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Cyclone Power Technologies, Inc.

 

601 NE 26th Court

Pompano Beach, FL 33064

Phone: 954-943-8721 Fax: 954-788-6565

www.cyclonepower.com

 

ENGINEERING DEVELOPMENT AGREEMENT

 

THIS AGREEMENT, is made this May 1, 2016, by and between CYCLONE POWER
TECHNOLOGIES, INC., a Florida corporation, with its principal office located at
601 N.E. 26th Court, Pompano Beach, Florida 33064, U.S.A. (“CYCLONE”), and G2E,
S.A.P.I. de C.V, with its principal office located at Escondida 116, Coyoacan,
Mexico Df 04010 (“G2E”).

 

Background

 

CYCLONE, is engaged in the business of research and development of heat
regenerative, external combustion engines, generally characterized as a high
efficiency, compact and powerful steam engine that runs on almost any fuel.

 

CYCLONE holds numerous patents and is engaged in the prototype of the engine, as
well as licensing for sales, joint ventures and manufacturing.

 

CYCLONE wishes to expand the sale of its engines for nonmilitary solar and
fueled stationary power applications and introduce them into Latin America, New
Zealand and Australia (more defined below) marketplace. The Mexico based G2E is
engaged in remote area technologies for rural development for commercial and
industrial applications Worldwide.

 

CYCLONE possesses the fundamental engine technology. G2E wishes to obtain a
CYCLONE nonmilitary solar and fueled stationary power ENGINE {“All Mark Engines
and other technologies“), to perform engineering and development work for all
nonmilitary solar and fueled stationary power with the goal for CYCLONE to grant
G2E an exclusive License Agreement(“License”) for the first ten (10) years in
territory of Latin America, New Zealand and Australia With minimums to maintain
exclusivity and nonexclusive thereafter to distribute Nonmilitary and Stationary
Applications in Latin America, New Zealand and Australia territory.

 

   

 

 

The Cyclone Engine includes trademark and patent rights, manufacturing trade
secrets, engineering blue prints and design drawings, specifications and other
proprietary information (Cyclone’s Technology”).

 

CYCLONE and G2E believe a mutually beneficial relationship for the engineering
integration of the Cyclone Engine, and its eventual marketing and sale in the
Latin America, New Zealand and Australia market can be developed through
corresponding working arrangements between them.

 

NOW, THEREFORE, the parties, in consideration of mutual promises, covenants and
understandings below, do agree as follows:

 

1) Lease/Purchase of Cyclone Beta Engine.       G2E will pay $25,000.00 USD as
follows :

 

a) $5,000 USD on signing the Engineering Agreement for development, integration
and drawings.

 

b) $5,000 USD per month after funding until the initial $25,000 is paid.

 

d) G2E acknowledges this arrangement is a Lease, with option to own the Mark 1
Engine and Cyclone drawings for TSU. Upon successful completion of the
engineering-development process above and entry into a formal, long term
License, title to the prototype Mark 1 & 3 Engine and TSU shall pass to G2E. In
the interim, it is expressly understood CYCLONE will retain ownership.

 

e) In the event G2E does not complete its engineering development within the
twelve (12) month period, this right to use Technology and Lease shall
terminate. Upon termination, G2E shall return the Mark 1 & 3 Engine and Cyclone
drawings for TSU, as well as all Technology and proprietary information, to
CYCLONE.

 

2) Confidential Information.

 

G2E acknowledges CYCLONE’S proprietary ownership rights in and to its patented
products and to its Know-How. All trade secrets, technical Know-How, other
knowledge, information, instructions and engineering disclosed or furnished to
G2E by CYCLONE shall be maintained in strict confidence by G2E and agrees that
throughout the term of this Agreement, and for five (5) years thereafter, such
information will not be disclosed or be permitted to be disclosed by G2E other
than to authorized individuals (including, without limitation, sales
representatives, distributors and technical personnel) engaged in carrying-out
the terms hereof. The parties agree this confidentiality extends to the
employees and officers of G2E. G2E agrees to provide the requisite internal
security of the subject proprietary information within its organization and
further agrees to require its agents, servants and employees having access to
the Know-How to acknowledge this obligation of confidentiality. A separate form
of Confidentiality is Attachment #3, which must be executed by both G2E and any
individual with access to the confidential information.

 

Initials: _______ _______

 

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3) Technical Assistance.

 

CYCLONE, upon request, will furnish technical personnel and Engineering to
assist G2E regarding the technical information and Know-How necessary to
carry-out the purposes of this Agreement, at no additional fees. Provided,
however, if travel is involved then G2E shall bear all travel, lodging,
expenses, and an hourly rate for Cyclone personnel.

 

4) Relationship.

 

G2E is an independent contractor. Nothing in this agreement shall be construed
to create a principal/agent, joint venture, partnership or any other business
relationship between the parties other than as set forth in this Agreement.
Neither party is authorized to act on behalf of the other.

 

5) Non-Circumvention.

 

During the term of this Agreement, G2E and CYCLONE agrees not to contact,
initiate contact, or attempt to do business with, at any time for any purpose,
either directly or indirectly, any officers, directors, shareholders,
consultants, attorneys, employees, agents, customers or other affiliates of G2E
or CYCLONE concerning this business opportunity, as referred by CYCLONE to G2E
or from G2E TO CYCLONE for the purpose of circumventing, the result of which
shall be to prevent CYCLONE or G2E from realizing a profit, license and royalty
fees or otherwise, without express written approval of CYCLONE or G2E, which
approval may be withheld by CYCLONE or G2E in its sole discretion.

 

6) Notices.

 

All notices shall be in writing and deemed to have been given when sent by
e-mail and Federal Express prepaid to the parties at the addresses set forth
below, or such other addresses from time to time given.

 

  To: Cyclone Power Technologies To: G2E   Frankie Fruge, President Daniel
Camarena   601 N.E. 26th Court Escondida 116   Pompano Beach, FL 33064
Coyoacan,Mexico Frankie@cyclonepower.com   dc@g2e.mx  

 

7) Remedies.

 

In addition to injunctive relief set forth in the Confidentiality and License
Agreements attached, all damages incurred by a party for a violation of the
terms hereof by the other, the prevailing party shall also be entitled to
recover all costs and reasonable attorney fees incurred by reason such breach or
obtaining compliance with the agreement and appeals. But, this shall not
restrict a party’s right to terminate as stated.

 

Initials: _______ _______

 

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8) No Waiver.

 

The failure of either party to insist on strict performance of any provisions
herein shall not affect the right of such party to enforce same, nor shall the
waiver of any breach constitute a waiver of a subsequent default of same or
similar nature, nor construed as a waiver of strict performance of any other
provisions.

 

9) Severability.

 

If any part of this agreement shall be declared void or invalid by law or
otherwise, the remaining provisions shall remain valid and enforceable.

 

10) Indemnification.

 

G2E agrees to indemnify and hold harmless CYCLONE from any and all loss, damage,
cost or expense (including, without limitation, legal fees, court costs, etc.)
arising out of, or in connection with, any claim due to any actions, negligence,
product liability, or willful misconduct by G2E or any of its agents or
employees. Upon entering into formal agreements (after 12 months development
period), G2E shall provide proof of products liability insurance, with CYCLONE
noted as an Additional Insured.

 

11) Governing Law.

 

This agreement shall be governed by and construed under the laws of the State of
Florida, USA. If any dispute arises between the parties, it shall be submitted
to the Circuit Court of Broward County, Florida, or binding arbitration under
the auspices of the American Arbitration Association, such proceedings to be
conducted in Broward County, Florida.

 

12) Entire Agreement.

 

This Agreement constitutes the entire understanding between the parties and
supersedes any previous oral or written undertakings. It may not be modified,
except in writing signed by both parties. This agreement shall be binding upon
the parties, their successors and assigns.

 

IN WITNESS WHEREOF, the parties, by their representatives, have set their hands
and seals the day and year first above written.

 

    Cyclone Power Technologies, Inc.   Witness                   By:      
Frankie Fruge, President             G2E, S.A.P.I. de C.V  

 

Initials: _______ _______

 

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                    Witness   By: Daniel Camarena  

 

Initials: _______ _______

 

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ATTACHMENT NUMBER 1

 

Specifications Sheet [TO BE DISCUSSED]

 

Beta Engines: Cyclone will deliver to G2E two (2) Beta Engine, materially
conforming to the following specifications, unless the parties subsequently
amend these specifications in writing:

 

  ____X___ Cyclone Engine block (MARK 1 THEN ABOUT 3 MONTHS LATER A MARK 3)  
____X___ Cyclone HP & LOW PRESSURE pumps   ____X___ Heat Exchanger   ____X___
Combustion chamber for Mark 3   ____X___ Air-cooled condenser   ____X___ TSU
DRAWINGS SIZED TO FIT ENGINE TO STORE 2 TIMES ENGINE SIZE FOR 24/7 POWER OUTPUT

 

  Use: _____ nonmilitary solar and fueled stationary power_______      
Fuels/Source of Heat: ____SOLAR & Gas__________       Required HP (net): _____5
HP & 20 HP_________       Required operating RPM range: ____1300 TO
3600__________       Alignment: to operate vertically.       Other:
______________

 

Beta Engines endurance testing:

 

Run at Cyclone for a minimum of 10 hours prior to delivery to G2E.

 

Acceptance Testing: G2E will use the Beta delivery engine to test usability of
the engine in its equipment (Acceptance Testing). Integration of the engine with
nonmilitary solar and fueled stationary power equipment will be done by G2E
engineers, with reasonable assistance from Cyclone.

 

Commercialization of Engines: Cyclone will manufacture engines through one or
more of its contractors, which will then be shipped to G2E in Mexico for
assembly and integration with their Nonmilitary and Stationary Applications
systems.

 

Safety and insurance certifications (i.e., UL) for the engines required by G2E
for its specific use, and in the geographic territories in which it operates,
shall be the responsibility of G2E.

 

Initials: _______ _______

 

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System level modifications and certifications for Nonmilitary and Stationary
Applications equipment shall be the responsibility of G2E (with Cyclone’s
reasonable assistance). Such system level modifications and certifications shall
include:

 

  - Endurance and durability testing above Cyclone’s standard testing   -
Environmental (i.e., freeze, climate) testing and modifications to piping,
condensers, etc., to meet SOLAR or Gasification specific requirements   -
Emissions testing and modifications (for Mark 3 gasification use)   - Noise
level testing and modification (for Mark 3 gasification use)   - Other
certifications and modifications for use with Nonmilitary and Stationary
Applications equipment

 

Initials: _______ _______

 

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attachment 2

Systems Application License Agreement

 

This Systems Application License Agreement (“Agreement”) is entered into as of
May 1, 2016(the “Effective Date”) by and between:

 

Cyclone Power Technologies, Inc., a Florida Corporation, having its offices
located at 601 NE 26th Court, Pompano Beach, Florida 33064 (“Cyclone”)

 

and

 

G2E, S.A.P.I. de C.V, a corporation formed in Mexico, having its offices located
at Escondida 116, Coyoacan, Mexico DF 04010, (“G2E“)

 

Recitals

 

WHEREAS, Cyclone has developed and patented a heat-regenerative external
combustion engine system called the Schoell Cycle Engine, which it has full
rights and authority to license for applications that include all stationary
applications excluding military and waste heat/waste to power (as that term is
defined below); and

 

WHEREAS, G2E is a systems integrator and remote power supplier (the “Equipment”,
as further defined below), and wishes to obtain a Systems Application License
Agreement for the Cyclone engine technology to use with and in its Equipment
subject to the terms and conditions set forth more fully in this Agreement; and

 

WHEREAS, this Agreement contains: I Specific License Terms, and II Standard
Terms and Conditions, which together comprise the full agreement of the parties
hereto.

 

NOW THEREFORE, for good and valuable consideration, and subject to the terms,
conditions, representations and warranties contained more fully herein, the
parties agree as follows:

 

Initials: _______ _______

 

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I. Specific License Terms

 

Technology:   Cyclone’s heat regenerative, Schoell-cycle external combustion
engine system (the “Cyclone Engine”). “Licensed Technology” is further defined
in Section 1 of the Standard Terms and Conditions.       Licensed Products:  
Mark Series Engines (the “Engine”) and other Cyclone products identified in
separate agreements.       Application:   The G2E may use the Engine
specifically for the Equipment, which shall be defined as all stationary non
military solar and fueled stationary power.       License Fee:   License fee for
exclusivity and territory is Mexico, Guatemala, Honduras, El Salvador,
Nicaragua, Costa Rica, Belize, Panama, Colombia, Venezuela, Ecuador, Suriname,
Peru, Bolivia, Chile, French Guyana, Paraguay, Brazil, Argentina, Uruguay, Cuba,
Dominican Republic, Haiti, Brazil, Australia, and New Zealand is $50,000 USD and
$25,000 USD will be paid at a rate of $5,000 USD per month starting with the
signing of this license and balance upon funding until the non-refundable
$25,000 USD interim fee is paid in full.       Exclusivity:   Cyclone grants
exclusive rights to the G2E for the Engine, and its designs and specifications,
for the specific Application of the Equipment (as set forth above) for a period
of the initial phase of twelve (12) months exclusive (date starts on delivery of
first beta engine) and upon mutual agreed successful testing of integrated
system to then grant ten (10) years exclusive and nonexclusive, automatically
renewable for additional 10 years upon reaching certain annual minimum sales
quotas (set forth in separate agreement after the twelve (12) month development.
This renewal provision will remain in effect for the term of the License
Agreement. The start of the first year will commence upon the delivery to G2E of
the first production Engine parts for integration with G2E’s Equipment.      
Quotas:   The sales quotas and minimum royalty calculation to extend the
exclusivity rights period will be agreed in good faith no later than six (6)
months prior to the commencement of Year 2 of this Agreement. Should the parties
not be able to agree upon a sales quota prior to the commencement of Year 2, the
parties shall submit the issue to an independent third-party expert to set
quotas for the following two (2 years. Such expert shall be chosen by the
parties, or if they cannot agree, the independent expert shall be chosen by the
two experts suggested by the parties.       Intellectual Property:   Cyclone and
the G2E will honor each other’s patents and confidentiality. G2E will post
Cyclone’s patent numbers on all products it produces with the Engine. Each party
agrees not to engage in any activity or business that will be in competition
with the other if such activity would violate any confidentiality, exclusivity
or patent rights of the other party. Additional IP representations are included
in the Standard Terms of this License.

 

Initials: _______ _______

 

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Territory:   Mexico, Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica,
Belize, Panama, Colombia, Venezuela, Ecuador, Suriname, Peru, Bolivia, Chile,
French Guyana, Paraguay, Brazil, Argentina, Uruguay, Cuba, Dominican Republic,
Haiti, Brazil, Australia, and New Zealand       License Term:   10 years with
one 10-year renewal       Development Fees:   As stated in Engineering
Development Agreement Section 2.       Sales Price:   Cyclone will manufacture
Engines for G2E, and ship such Engine to G2E. The price to be paid for each
Engine shall be determined between Cyclone and G2E based on volume and other
factors as stated above in the Quota section.        Royalties:   G2E will be
required to pay royalties on each licensed product it manufacturers. The Royalty
fee will have two components a base fee and an annual minimum to maintain the
exclusivity of the license agreement. The royalties will be calculated with a
base price per engine and a calculation for a minimum fluctuation of exchange
rate to USD. This will be agreed up on at time of manufacturing of each product
along with minimums.       Manufacturing:   G2E will have the right to
manufacture Cyclone products for its use or to sell to Cyclone. The right to
manufacture will be initiated with proof of standards by G2E to Cyclone. Cyclone
will not unreasonable withhold these rights to G2E.

 

Cyclone Contacts:

 

Technology: Harry Schoell, CEO, Tel: 954-943-8721, Harry@cyclonepower.com

Operational/ Legal: Frankie Fruge, Tel: 954-943-8721, Frankie@cyclonepower.com

 

G2E _ Contacts:

 

Technology: Daniel Camarena

 

Operational/Legal: Daniel Camarena

 

Initials: _______ _______

 

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Balance of page left blank on purpose

 

Initials: _______ _______

 

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Standard Terms and Conditions

 

1. Grant of License

 

1.1 Cyclone grants to G2E a license to use the Licensed Technology solely for
use by the G2E in the specific Equipment Applications and in the Territory set
forth in the Specific License Terms (the “License”). G2E may not manufacture or
have manufactured the Licensed Products for uses other than its identified
Applications, and may not sell the Licensed Products separately from its
Application systems, except as specifically set forth in the Distributorship
section of the Specific License Terms of this Agreement.

 

1.2 This License may not be transferred or sublicensed to a third party by G2E
without the prior written consent of the Cyclone, which consent may not be
unreasonably delayed or withheld. If G2E transfers or sublicenses its interests
within this Agreement to a third party, then such third party will be bound to
the requirements and provisions of this Agreement to the same degree as G2E.
This License to use the License Technology will automatically expire upon
termination of this Agreement.

 

1.3 The definition of “Licensed Technology” in the Specific License Terms shall
be further defined to mean: Cyclone’s proprietary technology related to its heat
regenerative, external combustion engine and shall include any information,
inventions, innovations, discoveries, improvements, ideas, know-how, show-how,
developments, methods, designs, reports, charts, drawings, diagrams, analyses,
concepts, technology, records, brochures, instructions, manuals, programs,
expertise, inventions whether or not reduced to practice or the subject of a
patent application, test-protocols, test results, descriptions, parts lists,
bills of materials, documentation whether in written or electronic format,
prototypes, molds, models, assemblies, and any similar intellectual property and
information, whether or not protected or protectable by patent or copyright, any
related research and development information, inventions, trade secrets, and
technical data in the possession of Cyclone that is useful or is needed in the
assembly or manufacture of the Licensed Products and that the Cyclone has the
right to provide to G2E and has so provided to G2E. This includes without
limitation, U.S. Patent #7,080,512, entitled Heat Regenerative Engine, other
patents pending US and foreign, all patents that may issue under this patent
application and their divisions, continuations, continuation-in-parts, reissues,
reexaminations, inventor’s certificates, utility models, patents of addition,
extensions, as well as certain research and development information, inventions,
know-how, and technical data that relate to and/or are disclosed in said patent
application, and any other patent applications, patents divisions,
continuations, continuation-in-parts, reissues, reexaminations, inventor’s
certificates, utility models, patents of addition, extensions that may issue or
be filed that relate to said Licensed Product and/or said patent application.

 

1.3 The Term of this License is set forth in the Specific License Terms, and
will take effect on the Effective Date and will continue in force and effect
unless at least 90 days prior to the expiration of the initial or any
renewal/additional term, as the case may be, either party gives written notice
to the other party hereto that such renewal is not to occur. If such notice is
given, this Agreement will terminate at the end of the then current term and all
rights and licenses under this Agreement will revert to Cyclone at the end of
the current term.

 

Initials: _______ _______

 

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2. License Fees and Sales Price

 

2.1 G2E will pay to Cyclone the License/Development Fees set forth in the
Specific License Terms.

 

2.2 G2E will pay to Cyclone the Sales Price or Royalties on G2E manufactured
Cyclone products at the rate and on the schedules specified in the Specific
License Terms, or any addendums or amendments, or any applicable Purchase Order
and Invoice. Payment shall be made as invoiced. All Sales payments shall be paid
in immediately available U.S. funds.

 

3. Reports and Audit.

 

3.1 G2E will provide Cyclone with a written report on a semi-annual basis
detailing the finished units of Licensed Products it has sold in the previous
six-month period, including quantity, model type and country where sold. These
reports are necessary for Cyclone to monitor G2E’s sales performance for
purposes of establishing quotas in the later years of this Agreement, in
addition to international patent and IP protection purposes.

 

4. Representations and Warranties.

 

4.1 Cyclone represents and warrants to G2E that Cyclone is the owner of the
Licensed Technology, and that Cyclone has the right to grant the License to G2E
hereunder.

 

4.2 Cyclone represents and warrants that Cyclone is not involved in any suits,
litigation or other claims contesting the validity or ownership of any of the
Licensed Technology, the Patents or Patent applications, and knows of no such
claims at this time pending or anticipated.

 

4.3 EXCEPT AS SET FORTH IN SECTION 8, BELOW, THIS SECTION IS CYCLONE’S ONLY
WARRANTIES CONCERNING THE LICENSED PRODUCTS, LICENSED TECHNOLOGY AND PATENTS,
AND IS MADE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR
IMPLIED.

 

4.4 G2E and Cyclone each represent and warrant to the other that it has full
power and authority to enter into this Agreement.

 

Initials: _______ _______

 

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4.5 G2E and Cyclone each represent and warrant to the other that neither the
execution nor delivery of this Agreement, nor the consummation of the
transactions contemplated herein, will constitute a violation or breach of the
warranting party’s constituent documents or violate, conflict with, result in
any breach of any material provisions of or constitute a default under any other
contract or commitment made by it, any law, rule or regulation, or any order,
judgment or decree, applicable to or involving it.

 

4.6 G2E and Cyclone each represent, covenant and agree to the other that it will
comply with all applicable international, federal, state and local laws,
regulations or other requirements, and agrees to indemnify the other party
against any liability arising from its violation of or noncompliance with laws
or regulations while using the Licensed Technology.

 

4.7 G2E and Cyclone each represent and warrant to the other that no order,
consent, filings or other authorization or approval of or with any court, public
board or governmental body is required for the execution, delivery and
performance of this Agreement by it.

 

4.8 G2E represents to Cyclone that neither it nor its affiliated companies are
currently or previously involved in any litigation or threatened litigation
concerning patent infringement, unauthorized use of intellectual property,
breach of a license agreement, or other similar claims.

 

4.9 G2E represents to Cyclone that no events specific to G2E have occurred, or
to its knowledge are pending, that have impaired or may impair materially the
financial condition or viability of the G2E, or otherwise make the performance
of its financial and operational duties hereunder impossible or impractical.

 

5. Identification of Infringers

 

5.1 G2E will, without delay, inform Cyclone of any known infringement,
unauthorized use, misappropriation, ownership claim, threatened infringement or
other such claim (collectively, an “Infringement”) by a third party with respect
to the Licensed Products, and/or the Licensed Technology, and will provide
Cyclone with any evidence available to G2E of such Infringement. G2E
acknowledges and agrees that Cyclone, in its sole and absolute discretion, will
decide what action should be taken with respect to any such disclosed
Infringement, whether or not litigation should be pursued against an alleged
infringer, the jurisdiction in which any such litigation should be pursued,
whether or not litigation should be settled or pursued to final resolution
against an alleged infringer, and the terms of settlement. G2E agrees that it
shall be responsible to contribute to the costs of all enforcement to protect
the Patented Licensed Technology if the claimed infringement involves products
similar or competitive to the G2E’s lift equipment products. In such case, G2E
shall contribute to all expenses incurred in any action Cyclone decides should
be taken to protect the Licensed Technology from Infringement or to defend any
claim against Cyclone or the Licensed Technology for Infringement relating
(“Infringement Action”), including all attorney, paralegal, accountant or other
professional fees from the notice of such Action through all trial and appellate
levels. Contribution by G2E shall not exceed twenty five percent (25%) of
Development Fees paid or due under this Agreement. The parties shall cooperate
with each other and provide all advice and assistance reasonably requested by
each other in pursuit of such Infringement matters.

 

Initials: _______ _______

 

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5.1.1 Cyclone will, without delay, inform G2E of any known infringement,
unauthorized use, misappropriation, ownership claim, threatened infringement or
other such claim by a third party with respect to the G2E Products, and/or
Patented Technology, and will provide G2E with any evidence available to Cyclone
of such Infringement.

 

5.2 Each party will execute all necessary and proper documents, take such
actions as is reasonably necessary to allow the other party to institute and
prosecute such infringement actions and will otherwise use its commercially
reasonable efforts to cooperate in the institution and prosecution of such
actions. Each party prosecuting any such infringement actions will keep the
other party reasonably informed as to the status of such actions. Any award paid
by third parties as a result of such an Infringement action (whether by way of
settlement or otherwise) will be applied first to reimburse the parties for all
costs and expenses incurred by the parties with respect to such action on a pro
rata basis in relation to the amount of costs and expenses so incurred by such
party and, if after such reimbursement any funds will remain from such award,
the parties will allocate such remaining funds between themselves in the same
proportion as they have agreed in writing to bear the expenses of instituting
and maintaining such action.

 

6. Improvements

 

6.1 G2E will timely inform Cyclone, in writing, of any improvements, changes,
advances and/or modifications to the Licensed Products or Licensed Technology
(hereinafter “G2E’s Improvements”), and the purpose(s) therefor, made by G2E.
Any and all such improvements, changes, advances and/or modifications to the
Licensed Products or Licensed Technology made by G2E (“G2E Improvements”) shall
become the property of Cyclone and G2E hereby assigns all of its right, title
and interest in and to such G2E Improvements to Cyclone regardless if developed
or invented by G2E or Cyclone or any of their employees or affiliates. Further,
Cyclone will own the entire right, title and interest in any and all patent
applications resulting from or relating to any and all improvements and/or
modifications to the Licensed Products or the Licensed Technology, whether filed
in the United States or countries other than the United States, related to said
improvements and/or modifications; and in and to any and all patents which may
be issued/granted on any and all said applications and any and all reissues
thereof. To the extent that improvements made by other G2Es to the Licensed
Technology would improve the G2E’s Licensed Products, such improvements shall be
made part of this License. The G2E shall retain ownership of all improvements
and intellectual property related to its Equipment.

 

Initials: _______ _______

 

 15 

 

 

6.2 G2E covenants and agrees for itself and for its successors and assigns that,
at Cyclone’s request, it will cause to be executed and delivered any
applications, affidavits, assignments, and other instruments as may be deemed
necessary or desirable to secure for or vest in Cyclone, its successors, legal
representatives, or assigns, all right, title, and interest in and to any
application, patent, or other right or property covered by this Section,
including the right to apply for and obtain patents in foreign countries under
the provisions of the International Convention; and G2E hereby requests and
authorizes the United States Commissioner of Patents and Trademarks to issue any
and all United States patents granted on the G2E Improvements, all divisions,
reissues, and continuations thereof to Cyclone as owner of the entire right,
title, and interest in and to the same, and authorize appropriately empowered
officials of foreign countries to issue any letters patent granted on any
patents and all divisions, reissues, and continuations thereof to Cyclone as
owner of the entire right, title, and interest in and to the same.

 

6.3 G2E will not contest the validity or enforceability of any patents that
issue from or as a result of any of the patents or patent applications for the
License Technology or any continuations, divisional or continuations-in-part of
such applications unless such patents or patent applications infringe on the G2E
patents and patent applications. G2E will not assert as a defense in any
litigation with respect to Licensed Products that any patents that issue from or
as a result of any of the patent applications (including any continuations,
divisionals or continuations-in-part of such applications) are invalid or
unenforceable, unless a court holding denotes such a result.

 

6.4 Cyclone has and will continue to have sole and absolute discretion to make
decisions with respect to the procurement and prosecution of the patents and
patent applications for the Licensed Technology, including the right to abandon
any such patent application. Cyclone’s abandonment of or any failure to obtain
or maintain an issued patent originating from any of the patents or patent
applications will not relieve or release G2E from its obligation to pay the
License Fees and Sales Prices provided in this Agreement, provided Cyclone can
show that suitable rights to exclude competitors from practicing the Licensed
Technology are still in place to provide G2E a valuable right under the License
in the Territory. Similarly, a holding or decision by a court of law that any
such issued patent is invalid or unenforceable will not relieve or release G2E
from its obligation to pay the License Fees and Sales Price provided in this
Agreement, pursuant to the same requirement of rights to exclude noted above. If
any of such events occur, G2E must continue to pay any License Fees and Sales
Price due during the Term. If Cyclone cannot show that suitable rights to
exclude competitors from practicing the Licensed Technology are still in place
in the Territory after abandonment, invalidation, or unenforceability has
occurred or been held by a court, then G2E may terminate this Agreement.

 

7. Default

 

7.1 If either party is in default of any material obligation under this
Agreement, then the non-breaching party may give written notice thereof to the
breaching party to cure the breach. If within 60 days after the date of such
notice such default is not cured, then this Agreement will automatically
terminate at the discretion of the non-breaching party and all rights and
licenses under this Agreement will revert to the beneficial owner thereof prior
to execution of the Agreement.

 

Initials: _______ _______

 

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7.2 This Agreement will terminate immediately if G2E is dissolved or liquidated.
This Agreement will also terminate immediately absent an adequate written
assurance of future performance if: (i) any bankruptcy or insolvency proceedings
under any federal or state bankruptcy or insolvency code or similar law, whether
voluntary or involuntary, is properly commenced by or against G2E; or (ii) G2E
becomes insolvent, is unable to pay debts as they come due or ceases to so pay,
or makes an assignment for the benefit of creditors; or (iii) a trustee or
receiver is appointed for any or all of G2E’s assets; or (iv) G2E does not make
sales of the Engines in any three (3) month period after the first full year of
the commercialization of the Engines.

 

7.3 Immediately after the expiration or termination of this Agreement for any
reason:

 

(a) All rights of G2E granted hereunder will terminate and automatically revert
to Cyclone, and G2E will discontinue all assembly and/or manufacturing of the
Licensed Technology and will no longer have the right to manufacture, sell or
put into use the Licensed Technology or any variation or simulation thereof for
any purpose whatsoever;

 

(b) G2E will be permitted to sell and dispose of its remaining inventory of
Engines on hand or in process on the date of such termination or expiration, for
a period of one hundred twenty (120) days following the date of such expiration
or termination (the “Sale Period”). G2E expressly agrees that it will not market
or sell/use any Licensed Product after the end of the Sale Period;

 

(c) All sums owed by G2E to Cyclone will become due and payable immediately;

 

(d) G2E will not, following expiration or termination of the this Agreement, use
Confidential Information to manufacture or sell Licensed Products anywhere in
the world; and

 

(e) G2E retains no rights whatsoever to any of Cyclone’s Licensed Technology.

 

(f) These restrictions of the G2E shall survive in perpetuity the termination of
this Agreement including after the expiration of Cyclone’s Patents. In such
case, G2E may not manufacture or sell Engines that would have been in violation
of Cyclone’s patent rights without negotiating and paying to Cyclone a
reasonable royalty.

 

7.4 Notwithstanding the foregoing, or any other provisions of this Agreement to
the contrary, Sections 4, 5, 6, 7 and 9 will survive the expiration or
termination of this Agreement.

 

Initials: _______ _______

 

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8. Risk of Loss

 

8.1 Both parties will acquire and maintain at their sole cost and expense
throughout the term of this Agreement, and for a period of five (5) years
following the termination or expiration of this Agreement, Comprehensive General
Liability Insurance, including product liability, advertiser’s liability (1986
ISO form of advertising injury rider), contractual liability and property
coverage, including property of others, (hereinafter collectively,
“Comprehensive Insurance”) underwritten by an insurance company qualified to
cover liability associated with activities in the Territory of this Agreement
(with respect to Cyclone, in the U.S., or such other territory where it
manufactures the engines). This insurance coverage will provide liability
protection of not less than $2,000,000 combined single limit for personal injury
and property damage including products/completed operations coverage (on a per
occurrence basis) with the other party named as an additional insured party on
the general liability coverage and as loss payee on the property coverage, and
the policy will purport to provide adequate protection for G2E and Cyclone
against any and all claims, demands, causes of action or damages, including
attorney’s fees, arising out of this Agreement including, but not limited to,
any alleged defects in, or any use of, the Licensed Products or the Licensed
Technology.

 

8.2 In the event of cancellation of any insurance required to be carried by a
party under this Agreement, the other party will be notified thirty (30) days
prior to cancellation of same. Should the cancellation be due to dissolution or
like problems with the insurance company, then the insured party shall have a
suitable amount of time to secure suitable insurance coverage, not to exceed
sixty (60) days after notice of cancellation occurs. Should the cancellation be
due to failure to pay premiums or like financial problems of G2E, then Cyclone
will have the right to terminate this Agreement if G2E does not secure proper
insurance coverage at the end of the above-noted thirty (30) day notification
period.

 

8.3 Risk of loss shall be attributed to the parties as follows:

 

(a) Cyclone shall be responsible for losses resulting from faulty design of its
of the Licensed Products, faulty manufacturing of engine parts for the Licensed
Products delivered to G2E, faulty assembly of the Licensed Products (to the
extent performed by Cyclone on behalf of G2E), and incorrect information about
the Technology or Licensed Products delivered to G2E that is reasonably and
prudently relied upon by G2E.

 

(b) G2E shall be responsible for faulty assembly of the Licensed Products (to
the extent performed by G2E, and not based on incorrect information supplied by
Cyclone), faulty installation of the Licensed Products into G2E’s lift
equipment, and all operation, use, customer training and maintenance of the
Licensed Products once installed in the G2E’s lift equipment (provided the loss
is not shown to result from one of Cyclone’s responsibilities in Section 8.3(a)
above).

 

Initials: _______ _______

 

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(c) G2E assumes sole responsibility for any commitments, obligations, or
representations made by it in connection with the use, sale, manufacture,
importation, offer to sell, distribution, operation, etc., of its lift equipment
, and Cyclone will have no liability to G2E, or any third parties, with respect
to economic and/or personal injury, including wrongful death, caused by or
resulting from the use of the G2E’s lift equipment by G2E, its agents,
employees, or customers, subject to the provisions of this Section 8.3.

 

8.4 G2E agrees to indemnify, defend and hold harmless Cyclone, its shareholders,
officers, directors, employees, affiliates, successors and assigns from and
against any and all expenses, damages, proceedings, direct or consequential
claims, liabilities, suits, actions, causes of action of any character or
nature, penalties, fines, judgments or expenses (including all attorneys’ fees),
arising out of, or related to G2E’s responsibilities in Section 8.3 above,
and/or G2E’s performance or breach of this Agreement.

 

8.5 Cyclone agrees to indemnify, defend and hold harmless G2E, its shareholders,
officers, directors, employees, affiliates, successors and assigns from and
against any and all expenses, damages, proceedings, direct or consequential
claims, liabilities, suits, actions, causes of action of any character or
nature, penalties, fines, judgments or expenses (including all attorneys’ fees),
arising out of, or related to Cyclone’s responsibilities in Section 8.3, above.

 

8.6 The indemnity provisions of this Section 8 will survive the expiration or
termination of this Agreement.

 

8.7 BOTH PARTIES acknowledge that in no event will ONE PARTY be liable TO THE
OTHER for any indirect, special, consequential, incidental or punitive damage,
loss or expense, even if BOTH PARTIES haVE been advised of their possible
existence.

 

9. Confidentiality

 

9.1 Confidential Information means information in oral and/or written form that
(a) relates to the Licensed Technology, including, without limitation past,
present and future research, development, business activities, products, and
services, and (b) has been identified, either orally or in writing, as
confidential by either party. Confidential Information shall also mean
information provided by either of the parties to the other regarding its
technology, systems engineering, business and marketing plans, and any other
materials identified, either orally or in writing.

 

9.2 The receiving party may use the Confidential Information only for the
purpose of producing the Licensed Products or as otherwise indicated or
contemplated by this Agreement. The receiving party will not, at any time, use
the Confidential Information in any other fashion, form, or manner for any other
purpose.

 

Initials: _______ _______

 

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9.3 The receiving party agrees not to disclose the Confidential Information in
any manner to anyone other than persons within its organization who have a need
to know for the purpose set forth above and who have acknowledged in writing the
obligations hereunder and have agreed to abide by the terms hereof. Under no
circumstances will the receiving party disclose the Confidential Information to
any third party.

 

9.4 Any Confidential Information in whatever form is the property of the
disclosing party and will remain so at all times. The receiving party may not
copy any Confidential Information for any purpose without the express prior
written consent of the disclosing party, and if consent is granted, any such
copies will retain such proprietary rights notices as appear on the original
thereof. Any copies of the Confidential Information that the disclosing party
may have permitted the other party to make, or other written materials
incorporating Confidential Information, will be the sole property of the
disclosing party and must be returned to it or destroyed upon the first to occur
of (a) termination or expiration of this Agreement or (b) request by the
disclosing party.

 

9.5 Nothing in this Section will prohibit or limit the receiving party’s use of
information it can demonstrate is (i) previously known to the receiving party,
(ii) independently developed by the receiving party, (iii) acquired by the
receiving party from a third party not under similar nondisclosure obligations
to the disclosing party, or (iv) which is or becomes part of the public domain
through no breach by the receiving party of this Agreement.

 

9.6 The receiving party acknowledges that the Confidential Information disclosed
and/or made available to it hereunder is owned solely by the disclosing party
and that the threatened or actual breach of this Agreement would cause
irreparable injury to the disclosing party, for which monetary damages would be
inadequate. Accordingly, the receiving party agrees that the disclosing party is
entitled to an immediate injunction enjoining any such breach or threatened
breach of this Agreement, subsequent to the posting of a suitable bond with the
court of pertinent jurisdiction. The receiving party agrees to be responsible
for all costs, including attorneys’ fees, incurred by the disclosing party in
any action enforcing the terms of this Section.

 

9.7 The receiving party will promptly advise the disclosing party in writing of
any unauthorized use or disclosure of Confidential Information of which the
receiving party becomes aware and will provide reasonable assistance to the
disclosing party to terminate such unauthorized use or disclosure.

 

9.8 This confidentiality section shall supersede all prior agreements pertaining
to confidential information between Cyclone and G2E or a preceding person or
entity working to initiate and/or negotiate the terms of this Agreement.

 

Initials: _______ _______

 

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10. Miscellaneous

 

10.1 Nothing contained in this Agreement will be construed as conferring by
implication, estoppel, or otherwise, upon any party licensed hereunder, any
license or other right under any patent except the licenses and rights expressly
granted herein.

 

10.2 G2E will conspicuously mark directly on each Licensed Product it
manufactures or sells that the Licensed Product is covered by the Cyclone’s
patent, including the numbers and other identifying information for which will
be provided to G2E.

 

10.3 All notices required by this Agreement will be in writing and sent by
certified mail, return receipt requested, by hand or overnight courier, to the
addresses set forth on the initial page, with copies to the Legal Contacts set
forth in the Specific License Terms, unless either party will at any time by
notice in writing designate a different address. Notice will be effective three
days after the date officially recorded as having been deposited in the mail or
upon receipt by hand delivery or the next day by overnight courier.

 

10.4 G2E shall not assign, convey, encumber, or otherwise dispose of any of its
rights or obligations under this Agreement without the prior written consent of
Cyclone, which consent shall not be unreasonably delayed or withheld, and any
such purported assignment will be invalid.

 

10.5 No term of this Agreement will be deemed waived, and no breach of this
Agreement excused, unless the waiver or consent is in writing signed by the
party granting such waiver or consent.

 

10.6 If any term or provision of this Agreement is determined to be illegal or
unenforceable, such term or provision will be deemed stricken or reduced to a
legally enforceable construction, and all other terms and provisions will remain
in full force and effect.

 

10.7 This Agreement represents the entire agreement of the parties replacing any
earlier agreements concerning the same matters. It may only be modified by a
subsequent writing signed by the parties hereto.

 

10.8 Each party is acting as an independent contractor and not as an agent of
the other party. Nothing contained in this Agreement will be construed to confer
any authority upon either party to enter into any commitment or agreement
binding upon the other party.

 

Initials: _______ _______

 

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10.9 This Agreement, including its formation, all of the parties’ respective
rights and duties in connection herewith and all disputes that might arise from
or in connection with this Agreement or its subject matter, will be governed by
and construed in accordance with the laws of the State of Florida, the United
States of America, without giving effect to that State’s conflict of laws rules.
If any controversy, dispute or disagreement arises from this Agreement, the
parties agree to first attempt to settle such by arbitration in accordance with
the rules of the American Arbitration Association. In such case, the decision of
the arbitrator or arbitrators shall be binding and final, and may be entered as
a judgment and enforced by any court having jurisdiction. The prevailing party
in any action shall be entitled to receive reimbursement for reasonable
attorneys’ fees, court/arbitration costs, and disbursements incurred in
connection with such controversy, dispute or disagreement. Should the need arise
to determine any reimbursement issues, the parties will be subject to the
exclusive jurisdiction of courts located in Broward County, Florida, and their
applicable courts of appeal, each party agreeing to such jurisdiction
exclusively.

 

In Witness Whereof, the parties have caused this Systems Application License
Agreement, comprised of these Specific License Terms and the Standard Terms and
Conditions to be executed by their duly authorized officers on the respective
dates hereinafter set forth

 

Cyclone Power Technologies, Inc.   G2E, S.A.P.I. de C.V.           By:     By:  
  Frankie Fruge, President    

Daniel Camarena

  May 1, 2016    

May 1, 2016

 

Initials: _______ _______

 

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