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A.

Thorium Power has conceived, developed and has a proprietary interest in certain thorium-based fuel technology that is compatible with existing uranium-fueled Light Water Reactors (“LWR”) while retaining significant advantages in lower fuel cycle costs and ease in waste disposal and which can have a positive effect in the field of non-proliferation of nuclear weapons while allowing the continuation of the development of commercial nuclear energy in the world;

B.

Thorium Power has conceived, developed and has a proprietary interest in certain thorium-based fuel technology that will allow for the effective and safe disposition of separated reactor-grade plutonium (civilian or spent fuel-derived plutonium) in existing or new nuclear power reactors. It can also be used to effectively dispose of excess weapons-grade plutonium;

C.	Kurchatov Institute has extensive experience with the research, testing and evaluation involving nuclear fuel and nuclear reactor facilities and systems, including systems for the use, storage and disposition of nuclear fuel;

D.

Thorium Power and Kurchatov Institute have been cooperating pursuant to (i) Protocol, dated October 20, 1994, (ii) Cooperative Research and Development Agreements CRADA No. BNL-C-96-02, CRADA No. BNL-C-98-15 and CRADA No. BNL-C-01-6 (the “CRADAs”); and (iii) a Collaborative Research Agreement, dated August 6, 2002 (the “2002 Agreement”);

E.

Kurchatov Institute also conducted technical and economic investigation of Thorium Power’s fuel technology relating to disposition of excess weapons-grade plutonium pursuant to an agreement with UT-Battelle, LLC acting under its contract with the DOE of the Management & Operation of the Oak Ridge National Laboratory (Work Release K1WR18BSC under General Order Agreement 85B99398V) (the “Oak Ridge Agreement”);

F.	Thorium Power financed ampoule irradiation testing of Thorium Power designed uranium-zirconium and thorium-uranium fuel samples in the IR-8 research reactor at Kurchatov Institute from 2002 to 2005 under the 2002 Agreement;

G.

In 2006 and 2007, at its own expense, Kurchatov Institute continued conducting irradiation testing of one ampoule device with uranium-zirconium seed fuel samples and two ampoule devices with thorium-uranium blanket fuel samples in the IR-8 research reactor (the “2006-2007 Irradiation Testing Program”). The description of the 2006-2007 Irradiation Testing Program is provided in Exhibit 1 attached hereto;

H.	Thorium Power desires to compensate Kurchatov Institute for the irradiation testing activities in the 2006-2007 Irradiation Testing Program and to acquire all of the corresponding test data and other technical data generated in the program.

 

1.	TRANSFER OF IRRADIATION TESTING DATA; ASSIGNMENT OF TECHNICAL DATA

 

1.1.

Consideration. In consideration of $410,000.00 (Four Hundred Ten Thousand US Dollars), Kurchatov Institute hereby transfers all of the test data generated in the course of the 2006-2007 Irradiation Testing Program and assigns all the Technical Data associated with the 2006-2007 Irradiation Testing Program (as defined in Article 1.3 herein) to Thorium Power and provides access to Thorium Power and its affiliates to the information and documentation specified in Exhibit 4 of this Agreement for audit purposes. The entire amount of consideration is due and payable to Kurchatov Institute within thirty (30) business days from the date of transfer by Kurchatov Institute to Thorium Power of all of the Technical Data as contemplated hereunder and Kurchatov Institute has complied with other provisions set forth in this Agreement, including submission to Thorium Power of copies of approvals and permits specified in Article 3 of this Agreement. The payment to Kurchatov Institute shall be sent by wire transfer pursuant to the following wire transfer instructions:

 

1.2.

Assignment by Kurchatov Institute. Kurchatov Institute hereby sells, assigns, conveys and transfers to Thorium Power (as well as its successors and assigns) the entire worldwide right, title and interest in and to the Technical Data. Kurchatov Institute hereby expressly agrees not to use, in any manner, the work product hereunder or exercise any rights associated therewith without the express written approval by Thorium Power.

 

 

1.3.

Definition of Technical Data. For purposes of this Agreement, “Technical Data” means any and all technical data, specified in Exhibit 2 hereto.

 

1.4.

Covenants. Kurchatov Institute hereby covenants and agrees as follows:

 

A.

As a result of the Technical Data rights assignment herunder, (i) Thorium Power is the sole owner of the entire right, title and interest in and to the Technical Data; and (ii) without limitation, the Technical Data rights will be held and enjoyed by Thorium Power no less fully and exclusively as they would have been by Kurchatov Institute had such assignment and transfer not been made;

 

B.

The assignment and licensing of the respective Technical Data rights by Kurchatov Institute shall be performed to the extent not prohibited by the Russian Law in a form required under the applicable law without payment of any additional consideration. The same rule shall apply to early termination or further prolongation of the licenses. The term of each license with respect to any of the Technical Data rights shall be subject to limitations as established by the applicable law;

 

C.

Kurchatov Institute has not and will not enter into an agreement with a third party that conflicts with this Agreement. To the extent that any subsequent agreement between Kurchatov Institute and a third party conflicts with the assignment of the Technical Data rights, Kurchatov Institute agrees that the terms of this Agreement will supersede the terms of such agreement;

 

D.	Any facts, circumstances or notices regarding any of the Technical Data rights shall be promptly communicated and delivered to Thorium Power; and

 

E.

Kurchatov Institute shall assist Thorium Power to the best of its ability in the protection of Thorium Power’s Technical Data rights. For that purpose, Kurchatov Institute shall testify in any legal proceedings, sign all papers, execute all applications, divisionals, continuations, continuations-in-part, reissues, renewals, extensions and additions thereof and counterparts thereto, make all rightful oaths and generally aid Thorium Power (as well as its successors and assigns), with expenses reasonably incurred to be borne by Thorium Power (except those expenses which relate in any way to any breach of this assignment, which expenses shall be borne by Kurchatov Institute), in obtaining and enforcing proper protection and access (in the reasonable discretion of Thorium Power) for and to the Technical Data rights.

 

1.5.

Request. Kurchatov Institute does hereby authorize and request that any and all Technical Data rights which may be granted upon the Technical Data be issued to Thorium Power as assignee of the entire interest therein. The assignment of the respective Technical Data rights by the respective right-holder shall be performed to the extent not prohibited by the Russian Law, in a form required by Russian Law, without payment of any additional consideration to Kurchatov Institute.

 

1.6.

Notice and Assistance Regarding Patent and Copyright Infringement. Kurchatov Institute shall report to Thorium Power promptly and in reasonable written detail, each notice or claim of patent or copyright infringement, or any other infringement related to Technical Data rights and (or) intellectual property rights based on the performance of this Agreement of which Kurchatov Institute has knowledge and shall furnish to Thorium Power, at the expense of Thorium Power, when requested by Thorium Power, all evidence and information in possession of Kurchatov Institute pertaining to such claim or any resulting suit.

 

2.	CONFIDENTIALITY AND COMMERCIAL SECRET

 

2.1.

Obligation of Confidentiality and Non-Use. Kurchatov Institute acknowledges and agrees that it owes a duty to Thorium Power to maintain in strict confidence all Confidential Information and Commercial Secret Information (as defined below) provided to, learned or developed by Kurchatov Institute in connection with the performance of the 2006-2007 Irradiation Testing Program either by Kurchatov Institute or its subcontractors. Kurchatov Institute shall take all steps reasonably necessary to prevent the unauthorized disclosure or dissemination of such Confidential Information or Commercial Secret Information for any reason and to any person or entity, except with the prior written consent of Thorium Power. In addition, Kurchatov Institute shall not use or copy any such Confidential Information or Commercial Secret Information, or authorize or permit others to use any such Confidential Information or Commercial Secret Information, for any purposes other than in connection with performance of the Services hereunder. Notwithstanding the foregoing, Kurchatov Institute may disclose such Confidential Information or Commercial Secret Information to those officers, employees, advisors and consultants of Kurchatov Institute (each, a “Representative,” and collectively, “Representatives”) who have a need to know such information in connection with performance of services under this Agreement; provided that each Representative, prior to such disclosure, is informed by Kurchatov Institute of the confidential nature of such information and of the confidentiality obligations imposed on Kurchatov Institute under this Agreement, and signs a written undertaking confirming his or its agreement to treat it confidentially. Kurchatov Institute shall be responsible for any and all breaches of the provisions of this Article 2 (Confidentiality and Commercial Secret) by its Representatives. The Parties acknowledge that Kurchatov Institute intends to engage [REDACTED] as Thorium Power’s representative to download and process the test data generated during the performance of the 2006-2007 Irradiation Testing Program. As used herein, “steps reasonably necessary” means, at a minimum, the steps that Kurchatov Institute takes to protect its own, similarly confidential or proprietary information, which steps shall not be less than a reasonable standard of care, and in the case of Commercial Secret Information shall include maintaining an up to date list of the Commercial Secret Information (the “List”), establishing a procedure for handling of such information and controlling compliance therewith, marking or labeling such information with the words ‘Commercial Secret’ and the name of Thorium Power and its location, and requiring conclusion of a confidentiality agreement in the form of Exhibit 3 by any person who shall have or is likely to have access to such information. At the discretion of Thorium Power, all or any part of the Confidential Information may become subject to a requirement that it be classified and protected as ‘Commercial Secret Information’ information within the meaning of Russian law.

 

2.2

Obligation to Inform. Upon learning of any actual or threatened unauthorized disclosure or use of the Thorium Power’s Confidential Information or Commercial Secret Information by it or a third party, Kurchatov Institute promptly shall provide Thorium Power with notice thereof.

 

2.3

Definition of Confidential Information and Commercial Secret Information. The term “Confidential Information” shall mean this Agreement and all trade secrets, data, know-how, technical data or other information and materials, business strategies, plans and procedures, business information, proprietary information, of Thorium Power, as well as any other information and materials that are deemed confidential or proprietary to or by Thorium Power (including, without limitation, all information and materials of Thorium Power’s customers and their other consultants). The term ‘Commercial Secret Information’ shall have the meaning established under Russian law. Protocols of irradiation testing shall be deemed to be Commercial Secret Information and shall be treated as such. At the same time, Commercial Secret Information excludes the following three documents relating to the 2006-2007 Irradiation Testing Program that were issued prior to the Effective Date of this Agreement and were not marked as Commercial Secret Information: (a) Safety analysis, (2) Technical solutions, and (3) Procedures for performing irradiation testing. The above three documents are deemed to be Confidential Information. Kurchatov Institute shall provide to Thorium Power copies of the above three documents simultaneously with the Technical Data specified in Exhibit 4.

 

2.4

Exceptions to Confidential Information. Notwithstanding the foregoing paragraph, “Confidential Information” shall not include any information or materials that: (a) are or become known to the general public through no act or omission of Kurchatov Institute or any other person with an obligation of confidentiality to Thorium Power or any of Thorium’s customers, or (b) are required to be disclosed pursuant to applicable law (provided, however, that prior to any disclosure of Confidential Information as required by applicable law, Kurchatov Institute shall advise Thorium Power of such required disclosure promptly upon learning thereof and shall cooperate with Thorium Power and Thorium Power’s customers in order to afford them a reasonable opportunity to contest or limit such disclosure).

 

2.5

Return or Destruction of Confidential Information. Upon the termination or expiration of this Agreement, or at any other time upon the written request of Thorium Power, Kurchatov Institute shall promptly return to Thorium Power or, at Thorium Power’s option, destroy all Confidential Information and Commercial Secret Information pursuant to Exhibit 2 in Kurchatov Institute’s possession or control, together with all copies, summaries and analyses thereof, regardless of the format in which such information exists or is stored. Within five (5) business days following the expiration or early termination of this Agreement, or any written request as set forth above, Kurchatov Institute shall provide Thorium Power with a written certification of Kurchatov Institute’s compliance with the provisions of this paragraph.

 

2.6

The provisions of this Article 2 concerning confidentiality and Commercial Secret information shall survive the termination of this Agreement and the agreements envisioned hereby, and the liquidation and reorganization of the parties hereto. Kurchatov Institute and any agent thereof including subcontractors shall be responsible for any and all damages connected with the unauthorized disclosure of Confidential or Commercial Secret Information.

 

3.	OBTAINING APPROVALS AND PERMITS

 

3.1.

Kurchatov Institute hereby agrees to obtain any and all necessary approvals and/or permits that may be required under Russian laws and regulations in order (i) to assign Technical Data rights as envisioned by Article 1 hereof; (ii) to transfer the work product created hereunder to Thorium Power; and (iii) to carry out any other activities pursuant to this Agreement. Kurchatov Institute shall promptly provide to Thorium Power full and accurate copies of such approvals and permits.

 

3.2.

Kurchatov Institute hereby agrees to apply for and obtain a permit and/or approval from the relevant Russian Federation export control authority in connection with the proposed transfer to Thorium Power of the technical documentation (including on magnetic media) created hereunder. Kurchatov Institute shall promptly forward to Thorium Power full and complete copies of such approvals and permits.

 

3.3.

Kurchatov Institute hereby agrees to obtain any other permits and/or approvals that may be required to perform this Agreement.

 

3.4.

In the event that Kurchatov Institute fails to obtain permits and/or approvals set forth in this Article 3, Thorium Power shall be entitled, at its election, (a) to suspend performance until such time as the permits and approvals have been obtained and copies supplied to Thorium Power, or (b) to terminate this Agreement. In no event shall Thorium Power be obligated to make any payments to Kurchatov Institute hereunder, including without limitation pursuant to Article 1.1 hereof, unless and until all such permits and approvals shall have been obtained and a copy supplied to Thorium Power.

4.	DISCLAIMERS AND LIMITATIONS OF LIABILITY

 

4.1.

Disclaimer of Consequential Damages. Neither Party shall be liable to the other Party hereto for any consequential, incidental, indirect, special, punitive or exemplary damages suffered or incurred by such other Party in connection with a breach or alleged breach of this Agreement, even if such other Party has been advised of the possibility of such damages. Consequential damages shall include, without limitation, lost profits, lost savings, lost business or lost goodwill, loss of nuclear material, loss of accountability of nuclear material, or unavailability of facilities. The provisions of this Article 4.1 shall apply to the full extent permitted by law whether such a claim is based on tort (regardless of the degree of fault or negligence), warranty, breach of contract, strict liability or otherwise, and shall survive the cancellation, expiration or termination of this Agreement, as well as the fulfillment of the obligations of the Parties hereunder and shall apply notwithstanding any other provisions of this Agreement.

 

4.2.

Acknowledgement. The Parties hereto, having been advised by legal counsel, acknowledge and agree that they are sophisticated parties in all matters relating to this Agreement and that the foregoing disclaimer and limitation of liability represent bargained-for allocations of risk, and that the economics, terms and conditions of this Agreement reflect such allocations.

5.	REPRESENTATIONS AND WARRANTIES

 

6.	COMPLIANCE WITH LAWS

 

6.1

Kurchatov Institute shall comply, and shall be responsible for ensuring that its employees and consultants comply, with all applicable laws in their performance of its services pursuant to this Agreement. Without limiting the generality of the foregoing, Kurchatov Institute further agrees that it will take no action, and it will ensure that its employees and contractors take no action, that would violate the Foreign Corrupt Practices Act of 1977, as amended, or any other similar U.S. or foreign law, or that would create any liability for Thorium Power under any such law. Kurchatov Institute further understands that materials and information resulting from the performance of this Agreement may be subject to U.S. and Russian export control laws and that Kurchatov Institute is responsible for its compliance with such laws. Kurchatov Institute shall be responsible for developing an internal compliance program to ensure compliance by it and its employees and contractors with all applicable laws.

6.2

Thorium Power agrees and covenants that the export product and products made using the Technical Data:

a.

Shall not be used for production of nuclear weapons and other devices or any other military purpose;

 

b.

Shall be safeguarded using methods of physical protection at the level not less than that recommended by the International Atomic Energy Agency;

 

c.

Shall be re-exported or transferred from the jurisdiction of the receiving country to any other country only upon the receipt of prior approval from the Russian Agency for Atomic Energy (Rosatom).

 

7.	CHOICE OF LAW

 

8.	EQUITABLE RELIEF

 

9.	AUDIT RIGHTS

 

 

10.

HEADINGS

 

11.

NOTICES

 

 

12.	AMENDMENTS OR MODIFICATIONS

 

13.	FORCE MAJEURE

 

14.	COUNTERPARTS

 

15.	NO THIRD-PARTY BENEFICIARIES

 

16.	REPRODUCTION OF DOCUMENTS

 

 

17.

SURVIVAL

 

18.	SEVERABILITY

 

19.

TERM.

 

 

20.	TERMINATION

 

21.	DISPUTE RESOLUTION

 

 

22.1.

Independent Contractor Status. Kurchatov Institute shall not be considered an employee of Thorium Power and shall not be entitled to participate in or receive any benefits or rights as an employee of Thorium Power under any employee benefit and welfare plans, including, without limitation, employee insurance, pension, savings and security plans (each, a “Plan”). In addition, even if Kurchatov Institute’s status is ultimately recharacterized by a third party to constitute employee status, Kurchatov Institute shall not be eligible to participate in or receive any benefits or rights as an employee of Thorium Power under any Plan unless and until Thorium Power consents to such eligibility in writing. Without limiting the generality of the foregoing, Kurchatov Institute shall not be considered an employee of Thorium Power for purposes of any state or federal laws relating to unemployment insurance, social security, workers compensation or any regulations which may impute any obligation or liability to Thorium Power reason of an employment relationship. Kurchatov Institute agrees to pay all income, payroll, and other taxes or levies imposed by any governmental authority on any compensation that Kurchatov Institute receives under this Agreement. Kurchatov Institute shall indemnify, defend and hold harmless Thorium Power and its officers and employees from and against any and all losses, damages, liabilities, obligations, judgments, penalties, fines, awards, costs, expenses and disbursements (including without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any claim, action, suit, proceeding or investigation) suffered or incurred by Thorium Power as a result of any allegation that Kurchatov Institute is an employee of Thorium Power by virtue of performing any work for or on behalf of Thorium Power hereunder or otherwise. This Agreement shall not be construed as authority for Kurchatov Institute to act as Thorium Power’s agent or in any other similar capacity, or to make commitments of any kind for the account of or on behalf of Thorium Power, and Kurchatov Institute shall not take any action suggesting otherwise.

 

22.2.

Assignment. Kurchatov Institute recognizes that Thorium Power desires to obtain these Services for the reasons stated in the Recitals above, and that this Agreement is non-transferable. Therefore, Kurchatov Institute may not assign or transfer this Agreement or any of its rights or obligations created hereunder, by operation of law or otherwise, without the prior written consent of Thorium Power.

 

23.	CONTRACT CONSTRUCTION

 

23.1.

Contract Construction. For purposes of contract construction, or otherwise, this Agreement is the product of negotiation and neither Party to it shall be deemed to be the drafter of this Agreement or any part thereof.

 

23.2.

Entire Agreement. Except as otherwise expressly set forth in this Agreement, those documents expressly referred to herein, embody the complete agreement and understanding among the Parties, and cancels and supersedes any related previous understanding or agreement, whether written or oral. Notwithstanding the foregoing and for the avoidance of doubt, this Section 23.2 shall not apply to any provisions of that certain Collaborative Research Agreement by and between Thorium Power and Kurchatov Institute dated August 6, 2002, as amended (the "CRA") that, by their terms, survive the expiration and termination of the CRA, as provided in Section 19 thereof.

 

24.

LANGUAGE