whether such party may then

obtain samples or purchase Light Valve Film from LICENSEE.

 

     4.5 Laws and Regulations.   LICENSEE agrees that it shall be

solely responsible for complying with all laws and regulations

affecting the manufacture, use and sale or other disposition of SPD

Light Valve Film by LICENSEE and its sublicensees, and for

obtaining all approvals necessary from governmental agencies and

other entities.   LICENSEE agrees to maintain a file of all such

approvals and to send LICENSOR a copy of all such approvals

(including English translations thereof in the case of approvals

required by any foreign country) within 10 business days of any

written request for such copies by LICENSOR.   LICENSEE

represents and warrants to LICENSOR that no approval from any

governmental agency or ministry, or from any third party, is

required to effectuate the terms of this Agreement or the

transactions contemplated hereby.

 

     4.6   Purchase of Components from Others.    By virtue of the

disclosure of Technical Information, other information, and

training, if any, provided from time to time by LICENSOR to

LICENSEE and to its other licensees, and each of their

sublicensees and affiliates, any component of a Light Valve,

including, without limitation, materials, suspensions, films,

polymers, coatings, particle precursors, and particles, SPD

Emulsion (each, a "Component"), which LICENSEE or its

sublicensees makes, has made for it, or purchases from any third

party for use in Light Valve Film shall be deemed to have been

manufactured at least in part using the Technical Information

provided by LICENSOR if LICENSEE or any supplier of a

Component to LICENSEE has had access to Technical

Information of any kind of LICENSOR or its licensees and their

sublicensees, consultants, subcontractors, agents or

representatives.   LICENSEE and its sublicensees each hereby

agrees that (i) all Components shall be used only in strict

accordance with the provisions of this Agreement, and that such

Components may not be used for any other purpose or resold by

LICENSEE or its sublicensees except as specifically permitted by

the license granted in Section 2.1 hereof, and (ii) LICENSEE and

its sublicensees will only look to the manufacturer or supplier of

such Component or other item used by LICENSEE or its

sublicensees and not to LICENSOR or its affiliates for any claims,

warranties, or liability relating to such Component or other item.

LICENSEE acknowledges that LICENSOR has not made any

representations or warranties regarding the availability of any

Component, or the price thereof, and that in all respects

LICENSEE shall deal directly with the suppliers of such

Components and will obtain from them information regarding

availability, pricing, and/or other terms relating to such

Components.

 

     4.7 No Warranties by LICENSOR.   LICENSOR does not

represent or warrant the performance of any material, Component,

or information provided hereunder, and LICENSEE expressly

acknowledges and agrees that any such material, Component or

information provided by LICENSOR hereunder is provided "AS

IS" and that LICENSOR makes no warranty with respect thereto

and   DISCLAIMS ALL WARRANTIES, EXPRESS OR

IMPLIED,   INCLUDING BUT NOT LIMITED TO THE

IMPLIED WARRANTIES OF MERCHANTABILITY AND

FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT

THERETO, ITS USE OR ANY INABILITY TO USE IT, OR THE

RESULTS OF ITS USE. Except for any breach of the terms of this

Agreement, in no event shall any party to this Agreement be liable

for any damages, whether in contract or tort (including

negligence), including but not limited to direct, consequential,

special, exemplary, incidental and indirect damages, arising out of

or in connection with this Agreement or the use, the results of use,

or the inability to use any material, Component or information

provided hereunder.

 

     4.8 Analysis.   LICENSEE represents and agrees that it will

only incorporate Components received from authorized suppliers

into Light Valve Film and   for no other purpose, and that

LICENSEE will not directly or indirectly attempt to reverse-

engineer any material provided to it hereunder by LICENSEE or

any supplier of any Component.

 

     4.9   Personnel. LICENSEE agrees to assign personnel from

its technical staff   who shall work on the development of Light

Valve Film during the term of this Agreement.

 

     4.10 Promotional Activities.   LICENSEE agrees that it shall

maintain adequate inventories of Light Valve Film produced by it

to meet on a timely basis the anticipated requirements of customers

listed on Schedule B hereto. In addition, LICENSEE shall

promptly develop and maintain a web site relating to its business

which prominently features LICENSOR's SPD technology and

LICENSEE's relationship to LICENSOR, and shall participate at

industry trade shows and conferences and/or engage in other

marketing and promotional activities reasonably necessary to

promote LICENSOR's SPD technology and LICENSEE's

business relating thereto.

 

     4.11   No other obligations.   LICENSEE and LICENSOR have

no other obligations to each other except as expressly provided in

this Agreement.

 

5      TRADEMARKS.

 

     5.1   Trademarks.   All trademarks or service marks that either

party may adopt and use for Light Valve Film, or other products

incorporating Light Valves are and shall remain the exclusive

property of the adopting party, and the other party shall not obtain

any rights and license to such marks under this Agreement, but

may inform others that the adopting party has licensed or produced

Light Valve Film, or products incorporating Light Valves under

such mark or marks, and may use the adopting party's logo in

connection therewith.   LICENSOR may require LICENSEE or its

permitted sublicensees to indicate on packaging that such product

is licensed from Research Frontiers Incorporated or to otherwise

include language and/or designations approved by LICENSOR

indicating an affiliation with Research Frontiers Incorporated.

 

6     INSURANCE AND INDEMNIFICATION.

 

     6.1   Insurance.   LICENSEE shall maintain at all times ample

product liability and other liability insurance covering its

operations relating to the subject matter of this Agreement and

shall name LICENSOR as an additional insured. Upon request,

LICENSEE shall provide LICENSOR of evidence of such

insurance. LICENSEE may fulfil its obligations hereunder through

self-insurance as long as LICENSEE remains solvent and in good

financial condition.

 

     6.2   Indemnification.   LICENSEE, and its affiliates,

successors and assigns and sublicensees (each, an "Indemnifying

Party"), each hereby indemnify and agree to hold harmless

LICENSOR and its shareholders, officers, directors, agents and

employees (each, an "Indemnified Party"), against any liability,

damage, loss, fine, penalty, claim, cost or expense (including

reasonable costs of investigation and settlement and attorneys',

accountants' and other experts' fees and expenses) arising out of

any action or inaction by any Indemnifying Party relating to this

Agreement including an Indemnifying Party's manufacture, sale,

use, lease or other disposition of Light Valve Film,   and related

materials (other than sales by LICENSEE to LICENSOR pursuant

to Section 4.2 hereof), or other use of the information and rights

granted hereunder. Any knowledge of LICENSEE's or its

sublicensee's activities by LICENSOR or its representatives shall

in no way impose any liability on LICENSOR or reduce the

responsibilities of LICENSEE hereunder or relieve it from any of

its obligations and warranties under this Agreement.

 

7     FUTURE PATENTS.

 

     7.1   Future Patents.   Each party, at its cost, shall have the

right to file patent applications in the United States and in foreign

countries covering any invention made by such party.

 

     7.2   Improvements and Modifications. (a)