License Agreement Dated January 3, 2003

LICENSE AGREEMENT EXECUTION COPY


THIS AGREEMENT, made effective as of the 3rd day of January, 2003, is by and between APJeT, INC. a corporation of the State of Delaware, having an office and place of business at 491 Bryce Ave, Suite 200, Los Alamos, NM 87544 ("APJeT"), and ADVANCED ENERGY INDUSTRIES, INC. a corporation of the State of Delaware, having an office and place of business at 1625 Sharp Point Dr., Fort Collins, CO 80525 ("AE"); APJeT and AE being sometimes referred to collectively as "the Parties" and individually as a "Party" to the Agreement:


WITNESSETH:


WHEREAS, APJeT owns an Exclusive License from the University of California, License Agreement No. 00-41-00911, with the right to sublicense United States Patents and Patent Applications defined in Appendix A, which relates to Atmospheric Pressure Plasma Jet Technology; and


WHEREAS, AE wishes to obtain, and APJeT is willing to grant, an exclusive license under said Licensed Patents, and under Licensed Patent Applications (as hereinafter further defined) in the Licensed Territory and Licensed Field of Use (as also hereinafter defined);


NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:


SECTION 1- DEFINITIONS


As used in this Agreement, the following terms shall be deemed to have the following meanings:


1.1. "Licensed Patent Applications" shall mean (a) United States Patent Applications defined in Appendix A (b) any and all continuations, divisions, and continuations-in-part of such Application, whether related to such Application directly or through one or more intervening applications; (c) any foreign application for patent or utility model claiming priority in whole or in part from any of the applications identified in subparagraphs (a) and (b) above; and (d) any and all continuations, divisions, and continuations-in-part of any of the applications identified in subparagraph (c) above, whether related to such applications directly or through one or more intervening applications.


1.2. "Licensed Patents" shall mean the United States Patents defined in Appendix A and all corresponding Foreign Applications and Foreign Patents (a) any and all patents and utility models issuing on or registered from any of the Licensed Patent Applications; and (b) any and all reexaminations, reissues, additions, or extensions of any of the patents or utility models identified in subparagraph (a) above.


1.3 "Patent Rights" shall mean the rights arising from the U.S. or Foreign patents or applications, including any continuing applications, divisionals, and reissues thereof; and the patents issuing on applications, identified in Appendix A of the University of California License Agreement No. 00-41-00911, incorporated herein by reference


1.4. "Licensed Product", singular or plural, shall mean any Atmospheric Pressure Plasma Jet Technology wherein the manufacture, use, offer for sale, sale or importation of Atmospheric Pressure Plasma Jet Technology by AE would, but for the rights and license granted herein, constitute an infringement of a valid and enforceable claim of a subsisting Licensed Patent and shall not include AE standard power delivery equipment (i.e., stand alone AE power supplies and match networks) but includes power generation and delivery equipment which is designed specifically as an integral and indivisible part of the Atmospheric Pressure Plasma Jet Technology.


1.5 "Licensed Method" shall mean any method, procedure or process whose use, but for the license granted to AE, would constitute an infringement of a subsisting claim of a patent or patent application identified in Appendix A.


1.6 "Sales" shall mean disposing of a Licensed Product by sale, lease, or other transaction for consideration or practicing a Licensed Method. Sales occur when the licensee, affiliate or sublicensee of the AE receives consideration for the disposition of the Licensed Product or practice of Licensed Method, when Licensed Product is paid for or delivered to a third person, whichever occurs first. Notwithstanding the above, a sale shall be considered to be made within ninety (90) days of delivery to a third person.


1.7. "Net Sales" shall mean the gross amounts for sales at sales price by AE and its sub licensees, less the following deductions where applicable: (a) Sales returns; (b) normal and customary allowances; (c) trade discounts; (d) royalty discounts for sales to the U.S. Government calculated by the amount of royalties that APJET would normally have had to pay for non-U.S. Government sales; and (e) transportation charges, duties and tariffs and foreign government or registration reporting, permitting or approval fees and costs, only if separately stated on an invoice or other statement of account or occurrence; but before the deduction of sales and excise taxes, cost of insurance, and agents' commissions.


1.8. An "Affiliate" of a Party shall mean a corporation or other entity controlled by, controlling, or under common control with APJeT or AE. For the purpose of this Agreement, "control" or "controlling" mean (a) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting stock or analogous interest in such corporation or other entity; or (b) the existence of any other relationship between APJeT or AE and such other corporation or entity which results in effective managerial control by one over the other, regardless of whether such control is continuously exercised.


1.9. "Licensed Territory" shall mean the countries and jurisdictions, including the United States of America and its territories and possessions, in which APJeT now or in the future holds a valid and enforceable subsisting Licensed Patent.


1.10 "Licensed Field of Use shall mean all fields in which AE can demonstrate that it is one of the top three leading vendors in market share in each of such fields, as demonstrated by dollar volume of sales in the preceding year, including but not limited to Semiconductor Processing, Data Storage (including but not limited to magnetic and optical), Flat Panel and Electronic Displays, and Architectural Glass, and in any other field mutually agreed upon by AE and APJeT as contemplated in Section 4.1.


1.11. "Effective Date" shall mean the date first written above.


1.12. "UC License" shall mean the Exclusive License APJeT has from the University of California, License Agreement No. 00-41-00911, with the right to sublicense United States Patents and Patent Applications defined in Appendix A, which relates to Atmospheric Pressure Plasma Jet Technology.


1.13 "Deposition Precursor Technology" means compositions of matter which may be deposited onto substrates using Deposition Plasma Jet Technology.


1.14 "Deposition Process Technology" means processes for depositing compositions of matter, including Deposition Precursor Technology, onto substrates using Deposition Plasma Jet Technology.


1.15 "Deposition Plasma Jet Technology" means apparatus operated at substantially atmospheric pressure capable of depositing compositions of matter, including Deposition Precursor Technology, onto substrates.


SECTION 2 - GRANT OF LICENSE


2.1. Except as set forth in 2.6 below, and in accordance with and subject to the terms of the UC License, APJeT hereby grants to AE and its Affiliates, and AE hereby accepts, a sole and exclusive, worldwide, royalty-bearing right and license under the Licensed Patent Applications and the Licensed Patents (with the right to grant sublicenses, as limited below in section 2.5) to make, have made, use, sell, offer for sale, lease and otherwise dispose of Licensed Products in the Licensed Territory in the Licensed Field of Use. AE accepts the terms and conditions required for sublicensees as outlined in the UC License.


2.2 AE hereby grants to APJeT and its Affiliates, and APJeT hereby accepts a paid-up, royalty-free nonexclusive license in the Licensed Field of Use to make, use, and sell, for experimental purposes only, prototype quantities under the Licensed Patents and Licensed Patent Applications, any improvements or other developments whether or not patentable, or patented in the Licensed Product. AE will disclose all improvements or other developments under an executed Confidentiality/Non-Disclosure Agreement.


2.3 The U.S government has a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced throughout the world, for or on behalf of the U.S. Government, inventions covered by the Patent Rights.


2.4 Under 35 U.S.C. 203 the U.S. Department of Energy has the right to require the Licensee to grant a nonexclusive, partially exclusive or exclusive license under the Patent Rights in any Field of Use to a responsible applicant or applicants in accordance with 48 CFR 27.304-1(g).


2.5. APJeT hereby grants to AE and its Affiliates, and AE hereby accepts, the right to grant sublicenses to others, contingent upon written approval from APJeT, and also contingent upon acceptance by the prospective sublicensee of all the terms and conditions required of sublicensees in the UC License.


2.6 The license granted to AE under 2.1 does not include (i) any right or license under the Licensed Patent Applications and/or the Licensed Patents to use Deposition Process Technology, any right to grant sublicenses to use Deposition Process Technology, or any right to sue third-parties for infringement of the Licensed Patent Applications and/or the Licensed Patents to the extent that such infringement arises from use of Deposition Process Technology by a third-party, or (ii) any right or license under the Licensed Patent Applications and/or the Licensed Patents to make, have made, sell, use, or import Deposition Precursor Technology, any right to grant sublicenses to make, have made, sell, use, or import Deposition Precursor Technology, or any right to sue third-parties for infringement of the Licensed Patent Applications and/or the


Licensed Patents to the extent that such infringement arises from the making, selling, use, or importing of Deposition Precursor Technology by a third-party. AE hereby acknowledges that APJET has exclusively licensed to Air Products and Chemicals, Inc. ("Air Products") (and not AE): (i) all rights under the Licensed Patent Applications and/or the Licensed Patents to use Deposition Process Technology, including all rights to grant sublicenses to use Deposition Process Technology, and (ii) all rights under the Licensed Patent Applications and/or the Licensed Patents to make, have made, sell, use, or import Deposition Precursor Technology, including all rights to grant sublicenses to make, have made, sell, use, or import Deposition Precursor Technology.


ARTICLE 3 - IMPROVEMENTS


3.1. Under an executed Confidentiality/Non-Disclosure Agreement, APJeT agrees to keep AE regularly and fully informed about designs, applications, and other developments relating to the Licensed Field of Use and the Licensed Product which become available and which APJeT is not legally prevented from communicating to AE.


If APJeT, independently develops improvements in the Licensed Field of Use or to the Licensed Products under this Agreement, whether or not patentable, or patented, APJeT agrees to grant AE a license with no additional royalties beyond those provided in Section 5.2, for AE to make, have made, use, and sell any such improvements to the Licensed Product(s) in the Licensed Field of Use. Notwithstanding anything herein to the contrary, APJeT shall have no obligation to grant AE a license to any Foreground Technical Information or Foreground Patent Rights owned by Air Products pursuant to Section 5.2 of the Collaboration Agreement Between APJeT, Inc., and Air Products Chemicals, Inc., effective December 16, 2002 (the "Collaboration Agreement.") For purposes of this section 3.1, the terms "Foreground Technical Information" and "Foreground Patent Rights" shall have the meanings ascribed to such terms in the Collaboration Agreement.


ARTICLE 4 - MANUFACTURING AGREEMENT


4.1. AE shall be the preferred supplier in the Licensed Field of Use. AE may from time to time submit a proposal to APJet for a specific application outside of the Licensed Field of Use. Other parties may also submit proposals to APJet for specific applications outside of the Licensed Field of Use. In the event there an overlap between two proposals or if APJet receives a proposal only from a third party, AE will be given a single opportunity to supply an equal or better business proposal to APJeT, however the terms of the third party's proposal to APJet will not be released to AE. Such proposal by AE to APJet in response to a proposal by a third party must include sufficient detail to allow APJet to determine whether the proposal submitted by AE presents an equal or better business ...