License Agreement Between Asahi Glass Company And Research Frontiers Effective May 11, 2006

SPD-SMART WINDOW LICENSE AGREEMENT
BETWEEN
RESEARCH FRONTIERS INCORPORATED
AND
ASAHI GLASS CO., LTD.


This License Agreement ("Agreement") effective as of May 11, 2006 by and between RESEARCH FRONTIERS INCORPORATED, a Delaware corporation ("LICENSOR") and ASAHI GLASS CO., LTD., a Japanese corporation ("LICENSEE").


RECITALS


WHEREAS, LICENSOR has been engaged in research and development in the application of physicochemical concepts to Light Valves and Licensed Products (both as hereinafter defined) and of methods and apparatus relating to products incorporating such concepts 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 manufacturing and selling Licensed Products; 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 premises 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.


The "Effective Date" of this Agreement shall be the date first set forth above 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.


"Licensed Product" means only a Light Valve Transportation Vehicle Window Product incorporating a Light Valve. The term "Licensed Product" shall not include Light Valves used or intended for use in any product other than as specifically defined herein, such as but not limited to, other window products not specifically defined herein, such as, but not limited to, Light Valve Architectural Window Products, window products for vehicles not specifically included in the definition of Light Valve Transportation Vehicle Window Product, and non- window products such as but not limited to displays, eyewear, sunvisors, toys, mirrors or filters for scientific instruments, lamps or contrast enhancement of displays. The term "display" means any device for displaying letters, numbers, images or other indicia or patterns. Nothing contained herein shall permit LICENSEE to sell, lease, or otherwise dispose of a Light Valve which is not incorporated or intended to be incorporated as described above into a Light Valve Transportation Vehicle Window Product.


"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 in the form of a liquid suspension, gel, film or other material.


"Light Valve Architectural Window Product" means a Light Valve used or intended for use solely as a window integrally incorporated in, or attached as a fixture to the external structure or internal structure of any building, whether permanent or temporary, and whether above or below ground.


"Light Valve Transportation Vehicle Window Product" means a Light Valve used or intended for use as a window (including sunroofs, windshields, and side and rear window panes which are an integral part of the internal or external structure) integrally incorporated in a transportation vehicle of a type not primarily designed or primarily intended for military use. The term "Light Valve Transportation Vehicle Window Product" shall not include a Light Valve used or intended for use as a sunvisor, but may include Light Valves which are used or intended for use in a non-military transportation vehicle as, or as part of, or are laminated to, or the surface area of which is primarily attached to, a window, sunroof or windshield. The term "transportation vehicle" shall mean passenger cars, recreational vehicles, trucks, boats, mobile cranes, and trains, but shall not include other types of vehicles such as aircraft, space craft and space-stations.


The "Net Selling Price" of Licensed Products on which royalties are payable shall be the genuine selling price of LICENSEE and its sublicensees hereunder f.o.b. factory at which nonaffiliated customers are billed in the usual course of business for Licensed Products, as packed for shipment to the customer, reduced only by the applicable proportions of the following if, and to the extent that, amounts in respect thereof are reflected in such selling price: (i) normal trade discounts actually allowed; (ii) sales, use or excise and added value taxes and custom duties paid; (iii) if the genuine selling price is other than f.o.b. factory, amounts paid for f.o.b. transportation of Licensed Products to the customer's premises or place of installation or delivery; (iv) the cost to LICENSEE or its sublicensees hereunder of any part or component included in Licensed Products which is purchased directly from LICENSOR; (v) insurance costs and the costs of packing material, boxes, cartons and crates required for shipping; provided, however, that the Net Selling Price of a Licensed Product may not be less than 90% of the gross selling price of said Licensed Product after all deductions therefrom excluding materials purchased by LICENSEE from LICENSOR pursuant to subsection (iv) hereof, if any. If a Licensed Product is leased, sold, used or to otherwise disposed of on terms not involving a bona fide arm's length sale to an unaffiliated third party, then the Net Selling Price for such transactions shall be deemed to be the Net Selling Price as defined above for identical products sold to a nonaffiliated customer nearest to the date of such lease, sale, use, or other disposition. If a Licensed Product is sold in combination with other products or as a part or component of another product and a single selling price is billed for such combination product, the Net Selling Price for the computation of royalties payable hereunder on such Licensed Product shall be equal to the product of the single selling price for such combination product (reduced as may be permitted by subsections (i-v) above) times the actual cost of manufacturing such Licensed Product divided by the actual cost of manufacturing such combination product.


"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, know- how of LICENSOR and the like owned or controlled by LICENSOR, to the extent they exist, that relate to Light Valves, Licensed Products and/or to the suspensions or other components used or usable for Licensed Products or Light Valves including, but not limited to, particles, particle precursors, coatings, polymers, liquid suspensions and suspending liquids, or any combination thereof, and that consist of concepts invented or developed 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, have made, and to lease, sell, or otherwise dispose of Licensed Products in the Licensed Territory.


2.2 No Other Rights. LICENSEE acknowledges that, except for the specific licenses granted to it under Section 2.1 hereof for use in Licensed Products, LICENSEE has not acquired any rights or licenses under this Agreement to use Light Valves or any components thereof made by or for LICENSEE or its sublicensees pursuant to this Agreement.


2.3 Sublicenses. LICENSEE may grant non-exclusive sublicenses to any of its affiliates at least 80% of the ownership of which is held directly or indirectly by LICENSEE, the obligations of which affiliates to LICENSOR hereunder LICENSEE hereby guarantees, provided that each such affiliate 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) 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 that does not meet the requirements of this section.


3 ROYALTY PAYMENTS, REPORTS AND RECORD-KEEPING.


3.1 Royalties and Reports on Net Sales. During the term of this Agreement, LICENSEE shall pay LICENSOR an earned royalty which shall be ten percent (10%) of the Net Selling Price of Licensed Products which embody, or the manufacture of which utilizes, any of the rights granted under Section 2.1 hereof, and which are manufactured by or for LICENSEE and sold, leased, used or otherwise disposed of by or for LICENSEE or a permitted sublicensee. Payments under this Section 3.1 shall be made on a quarterly basis and made within 30 days after the end of the calendar quarter in which such Licensed Products were sold, leased, used or otherwise disposed of by or for LICENSEE or a permitted sublicensee hereunder. Each royalty payment shall be in U.S. dollars and shall be accompanied by a statement by LICENSEE showing in reasonable detail the amount of Licensed Products sold, used, leased or otherwise disposed of by or for LICENSEE and its sublicensees during the preceding month, any deductions taken or credits applied and the currency exchange rate used to report sales made in currencies other than U.S. dollars. LICENSEE shall use the exchange rates for buying U.S. dollars in effect on the last day of each month, as specified in The New York Times. The first such statement shall cover the period from the Effective Date of this Agreement to the end of the first calendar month in which a Licensed Product is sold, used, leased or otherwise disposed of by or for LICENSEE or its sublicensees. LICENSEE shall also furnish to LICENSOR at the same time it becomes available to any third party a copy of each brochure, advertisement or other marketing and promotional materials prepared, published or distributed by LICENSEE or its sublicensees relating to Licensed Products. LICENSOR shall have the right, but not the obligation, to approve any use by LICENSEE of its name, logo, or other information about Licensed Products and to require the correction of any inaccurate information.


3.2 Minimum Royalties. Regardless of whether LICENSEE is selling any Licensed Products, during the term of this Agreement LICENSEE shall pay LICENSOR an initial fee of [Confidential Information Omitted and filed separately with the Securities and Exchange Commission]upon signing of this License Agreement and the non-refundable minimum royalties (in U.S. Dollars) specified below for each of the stated periods unless this Agreement is theretofore terminated:


Period Minimum Royalty


[Confidential Information Omitted and filed separately with the Securities and Exchange Commission]


3.3 Time and Method of Payment. The initial payment under Section 3.2 and the minimum royalty payment for 2006 shall be paid to LICENSOR within 30 days of the Effective Date of this Agreement, and each subsequent payment under Section 3.2 to LICENSOR shall be made on or before January 31 of each license year commencing January 1, 2007. All other payments shall be due on the date specified in this Agreement, or if no date is specified, within 30 days of invoice. All payments made to LICENSOR under this Agreement shall be paid by wire transfer of immediately available funds to the account of Research Frontiers Incorporated at Chase Manhattan Bank, 6040 Tarbell Road, Syracuse, New York 13206, Account No.: 825-624-290, ABA Wire Code No.: 021 000 021, or to such other account or place as LICENSOR may specify in a notice to LICENSEE.


3.4 Sales, Use and Returns. Licensed Products shall be considered as sold, leased or used and royalties shall accrue on the earlier of when such Licensed Products are billed out or when delivered, shipped or mailed to the customer. If as a result of a price reduction or a return of Licensed Products previously sold a credit or refund to a customer is given on part or all of the sale price of such Licensed Products, a credit shall be allowed against royalties accruing thereafter under this Agreement equal to the royalty paid on that part of the sales price so credited or refunded.


3.5 Recordkeeping. LICENSEE shall keep and shall cause each sublicensee to keep for six (6) years after the date of submission of each statement supported thereby, true and accurate records, files and books of accounts that relate to Licensed Products, all data reasonably required for the full computation and verification of the Net Selling Price of Licensed Products, deductions therefrom and royalties to be paid, as well as the other information to be given in the statements herein provided for, and shall permit LICENSOR or its duly authorized representatives, upon reasonable notice, adequately to inspect the same at any time during usual business hours. 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, disclosing to LICENSOR and to LICENSEE only whether there is a breach or discrepancy and, if so, the amount of the discrepancy and the details of any breach. Such an audit shall be made upon reasonable advance notice to LICENSEE and during usual business hours no more frequently than annually. 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 underpayment error in excess of two percent of the total monies paid to LICENSOR by LICENSEE during the audited period, in which case LICENSEE shall bear the full cost of such audit. LICENSEE shall pay LICENSOR all additional monies that are disclosed by the audit to be due and owing to LICENSOR within thirty (30) days of the receipt of the report, and LICENSOR shall, at its option, either pay LICENSEE any monies that are disclosed by the audit to have been over paid within thirty (30) days of the receipt of this report, or credit such amount towards future royalty or other payments due by LICENSEE to LICENSOR.


4 OBLIGATIONS OF LICENSEE.


4.1 Compliance. LICENSEE agrees that, without limitation, any manufacture, sale, lease, use or other disposition of Licensed Products that is not in strict accordance with the provisions of this Agreement shall be deemed a material breach of this Agreement.


4.2 End Users. LICENSEE shall require all direct recipients of Licensed Products to whom Licensed Products are 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 Licensed Products.


4.3 Laws and Regulations. LICENSEE shall be solely responsible for complying with all laws and regulations affecting the manufacture, use and sale or other disposition of Licensed Products 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, to the extent that such English translations are readily available, 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.


4.4 Purchase of Components from Others. By virtue of the disclosure of Technical Information and information, 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 (each, a "Component"), which LICENSEE or its sublicensees makes, has made for it or purchases from any third party for use in Licensed Products 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 shall (i) use all Components only in strict accordance with the provisions of this Agreement, and not 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) 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.


4.5 No Warranties by LICENSOR. LICENSOR does not represent or warrant the performance of any Licensed Product or of any material, Component or information provided hereunder, and LICENSEE expressly acknowledges and agrees that any such material, Component or i ...