Technology License Agreement
This Technology License Agreement (this
"Agreement") is made and entered into
effect as of ___________, 2003 (the
"Effective Date") by and among Manhattan
Scientifics, Inc., a Delaware corporation
with its office at 405 Lexington
Avenue, 32nd Floor, New York, New York,
10174, USA ("MSI"), and Energy Related
Devices, a New Mexico corporation with its
offices at 127 Eastgate Dr., Los
Alamos, New Mexico, 87544 ("ERD").
MSI and ERD may each be referred to herein
individually as a "Party" and jointly
as the "Parties."
1. Background
1.1. MSI owns
intellectual property rights and an exclusive world wide
license related to micro-fuel cells and solar cells, developed in
part
by ERD under a previous License Agreement and Agreement and Plan
of
Merger between MSI and ERD;
1.2. ERD has
incurred reimbursable expenses and advanced payments for
various MSI expenses relating to the intellectual property rights
and
R&D expenses;
1.3. MSI and ERD
desire to terminate the R&D and related Milestone
Agreements and substitute a new Technology License Agreement,
while
providing that all other Agreements between the parties remain in
full
force and effect.
1.4. MSI and ERD
desire that this Agreement extinguish all claims by
the Parties under the R&D Agreement, and enable each of MSI and
ERD to
further develop and commercialize the technology.
1.5. Now,
therefore, in consideration of the foregoing and the
covenants and promises contained herein, the Parties hereby agree
as
follows.
2. Definitions
2.1.
Intellectual Property. Patents, patentable inventions that
become
patented, copyrights, copyrightable works of authorship, and
Information/Know-how.
2.2.
Information/Know-how. Information and data of any type and in
any
tangible or intangible form, whether or not patentable, whether or
not
protected as trade secrets, including without limitation ideas,
inventions, works of authorship, plans, designs, practices,
methods,
techniques, specifications, production technical operating
procedures,
standard operating procedures, protocols under development,
formulations, software, formulae, knowledge, know-how, skill,
experience, test data, analytical and quality control data,
stability
data, results of studies, patent and other legal information or
descriptions.
2.3. R&D
Agreement. The Research and Development Agreement dated
January 11, 1998 among ERD, MSI, and Tamarack Storage Devices,
Inc.
("Tamarack").
2.4. R&D
Milestone Amendment. The amendment to the R&D Agreement
expressed in a letter dated May 12, 1999 from Bach & Associates
to
ERD.
2.5. ERD Claimed
Expenses. All of ERD claims for compensation or
consideration from MSI incurred as of the effective date of
this
Agreement, including, but not limited to, $283,254.86 set forth in
the
ERD Letter (details of the claims in the letter).
2.6. MFC IP.
Intellectual Property concerning fuel cells and subject
to the R&D Agreement, and/or R&D Milestone Amendment,
including the
"Fuel Cell Patents" as defined in the R&D Agreement, and
including the
Intellectual Property listed in Exhibit A.
2.7. MFC
Trademarks. Any trademarks or service marks in the MFC IP.
<PAGE>
2.8. Approved Products and Services.
Products or services that MSI has
given approval,
according to the process set forth in Exhibit C, to ERD for
marking with one
or more MFC Trademarks. Approved Products and Services
further means
any brochures, descriptions, or other information that MSI
has given
approval, according to the process set forth in Exhibit C, to
ERD
for marking with
one or more MFC Trademarks.
2.9. Derivative MFC IP. Intellectual
Property developed or acquired after
the effective
date hereof by either party that includes MFC IP, is based on
or derived from
MFC IP, works in combination with MFC IP, or provides a
design-around
the MFC IP alternative to MFC IP, or requires MFC IP for
operation.
2.10.Solar IP. Intellectual Property
concerning solar cells and subject to
the R&D
Agreement, and/or the R&D Milestone Amendment, including the
"Solar
Cell Patents" as
defined in the License Agreement, and including the
Intellectual
Property listed in Exhibit B.
2.11.Cross-license Period. The period from
the Effective Date of this
Agreement until
both parties mutually agrees to terminate the Agreement.
2.12.Sub-licensees. Third parties who are
granted rights by ERD (or MSI in
the case of a
cross-license issued by ERD), to Intellectual Property
subject to this
Agreement, who are bound by the Cross-license Provisions of
this Agreement,
and who are not permitted to grant further sublicenses.
2.13.Option Period. The period from the
effective date of this Agreement
until twelve
months thereafter.
2.14.Direct Rate. The rate of royalty
payment to MSI related to products
and services
developed by ERD for which there is no sub-licensee.
3. License Grants
3.1. MFC IP.
Subject to the terms and conditions hereof, MSI hereby
grants to ERD a nonexclusive, worldwide license to do the
following:
3.1.1. make, have made on its behalf, use, sell, and import
inventions claimed in the MFC IP;
3.1.2. use any Know-how in the MFC IP;
3.1.3. reproduce, distribute without accounting, prepare
derivative works of, and perform and display publicly and
copyrightable works in the MFC IP;
3.1.4. mark Approved Products and Services with MFC Trademarks;
3.1.5. offer to do any of the preceding; and
3.1.6. grant permission to ERD Sub-licensees to do any of the
preceding.
3.2.
Cross-license. Subject to the terms and conditions hereof, and
to
the extent of each party's rights, MSI hereby grants to ERD, and
ERD
hereby grants to MSI, a nonexclusive, worldwide license do the
following:
3.2.1. make, have made on its behalf, use, sell and import
inventions claimed in Derivative MFC IP;
3.2.2. use any Know-how in the MFC Derivative IP;
3.2.3. reproduce, distribute without accounting, prepare
derivative works of, and perform and display publicly and
copyrightable works in the MFC Derivative IP;
3.2.4. offer to do any of the preceding; and
3.2.5. grant permission to MSI or ERD Sub-licensees to do any
of
the preceding.
3.3. Ownership
and No Implied Licenses. Each Party hereby acknowledges
and agrees that, except as otherwise explicitly set forth in
this
Agreement:
3.3.1. MSI retains all currently held rights, title and
interest
to all MFC IP and Solar IP.
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3.3.2.Each party retains all rights, title, and interest to MFC
Derivative IP developed or acquired by such party.
3.3.3.Nothing in this Agreement shall be construed as
conferring
on either party, its affiliates, or its sub-licensees, any
express or implied license or option to license any
Intellectual
Property, except as expressly provided herein.
4. Release of Claims.
4.1. ERD hereby
releases MSI from all claims arising from or related
to ERD Claimed Expenses and from all claims arising from or related
to
the R&D Agreement and the R&D Milestone Amendment including
without
limitation all claims for any damages, interest, and special or
consequential damages relating thereto. ERD agrees to indemnify
and
hold MSI harmless from any such claims by ERD or by any party
claiming
through ERD.
4.2. MSI hereby
releases ERD from all claims arising from or related
to ERD Claimed Expenses and from all claims arising from or related
to
the R&D Agreement, the R&D Milestone Amendment, or the ERD
Letter,
including without limitation all claims for any damages, interest,
and
special or consequential damages relating thereto. MSI agrees
to
indemnify and hold ERD harmless from any such claims by MSI or by
any
party claiming through MSI.
5. Confidentiality.
Confidential information, if any, will be treated
according to
separate confidentiality agreements between the Parties. The
confidentiality
agreement contained in paragraph 4 within the R&D Agreement
shall remain in
full force and effect.
6. Previous Documents.
6.1. The R&D
Agreement and R&D Milestone Amendment are both terminated
and replaced by this Agreement. All other previously written
and
executed agreements between MSI, ERD, Robert Hockaday, their
assigns,
predecessors, or successors in interest remain in full force
and
effect.
6.2. ERD will
continue prosecution of and maintain the MFC IP and the Solar
IP.
6.2.1. MSI will reimburse ERD for its, expenses related to
prosecution and maintenance (including, but not limited to, ERD
personnel work time, copy expenses, mailing expenses, and
communications expenses) direct costs and fees as set forth
herein. ERD shall provide written notice to MSI at least 30
days
prior to any action that will incur such as an expense.
6.2.2. As owner of the MFC IP and Solar IP, MSI retains the
right
to prosecute and/or maintain any IP that ERD fails to prosecute
and/or maintain. If ERD shall decide not to continue the
prosecution or maintenance, or shall decide to take or not take
any action that would reasonably be expected to reduce, impair,
or limit the validity or enforceability of the MFC IP or Solar
IP, then ERD shall provide written notice of such decision to
MSI
allowing MSI at least 30 days to continue, at MSI's expense,
such
prosecution or maintenance, or to take such other actions, at
MSI's expense, to avoid such reduction, impairment, or
limitation. Any such decision shall be based solely on ERD's
economic ability to advance associated expenses, but such
decision shall,
to the extent possible, involve the concurrence
of both Parties.
6.3. During the
term of this Agreement ERD will provide professional
support to MSI's efforts to transfer or license the MFC IP and
the
Solar IP to third parties, as needed by MSI without imposing an
unreasonable burden on ERD. MSI will compensate ERD for such
support
at a rate of $58 (fifty eight dollars) per hour, the rate will
escalate at a rate of 5% per year beginning with the first year
after
the effective date of this Agreement, plus direct costs, payable
as
set forth herein.
<PAGE>
6.4. During the
term of this Agreement ERD will as needed and as
available, provide MSI with office space in ERD's Los Alamos
facility,
at no charge, except administrative support will be provided as
needed
by MSI and as available from ERD, and MSI shall compensate ERD
for
such administrative support at a rate of $25 (twenty five dollars)
per
hour, which rate will escalate at a rate of 5% per year beginning
with
the first year after the effective date of this Agreement, payable
as
set forth herein.
6.5. ERD will
pay amounts due to IP Counsel relating to filing,
prosecution, and maintenance of the MFC IP and the Solar IP,
currently
estimated to be $48,095.54. MSI will reimburse ERD for such amounts
as
set forth herein.
7. Purchase Rights to MFC IP.
7.1. During the
Option Period ERD may purchase MSI's interest in the
MFC IP, subject to any intervening licenses or encumbrances, for
the
total of MSI's investment including the MSI cash payments
totaling
$2,167,010, in the MFC IP and related projects plus 5% annual
interest
determined from the time of each MSI expenditure or payment to
ERD
(the "MFC Option").
7.2. During the
Option Period, if MSI enters bona fide negotiations
with a third party to purchase MSI's rights to the MFC IP (the
"MFC
Third Party"), MSI shall notify ERD in writing of its interest
in
transferring rights to such MFC Third Party. ERD shall have the
right
within thirty (30) days of such notice (the "First 30-day Period"),
to
exercise the MFC Option of this Agreement and so state in writing
to
MSI. ERD will then have an additional thirty (30) days (the
"Second
30-day Period") (a maximum of 60 days from MSI's initial
notification)
to execute a Purchase Agreement with MSI for the purchase price
as
defined in Paragraph 7.1 and on terms as negotiated in good faith
by
the Parties during the Second 30-day Period. If ERD fails to
provide
written notice of exercise within the First 30 day Period, or fails
to
execute a Purchase Agreement within the Second 30-day Period, or
fails
to perform under the Purchase Agreement, then MSI shall be allowed
to
transfer rights to the MFC Third Party at any time, or to
another
party within 60 days after the end of the First 30-day Period.
8. Purchase Rights to Solar IP.
8.1. During the
Option Period ERD may purchase MSI's interest in the
Solar IP, subject to any intervening licenses or encumbrances, for
1.8
million shares of MHTX common stock (the "Solar Option").
8.2. During the
Option Period, if MSI enters bona fide negotiations
with a third party to purchase MSI's rights to the Solar IP
(the
"Solar Third Party"), MSI shall notify ERD in writing of its
interest
in transferring rights to such Solar Third Party. ERD shall have
the
right within thirty (30) days of such notice (the "First 30-day
Period"), to exercise the Solar Option of this Agreement and so
state
in writing to MSI. ERD will then have an additional thirty (30)
days
(the "Second 30-day Period") (a maximum of 60 days from MSI's
initial
notification) to
execute a Purchase Agreement with MSI for the
purchase price as defined in Paragraph 8.1 and on terms as
negotiated
in good faith by the Parties during the Second 30-day Period. If
ERD
fails to provide written notice of exercise within the First 30
day
Period, or fails to execute a Purchase Agreement within the
Second
30-day Period, or fails to perform under the Purchase Agreement,
then
MSI shall be allowed to transfer rights to the Solar Third Party
at
any time, or to another party within 60 days after the end of
the
First 30-day Period.
<PAGE>
9. Payments from MSI to ERD.ERD
shall issue an invoice to MSI at the end
of each calendar
quarter showing all amounts due from MSI to ERD hereunder.
As payment for
each such invoice MSI shall issue to ERD a convertible note
(the form of
which is contained in Exhibit D of this Agreement) from MSI to
ERD in the
amount of the amount due on such invoice, which note is
convertible into
a number of shares of MSI common stock whose total value,
at the closing
price as of the date of conversion, equals or exceeds the
amount of the
note. The parties anticipate that the 144 holding period for
the convertible note
and the underlying shares will begin on the issuance
of the note, and
that ERD will convert the note to shares after the
requisite
holding period has passed. MSI warrants, to the extent
consistent
with current
applicable law, the 144 holding period on the convertible note
is one year from
the issuance of the note and after one year the issued
common stock
will be free of restrictions and encumbrances and can be
freely
