Cost Reimbursement Research Project Agreement

Exhibit 10.7


GEORGIA TECH APPLIED RESEARCH CORPORATION
Cost Reimbursement Research Project Agreement
Research Proposal No. 01,205,072,04,96874


Research Project No.


THIS AGREEMENT is made by and between GEORGIA TECH APPLIED RESEARCH CORPORATION, a Georgia corporation, having principal offices at Research Administration Building, Georgia Institute of Technology, Atlanta, Georgia, 30332-0420 (hereinafter known as "GTARC") and FLIGHT SAFETY TECHNOLOGIES, INC. having a business address of 63 Mountain Green Circle, Candlewood, Quail Meadows Estate, Windsor Mill, MD 21244-2602 (hereinafter known as "FST").


In consideration of the mutual premises and covenants herein contained and intending to be legally bound, the parties hereto agree as follows:


Section 1. Definitions .

1.1 "Research Project" shall refer to the performance of the scope of work set forth in GTARC's Research Proposal entitled "UNICORN Antenna Evaluations and Modeling" dated August 12, 2003. The aforesaid scope of work is incorporated herein by reference as if set forth in full text as Attachment A.


1.2 "Staff Member" shall mean employees, independent contractors, subcontractors, consultants and student assistants of the Georgia Institute of Technology (hereinafter "GIT"), a unit of the University System of Georgia, who shall perform the Research Project.


1.3 "GTARC" is a wholly controlled non-profit subsidiary of the Georgia Tech Research Corporation ("GTRC"). GTARC and GTRC are tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended ("Code") and are supporting organizations of the GIT under Section 509(a)(3) of the Code. GTARC was formed for the purpose of entering into sponsored research agreements for Georgia Tech Research Institute (GTRI). GTRC owns and administers intellectual property developed at GIT/GTRI. GTARC may enter into contractual agreements regarding intellectual property owned by GTRC that are in accordance with GIT policy.


1.4 "Intellectual Property" means any intellectual property, including, without limitation, any ideas, inventions, know-how, design rights, analysis techniques, discoveries and modifications and improvements to any of the foregoing including all computer software, works, material and data, whether or not protectable by patent, trade secret or copyright.


1.5 "Background Intellectual Property" means all GTARC and FST Intellectual Property, including but not limited to inventions, designs, patents, trademarks, copyrights, computer software, analysis techniques and trade secrets conceived and/or first reduced to practice either prior to or outside the scope of this agreement and subsequent modifications and improvements thereto.


1.6 "Joint Intellectual Property" means any Intellectual Property that is jointly developed by at least one or more employees, agents or consultants of both GTARC and FST. A joint invention requires an inventive contribution to the conception or reduction to practice of the invention by each inventor (not merely an implementation, modification or improvement to or of the suggestion or instructions of the inventor); and can be made even though the inventors did not physically work together or at the same time, did not each make the same or amount of contribution, or did not each make a contribution to the subject matter of every claim of any patent covering the invention.


1.7 "Proprietary Information" means any technical data or information that is disclosed to GTARC by FST or by FST to GTARC pursuant to the execution of this Research Project, and under the terms and conditions of a Proprietary Information Agreement dated March 12, 2003.

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Section 2. Term .

2.1 GTARC shall undertake the Research Project during the term of this Agreement which shall commence upon September 1, 2003, and shall continue for a period of nine (9) months unless sooner terminated or extended in accordance with the terms hereof.


Section 3. Compensation and Expenses; Contract Cost Limitation .

3.1 FST agrees to reimburse GTARC for the actual direct and indirect costs incurred by GTARC in the performance of the Research Project.


3.2 GTARC reserves the right to modify its direct and indirect rates effective July 1, each year.


3.3 GTARC will render its invoices as indicated in 3.4 below. FST agrees to pay each invoice within thirty days of the invoice date. Any invoice not paid within thirty days of the invoice date will be considered delinquent and subject to a one-and-a-half percent (1.5%) per month fee for each month or fraction thereof, until the payment is received.


BILLING ADDRESS:


ATTN:
PHONE NO.

Flight Safety Technologies, Inc
1 Spar Yard
New London, Connecticut 06320
David Cryer
860-443-7768


3.4 FST agrees to pay the sum of Ninety-five Thousand, One Hundred Twenty-two Dollars and Fifty-eight Cents ($95,122.58) ("Contract Cost Limitation") for the Research Project which includes Option 1 in the amount of Fifty-six Thousand, Three Hundred Eighty-one Dollars and Thirty-three Cents ($56,381.33); plus Sub-Option 3 of Option 2 in the amount of Thirty-One Thousand, Six Hundred Thirty-three Dollars and Ninety-eight Cents ($31,633.98); and Sub-Option 4 of Option 2 in the amount of Seven Thousand, One Hundred Seven Dollars and Twenty-seven Cents ($7,107.27). GTARC will not invoice FST in excess of Contract Cost Limitation without first obtaining the approval of FST. FST shall make two payments. The first payment of Forty-seven Thousand, Five Hundred Sixty-one Dollars and Twenty-nine Cents ($47,561.29) will be due upon contract execution. The second payment of Forty-seven Thousand, Five Hundred Sixty-one Dollars and Twenty-nine Cents ($47,561.29) will be due within one hundred twenty (120) days of execution. Any unused funds will be returned to FST. Payments are to be made to:


Georgia Tech Applied Research Corporation,
P.O. Box 277004,
Atlanta, GA 30384-7004.


3.5 GTARC reserves the right to discontinue the Research Project if FST fails to pay any GTARC invoice within the time herein specified. GTARC shall not be obligated to incur costs in excess of the Contract Cost Limitation.


Section 4. Reports .

4.1 GTARC agrees to render to FST Monthly Status Reports and a Final Report summarizing the results of the Research Project.


Section 5. Publicity .

5.1 Each party agrees not to authorize or commission the publication of any promotional materials containing any reference to the other party without the prior written approval of the other party; provided, GTARC and GIT may include FST's name and Research Project title in published listings of research sponsors and FST may include GTARC and GIT's name and the purpose of this Research Project in its public filings with the Securities and Exchange Commission. The provisions of this Section 5 shall survive termination of this Agreement.


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Section 6. Publication .

6.1 GTARC and GIT may catalog and place reports of the Research Project in the GIT Library. Further, GTARC and GIT may issue publications based on the Research Project and use the research results in their research and education programs.


6.2 FST recognizes that the results of the Research Project must be publishable and agrees that Staff Members engaged in the Research Project shall be permitted to present at symposium, national, or regional professional meetings, and to publish in journals, thesis or ...