Patent Licence

DATED 7 JULY 2000 --------------------------------------------------------------------------------


(1) CERAVISION (IRELAND) LIMITED


- and -


(2) AUGRID OF NEVADA, INC.


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PATENT LICENCE


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SUBJECT TO CONTRACT


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CONTENTS


1. DEFINITIONS AND INTERPRETATION............................................2


2. GRANT.....................................................................4


3. OBLIGATIONS OF THE LICENSEE...............................................7


4. PAYMENTS BY THE LICENSEE..................................................9


5. RECORDS..................................................................11


6. SUB-LICENSING............................................................12


7. IMPROVEMENTS.............................................................12


8. DEFENCE OF THE PATENT(S) AND INFRINGEMENTS...............................13


9. CONFIDENTIALITY..........................................................15


10. DURATION................................................................17


11. TERMINATION.............................................................17


12. EFFECT OF TERMINATION...................................................18


13. MAINTENANCE OF PATENTS..................................................19


14. FORCE MAJEURE...........................................................20


15. ASSIGNMENT..............................................................21


16. SEVERABILITY............................................................21


17. THIRD PARTY RIGHTS......................................................21


18. PARTNERSHIP.............................................................21


19. WAIVER AND RELEASE......................................................22


20. ENTIRE AGREEMENT........................................................22


21. NOTICES.................................................................23


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22. LAW AND JURISDICTION....................................................23


SCHEDULE 1..................................................................24


Definitions.................................................................24


SCHEDULE 2..................................................................27


Patents and Applications....................................................27


SCHEDULE 3..................................................................29


Trade Marks and Requirements for Use........................................29


SCHEDULE 4..................................................................30


Royalties...................................................................30


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THIS PATENT LICENCE is made on 7 July 2000


BETWEEN:


(1) CERAVISION (IRELAND) LIMITED a company registered in the Republic of Ireland (Registration No. 321650) whose registered office is at 1 High Street, Dublin 8 ("the LICENSOR"); and


(2) AUGRID OF NEVADA, INC a company registered in the State of Nevada, USA, whose principal office is at 140 Public Square, The Park Building, Suite 208, Cleveland, Ohio 44114, USA (the "LICENSEE")


BACKGROUND


(A) The Licensor is the exclusive Licensee with rights to sub-licence of
patent applications and non-patented know-how in respect of FED's (as
defined below), and in particular FEDs incorporating ceramic substrates
having front layer vias and of methods of sealing a visual display
having a glass face plate and such an FED.


(B) As referred to herein, an FED display is comprised essentially of an
anode or front plate sealed to a cathode or back plate, which latter
incorporates the field effect emission device. The method of sealing is
the subject of Sealing Patents (as defined below). The anodes and the
cathodes in particular are compound structures. These terms are
therefore used to refer to the respective compound components brought
together to be sealed. Both types of components as such, and the
cathodes in particular, are or will be the subject of the Anode and
Cathode Patents (as defined below).


(C) For their operation, the individual FED pixels of the cathode require
to be controlled both individually at their turn in the cycle of
operation and collectively to produce an image. Driver and control
integrated circuits for this can be attached to the back of the
cathodes of the displays. The assembled combinations of FED displays
and the integrated circuits are the subject of Display Drive and
Control Circuit Patents (as defined below).


(D) This licence is concerned with both (i) manufacture of FED displays by
sealing under the Sealing Patents of anodes and cathodes the subject of
the Anode and Cathode Patents and (ii) assembly of the integrated
circuits onto the cathodes after sealing to produce FED displays the
subject of the Display Drive and Control Circuit Patents.


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(E) The Licensor has agreed to licence the Licensee with regard to what is
set out in (D) above upon the terms and conditions specified in this
Agreement and this Agreement is entered into pursuant to the Exclusive
Project Agreement and in conjunction with the Machinery Lease
Agreement.


IT IS HEREBY AGREED as follows:-


1. DEFINITIONS AND INTERPRETATION


1.1 In this agreement, the following words and phrases shall have
the following meanings:


"AGREEMENT YEAR(S)" means the 12 month period ending on the
first and subsequent anniversaries of the Effective Date of
this agreement.


"CERAVISION GROUP" means all those corporate entities which
are or during the course of this Agreement become members of
the Group of companies of which Ceravision Limited is the
parent company.


"CUSTOMER(S)" means a person, firm or company in the Sales
Territory to whom the Licensee agrees to supply the Products.


"DISPLAY DRIVE AND CONTROL CIRCUIT PATENTS" has the meaning
ascribed to it in Schedule 1.


"EFFECTIVE DATE" means the earlier of the Phase One Completion
as defined the Exclusive Project Agreement or 1 July 2001.


"EXCLUSIVE PROJECT AGREEMENT" means the agreement between
Ceravision Limited and the Licensee dated 6 July 2000.


"EXCLUSIVE TERM" has the meaning ascribed to it in Schedule 1.


"FEDS" means field effect emission devices for visual
displays.


"FIELD OF USE" has the meaning ascribed to it in Schedule 1.


"LICENSEE'S IMPROVEMENT(S)" means all incremental
improvements, modifications or adaptions to any part of the
Products or Processes including all major or minor advances in
technology relating thereto and inventions which are
patentable in their


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own right, all or any of which might reasonably be of
commercial interest to the Licensor in the operation of the
Processes and which may be made or acquired (with free rights
of disposal) by either party during the term of this
agreement.


"MANUFACTURING TERRITORY" has the meaning ascribed to it in
Schedule 1.


"MINIMUM ROYALTIES" means the minimum payment for each
Agreement Year as specified in Part 2 of Schedule 3.


"NON-EXCLUSIVE TERM" has the meaning ascribed to it in
Schedule 1.


"PATENT(S)" means the Sealing Patents and the Anode and
Cathode Patents and the Display Drive and Control Circuit
Patents.


"PROCESSES" has the meaning ascribed to it in Schedule 1.


"PRODUCTS" has the meaning ascribed to it in Schedule 1.


"PROPRIETARY COMPONENTS" means both (i) Proprietary Anodes and
Cathodes and (ii) Proprietary Integrated Circuits, which are
the subject of the Display Drive and Control Circuit Patents.


"PROPRIETARY ANODES AND CATHODES" means anodes and cathodes
which are the subject of the Anode and Cathode Patents.


"PROPRIETARY INTEGRATED CIRCUITS" means integrated circuits
which are the subject of the Display Drive and Control Circuit
Patents.


"ROYALTY" means all amounts payable by the Licensee or any
sub-licensee as detailed in Schedule 4.


"SALES TERRITORY" has the meaning ascribed to it in Schedule
1.


"SEALING MACHINES" has the meaning ascribed to it in Schedule
1.


"SEALING PATENTS" has the meaning ascribed to it in Schedule
1.


"TARGET" has the meaning ascribed to it in Schedule 1.


"THE TERM" has the meaning ascribed to it in Schedule 1.


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1.2 Any reference to a Capitalised term which is not defined above
in this Agreement is a reference to a term defined in the
Exclusive Project Agreement.


1.3 Words in the singular include the plural and vice versa and
words in one gender include any other gender;


1.4 Any reference to a statute, statutory provision or
sub-ordinate legislation includes such legislation as amended
and in force from time to time and any legislation which
modifies, consolidates (with or without modification),
re-enacts or supersedes it except to the extent that it would
impose any new or extended obligation, liability or
restriction on, or would otherwise adversely affect the rights
of, any party to this agreement;


1.5 A reference to clauses and schedules are to clauses and
schedules of this agreement and references to sub-clauses and
paragraphs are references to sub-clauses and paragraphs of the
clause or schedule in which they appear;


1.6 The table of contents and headings are for convenience only
and shall not affect the interpretation of this agreement;


2. GRANT


2.1 The Licensor grants to the Licensee subject as provided below:


2.1.1 under the Sealing Patents, the exclusive, during the
Exclusive Term and non-exclusive thereafter during
the Non-Exclusive Term, right and licence in the
Manufacturing Territory to manufacture Products for
use in the Field of Use by sealing together anodes
and cathodes by means of Process I, together with the
right in the Sales Territory to sell the Products for
use in the Field of Use, but not including any right
to manufacture sealing machines the subject of the
Sealing Patents


2.1.2 under the Anode and Cathode Patents, the exclusive,
during the Exclusive Term, and non-exclusive
thereafter during the Non-Exclusive Term, right and
licence in the Manufacturing Territory to manufacture
Products for use in the Field of Use by sealing
together Proprietary Anodes and Cathodes by means of
Process II to make display devices protected by the
Anode and


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Cathode Patents, together with the right in the Sales
Territory to sell the Products incorporating the
Proprietary Anodes and Cathodes for use in the Field
of Use, but not including any right to manufacture
the Proprietary Anodes and Cathodes;


2.1.3 under the Display Drive and Control Circuit Patents,
the exclusive, during the Exclusive Term, and
non-exclusive thereafter during the Non-Exclusive
Term, right and licence in the Manufacturing
Territory to manufacture Products for use in the
Field of Use by assembly of Proprietary Integrated
Circuits and non-proprietary integrated circuits onto
the cathodes of the Products manufactured under
clauses 2.1.1 and 2.1.2 by means of Process III to
make display devices protected by the Display Drive
and Control Circuit Patents, together with the right
in the Sales Territory to sell the Products having
such integrated circuits attached for use in the
Field of Use, but not including any right to program
or otherwise produce the Proprietary Integrated
Circuits,


which rights in this Clause 2.1 must be exercised jointly and
not individually.


2.2 Licensor further grants to Licensee, subject to Licensee's
performance of its obligations hereunder, a non-transferable,
indivisible and exclusive, during the Exclusive Term and
non-exclusive during the Non-Exclusive Term, right and
license, without the right to sublicense, to use the Trade
Marks set forth in Schedule 3 in connection with the
manufacture of Products in the Manufacturing Territory for use
in the Field of Use and the sale of such Products in the Sales
Territory for use in the Field of Use.


2.3 In consideration of the Licence granted above, the Licensee
agrees not to manufacture, use or sell any Products or
articles outside the Field of Use.


2.4 The Licensor reserves the right to terminate the exclusivity
of this Licence if the Licensee competes within the
Manufacturing Territory with the Licensor or any undertakings
connected with the Licensor or with other undertakings in
respect of research and development, production, use or
distribution of products competing with the Processes or the
Products and further the Licensor reserves the right to
require, at any time, that the Licensee prove to the
satisfaction of the Licensor that


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none of the Patents is being used by the Licensee, or on its
behalf, for the production of any products (or the provision
of any services), other than the Products. Licensor and
Licensee mutually agree that the restrictions contained at the
end of Clause 2.1, and in Clause 2.3 and this Clause 2.4, are
reasonable, non-burdensome, and necessary for the proper
implementation of the Licence granted herein, and in order to
protect Licensor's business and its competitive position in
the marketplace. The covenants and agreements contained in
this Clause 2 shall each be construed and deemed to consist of
a series of separate covenants, one for each type of product
and for each region included within the geographic area
described above. If a court or arbitrator decides that any
provision or restriction in this Clause 2 is unreasonable or
unenforceable, the parties agree that the court or arbitrator
has the power to delete words and modify this Clause 2 in a
manner that comes closest to the intent of the parties as
expressed herein while rendering this Agreement as modified
valid and enforceable. If a court or arbitrator refuses to
enforce all of these separate covenants included herein,
Licensor and Licensee agree that certain covenants, which if
eliminated would permit the remaining covenants to be
enforced, will be deemed eliminated from this Clause 2 for
purposes of that enforcement.


2.5 In the event the Display Drive and Control Circuit Patents do
not issue in the United States Patent Office, then the parties
agree that the requirement to jointly exercise the Display
Drive and Control Circuit Patents together with the Sealing
Patents and the Anode and Cathode Patents as set forth in
Clause 2.1 shall no longer apply and shall be severable from
the other provisions herein, and the grant under Clause 2.1.3
shall be of no further force or effect. In such event, the
Royalties required to be paid by Licensee to Licensor pursuant
to Schedule 4 shall be reduced by ten percent (10%). [For
example, for the first 500,000 Products produced in any
Agreement Year, the Royalty shall be $8.71 per Product instead
of $9.68 per Product.] In the event the Display Drive and
Control Circuit Patents do not issue in the United States
Patent Office, Licensee shall still be required under Clause
2.1 to jointly exercise the rights and Licence under the
Sealing Patents and the Anode and Cathode Patents.


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3. OBLIGATIONS OF THE LICENSEE


3.1 The Licensee shall use its best endeavours to exploit the
Processes and increase the production and sales of the
Products within the Sales Territory subject to the terms of
this agreement.


3.2 The Licensee shall ensure that the Products comply with the
requirements and standards set by national and public
authorities wherever the Licensee intends to sell the Products
and shall provide the Licensor with copies of all
communications to and from regulatory authorities relating to
the Products.


3.3 The Licensee shall ensure that all Products supplied by the
Licensee are manufactured to the highest standards of quality
and workmanship. The Licensee shall upon reasonable notice
from the Licensor give the Licensor or its authorised
representative free access at any reasonable time to any place
where the manufacture of the Products by the Licensee and
every permitted sub-licensee shall be carried on for the
purpose of ensuring that the Licensee, and any permitted
sub-licensee, is observing these obligations.


3.4 If the Licensee develops or designs during the term of this
Agreement further products within the Field of Use it shall
immediately by notice in writing to the Licensor give full
details of the nature and specification of such products. If
the Licensee wishes to manufacture such new products, provided
that the Licensor is satisfied that these Products fall within
the Field of Use they will be added as Products by written
amendment.


3.5 Following the commencement of production of the Products, the
Licensee shall achieve the Target in each Agreement Year.


3.6 The Licensee shall ensure that all literature and packaging
prepared by the Licensee and relating to the Products includes
a reference to relevant patent pending or patent numbers and
states that such Products are made under licence from the
Licensor.


3.7 The Licensee shall be required to include or apply the Trade
Marks set forth in Schedule 3 on all Products and their
packaging produced under this Agreement and under the
Exclusive Project Agreement. Such required use of the Trade
Marks shall include, without limitation, the prominent display
of the Trade Marks on the boot-up


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screen or introductory screen displayed on the Products during
their use. The parties agree that the size, placement, order
of appearance or display, and other manner of use of the Trade
Marks by Licensee must be pursuant to the requirements and
instructions communicated to Licensee from time to time by
Licensor. In order to maintain and enhance the goodwill
associated with the Trade Marks, Licensee agrees that Licensor
must approve all uses of the Trade Marks on the Products and
their packaging and on any sales or promotional materials
before they are sold or distributed by Licensee. Title to the
Trade Marks shall always remain with Licensor. Licensee shall
not acquire any right or interest in the Trade Marks except
the limited right to use the same pursuant to this Agreement.
Licensee agrees that Licensee's use of the Trade Marks shall
inure to Licensor's exclusive benefit. Licensee agrees that it
will never use the Trade Marks or any similar names or marks
in connection with the manufacture, marketing, sale or
distribution of any products or services except for the
Products for use in the Field of Use. Licensee shall not use
any trade name, corporate or business name identical with or
confusingly similar to the Trade Marks. Licensee further
agrees that it shall not have the right to modify any of the
Trade Marks without Licensor's prior written consent. In
addition, Licensee agrees that it will not challenge or
otherwise contest the validity, ownership or enforceability of
the Trade Marks or of any current or subsequent applications
or registrations of the Trade Marks or any variations thereof
filed by Licensor or its affiliates, and Licensee further
agrees not to directly or indirectly apply for or attempt to
register for itself or others any of the Trade Marks or any
similar names or marks anywhere in the Sales Territory.


3.8 The Licensee shall provide such advertising and publicity as
may reasonably be expected to bring the Products to the
attention of as many purchasers and potential purchasers as
possible. All such advertising shall be in accordance with the
law of the relevant country and shall be submitted to the
Licensor for its written approval before publication.


3.9 The Licensee shall be exclusively responsible for the
technical and commercial operation of the Processes that might
be necessary or desirable for all Products sold or supplied by
the Licensee and accordingly the Licensee shall indemnify the
Licensor in respect of all costs damages and expenses incurred
as a result of any claims by third parties in tort or
otherwise against the Licensor arising in any way


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out of the use of any of the Patent(s) and/or sale or use of
the Products by the Licensee.


3.10 Upon commencement of manufacturing the Products, the Licensee
shall take out and maintain public liability, Products
liability and other insurance in connection with the Products
and their sale to and use by third parties anywhere in the
Sales Territory, and ensure that at all times it complies with
all the terms and conditions of such policies of insurance.
Such insurance will provide coverage for not less than
$5,000,000 (US dollars) per occurrence for personal injury or
property damages.


3.11 The Licensee shall promptly inform the Licensor in writing of
the addresses of all location(s) at which the Processes are
being used by or on behalf of the Licensee, and of any changes
or additions.


3.12 If Licensee purchases all of its requirements for Proprietary
Integrated Circuits from Licensor or its nominated suppliers
as required under the Exclusive Project Agreement, then the
parties agree that the Royalties payable by Licensee to
...