EXCLUSIVE LICENSE AGREEMENT
This agreement is made and effective this Oct. 15, 2001 between Turbodyne
Systems, Inc. and Turbodyne Technologies, Inc. collectively. "Turbodyne" herein
called licensee, and having an address of 0000 Xxxxxxxxxxx Xxx, Xxxxxxxxxxx, XX
00000, and Xxxxx X. St. Xxxxx having and address of 0000 Xxxxx Xxxxxxx Xx #0-000
Xxxxxxxxx, XX 00000 and hereinafter called "licensor".
Whereas the licensor has invented and developed three inventions evidenced
by patent applications to be filed with the United States Patent Office under
the titles of
a- "Electrically assisted engine charging system."
b- "Intelligent engine air intake system."
c- "Exhaust gas driven electric generating system."
And is desirous of granting an exclusive worldwide license with the right
to sublicense to the licensee on the three inventions.
And whereas the licensee is desirous of licensing the above inventions,
from the licensor. Therefore, the parties for good and valuable considerations
and other premises contained herein, agree as follows:
1. GRANT OF LICENSE.
------------------
Licensor hereby grants to licensee the worldwide exclusive license with the
right to sublicense to make, have made, use and sell products incorporating the
technology for the inventions together with know how and any trade secrets.
2. CONSIDERATION AND ROYALTY
---------------------------
A. With the signing of this agreement licensee pays to licensor the sum of
$300,000.00 in cash evidencing a payment of $100,000.00 for each invention so
licensed. As an alternative the parties agree, that due to financial condition
of the licensee, the licensor agrees to treat the above sum of $300,000.00 as a
private placement under regulation "D" in the common stock of Turbodyne
Technologies, Inc. at the price of $0.15 per share, representing the current
discounted value of the shares. The licensor therefore agrees to accept two
million shares of the common stock of Turbodyne Technologies, Inc. plus warrants
to purchase two million shares of common stock of Turbodyne Technologies, Inc.
at a price of $0.30 per share for a period of four years from the date of this
agreement.
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B. A royalty equal to 2% (two percent) of gross sales price of the products
manufactured and sold payable quarterly by licensee. This royalty is payable on
all the products manufactured and sold by the licensee as well as any products
manufactured and sold by any sub-licensee of the licensee. Gross sales price is
defined as gross invoice price of products incorporating the licensed
technology, less, commissions, discounts and shipping costs.
3. SECURITY COLLATERAL
--------------------
In order to guarantee the performance of this agreement, in view of the
weak financial condition of the licensee, Turbodyne Technologies, Inc. hereby
pledges all of the outstanding and issued shares of stock of its fully owned
subsidiary "Turbodyne Systems, Inc." to the licensor as a security collateral
for the performance of this agreement and subject to the terms and conditions of
the pledge agreement attached as exhibit "A".
It is further agreed that under no circumstance, Turbodyne Technologies,
Inc. will sell, hypothecate, transfer or otherwise alienate its ownership of the
shares so pledged.
4. PATENT ENFORCEMENT
-------------------
In the event either party discovers material evidence of manufacture, use
or sale by a third party of a product which materially infringes any claim of
patents comprising a portion of licensed patent pending or granted patent, the
party that discovered the evidence shall notify the other party promptly in
writing upon such discovery.
The licensee shall have the obligation to initiate an action to enforce the
licensed patent. Any such enforcement shall be at the expense of licensee. The
licensor shall fully cooperate with the licensee in such enforcement and any
damage award received form the third parties, after the deduction of litigation
costs, shall be divided 20% to licensor and 80% to licensee. In the event that
the licensee determines not to pursue litigation after a 60 day notice then the
licensor at its own expense hall have the right and authority on behalf of the
parties to bring suit and any recovered damages is for the account of the
licensor.
5. PATENT ENFORCEMENT
-------------------
Any improvements in the subject matter of the invention conceived by Either
party or their agents shall be for the exclusive use of the licensee and subject
to royalty payments under the terms and conditions of this agreement.
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6. FILING AND MAINTAINING PATENTS
---------------------------------
Effective the date of this agreement the licensee shall be responsible for
the prosecution including all costs of the patent application, and licensor
shall fully co-operate with the licensee.
Licensee shall be responsible for the maintenance costs of the patents and
licensor shall fully co-operate with the licensee whenever required to sign any
documentation for perfecting of letter patents and foreign applications, which
shall be filed in countries with reasonable expectation of commercial return.
7. BOOKS AND RECORDS
-------------------
Licensee shall keep adequate books and records in sufficient detail to
enable the royalties payable hereunder to be determined, and shall permit said
records to be inspected at any time during regular business hours by the
licensor or its authorized agent.
8. ASSIGNABILITY
-------------
Either party shall have the right to assign this agreement to a third party
and notify the other party of such assignment or sub-license within five working
days.
In the event that the licensee assigns this agreement to a third party,
then the licensee shall guarantee the performance of this agreement by the third
party.
By this agreement, the licensee at the option of the licensor, assigns the
payment of royalties payable to the licensor per the terms of this agreement to
the third party sub-licensee of the licensor up to the amounts payable under
this agreement, so that the licensor can receive its royalties directly from the
third party sub-licensees. Any such payments received from the third party
sub-licensees shall be credited towards royalties payable under this agreement
by the licensor to the licensee.
9. NOTICE
------
Any notices to be given to either party hereunder shall be in writing and
shall be delivered personally or by registered mail, return receipt requested.
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10. DEFAULT
-------
In the event of a default in the payment of any royalties pursuant to this
agreement by licensee and upon sending of the notice of default by the licensor.
If such default is not cured within 30 days from the date of notice, then at the
option of the licensor the license shall be declared null and void and become
the sole property of the licensor.
In the event of non-monetary defaults, the parties if unable to settle the
dispute within 30 days, the matter can be submitted to arbitration in California
according to the rules of American Arbitration Society.
11. GOVERNING LAW
--------------
This agreement shall be governed by the laws of the State of California.
In witness whereof the parties have caused this agreement to be executed
and delivered as of the date first above written.
Turbodyne Systems, Inc. (licensee) Inventor (licensor)
By: /s/ Xxxxxxx X. Xxxxxxx
_______________________________ Xxxxx X. St. Xxxxx
Title: Secretary /s/ Xxxxx X. St. Xxxxx
_______________________________ _______________________
By: /s/ Xxxxxx Xxxxx
_______________________________
Title: Director
_______________________________
Turbodyne Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
_______________________________
Title: Chief Financial Officer
_______________________________
By: /s/ Xxxxxx Xxxxx
_______________________________
Title: President
_______________________________
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