1.

SPP and VISUALANT have entered into a Joint Research and Product Development Agreement (JRPDA) and a Stock Purchase Agreement of even date herewith, and

2.

The Parties each are desirous of entering into an Intellectual Property licensing agreement regarding certain existing rights in Intellectual Property owned by Visualant;

3.

VISUALANT has developed, owns, has received patents and has patents pending on certain proprietary technology known as Spectral Pattern Matching or SPM technology.

4.

NOW, THEREFORE, in consideration of the foregoing, the promises herein and in the JRPDA, and in the Stock Purchase Agreement and for other good and valuable consideration set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

A.

DEFINITIONS

1.

“Intellectual Property” or “IP” means technical and other specifications, technical designs or solutions, drawings, diagrams, protocols, schematics, apparatuses, hardware, tools, devices, descriptions, methods, techniques, processes, formulae, specifications, procedures, methods and results, algorithms, software, software code (in any form including source code and object code or executable code), user interfaces, database rights, trade secrets, registered or unregistered trademarks and service marks, know-how, inventions whether patentable or not, patent applications, patents, registered and unregistered copyrights, confidential or proprietary information, mask works rights, registered and unregistered design rights, utility models, and any other forms of technology, in each case whether registered or unregistered, throughout the World, as well as business information including, but not limited to, business plans, vendors, supply sources, customers, potential customers and pricing, as well as other Confidential Information.

2.

“SPM” means Spectral Pattern Matching, the trade name of VISUALANT’S Intellectual Property.

B.

GRANT OF LICENSE(S) TO SPP BY VISUALANT

1.

VISUALANT License Grant.  In exchange for an initial payment of US$1,000,000 to VISUALANT by SPP, SPP shall obtain an exclusive license to all related IPs of the SPM technology. The exclusive territory shall include Japan, China, Taiwan, Korea and the entirety of Southeast Asia (Burma, Indonesia, Thailand, Cambodia, Laos, Vietnam, Singapore and the Philippines).  At the completion of the JRPDA the parties shall decide upon the running royalty to be paid by SPP to VISUALANT.  In addition the payment contemplated by B.1 is consideration for the following license grants by VISUALANT to SPP.  

2.

The licenses granted to SPP by VISUALANT in this Section B:

a.

include the right to sublicense to any wholly-owned subsidiary of SPP; and

b.

are not assignable or transferrable except as part of a sale of substantially all business assets or line of business of VISUALANT as set out in the JRPDA.