Ikona Gear International, Inc. - Exhibit 10.1







	MAGNA Drivetrain AG & Co KG 
	AND 
	IKONA GEAR USA, INC. 
	AND 
	IKONA GEAR INTERNATIONAL, INC. 
	 
	_______________________
	 
	LICENSE 
	AGREEMENT 
	_______________________
	
	
	
	






 

	LICENSE AGREEMENT 
	 
	TABLE OF CONTENTS 




	1. DEFINITIONS
      	1 
	  	1.1 	Definitions. 	1 
	  	1.2 	Other Definitions. 	5 
	2. LICENSE
      GRANT AND RELATED RESTRICTIONS 	5 
	  	2.1 	Development License. 	5 
	  	2.2 	Commercialization License. 	5 
	  	2.3 	Right to Sub-License. 	6 
	  	2.4 	Designation of Designated Magna Applications
    	7 
	3. COMMERCIALIZATION
    	8 
	  	3.1 	Diligence in Commercialization 	8 
	  	3.2 	Corporation to Control Production Program.
    	9 
	4. EXCLUSIVITY
      FEE 	9 
	  	4.1 	Exclusivity Fee. 	9 
	5. ROYALTY
      PAYMENTS 	10 
	  	5.1 	Royalty for License. 	10 
	6. PAYMENT
      TERMS 	11 
	  	6.1 	Invoices and Payments. 	11 
	  	6.2 	Payment of Royalties 	11 
	  	6.3 	Taxes 	12 
	  	6.4 	Late Payments 	12 
	  	6.5 	Records and Access 	12 
	7. INTELLECTUAL
      PROPERTY 	13 
	  	7.1 	Existing Intellectual Property. 	13 
	  	7.2 	Improvements to Technology 	13 
	  	7.3 	Use of Trademarks 	13 
	8. FILING
      OF PATENTS AND TECHNICAL ASSISTANCE 	14 
	  	8.1 	Technical Assistance. 	14 
	  	8.2 	Filing of Patents 	15 
	9. REPRESENTATIONS,
      WARRANTIES AND COVENANTS 	15 
	  	9.1 	Licensor’s Representations and Warranties.
    	15 
	  	9.2 	Ikona Gear Validation. 	16 
	  	9.3 	Corporation’s Representations and Warranties.
    	16 
	  	9.4 	Corporation’s Continuing Obligations.
    	16 
	  	9.5 	No Warranty. 	16 
	  	9.6 	No Consequential Damages 	17 
	10. INDEMNIFICATION	17 
	  	10.1 	Licensor’s Obligation to Indemnify.
      	17 
	  	10.2 	The Corporation’s Obligation to Indemnify
      	17 







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	 11. INFRINGEMENT 	 18 
	 	 11.1 	 Infringement by the Corporation. 	 18 
	 12. ENFORCEMENT 	 21
	 	 12.1 	 Infringement by Third Party 	 21 
	 	 12.2 	 Rights on Infringement 	 21 
	 	12.3 	 Cooperation with Other Licensees. 	 22 
	 13. CONFIDENTIALITY
    	 23
	 	13.1 	 Obligation of Confidentiality 	 23 
	 	13.2 	 Permitted Disclosure 	 23 
	 	13.3 	 Survival of Obligation. 	 24 
	 14. TERM 	 24 
	 	14.1 	 Term of Agreement 	 24 
	 15. TERMINATION 	 24 
	 	15.1 	 Termination for Bankruptcy, Insolvency,
      etc 	 24 
	 	15.2 	 Termination for Default 	 25 
	 	15.3 	 Termination by the Corporation. 	 26 
	 	 15.4 	 Terminating Party 	 26 
	 	15.5 	 Rights on Termination 	 26 
	 	15.6 	 Obligations on Termination 	 26 
	 	15.7 	 Royalty Payments Upon Termination. 	 27 
	 	15.8 	 Right to Use Technology upon Termination/Expiration.
      	 27 
	 16. NOTICE 	 28 
	 	16.1 	 Notice 	 28 
	 17. INSURANCE 	 29 
	 	17.1 	 Insurance Coverage 	 29 
	 18. GENERAL 	 29 
	 	18.1 	 Force Majeure 	 29 
	 	18.2 	 Further Assurances. 	 29 
	 	18.3 	 Amendments 	 29 
	 	18.4 	 Assignment. 	 29 
	 	18.5 	 Severability 	 30 
	 	18.6 	 Survival 	 30 
	 	18.7 	 No Waiver 	 30 
	 	18.8 	 Currency. 	 30 
	 	18.9 	 Time of the Essence 	 30 
	 	18.10 	    Governing Law 	 30 
	 	18.11 	    Arbitration 	 31 
	 	18.12 	    Entire Agreement. 	 31 
	 	18.13 	    Headings 	 31 
	 	18.14 	    Relationship of the Parties
      	 31 
	 	18.15 	    Public Announcements 	 31 
	 	18.16 	    Rights and Remedies 	 32 
	 	18.17 	    Execution in Counterparts
      	 32 
	 	18.18 	    Additional Obligations of
      Ikona 	 32 













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 SCHEDULE A      LICENSED PATENTS

 SCHEDULE B      DESIGNATION ADDENDUM






LICENSE AGREEMENT

This LICENSE AGREEMENT is made as of December 15, 2005
  (the “Effective Date”) among MAGNA Drivetrain AG & Co
  KG , an Austrian corporation (hereinafter referred to as the “Corporation”),
  IKONA GEAR USA, INC., a Nevada corporation (hereinafter referred to as
  “Licensor”) and IKONA GEAR INTERNATIONAL, INC., a Nevada
  corporation (hereinafter referred to as “Ikona”)

WHEREAS:

A. Licensor possesses certain intellectual and industrial
property (including confidential and/or proprietary information, trade secrets,
patents, inventions, know-how and show-how) relating to the design and
manufacture of planetary gear technology owned by Licensor, including the
patents listed on Schedule A to this Agreement; 

B. Licensor and the Corporation entered into a letter agreement
dated April 8, 2003, as extended by a letter agreement dated April 27, 2004 and
amended by a letter agreement dated September 3, 2004 (collectively, the
“Development Agreement”), to examine and develop automotive applications
for planetary gear technology owned by Licensor; and

C. The Corporation is desirous of licensing such technology
from Licensor for use by the Corporation, its affiliates and certain
sub-licensees and Licensor is willing to license such technology to the
Corporation, on the terms and conditions set out in this Agreement.

NOW THEREFORE in consideration of the premises and the
mutual covenants and agreements contained in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties to this Agreement hereby each agree with the other as
follows:

1. DEFINITIONS

1.1 Definitions.

As used in this Agreement, the following terms shall have the
meanings set forth below:

	 	(a) 	
      “Affiliate” means, with respect to a specified
      Person, a Person that, directly or indirectly through one or more
      intermediaries, controls, or is controlled by, or is under common control
      with, the specified Person. For the purposes of this definition, the term
      “control” shall mean the possession of the power to direct or cause
      the direction of the management and policies of a person, whether through
      the ownership of voting securities, by contract or otherwise. For greater
      certainty, the ability to appoint 50% or more of the directors or
      individuals performing a similar function in respect of any Person shall
      be deemed to be “control” of that Person;

	 	 	 
	 	(b) 	
      “Agreement” means this Agreement as amended from
      time to time together with all Schedules hereto, and the words “this
      Agreement”, “hereof”, “herein”,







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			 “hereunder” and similar expressions shall
        refer to this Agreement and not to any particular Article, Section, Subsection
        or Paragraph hereof;

	 	 	 
	 	(c) 	 “Automotive Applications” means the use of
        the Technology, including use in ** Portions of this exhibit have been
        omitted and filed separately with the SEC.

	 	 	 
			 Confidential treatment has been requested with respect
        to the omitted portions.

	 	 	 
	 	(d) 	 “Business Day” means a day, other than
        a Saturday or Sunday, on which the principal commercial banks located
        in the Province of Ontario or the Province of British Columbia or in Austria
        are open for business during normal business hours;

	 	 	 
	 	(e) 	 “Confidential Information” means any
        and all confidential and/or all proprietary information and trade secrets
        disclosed by Licensor or the Corporation to the other party, as the case
        may be, pertaining to their respective technologies and other business
        activities and information, including, without limitation, the Ikona Gears,
        the Technology, any Designated Magna Parts and any Improvements, including,
        without limitation all scientific knowledge, technology, know-how, designs,
        inventions, processes, methods, data, specifications, plans, drawings,
        models, prototypes, techniques, formulae, patterns, computations, software,
        codes, programs, special devices, products, operational information, financial
        information (including pricing and costing information), customer information,
        supplier information, distribution information, computer or other data,
        business plans, strategic plans or other records and information disclosed
        pursuant to the terms of this Agreement, whether disclosed visually, orally
        (if confirmed in writing), in written, graphic or physical form, or in
        any other manner whatsoever and whether or not such information is specifically
        described, designated or marked “private” or “confidential”
        and shall specifically include confidential information disclosed prior
        to the date hereof pursuant to the Confidentiality Agreement;

	 	 	 
	 	(f) 	 “Confidentiality Agreement” means the
        confidentiality agreement dated January 21, 2003 by and between the Corporation
        and Licensor;

	 	 	 
	 	(g) 	 “Contract Year” means each of the one
        (1) year period commencing on September 1st of each calendar
        year and ending on August 31st in the following year during
        the Term;

	 	 	 
	 	(h) 	 “Default Notice” has the meaning set
        forth in Section 15.2;








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	 	(i) 	 “Designated Magna Application” means
        an Automotive Application designated by the parties under Section 2.4
        from time to time during the Term;

	 	 	 
	 	(j) 	 "Designated Magna Parts" means automotive parts,
        components or modules that incorporate the Ikona Gear and are covered
        by a Designated Magna Application;

	 	 	 
	 	(k) 	 “Designation Addendum” has the meaning
        set out in Section 2.4;





	 	(l) 	 “Designation Date” means,
        in respect of a Designated Magna Application, the date on which the parties
        execute a Designation Addendum therefor;

	 	 	 	 
	 	(m) 	 “Designation Notice” has
        the meaning set out in Section 2.4;

	 	 	 	 
	 	(n) 	 “Development Agreement” has
        the meaning set forth in the recitals hereto;

	 	 	 	 
	 	(o) 	 “Effective Date” means the
        date first set out on page 1 hereof;

	 	 	 	 
	 	(p) 	 “FTE” means full-time equivalent;

	 	 	 	 
	 	(q) 	 “Ikona Gear” means a gear
        set covered by at least one of the Licensed Patents;

	 	 	 	 
	 	(r) 	 "Improvements" shall mean any and all
        improvements, enhancements, revisions and derivative works of, to, in
        or based upon the Technology;

	 	 	 	 
	 	(s) 	 “Intellectual Property” shall
        mean all intellectual property (whether registered, applied for or unregistered),
        including any inventions, inventor’s, rights, discoveries, improvements,
        Patents, copyrights, copyright applications, moral rights, industrial
        designs, industrial design applications, mask works, utility models, trademarks,
        trademark applications, know-how, show-how and trade secrets;

	 	 	 	 
	 	(t) 	 “Know-How” means techniques,
        trade secrets, scientific knowledge, know-how, show-how, processes, procedures,
        methods, formulae, products, blue prints, drawings and specifications
        for materials, processes and equipment, and all other technical data,
        documents or information;

	 	 	 	 
	 	(u) 	 “Licensed Know-How” means
        all Know-How and Intellectual Property (other than the Licensed Patents)
        that is or becomes owned, used, developed or possessed by Licensor as
        at the Effective Date and/or during the Term relating to the design and
        manufacture of the Ikona Gear;

	 	 	 	 
	 	(v) 	 “Licensed Patents” means:

	 	 	 	 
			(i) 	 the Patents identified in Schedule A hereto as
        the same may be amended or updated from time to time, and

	 	 	 	 
			(ii) 	 any Patents that claim priority to the Patents identified
        in Schedule A hereto made by the parties during the Term, whether
        jointly or solely by a party;

	 	 	 	 







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	 	(w) 	 “Patents” means:

	 	 	 	 
			(i) 	 any issued patent or patent application (and any patents
        which may issue hereafter pursuant to any patent application),

	 	 	 	 
			(ii) 	 all continuations and continuations-in-part applications
        to the issued patent or patent application set out in Paragraph (i) (solely
        to the extent such continuations-in-part applications contain subject
        matter on which claims issuing obtain the benefit of a priority date of
        any patent or patent application set out in Paragraph (i)),





			(iii) 	 all divisions, patents of addition, derivatives, substitutions,
        re- examinations, reissues, renewals and extensions of any of the patent,
        patent application, continuations and continuations-in-part applications
        set out in Paragraphs (i) and (ii), and

	 	 	 	 
			(iv) 	 all foreign counterparts of any of the foregoing;

	 	 	 	 
	 	(x) 	 “Person” shall, as the context
        requires, include any individual, body corporate, partnership, joint venture,
        association, syndicate, trust, government body and any other form of entity
        or organization;

	 	 	 	 
	 	(y) 	 “Production-Ready Date” means
        the first day of the month following the date on which all validation
        and process qualification is completed to the satisfaction of the Corporation
        acting reasonably and its customers (in its customers’ sole discretion)
        and the Corporation is ready and able to manufacture Designated Magna
        Parts with respect to the Corporation’s applicable OEM production
        program;

	 	 	 	 
	 	(z) 	 “Regulatory Approval” means
        any and all approvals, licenses, registrations or authorizations of any
        federal, state, provincial or local regulatory agency, department, bureau
        or other governmental entity, necessary for the commercial manufacture,
        use, storage, import, transport, marketing, and sale or distribution of
        Designated Magna Parts for use in Automotive Applications in a country
        or regulatory jurisdiction;

	 	 	 	 
	 	(aa) 	 “Sub-Licensee” means a Third
        Party sub-licensee of the Corporation approved by Licensor under Subsection
        2.3(b);

	 	 	 	 
	 	(bb) 	 “Technical Documentation”
        means all technical or other information, data, records or documents,
        whether computerized or otherwise, relating to the Technology and use
        of the Ikona Gears in Automotive Applications including, without limitation,
        all blue prints, designs, drawings, text, material, process or other specifications,
        formulae, patterns, computations, quality control and evaluations tests,
        techniques, standards and results, process parameters and copies of all
        Patents, patent searches, objects, investigations and applications and
        shall also include customer information, supplier information and distribution
        information relevant to the use of the Ikona Gears in Automotive Applications;








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	 	(cc) 	 “Technology” means the Licensed
        Know-How and the Licensed Patents;

	 	 	 	 
	 	(dd) 	 “Term” has the meaning set
        forth in Section 14.1;

	 	 	 	 
	 	(ee) 	 “Termination Notice”
        has the meaning set forth in Sections 15.1 and 15.2, as the case may be;





	  	(ff) 	“Territory” means the jurisdictions
      identified in Schedule A hereto, as the same may be amended (or deemed amended)
      from time to time; and
	  	  	  	  
	  	(gg) 	“Third Party” shall mean any Person
      other than the Corporation, Licensor or their respective Affiliates. 
	  	  	  	  
	1.2 	Other Definitions. 
	  	  	  	  
	Any words defined elsewhere in this Agreement
      shall have the particular meaning assigned to the words thereto. 

	  	  	  	  
	2. 	LICENSE GRANT AND RELATED RESTRICTIONS
    
	  	  	  	  
	2.1 	Development License. 
	  	  	  	  
	Subject to the terms
        and provisions of this Agreement, Licensor hereby grants to the Corporation
        a non-exclusive license during the Term in and to the Technology, to research,
        design, develop, build, test and market Ikona Gears for use in Automotive
        Applications, with the right to sub- license such rights to its Affiliates
        and Third Parties on the terms and conditions set forth in Section 2.3.
      




	  	  	  	  
	2.2 	Commercialization License. 
	  	  	  	  
		(a) 	 Subject to Subsection
        2.2(b) and the other terms and provisions of this Agreement, Licensor
        hereby grants to the Corporation a non-exclusive, royalty- bearing license
        during the Term in and to the Technology, to make (including, where necessary,
        design and develop), have made, assemble, have assembled, use, have used,
        sell, have sold, offer for sale, import and export Designated Magna Parts
        in the Territory solely for use in Automotive Applications, with the right
        to sub-license such rights to its Affiliates and Third Parties on the
        terms and conditions set forth in Section 2.3. 








	  	  	  	  
		(b) 	 If, under Section
        2.4, the parties designate a Designated Magna Application on an exclusive
        basis, the license granted under Subsection 2.2(a) in respect of the applicable
        Designated Magna Parts for such Designated Magna Application shall, for
        a period of three (3) years from the earlier of: 




	  	  	  	  
			(i) 	 the Production Ready Date for
        the first applicable Designated Magna Part for such Designated Magna Application;
        and 


	  	  	  	  
			(ii) 	the second anniversary of the Designation Date for
      such Designated Magna Application; 













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	comprise a sole, exclusive royalty-bearing
        license during the Term in and to the Technology, to make (including,
        where necessary, design and develop), have made, assemble, have assembled,
        use, have used, sell, have sold, offer for sale, import and export such
        Designated Magna Parts in the Territory solely for use in Automotive Applications,
        with the right to sub-license such rights to its Affiliates and Third
        Parties on the terms and conditions set forth in Section 2.3. Upon the
        expiration of such three (3) year period, the sole and exclusive license
        granted hereunder in respect of the Designated Magna Application shall
        convert to a non- exclusive, royalty-bearing license, on the terms and
        conditions set out in Subsection 2.2(a) without the requirement of any
        further act or formality.

	 	 	 	 
	2.3 	 Right to Sub-License.

	 	 	 	 
		(a) 	 The Corporation shall be entitled to sub-license
        its rights under Sections 2.1 or 2.2 to any Affiliate of the Corporation
        on prior written notice thereof to Licensor, provided that:

	 	 	 	 
			(i) 	 each such sublicense shall be by written agreement;

	 	 	 	 
			(ii) 	 the Corporation will cause the Affiliate so sublicensed
        to perform the terms of this Agreement as if such Affiliate were the Corporation
        hereunder; and

	 	 	 	 
			(iii) 	 the obligations and liabilities of such Affiliates and
        the Corporation hereunder shall be joint and several and Licensor shall
        not be obliged to seek recourse against an Affiliate before enforcing
        its rights against the Corporation. For greater certainty it is hereby
        confirmed that any default or breach by an Affiliate of the Corporation
        of any term of this Agreement will also constitute a default by the Corporation
        under this Agreement.

	 	 	 	 
		(b) 	 The Corporation shall be entitled to sub-license
        its rights under Sections 2.1 or 2.2 to Third Parties, provided that:

	 	 	 	 
			(i) 	 the Corporation shall first identify such sub-licensees
        to Licensor for prior written approval, such approval not to be unreasonably
        withheld or delayed;

	 	 	 	 
			(ii) 	 each such sublicense shall be by written agreement;
        and

	 	 	 	 
			(iii) 	 the Corporation shall not include in any sublicense
        agreement covenants by the Sub-Licensee that are inconsistent with the
        terms and conditions set out in this Agreement, including, without limitation,
        those related to obligations of confidentiality. Each sublicense agreement
        shall provide that, upon termination of this Agreement, at Licensor’s
        sole option and subject to the Sub-Licensee’s right to terminate
        the sublicense agreement, such sublicense agreement shall be automatically
        converted to a direct license from Licensor.








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		 (c)
	The Corporation shall furnish to Licensor
        a copy of each sublicense agreement entered into hereunder within 30 days
        after execution thereof, provided that such copy may be redacted to exclude
        provisions other than those required to confirm compliance with this Agreement,
        including the calculation of royalties and the conduct of audits hereunder.
        All sublicense agreements furnished to Licensor hereunder shall be deemed
        to be the Confidential Information of the Corporation and shall be subject
        to Licensor’s obligation of confidentiality under Article 13. For
        purposes of this Subsection 2.3(c), confidential information of the Sub-
        Licensee shall be deemed to be Confidential Information of the Corporation.

	 	 	 	 
	2.4 	 Designation of Designated Magna Applications.

	 	 	 	 
		(a) 	 From time to time during the Term, the Corporation
        may provide written notice to Licensor (a “Designation Notice”)
        requesting the designation of one or more automotive applications as Designated
        Magna Applications on either:

	 	 	 	 
			(i) 	 a non-exclusive basis licensed under Subsection 2.2(a)
        of this Agreement; or

	 	 	 	 
			(ii) 	 an exclusive basis licensed under Subsection 2.2(b)
        of this Agreement, subject to the payment of the exclusivity fee set out
        in Section 4.1 for each such Designated Magna Application.

	 	 	 	 
		(b) 	 Subject to Subsection 2.4(c), the Corporation
        and Licensor shall execute a written addendum to this Agreement, in the
        form set out in Schedule B attached hereto (a “Designation
        Addendum”) within five (5) Business Days of Licensor’s receipt
        of the Designation Notice. Upon execution of a Designation Addendum by
        both parties, the Designation Addendum shall be deemed to form an integral
        part of this Agreement and the Automotive Application described therein
        shall become a Designated Magna Application, for which the Technology
        is licensed on a non- exclusive or exclusive basis, as set out therein.

	 	 	 	 
		(c) 	 If the proposed designation is not available
        due to the fact that the proposed Designated Magna Application is subject
        to a license in and to the Technology for use in a specific part, module
        or component for use in Automotive Applications granted by Licensor to
        a bona fide Third Party prior to the request for designation hereunder,
        then:

	 	 	 	 
			(i) 	 where such Third Party license was granted on an exclusive
        basis, the parties shall discuss the proposed designation and such revisions
        as are necessary to avoid conflict with the Third Party license following
        which, the Corporation may resubmit its designation with such revisions;
        or

	 	 	 	 
			(ii) 	 where such Third Party license was granted on a non-exclusive
        basis, to the extent the Corporation was requesting an exclusive license,
        the Corporation may resubmit its designation as a request for a non-exclusive
        license.








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		 	The unavailability of a license pursuant to this
        Subsection 2.4(c) shall be reasonably substantiated by Licensor by providing
        evidence of such Third-Party license to the Corporation with reasonable
        promptness following receipt of the Designated Notice. Any disputes pursuant
        to this Subsection 2.4(c) may be referred directly to arbitration under
        Section 18.11. The decision of the arbitrator shall be final and binding
        and the parties shall execute a Designation Addendum reflecting such decision.

		 	 
		(d) 	 For clarity, the form of license applied (i.e., exclusive
        or non-exclusive) to the designation of one or more Automotive Applications
        as a Designated Magna Application shall apply to all parts, components
        or modules within the applicable Automotive Application as designated
        in the Designated Notice. By way of illustration, the following is a non-exhaustive
        list of Automotive Applications to which a license may apply: ** Portions
        of this exhibit have been omitted and filed separately with the SEC. Confidential
        treatment has been requested with respect to the omitted portions. The
        Corporation does not offer any assurance or guarantee that it will develop
        the Technology for application in any or all of these areas.

	 	 	 
		(e) 	 Following the designation of a Designated Magna Application
        on an exclusive basis pursuant to Subsection 2.2(b), and for the duration
        of such exclusivity, Licensor will not enter into any agreement, obligation
        or commitment that would prevent or impair the exercise of all rights
        granted to the Corporation pursuant to Subsection 2.2(b), provided that
        the foregoing shall not prevent Licensor from licensing the Technology
        for research and development purposes. Following the grant of a license
        pursuant to Section 2.2. and for the duration of such exclusivity period,
        Licensor will not seek or solicit any business, contracts or orders incorporating
        the Technology into any part, component or module for Automotive Applications
        where such part, component or module would compete with a Designated Magna
        Part. For clarity, subject to the first sentence of this Subsection 2.4(e),
        nothing in the foregoing sentence shall prohibit Licensor from accepting
        business or orders from, or entering into contracts with, Third Parties
        with respect to competing products where such business or orders were
        not solicited by Licensor.

	 	 	 
		(f) 	 During the exclusivity periods provided under Subsection
        2.2(b), Licensor will not manufacture, have made, use or sell products
        that compete with Designated Magna Parts covered by the exclusive Designated
        Magna Application.

	 	 	 
	3. 	 COMMERCIALIZATION

	 	 	 
	3.1 	 Diligence in Commercialization.

	 	 	 
		(a) 	 The parties acknowledge and agree that, except as otherwise
        provided in this Agreement, the Corporation (or applicable Affiliate or
        Sub-Licensee, as the case may be) shall be solely responsible for developing
        and promoting, marketing, 








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			selling and otherwise commercializing
        the Designated Magna Parts in the Territory, including obtaining any applicable
        Regulatory Approvals therefor.

			 
		(b)	
        With respect to Designated Magna Parts that fall within an exclusive
          Designated Magna Application under Subsection 2.2(b), and for the period
          of such exclusivity, the Corporation shall, in the Corporation’s
          sole judgment, at its sole cost and expense, utilize commercially reasonable
          efforts and sound and reasonable business practice in developing and
          promoting, marketing, selling and otherwise commercializing the Designated
          Magna Parts in the Territory to meet or cause to be met the market demand
          for the Designated Magna Parts.

        Notwithstanding the foregoing, nothing contained herein shall be construed
          to require the board of directors or senior management of the Corporation
          to take or refrain from taking any action that would be inconsistent
          with its obligation to properly exercise its business judgment or discharge
          its fiduciary duties under applicable law and nothing herein contained
          shall be interpreted as imposing any liability on the Corporation for
          any action or inaction with respect to the commercialization of Designated
          Magna Parts where the Corporation is acting at the direction of senior
          management or its board of directors. 

      








	  	  	  
		(c) 	Licensor acknowledges
        that securing purchase orders for products, components or modules incorporating
        the Technology could take several years and there can be no assurance
        that orders will be obtained during that time or at all. 


	  
	  	  	  
		(d) 	The Corporation shall designate a Designated
      Magna Application pursuant to Subsection 2.2(b) on or before August 31st,
      2006. 

	  	  	  
	3.2 	Corporation to Control Production
      Program. 
	  	  	  
	The Corporation (or
        applicable Affiliate or Sub-Licensee, as the case may be) may, in its
        sole discretion, refuse to accept to participate in any particular production
        program or a purchase order for a Designated Magna Part, including without
        limitation for any of the following reasons: 



	  	  	  
		(a) 	the proposed selling
        price of the Designated Magna Part would not enable the Corporation (or
        applicable Affiliate or Sub-Licensee, as the case may be) to achieve a
        sufficient rate of return on the Designated Magna Part, after payment
        of the royalty thereon to Licensor; or 




	  	  	  
		(b) 	any other technical,
        production or economic reason in the judgment of the Corporation (or applicable
        Affiliate or Sub-Licensee, as the case may be). 


	  	  	  
	4. 	EXCLUSIVITY FEE 
	  	  	  
	4.1 	Exclusivity Fee. 
	  	  	  
	For each Designated
        Magna Application designated on an exclusive basis under Section 2.4,
        the Corporation shall pay to Licensor, upon execution of the Designation
        Addendum therefor, the sum of ** Portions of this exhibit have been
        omitted and filed separately with the SEC. Confidential treatment
        has been requested with respect to the omitted portions. in cash by
        bank transfer to Licensor’s bank account, using the co-ordinates
      




















- 10 -

provided by Licensor to the Corporation. The exclusivity fee
  paid hereunder shall be guaranteed, non-refundable and non- creditable, and
  in particular shall not be creditable against royalties payable under this Agreement.
  For greater clarity, the parties agree that, following the payment of the foregoing
  exclusivity fee, the royalty under Section 5.1 will not be subject to a minimum
  royalty and no minimum royalty will be payable thereunder or otherwise with
  respect to the applicable Designated Magna Application or related Designated
  Magna Parts. For each Designated Magna Application designated before August
  31st, 2006, payment of the exclusivity fee therefor will be deferred until August
  31st, 2006, provided that if written notice of termination of this Agreement
  is delivered at least 90 days prior to August 31st, 2006, the Corporation’s
  obligation to pay such deferred exclusivity fee shall not survive termination
  pursuant thereto.

5. ROYALTY PAYMENTS 

5.1 Royalty for License.

In consideration of the licenses granted under Sections 2.1 and
  2.2, the Corporation shall pay to Licensor during the Term, without duplication,
  a royalty, depending on volume, as follows:


  	Volume of Designated Magna Parts 

        per Designated Magna Application 
(Number of Designated
      Magna Parts) 	Royalty 

        (per Designated
      Magna Part) 



	** Portions of this exhibit have been
      omitted and filed separately with the SEC. Confidential
      treatment has been requested with respect to the omitted
      portions. 	** Portions of this exhibit
      have been omitted and filed separately with the SEC.
      Confidential treatment has been requested with respect to
      the omitted portions. 









per Designated Magna Part manufactured by the Corporation or
its Affiliates or Sub-Licensees in the Territory or sold by the Corporation or
its Affiliates or Sub-Licensees to any Person in the Territory, in accordance
with the payment provisions of Article 6. For the purposes of clarification, the
parties acknowledge that: 

	 	(a) 	
      in respect of sales between the Corporation and its
      Affiliates and Sub-Licensees, the royalty payable hereunder shall be paid
      only in respect of the first sale of such item, and no duplicate royalty
      shall be payable in respect of the resale of the same item by the
      Corporation or its Affiliates and Sub-Licensees, as the case may
  be;

	 	 	 
	 	(b) 	
      with respect to a particular Designated Magna Part, to
      the extent that the royalty payable hereunder shall have been paid with
      respect to the manufacture of such Designated Magna Part, no duplicate
      royalty shall be payable in respect of the sale or resale of the same item
      by the Corporation or its Affiliates or Sub- Licensees; and

	 	 	 
	 	(c) 	
      to the extent that the Designated Magna Part is a
      component or module (as opposed to a single part), the royalty payable
      hereunder shall be paid once in respect to such component or module and no
      royalty shall be payable in respect of each part that is incorporated into
      a component or module (or components that are incorporated into a
      module).








- 11 -

For purposes of calculating royalty payments hereunder, the manufacture
  and/or sale of Designated Magna Parts shall be calculated net of returns or
  recalls of Designated Magna Parts which are accepted for return and credited
  by the Corporation or its Affiliates and Sub-Licensees, provided that the royalty
  payments hereunder shall apply to any Designated Magna Parts repaired or provided
  in exchange or replacement for any returned or recalled Designated Magna Parts
  to the extent so credited by the Corporation or its Affiliates and Sub-Licences,
  as the case may be. To the extent not already accounted for pursuant to the
  foregoing sentence, no royalties will be payable on Designated Magna Parts manufactured
  or sold in connection with the return or recall of Designated Magna Parts which
  are accepted by the Corporation or its Affiliates and Sub-Licensees. For greater
  clarity, the parties agree that, except for the royalties and fees expressly
  payable hereunder, no other fee or royalty will be payable to the Licensor under
  this Agreement, a sublicense agreement or otherwise with respect to sales of
  Designated Magna Parts. Licensor agrees that any up front or similar fees paid
  to the Corporation by any Sub-Licensee shall be retained by the Corporation
  as compensation for its efforts and costs associated with the sublicense to
  the Sub-Licensee and continued support of such Sub-Licensee.

6. PAYMENT TERMS

6.1 Invoices and Payments.

Licensor shall provide to the Corporation invoices setting out
any amounts owed by the Corporation to Licensor in respect of obligations
performed by the Licensor under this Agreement. All such amounts shall be due
and payable sixty (60) days after receipt of the date of the invoice. Invoices
for FTE reimbursement will be invoiced quarterly and be accompanied by a
statement detailing the actual hours and costs and expenses incurred during the
quarter.

6.2 Payment of Royalties.

	 	(a) 	 All royalties payable under Section 5.1 shall
        be payable within sixty (60) days after the last day of each calendar
        quarter during the Term, commencing for the calendar quarter during which
        the first sale of a Designated Magna Part by the Corporation or its Affiliates
        or Sub-Licensees occurs.

	 	 	 	 
	 	(b) 	 The Corporation will also provide to Licensor
        within sixty (60) days after the last day of each calendar quarter following
        the commencement of royalty payments, a written report either electronically
        or by facsimile signed by an officer of the Corporation certifying such
        information in sufficient detail to permit verification of the calculation
        of the royalty payments for the preceding calendar quarter, including:

	 	 	 	 
	 		(i) 	 the number of Designated Magna Parts manufactured or
        sold in the Territory by the Corporation and its Affiliates and Sub-Licensees
        during the calendar quarter; and

	 	 	 	 
	 		(ii) 	 the royalties payable to Licensor for the calendar quarter.








- 12 -

	 		 Licensor acknowledges that such information
        comprises the Corporation’s Confidential Information, shall be used
        by Licensor solely for the purpose of verifying amounts owing hereunder,
        shall be held in confidence in accordance with Article 13 and shall not
        be disclosed by Licensor to any Third Party without the Corporation’s
        prior written consent. The foregoing obligation of non- disclosure shall
        survive the termination of this Agreement.



6.3 Taxes.

	 	(a) 	
      For the purposes of this Section 6.3, “Taxes”
      shall include all taxes, including, without limitation, all tariffs,
      customs duties, social services taxes, goods and services tax, value
      added, excise and other sales taxes.

	 	 	 
	 	(b) 	
      Licensor shall collect and remit all Taxes assessed or
      levied in connection with any activities performed by Licensor and shall
      pay all applicable Taxes levied on account of payments made to Licensor
      under this Agreement.

	 	 	 
	 	(c) 	
      The Corporation shall collect and remit all Taxes
      assessed or levied in connection with any activities performed by the
      Corporation pursuant to this Agreement.

	 	 	 
	 	(d) 	
      If any law or regulation in any country requires the
      withholding by the Corporation of any Taxes due on payments to be remitted
      to Licensor under this Agreement, such Taxes shall be deducted from the
      amounts paid to Licensor, provided that the Corporation shall take all
      reasonable measures, at Licensor’s written request and at Licensor ́s sole
      cost and expenses, to reduce the amount of such Taxes. If the Taxes are
      deducted from the amounts paid to Licensor, the Corporation shall furnish
      Licensor the originals of all official receipts for such Taxes and such
      other evidence of such Taxes and payment thereof as may be reasonably
      requested by Licensor and shall provide any reasonable assistance or
      co-operation, at Licensor’s sole cost and expense, which may be requested
      by Licensor in connection with any efforts by Licensor to obtain a credit
      for such Taxes, including, if reasonable to do so, the characterization of
      payments made hereunder so that it may take advantage of any and all
      benefits under any tax treaty between Canada and any foreign
    countries.



6.4 Late Payments.

Unless otherwise waived by Licensor, the Corporation shall pay
to Licensor upon any and all payments that are at any time overdue and payable
for more than 30 days after written notice of such default has been delivered to
the Corporation, interest at the rate of one percentage point (1%) above the
prime lending rate established by Licensor’s principal bank in Canada as of the
date such royalties become due, which rate shall be applied throughout the
period commencing on the date when such royalties become due up to the date of
payment. 

6.5 Records and Access.

	 	(a) 	 The Corporation shall keep and maintain for a period
        of three (3) years following each Contract Year, full, accurate and complete
        records and books of account in accordance with GAAP of all transactions
        relating to the subject matter of this Agreement, including the manufacture
        and sale of Designated Magna Parts by the Corporation and its Affiliates
        and Sub-Licensees, for the accurate determination of the yearly royalty
        payments to be made under this Agreement with respect to such Contract
        Year.








- 13 -

	 	(b)	Licensor shall have the right,
        upon reasonable advance notice, once each Contract Year to have a representative
        attend at the Corporation’s premises to inspect and audit the procedure
        by which the Corporation has determined the amount of the royalties payable
        hereunder. The costs and expenses for any inspection and audit shall be
        borne by Licensor provided that if an error of greater than five percent
        (5%) in the amount of the royalty paid or payable to Licensor is revealed
        by the inspection and audit, such costs and expenses shall be borne by
        the Corporation. 







7. INTELLECTUAL PROPERTY

7.1 Existing Intellectual Property.

As between the Corporation and Licensor, title to and ownership
or control of all rights in and to all Intellectual Property owned or licensed
by Licensor (other than rights licensed to Licensor by the Corporation) shall at
all times remain with Licensor and, except as expressly granted under this
Agreement, no rights in or to any such Intellectual Property shall vest in the
Corporation. 

7.2 Improvements to Technology

Any Improvements to the Licensed Patents made by the
Corporation and its Affiliates and Sub-Licensees for which patent applications
may be filed claiming priority to any Licensed Patents, shall be solely owned by
Licensor, and in respect of any such Improvements made by the Corporation or its
Affiliates, the Corporation or its Affiliates shall, at Licensor’s sole cost and
expense, assign or cause to be assigned to Licensor all right, title and
interest in and to such Improvements, and Licensor shall promptly add Patents
resulting therefrom to Schedule A and such Patents shall be automatically
included in the license granted by Licensor to the Corporation under Sections
2.1 and 2.2 (and, in any event, will be deemed to be added to Schedule A)
without the payment of any additional consideration by the Corporation, its
Affiliates or Sub-Licensees. The Corporation shall inform Licensor of any such
Improvements in a timely manner and, at Licensor’s sole cost and expense,
reasonably co-operate with Licensor in seeking Patent coverage for such
Improvements.

7.3 Use of Trademarks.

Licensor hereby grants to the Corporation the right to use the
trademark “IKONA GEAR” solely to refer to the Ikona Gears and Designated Magna
Parts, provided that to the extent permitted by the customer of the Corporation
or its Affiliates or Sub-Licensees, as the case may be, the Corporation shall
include, or cause to be included, at the Corporation’s sole cost and
expense:

	 	(a) 	on each Designated Magna Part, the trademark, “IKONA
      GEAR” and the patent markings applicable thereto (including applicable
      patent numbers); or 








- 14 -

	 	  	  
	 	(b) 	on the labeling or packaging of such Ikona Gears
      and Designated Magna Parts, such wording as may be mutually agreeable to
      the parties to indicate that the use of Licensor’s trademark is under
      license; 


	 	  	  
	provided that: 
	 	 	 
	 	(c) 	the cost of doing so is commercially reasonable giving
      due regard to the overall cost at the applicable Designated Magna Part and
      anticipated margins associated therewith; 






	 	(d) 	
      the inclusion thereof does not interfere with the
      manufacturing process for the applicable Designated Magna Part;
  and

	 	 	 
	 	(e) 	
      the inclusion thereof does not interfere with the product
      interfaces or utility of the applicable Designated Magna
  Part.



8. FILING OF PATENTS AND TECHNICAL
ASSISTANCE

8.1 Technical Assistance. 

	 	(a) 	
      The parties acknowledge that Licensor has delivered to
      the Corporation copies of all Technical Documentation, in written or other
      tangible form, that the Corporation may reasonably require to enable the
      Corporation to utilize the licenses granted under Sections 2.1 and
    2.2.

	 	 	 
	 	(b) 	
      Licensor, at the Corporation’s written request by way of
      an executed purchase order, agrees to provide to the Corporation, for a
      period of up to twelve (12) months commencing on the Effective Date, such
      reasonable technical and engineering assistance of up to one full time
      equivalent (FTE) as may be required to assist the Corporation in the
      integration of the Technology into the Ikona Gears and the Designated
      Magna Parts and for which Licensor will charge to and invoice the
      Corporation at the rate of Cdn$150 per hour, plus reasonable disbursements
      and expenses and goods and services tax (“GST”). Disbursements and
      expenses in excess of Cdn$5,000 per month shall require the prior written
      approval of the Corporation. Licensor will provide assistance from its
      Coquitlam facilities during Licensor’s normal business hours on Licensor’s
      Business Days unless otherwise agreed by the parties. If the Corporation
      requests assistance at locations other than Licensor’s Coquitlam
      facilities, the Corporation will promptly reimburse Licensor for its
      reasonable travelling and other reasonable disbursements and expenses
      actually and properly incurred in connection with the provision of such
      services, provided that Licensor keeps proper accounts and provides
      reasonable substantiation thereof to the Corporation within 30 days after
      the date the expenses are incurred.

	 	 	 
	 	(c) 	
      All such information provided by Licensor shall be held
      in confidence by the Corporation and its Affiliates, Sub-Licensees and
      their respective employees in accordance with the terms of Article
    13.








- 15 -

8.2 Filing of Patents.

Licensor shall be responsible for, and shall pay all attorneys’
  fees and related costs and out-of-pocket expenses related to, such renewals
  and maintenance as may be necessary or desirable to maintain and keep the Licensed
  Patents in good standing and the preparation, prosecution, issuance and/or maintenance
  and renewal of Patents in respect of Improvements. The Corporation shall have
  the right to review and comment on each filing made with respect to the Licensed
  Patents or any Patent for an Improvement to any Licensed Patent to be filed
  in the United States or any other jurisdiction and consult with Licensor as
  required prior to such filing to ensure that any Patent protection obtained
  by Licensor and the applicable claims are appropriate for the Ikona Gears and
  Designated Magna Parts and the business to be conducted by the Corporation.
  The Corporation shall have the right to monitor, and Licensor shall provide
  the Corporation with all relevant documents relating to, the prosecution of
  any Patents for such Improvements. The Corporation and Licensor shall, acting
  in good faith, mutually determine the countries foreign to the United States
  and Canada in which the said patent applications shall be filed. Licensor, its
  attorneys, agents and representatives, shall exercise all reasonable efforts
  to obtain allowance and issuance of the patents, as soon as practicable. If
  Licensor determines that any renewal, extension or other like application with
  respect to a Licensed Patent or a Patent application for Improvements to a Licensed
  Patent is not appropriate and will not be filed or prosecuted (or, if filed,
  will be abandoned), then Licensor shall advise the Corporation accordingly,
  and shall allow the Corporation a reasonable opportunity, at the Corporation’s
  sole option, to elect to proceed with such filing or prosecution, for the Corporation’s
  benefit and at its sole cost and expense (and whether in the Corporation’s
  own name or for and on behalf of Licensor), and Licensor agrees to fully cooperate
  with the Corporation in this regard; any right, title or interest in any such
  renewal, extension or other like application shall be owned or held by the Corporation.

9. REPRESENTATIONS, WARRANTIES AND
COVENANTS

9.1 Licensor’s Representations and Warranties.

Licensor hereby represents and warrants to the Corporation
that: 

	 	(a) 	
      it has full corporate power and authority to enter into
      this Agreement and to grant the license rights provided for
  herein;

	 	 	 
	 	(b) 	
      Licensor is the sole and exclusive owner of all rights in
      the Licensed Patents and, to the best of Licensor’s knowledge, the
      Licensed Know-How;

	 	 	 
	 	(c) 	
      Schedule A contains a complete list of all Patents
      relating to the design and manufacture of gears using Licensor’s planetary
      gear technology;

	 	 	 
	 	(d) 	
      there are no licenses relating to the Technology under
      which Licensor must pay a fee or royalty to any Third Party;

	 	 	 
	 	(e) 	
      as of the date hereof, no Third Party has been granted
      any rights to use or exploit the Technology and there are no outstanding
      assignments, grants, licenses, encumbrances, obligations or agreements,
      either written or oral, express or implied, which are inconsistent with
      this Agreement or that would prevent or impair the exercise of all rights
      granted to the Corporation pursuant to the terms of this Agreement;
    and

	 	 	 
	 	 	
       







- 16 -

	 	(f) 	there are no claims, actions,
        suits or proceedings commenced, pending or, to the best of Licensor’s
        knowledge, threatened, involving any Third Party alleging ownership of
        any or all of the Technology or claiming that the Technology infringes
        any existing Intellectual Property rights of such party, asserting the
        invalidity or unenforceability of the Licensed Patents or any misappropriation,
        use or infringement of any of the Technology and Licensor is not aware
        of any existing grounds under which any such claims, actions, suits or
        proceedings might be commenced against either it or the Corporation. 




9.2 Ikona Gear Validation.

Licensor undertakes to provide reasonable assistance to the
Corporation so that the Technology will successfully satisfy the Corporation’s
reasonable production purposes and requirements, and will take all steps, as
directed by way of an executed purchase order, at the Corporation’s expense, as
may be required to assist in resolving any technical issues which may prevent
the Corporation from attaining its required production levels for Designated
Magna Parts. 

9.3 Corporation’s Representations and Warranties.

The Corporation represents and warrants to Licensor that it has
full corporate power and authority to enter into this Agreement and to perform
all of the obligations required to be performed by the Corporation
hereunder.

9.4 Corporation’s Continuing Obligations.

The Corporation hereby covenants to Licensor that: it shall not
dispute or contest, directly or indirectly, the validity, ownership or
enforceability of any of the Licensed Patents or any of Licensor’s right, title
and interest in and to the Technology, nor counsel, procure or assist any other
party to do the same.

9.5 No Warranty. 

LICENSOR AND THE CORPORATION EACH MAKE NO REPRESENTATIONS OR
  WARRANTIES, EXPRESS OR IMPLIED, AND DISCLAIM ALL REPRESENTATIONS AND WARRANTIES,
  OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT, WITH RESPECT TO THE
  IKONA GEAR, THE DESIGNATED MAGNA PARTS, THE LICENSED PATENTS, THE LICENSED KNOW-HOW
  OR THE LIKELIHOOD OF SUCCESS IN THE DEVELOPMENT AND COMMERCIALIZATION OF ANY
  PRODUCTS, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS
  FOR A PARTICULAR PURPOSE, AND EACH PARTY HEREBY ACKNOWLEDGES THAT IT HAS BEEN
  ADVISED BY THE OTHER PARTY TO UNDERTAKE ITS OWN DUE DILIGENCE WITH RESPECT TO
  THE FOREGOING.




- 17 -

9.6 No Consequential Damages.

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, IN
  NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL
  OR INDIRECT DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY. 

10. INDEMNIFICATION

10.1 Licensor’s Obligation to Indemnify.

Licensor agrees to indemnify and hold harmless the Corporation
and its Affiliates and each of their directors, officers, employees and agents
against and from any and all disputes, damages, charges, proceedings (or the
defence thereof), suits, actions, costs, judgements, losses, claims, liabilities
and demands, including legal and other fees, disbursements and expenses, that
any such Person may suffer or incur, or that may be asserted against any such
Person, directly or indirectly arising from, as a consequence of, or resulting
from:

	 	(a) 	
      any allegation or finding that the Technology or the
      making, assembly, use, import/export or sale of:

	 	 	 	 
	 		(i) 	
      the Ikona Gears, or

	 	 	 	 
	 		(ii) 	
      Designated Magna Parts, by virtue of the inclusion of an
      Ikona Gear in such Designated Magna Parts,

	 	 	 	 
	 		
      infringes any patent, design patent, industrial design
      registration or copyright or violates any other Intellectual Property or
      other right of a Third Party;

	 	 	 	 
	 	(b) 	
      any breach of any representation or warranty made by or
      on behalf of Licensor pursuant to this Agreement; or

	 	 	 	 
	 	(c) 	
      any breach of any covenant made by or on behalf of
      Licensor pursuant to this Agreement;



except to the proportional extent caused by any of the
indemnified parties.

10.2 The Corporation’s Obligation to Indemnify.

The Corporation agrees to indemnify and hold harmless Licensor
and its Affiliates and each of their directors, officers, employees and agents
against and from any and all disputes, damages, charges, proceedings (or the
defence thereof), suits, actions, costs, judgements, losses, claims, liabilities
and demands, including legal and other fees, disbursements and expenses, that
any such Person may suffer or incur, or that may be asserted against any such
Person, directly or indirectly arising from, as a consequence of, or resulting
from:

	 	(a) 	 any allegation or finding that any Intellectual Property
        (other than the Technology) that the Corporation or its Affiliates or
        Sub-Licensees elect to use in the making, assembly, use, export or sale
        of the Designated Magna Parts infringes any patent, design patent, industrial
        design registration or copyright or violates any other Intellectual Property
        or other right of a Third Party;








- 18 -

	 	(b) 	 any personal injury, product liability or property damage
        relating to or arising from any Designated Magna Parts designed, manufactured
        or sold by the Corporation or its Affiliates or Sub-Licensees;





	 	(c) 	
      any breach of any representation or warranty made by or
      on behalf of the Corporation pursuant to this Agreement; or

	 	 	 
	 	(d) 	
      any breach of any covenant made by or on behalf of the
      Corporation pursuant to this Agreement.



except to the proportional extent caused by any of the
indemnified parties. 

11. INFRINGEMENT

11.1 Infringement by the Corporation.

In the event that any Third Party brings a claim, suit, action
or proceeding against the Corporation or any of its Affiliates or Sub-Licensees
or any customer of any of the foregoing that the manufacture, assembly, use,
sale, distribution, marketing or importation/exportation of an Ikona Gear or a
Designated Magna Part infringes such Third Party’s rights in Intellectual
Property (an “Infringement Suit”), the Corporation shall promptly notify
Licensor of the Infringement Suit and, to the extent permitted, deliver copies
of the relevant court filings; provided that the failure to provide such notice
promptly shall not release Licensor from any of its obligations to indemnify
unless (and only to the extent that) such failure shall prevent Licensor from
contesting, or materially and adversely affect the ability of Licensor to
contest, such Infringement Suit. The following provisions shall apply with
respect to an Infringement Suit:

	 	(a) 	 where the claim, suit, action or proceeding
        relates only to the Ikona Gear or the inclusion thereof in a Designated
        Magna Part, Licensor, in its sole discretion, shall have the first right,
        but not an obligation, to assume and control the defence of the Infringement
        Suit; provided that:

	 	 	 	 
	 		(i) 	 Licensor may only assume and control the defence of
        the Infringement Suit if Licensor delivers to the Corporation a written
        confirmation that the Licensor’s obligation to indemnify the Corporation
        and other indemnified parties in accordance with Subsection 10.1(a) applies
        in respect of such Infringement Suit; and

	 	 	 	 
	 		(ii) 	 nothing herein shall preclude the indemnified party
        from participating, at it own expense, in the defense of the Infringement
        Suit.

	 	 	 	 
	 	(b) 	 Licensor shall not be entitled to assume and
        control (but may, at its own expense, participate in) the defense of any
        such Infringement Suit if and to the extent that:








- 19 -

	 		 (i)
	in the reasonable opinion of the Corporation or other
        indemnified parties acting in good faith, such proceeding involves any
        risk of impairing the Corporation’s or other indemnified party’s
        reputation in the industry or the imposition of criminal liability on
        the Corporation or other indemnified party or the control of such action,
        suit or proceeding would involve an actual or potential conflict of interest
        as between the Licensor and the Corporation or other indemnified party,
        such that it is advisable for the Corporation or other indemnified party
        to be represented by separate counsel; or

	 	 	 	 
	 		(ii) 	 the claim, suit, action or proceeding does not relate
        only to the Ikona Gear or the inclusion thereof in a Designated Magna
        Part or otherwise involves claims not fully indemnified by Licensor under
        Subsection 10.1(a) which Licensor and the Corporation or other indemnified
        parties have been unable to sever from the Infringement Suit; or

	 	 	 	 
	 		(iii) 	 there are one or more defenses available to the Corporation
        or other indemnified parties that are different from or in addition to
        those available to Licensor.

	 	 	 	 
	 	(c) 	 The benefits (including any recovery by way
        of costs, damages or other amounts) of any defence commenced by Licensor
        shall accrue to, and the costs of any such proceedings, including the
        Corporation’s costs related to co-operating with Licensor, shall
        be borne by, Licensor. Nothing herein shall preclude the Corporation or
        the other indemnified parties from exercising any rights or remedies available
        to them at law or in equity including the commencement of appropriate
        proceedings against the alleged infringer or unauthorized user to recover
        any damages or losses suffered by the Corporation or any other indemnified
        party.

	 	 	 	 
	 	(d) 	 if Licensor does not take steps, in accordance
        with Subsection 11.1(a), to defend against the Infringement Suit within
        thirty (30) days after the date that notice thereof was received from
        or delivered to Licensor or such shorter time as may be required by applicable
        law, the Corporation shall have the right, but not the obligation, to
        undertake such defence. The benefits (including any recovery by way of
        costs, damages or other amounts) of any defence commenced by the Corporation
        shall accrue to the Corporation, and the unrecovered costs of any such
        defence, including Licensor’s costs related to co-operating with
        the Corporation, shall be borne by the Licensor. Licensor will, upon receipt
        of written request from the Corporation, assist the Corporation by providing
        any reasonable evidence and technical information available to Licensor;

	 	 	 	 
	 	(e) 	 the party defending against the Infringement
        Suit (in this section, the “Litigating Party”) shall
        have the right to control such litigation; provided that:

	 	 	 	 
	 		(i) 	 neither the Corporation nor any other indemnified party
        under Subsection 10.1(a) shall enter into any settlement or other compromise
        with respect to an Infringement Claim for which Licensor has in writing
        under Subsection 11.1(a) agreed to fully indemnify without the prior written
        consent of Licensor which may be withheld by the Licensor acting reasonably;
        and








- 20 -

	 		(ii)	 to the extent Licensor has assumed control of such Infringement
        Claim in accordance with Subsection 11.1(a), Licensor may enter into any
        settlement or other compromise with respect to such Infringement Claim
        without the prior written consent of the Corporation or other indemnified
        party, except in the case of a settlement involving any finding or admission
        of liability, fault or violation of law on the part of the Corporation
        or other indemnified party or in the case of a settlement that has an
        adverse effect on any other claims that may be made by the indemnified
        party against the third party bringing the Infringement Claim, in which
        case the prior written consent of the Corporation or other indemnified
        party shall be obtained;

	 	 	 	 
	 	(f) 	 the Litigating Party shall keep the other
        party fully informed of the status of the Infringement Suit, shall consult
        with the other party from time to time regarding the Infringement Suit
        and shall provide the other party with all information with respect to
        such Infringement Suit as such party shall reasonably request; and

	 	 	 	 
	 	(g) 	 the royalty payable hereunder on account
        of the Designated Magna Parts that are the subject of the Infringement
        Suit, up to a maximum amount equal to the amount claimed by the Third
        Party in the Infringement Suit, shall be withheld by the Corporation and
        held in trust in an interest-bearing trust account for Licensor until
        such Infringement Suit has been settled or resolved by a final and non-
        appealable order of a court of competent jurisdiction. No Infringement
        Suit shall prevent the payment of any royalty on account of Designated
        Magna Parts that are not the subject of the Infringement Suit. In the
        event such final and non- appealable order of a court of competent jurisdiction
        determines that the the manufacture, assembly, use, sale, distribution,
        marketing or importation/exportation of an Ikona Gear or Designated Magna
        Part by virtue of the inclusion of the Ikona Gear infringes the rights
        of such Third Party, the Corporation will be entitled to discontinue the
        payment of all royalties payable in respect of the affected Designated
        Magna Parts and any royalty payments held in trust shall be released to
        the Corporation together with the accrued interest thereon and the Corporation
        shall be entitled to offset any loss or damage covered by the indemnity
        under Section 10.1 resulting from such infringement claim against any
        royalties owing to Licensor under this Agreement. The Corporation shall
        also be entitled to offset any costs and expenses actually and reasonably
        incurred by the Corporation in defending against the Infringement Suit,
        including its costs and attorney fees, against any royalties owing to
        Licensor under this Agreement. If the final and non-appealable order of
        a court of competent jurisdiction determines that the manufacture, assembly,
        use, sale, distribution, marketing or importation/exportation of an Ikona
        Gear or a Designated Magna Part do not by virtue of the inclusion of the
        Ikona Gear infringe the rights of such Third Party, the Corporation shall
        pay, from the trust account, the royalties for the whole period in which
        such royalty payments were withheld plus accrued interest.








- 21 -

12. ENFORCEMENT

12.1 Infringement by Third Party. 

In the event that either party reasonably believes that a Third
  Party is or may be infringing, encroaching or violating any claim of the Licensed
  Patents or infringing any Licensed Know-How and whether such unauthorized use
  or infringement is actual or threatened, such party shall promptly deliver to
  the other party notice of the facts known to it and upon which it bases its
  opinion of such actual or threatened, unauthorized use or infringement and outlining
  any proceedings it considers necessary or appropriate to enforce any or all
  of Licensor’s rights in the Technology.

12.2 Rights on Infringement. 

	 	(a) 	
      Licensor shall use all reasonable measures, whether by
      action, suit or other proceeding to restrain or enjoin the infringement of
      the Licensed Patents and/or Licensed Know-How, by such Third Party. Upon
      receipt of the notice referred to in Section 12.1 hereof, Licensor shall
      have ninety (90) days to commence appropriate proceedings against the
      alleged infringer or unauthorized user, as the case may be. The
      Corporation agrees to cooperate with Licensor in any such proceeding
      including the voluntary joinder as party plaintiff if reasonably
      determined to be required by Licensor and to have its employees,
      representatives and/or agents testify in any legal proceeding, sign all
      lawful papers, and make all rightful oaths and generally do everything
      reasonably necessary to aid Licensor to enforce proper protection for the
      Licensed Patents and/or Licensed Know-How, in Canada, the United States
      and in any and all other applicable countries. The benefits (including any
      recovery by way of costs, damages or other amounts) of any proceedings
      commenced by Licensor shall accrue to, and the costs of any such
      proceedings, including the Corporation’s costs related to co-operating
      with Licensor, shall be borne by Licensor, provided that nothing herein
      shall preclude the Corporation or the other indemnified parties from
      exercising any rights or remedies available to them at law or in equity
      including the commencement of appropriate proceedings against the alleged
      infringer or unauthorized user to recover any damages or losses suffered
      by the Corporation or any other indemnified party. If, as a result of such
      claim, a final and non-appealable order of a court of competent
      jurisdiction determines that a Licensed Patent is invalid, then the
      Corporation will be entitled to discontinue the payment of all royalties
      payable hereunder in respect of Designated Magna Parts practising such
      Licensed Patent and may, at its sole option, in whole or in part,
      terminate this Agreement by providing written notice of termination to
      Licensor. The Corporation will be entitled to offset any loss or damage
      resulting from such claim, including its costs and attorney fees, against
      any royalties owing to Licensor under this Agreement.

	 	 	 
	 	(b) 	
      If, at the end of the said ninety (90) day period, Licensor
        has not notified the Corporation that it has commenced appropriate proceedings
        against the alleged infringer or unauthorized user and the alleged infringement
        or unauthorized use has not ceased, the Corporation shall have the right,
        but not the obligation, to commence appropriate proceedings against the
        alleged infringer or unauthorized user. 







- 22 -

	 		 If the Corporation institutes such proceedings, Licensor
        agrees to cooperate with the Corporation in any such proceeding including
        the voluntary joinder as party plaintiff if reasonably determined to be
        required by the Corporation and to have its employees, representatives
        and/or agents testify in any legal proceeding, sign all lawful papers,
        and make all rightful oaths and generally do everything reasonably necessary
        to aid the Corporation to enforce proper protection for the Licensed Patents
        and/or Licensed Know-How in Canada, the United States and in any and all
        other countries. The benefits (including any recovery by way of costs,
        damages or other amounts) of any proceedings commenced by the Corporation
        shall accrue to, and the costs of any such proceedings, including Licensor’
        costs related to co-operating with the Corporation, shall be borne by,
        the Corporation. Nothing in this Section 12.2 makes it mandatory for the
        Corporation to commence such proceedings. If, as a result of such claim,
        a final and non-appealable order of a court of competent jurisdiction
        determines that a Licensed Patent is invalid, then the Corporation will
        be entitled to discontinue the payment of all royalties payable hereunder
        in respect of Designated Magna Parts practising such Licensed Patent and
        may, at its sole option, in whole or in part, terminate this Agreement
        by providing written notice of termination to Licensor. The Corporation
        will be entitled to offset any loss or damage resulting from such claim,
        including its costs and attorney fees, against any royalties owing to
        Licensor under this Agreement.

	 	 	 
	 	(c) 	
      The party taking action against an alleged infringer
      shall have the right to control, but it shall have no right to settle any
      dispute in any manner which would abridge the reserved rights of the other
      party under this Agreement. By way of example and not by way of
      limitation, neither party may stipulate or admit to the invalidity or
      unenforceability of any Licensed Patent. Before any action is taken by
      either party which could abridge the rights of the other party hereunder,
      the parties agree to consult, in good faith, with a goal of adopting a
      mutually satisfactory position.

	 	 	 
	 	(d) 	
      The party taking action shall keep the other party fully
      informed of the enforcement action, shall consult with the other party
      from time to time regarding the enforcement action and shall provide the
      other party with all information with respect to such enforcement action
      as such party shall reasonably request.



12.3 Cooperation with Other Licensees. 

The Corporation acknowledges that Licensor may grant licenses
  to Third Parties under the Licensed Patents both within and outside the field
  of Automotive Applications and that such licenses may include rights to permit
  such Third Parties to defend or enforce a claim within the Licensed Patents.
  To the extend that Licensor grants to a Third Party any license including rights
  to defend or enforce a claim within Licensed Patents, the Corporation will use
  commercially reasonable efforts to cooperate with Licensor and such Third Party,
  at Licensor’s sole cost and expense, in the defense or enforcement of such
  Licensed Patents and, in connection with such efforts, will use good faith efforts
  to determine, jointly with Licensor and such Third Party, the course of action,
  if any, necessary or appropriate to defend or enforce such Licensed Patents,
  as applicable; provided that Licensor includes provisions in its license with
  such Third Party no less restrictive and comparable to this Section 12.3.




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13. CONFIDENTIALITY

13.1 Obligation of Confidentiality.

During the Term each party shall hold in trust as confidential
  and secret and, without the prior written consent of the other party, shall
  not disclose, distribute or disseminate to any otherPerson (other than to Sub-Licensees
  provided such disclosure is in accordance with the applicable sub-license agreement
  or to Affiliates as otherwise permitted pursuant to this Agreement) any Confidential
  Information furnished to such party by the other party pursuant to this Agreement.
  Each party shall use the Confidential Information solely for the purposes set
  forth in this Agreement. Each party agrees to handle Confidential Information
  belonging to the other party with at least the same degree of care as it handles
  its own proprietary information and to take all reasonable precautions to prevent
  its officers and employees from disclosing Confidential Information to others
  and from utilizing the same for any purpose other than this Agreement. In furtherance
  of the foregoing, both parties will disclose such Confidential Information only
  to those of their respective employees and agents having a need to know such
  Confidential Information for purposes set forth in this Agreement. Both parties
  agree to have any of their respective employees or agents who may become involved
  in the exchange of Confidential Information to execute a non-disclosure agreement
  consistent with the provisions of this agreement or to provide the disclosing
  party, upon request, with evidence of a written undertaking by such employee
  or agent to keep Confidential Information received in the course of performing
  his/her/its duties confidential. Both parties shall enforce such undertaking
  in respect of any actual or threatened breach of confidentiality provided for
  in this Agreement by such agent or employee to the extent permissible at law.

13.2 Permitted Disclosure.

Notwithstanding Section 13.1, the Corporation shall be
permitted to reveal such of the Confidential Information to its customer(s) as
reasonably required by the Corporation to carry out its business activities with
such customer(s) as contemplated under this Agreement, provided that the
Corporation shall use such efforts to protect the Confidential Information as is
the Corporation’s usual practice in disclosing its own confidential information
to its customers. Additionally, the foregoing obligations of confidentiality and
non-disclosure in respect of the Confidential Information shall not extend to
any Confidential Information which:

	 	(a) 	 was known and existed in documentary or other physical
        form in the possession of the receiving party at the time of disclosure;

	 	 	 
	 	(b) 	 was part of the public domain at the time of disclosure
        or thereafter becomes part of the public domain through no act or failure
        to act of the receiving party;

	 	 	 
	 	(c) 	 was furnished by either party as a matter of right without
        restriction on its disclosure or which is disclosed with the consent of
        the disclosing party;

	 	 	 
	 	(d) 	 was disclosed to the receiving party by a Third Party,
        provided that such Third Party did not acquire the information directly
        or indirectly from the receiving party or, to the best of the receiving
        party’s knowledge, was not breaching any agreement or any confidential
        relationship with the disclosing party;








- 24 -

	 	(e) 	was independently developed by the receiving
        party or its Affiliates without reference to the disclosing party’s
        Confidential Information; or

	 	 	 
	 	(f) 	was required to be disclosed
        pursuant to any judicial, administrative or regulatory process or in connection
        with any inquiry, investigation, action, suit, proceeding or claim, provided
        that, if such disclosure is required, the receiving party will first give
        notice to the disclosing party so that it will have an opportunity (at
        its own expense) to seek a protective order or other appropriate remedy;
      




provided that any combination of the information which
comprises part of the Confidential Information shall not be included in the
foregoing exceptions merely because individual parts of the information were
within the public domain or were within the prior possession of the receiving
party or disclosed to it by a Third Party, as applicable, unless the combination
itself was in the public domain, prior possession, or was so received, as
applicable.

13.3 Survival of Obligation.

The terms of this Article 13 will continue in force for a
period of three (3) years after the earlier of the termination or expiration of
this Agreement. Upon termination or expiration of this Agreement, Section 15.6
shall apply.

14. TERM

14.1 Term of Agreement

Unless earlier terminated in accordance with the terms of this
Agreement, the term of this Agreement shall commence on the Effective Date and
shall continue until the expiration of the last remaining Licensed Patent (the
“Term”) and the Corporation shall retain the licenses set forth in
Sections 2.1 and 2.2 and all benefits thereof for such period. 

15. TERMINATION

15.1 Termination for Bankruptcy, Insolvency, etc. 

This Agreement may be immediately terminated by Licensor or the
Corporation, as the case may be, by providing ten (10) days’ written notice to
the other party (the “Termination Notice”) if any of the following
circumstances or events is applicable to the other party:

	 	(a) 	 Dissolution – The Corporation or Licensor
        is wound up, dissolved or liquidated under any law, or becomes subject
        to the provisions of the Winding-Up and Restructuring Act (Canada)
        or similar legislation in the United States, or otherwise has its existence
        terminated or passes any resolution in connection therewith;

	 	 	 
	 	(b) 	 Insolvency - The Corporation or Licensor makes
        a general assignment for the benefit of its creditors, acknowledges its
        insolvency or is declared or becomes bankrupt or insolvent, or otherwise
        fails in its business;








- 25 -

	 	(c) 	 Act of Bankruptcy - The Corporation or Licensor
        commits an act of bankruptcy under any applicable laws including, but
        not limited to, the Bankruptcy and Insolvency Act (Canada) or similar
        legislation in the United States;





	 	(d) 	 Bankruptcy Proposal – Any filing of a proposal
        or notice of intention to make a proposal is made in respect of the Corporation
        or Licensor under the Bankruptcy and Insolvency Act (Canada) or
        similar legislation in the United States;

	 	 	 
	 	(e) 	 Protection from Creditors – Any filing is
        made or a proceeding is commenced in respect of the Corporation or Licensor
        seeking any stay of proceeding, protection from creditors, moratorium,
        reorganization, arrangement, composition, re-adjustment, or any other
        relief under any present or future law of any jurisdiction relative to
        bankruptcy, insolvency or other relief for debtors, including, without
        limitation, the Companies’ Creditors Arrangement Act (Canada)
        or similar legislation in the United States;

	 	 	 
	 	(f) 	 Appointment of Trustee or Receiver – Any
        trustee in bankruptcy, interim receiver, receiver, receiver and manager,
        custodian, sequestrator, administrator, monitor or liquidator or any other
        person with similar powers shall be appointed in respect of the Corporation
        or Licensor, the Technology or the Patents, or in respect of all or a
        substantial portion of the respective property, assets or undertaking
        of the Corporation or Licensor;

	 	 	 
	 	(g) 	 Enforcement Against Secured Property – Any
        holder of any security interest, mortgage, lien, charge, claim or encumbrance
        enforces against, delivers any notices relating to its rights or its intention
        to enforce against, or becomes entitled to enforce against or otherwise
        takes possession, management or control of the Technology or the Patents
        or a material part of the Corporation’s or Licensor’s respective
        property, assets and undertakings;

	 	 	 
	 	(h) 	 Seizure – A distress, execution, warrant,
        garnishment, attachment, sequestration, levy, writ, or any similar process
        is issued or enforced upon or against a material portion of the Corporation’s
        or Licensor’s property, assets and undertakings, or any Third Party
        demand is issued or other seizure is made by any governmental agency,
        administrative body or any taxation authority in respect of a material
        portion of the Corporation’s or Licensor’s property, assets
        or undertakings;

	 	 	 
	 	(i) 	 Sale of Assets – The Corporation or Licensor
        liquidates its assets or sells all or substantially all of its assets
        (except to an Affiliate); or

	 	 	 
	 	(j) 	 Continuation of Business – The Corporation
        or Licensor ceases to carry on business in the ordinary course for a period
        in excess of thirty (30) days.



15.2 Termination for Default.

If either Licensor or the Corporation is in material default
  of any obligations under this Agreement, the non-defaulting party may, at its
  option, give the defaulting party written notice specifying the material default
  in reasonable detail and requesting the material default be cured within thirty
  (30) days (the “Default Notice”). In the event the defaulting
  party has not cured the 




- 26 -

material default within the thirty (30) day time period or commenced
  appropriate actions to cure such material default if such material default may
  not reasonably be expected to be cured within such period (whereby such actions
  must be continuously and diligently continued thereafter) the non-defaulting
  party may, at its option, immediately terminate this Agreement by delivering
  a written notice of termination to the defaulting party (the “Termination
  Notice”), provided, however, such Termination Notice must be given
  within one hundred and eighty (180) days of the Default Notice.

15.3 Termination by the Corporation.

	 	(a) 	
      Notwithstanding any other provision of this Agreement,
      the Corporation may terminate this Agreement by providing ten (10) days’
      prior written notice thereof to Licensor in the event that the
      Corporation’s legal counsel reasonably determines that the Technology or
      the making, assembly, use, export, import or sale of Ikona Gears or
      Designated Magna Parts, by virtue of the inclusion of the Ikona Gear,
      infringes any patent, design patent, industrial design registration or
      copyright or violates any other Intellectual Property right of another
      Person or if any claim of any of the Licensed Patents is determined to be
      invalid, in which case, without further action on the part of either
      party, subject to Section 15.8, all rights and licenses granted by
      Licensor to the Corporation pursuant to this Agreement shall revert to
      Licensor and the Corporation shall retain no rights therein.

	 	 	 
	 	(b) 	
      Notwithstanding any other provision of this Agreement,
      the Corporation may terminate this Agreement at any time and for any
      reason (or no reason at all) by providing 90 day’s prior written notice
      thereof to Licensor, in which case, upon the effective date of such
      termination and subject to Section 15.8, all rights and licenses granted
      by Licensor to the Corporation pursuant to this Agreement shall revert to
      Licensor and the Corporation shall retain no rights
  therein.



15.4 Terminating Party.

Upon termination of this Agreement pursuant to Sections 15.1,
15.2 or 15.3, the terminating party shall no longer be subject to the terms and
conditions of this Agreement other than those obligations accrued to the date of
termination and any obligations under Articles 10 and 13 and Section 15.8.

15.5 Rights on Termination.

Any termination under this Article 15 shall be without
prejudice to any other rights, remedy or relief vested in or to which a party
may otherwise be entitled against the other party.

15.6 Obligations on Termination.

Upon the termination or expiration of this Agreement, each
party shall immediately return to the other party all Confidential Information
in its possession, custody or control belonging to the other party relating to
the Technology, the Ikona Gears and the Designated Magna Parts, except, in the
case of the Corporation, for any information which the Corporation must retain
to fulfill any purchase orders or warranty or service requirements pursuant to
Section 15.8.




- 27 -

15.7 Royalty Payments Upon Termination.

If this Agreement is terminated in accordance with this Article
15, the Corporation shall, subject to the terms of this Agreement, continue to
pay Licensor all amounts earned pursuant to Section 5.1 prior to the effective
date of termination and any amounts earned thereafter as a result of sales of
residual inventory of Designated Magna Parts. 

15.8 Right to Use Technology upon Termination/Expiration.


In the event of any termination under this Agreement or the
expiration of the Term pursuant to Article 14: 

	 	(a) 	 In the case of the termination of this Agreement
        under Section 15.1 or the termination of this Agreement by any receiver,
        receiver and manager, trustee or any other person with similar powers
        appointed in the circumstances set forth in such Section 15.1, the Corporation,
        its Affiliates and its Sub-Licensees shall have the right to maintain
        any and all rights under this Agreement (subject to the payment of royalties
        as provided in this Agreement), including, but not limited to, the use
        and license of the Technology, for a period of twelve (12) months from
        the date of the termination of this Agreement under Section 15.1 or the
        termination of this Agreement by such receiver, receiver and manager,
        trustee or other such person, as the case may be or for such longer period
        as may be necessary in order to permit the Corporation to fulfill existing
        orders for Designated Magna Parts.

	 	 	 	 
		(b)
	 In addition to any rights granted
        to the Corporation, its Affiliates and its Sub- Licensees pursuant to
        the extension of this Agreement for the additional twelve (12) month period
        as set forth in Subsection 15.8(a), the Corporation, its Affiliates and
        its Sub-Licensees shall retain the use of the Technology for such additional
        period as required to comply with their customary warranty and service
        requirements.





	 	 	 	 
	 	(c) 	 In the case of the expiration of the Term
        pursuant to Article 14 or the termination of this Agreement under any
        Section other than Section 15.1:

	 	 	 	 
	 		
      (i)
	 the Corporation, its Affiliates and its Sub-Licensees
        shall maintain any and all rights under this Agreement including, but
        not limited to, the use of the Technology in order to permit the Corporation,
        its Affiliates and its Sub-Licensees to fulfill existing orders for Designated
        Magna Parts, subject to the payment of royalties as provided in this Agreement;
        provided that, if the Agreement is terminated by the Corporation pursuant
        to Section 15.2 the Corporation, its Affiliates an its Sub-Licensees shall
        retain its rights under this Agreement (subject to the payment of royalties
        as provided in this Agreement) for such additional period as required
        to fulfill any orders (whether existing or future orders) under any OEM
        production program awarded to the Corporation, its Affiliates or its Sub-
        Licensees prior to the date of such termination;








- 28 -

	 	 	(ii) 	 the Corporation shall retain the use of the Technology
        for such additional period as required to comply with its customary warranty
        and service requirements; and

	 	 	 	 
	 	 	(iii) 	 Licensor may, at its option, assume in writing any existing
        sub-license agreements granted by the Corporation and upon such assumption,
        the Corporation shall thereafter be released from any future obligations
        under such agreements.



16. NOTICE

16.1 Notice.

Any notice required or permitted to be given hereunder shall be
in writing and may be delivered in person or by registered mail or transferred
by facsimile or other form of recorded communication tested prior to
transmission, addressed to the respective party at the address set forth below
or such changed address as may be given by a party to the other by such written
notice. Any such notice shall be considered to have been made and received on
the date when personally delivered or five (5) Business Days after the date of
mailing or one (1) Business Day after the date of forwarding if sent by
facsimile or other form of recorded communication.

	Address of the Corporation: 	Address of Licensor: 
	          Magna
      Drivetrain AG & Co KG . 	          Ikona
      Gear USA, Inc. 
	          Industriestraße
      35 	          1507
      Pine Street 
	          A-8502
      Lannach 	          Boulder,
      Colorado 
	          AUSTRIA
    	          80302
      U.S.A. 
	          Attention:           Dr.
      Peter Reif 	          Attention:           Clifford
      Neuman, Esq. 
	          Telephone
      No. +43 (0) 50 444 3737 	          Telephone
      No. 303-449-2100 
	          Facsimile
      No. +43 (0) 50 444 2298 	          Facsimile
      No. 303-449-1045 
	 	 
	with a copy to: 	Address of Ikona: 
	          Magna
      International Inc. 	          Ikona
      Gear International, Inc. 
	          337
      Magna Drive 	          1
      – 1850 Hartley Avenue 
	          Aurora,
      Ontario 	          Coquitlam,
      British Columbia 
	          L4G
      7K1 CANADA 	          V3K
      7A1 CANADA 
	          Attention:           J.
      Brian Colburn 	          Attention:           Laith
      I. Nosh 
	                    Executive
      Vice-President, 	          Telephone
      No. 604-523-5500 
	                    Special
      Projects and Secretary 	          Facsimile
      No. 604-520-5965 
	          Telephone
      No.: 905-726-7022 	 
	          Facsimile
      No.: 905-726-7173 	 






- 29 -

	 	with a copy to: 
	 	          Farris,
      Vaughan, Wills & Murphy LLP 
	 	          P.O.
      Box 10026, Pacific Centre South 
	 	          Toronto
      Dominion Bank Tower 
	 	          700
      West Georgia Street, 25th Floor 
	 	          Vancouver,
      British Columbia 
	 	          V7Y
      1B3 CANADA 
	 	          Attention:
      R. Hector MacKay-Dunn, Q.C. 
	 	          Telephone
      No.: 604-684-9151 
	 	          Facsimile
      No.: 604-661-9349 


17. INSURANCE

17.1 Insurance Coverage

Corporation and Licensor each represent that they are
sufficiently insured against any liability arising under Article 10 for which it
has an indemnification obligation.

18. GENERAL

18.1 Force Majeure.

Neither party shall be liable for failure or delay in the
performance of its obligations, other than monetary obligations, under this
Agreement when the failure is a result of circumstances beyond its reasonable
control including, but not limited to, fire, flood, strikes, labour trouble or
other industrial disturbances, inevitable accidents, war (declared or
undeclared), embargoes, blockades, riots, insurrections or governmental
regulations.

18.2 Further Assurances.

Each of the parties to this Agreement agrees to execute such
documents and agreements and to do such further things as may be reasonably
necessary or desirable to carry out the provisions and purposes of this
Agreement.

18.3 Amendments.

This Agreement may not be amended or modified in any respect
except by written agreement signed by the parties hereto.

18.4 Assignment.

This Agreement shall not be assigned, in whole or in part, by
either party without the prior written consent of the other party.
Notwithstanding the foregoing, prior written consent shall not be required for
assignments of this Agreement:




- 30 -

	 	(a) 	
      by the Corporation:

	 	 	 	 
	 		(i) 	
      to an entity which is an Affiliate of the Corporation;
      or

	 	 	 	 
	 		(ii) 	
      to an entity which purchases all or substantially all of
      the Corporation’s business relating to the design and/or manufacture of
      Ikona Gears and Designated Magna Parts; and

	 	 	 	 
	 	(b) 	
      by Licensor to an entity (including an Affiliate of
      Licensor) that purchases all of the Technology, or to which all of the
      Technology is transferred or assigned;



provided such entity first agrees to be bound by the terms and
conditions of this Agreement. Subject to the foregoing, this Agreement shall be
binding upon and enure to the benefit of the parties hereto, their successors
and permitted assigns.

18.5 Severability.

The invalidity or unenforceability of any provision of this
Agreement or any covenant herein contained shall not affect the validity or
enforceability of any other provision or covenant hereof or herein
contained.

18.6 Survival.

All obligations of the Corporation and Licensor which expressly
or by their nature survive termination, expiration or assignment of this
Agreement shall continue in full force and effect subsequent to and
notwithstanding such termination, expiration or assignment until they are
satisfied or by their nature expire.

18.7 No Waiver.

The rights of each party hereunder are cumulative and no
exercise or enforcement by a party of any right or remedy hereunder shall
preclude the exercise or enforcement by such party of any other right or remedy
hereunder or which such party is otherwise entitled by law to enforce. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.

18.8 Currency.

All dollar values expressed in this Agreement are in Canadian
dollars.

18.9 Time of the Essence.

Time shall be of the essence of this Agreement and the
transactions contemplated hereby.

18.10 Governing Law.

This Agreement shall be governed and construed in accordance
with the laws of Ontario and the parties hereto hereby agree to attorn to the
jurisdiction of the courts of Ontario. The parties acknowledge and agree that
the International Sale of Goods Act and the United Nations 




- 31 -

Convention on Contracts for the International Sale of Goods
have no application to this Agreement.

18.11 Arbitration.

In the event of any dispute or difference arising out of this
Agreement or the breach hereof, the Corporation and Licensor agree to use their
reasonable efforts to settle the same on an equitable basis through good faith
consultation and negotiation between senior officers of each of them. If such
dispute or difference is not so satisfactorily resolved within a period of
thirty (30) days, then upon notice by either party to the other, the dispute or
difference shall be finally settled by binding commercial arbitration conducted
in accordance with the provisions of the Arbitrations Act (Ontario), by
one arbitrator appointed by mutual agreement of the Corporation and Licensor or,
in the event no such agreement is obtained within fifteen (15) days, by a panel
of three (3) arbitrators, one of whom will be selected by each party and the
third of whom will be selected by the other two arbitrators. 

18.12 Entire Agreement.

This Agreement, including the Schedules attached hereto,
constitutes the entire agreement between the parties hereto including their
Affiliates with respect to the licensing of the Technology for Automotive
Applications and other matters described herein and supersedes all prior
agreements, undertakings and arrangements in respect thereto including, without
limitation, the Development Agreement and the Confidentiality Agreement. There
are not and shall not be any verbal statements, representations, warranties,
undertakings or agreements between the parties including their Affiliates.

18.13 Headings.

All headings and the division of this Agreement into Articles,
Sections, Subsections and Paragraphs are for the convenience of reference only
and shall not affect the interpretation hereof.

18.14 Relationship of the Parties.

Each party is and will at all times remain an independent
contractor and is not and shall not represent itself to be the agent, joint
venturer or partner of the other party. No representations will be made or acts
taken by any party which could establish any apparent relationship of agency,
joint venture or partnership and neither party will be bound in any manner
whatsoever by any agreements, warranties or representations made by the other
party to any other person or with respect to any other action of the other
party. Nothing in this Agreement shall in any way limit or affect the
Corporation’s ability to carry on its business in the ordinary and normal course
(including the establishment of the Corporation’s own production facilities, the
completion of joint ventures and acquisitions, and the continuation of the
Corporation’s own proprietary developments) on a global basis.

18.15 Public Announcements.

Licensor and the Corporation each agree that they and their
Affiliates shall not issue any press release or otherwise make any public
statement or respond to any media inquiry with respect to 




- 32 -

this Agreement or the transactions contemplated hereby without
the prior written approval of the other party, which shall not be unreasonably
withheld or delayed, except as may be required by law or by any stock exchanges
having jurisdiction over Licensor, the Corporation or their respective
Affiliates. Notwithstanding the foregoing, Licensor and the Corporation hereby
agree that Licensor will solely issue a press release regarding this Agreement
and the relationship of the parties hereunder and on the occurrence of
subsequent milestones under this Agreement, which shall be in a form mutually
agreed by the parties acting reasonably.

18.16 Rights and Remedies.

The rights and remedies available under this Agreement shall be
cumulative and not alternative and shall be in addition to and not a limitation
of any rights and remedies otherwise available to the parties at law or in
equity.

18.17 Execution in Counterparts.

This Agreement may be executed in one or more counterparts,
each of which when so executed shall constitute an original and all of which
together shall constitute one and the same agreement.

18.18 Additional Obligations of Ikona

	 	(a) 	
      In consideration of the execution by the Corporation of
      this Agreement and in consideration of the representations, warranties,
      covenants, agreements and conditions contained in this Agreement, and
      other good and valuable consideration (the receipt and sufficiency of
      which are hereby acknowledged), Ikona does hereby:

	 	 	 	 
	 		(i) 	
      agree to cause Licensor to fulfill its obligations under
      this Agreement (including without limitation Licensor’s indemnification
      obligations under Article 10 hereof) (collectively the “Licensor
      Obligations”), subject to the terms and conditions hereof;
  and

	 	 	 	 
	 		(ii) 	
      agree that, in the event that Licensor shall fail to pay
      or perform any Licensor Obligations and a written notice (an “Licensor
      Default Notice”) executed by the Corporation is delivered to Ikona, in
      the manner provided in Section 16.1 hereof, which Licensor Default Notice
      describes Ikona’s failure to pay or perform any such Licensor Obligations,
      Ikona shall cause Licensor to fulfill such Licensor Obligations as are
      specified in the Licensor Default Notice, in each case in accordance with
      the terms of, and subject to the limitations set forth herein;
      notwithstanding the foregoing, the obligations and liabilities of Licensor
      and Ikona shall be deemed to be joint and several and the Corporation
      shall not be obliged to seek recourse against Licensor before enforcing
      its rights against Ikona.

	 	 	 	 
	 	(b) 	
      without limiting the generality of the foregoing, Ikona’s
      obligations pursuant to this Section 18.18 shall include, without
      limitation, the obligation to transfer or cause to be transferred to
      Licensor a sufficient amount of its funds to allow Licensor to meet its
      obligations under this Agreement. Ikona agrees that its obligations
      hereunder shall continue and be binding and enforceable against
  it







- 33 -

	 		
      with respect to the obligations of any of Licensor’s
      successors and assigns (whether pursuant to contract or otherwise pursuant
      to law), provided that, for greater certainty, Ikona agrees that in the
      event that Licensor is dissolved, wound- up or otherwise liquidated, Ikona
      shall assume and be directly and primarily obligated without respect to
      the Licensor Obligations.

	 	 	 	 
	 	(c) 	
      Ikona further agrees to pay the reasonable and necessary
      expenses and costs (including, without limitation, reasonable attorneys’
      fees and expenses) incurred by the Corporation in connection with any
      action, suit or proceeding brought or maintained against Ikona if Licensor
      would have been obligated to pay such costs pursuant to the provisions
      hereof had such payment of expenses and costs been sought directly from
      Licensor.

	 	 	 	 
	 	(d) 	
      Ikona shall have the benefit of all defences, equities
      and rights of set-off or deduction that Licensor has in respect of
      Licensor’s Obligations hereunder.

	 	 	 	 
	 	(e) 	
      The Corporation is hereby authorized, without notice or
      demand and without affecting or impairing the obligations or liability of
      Ikona hereunder, to, from time to time:

	 	 	 	 
	 		(i) 	
      extend the time for payment or performance of the
      Licensor Obligations;

	 	 	 	 
	 		(ii) 	
      accept partial payment or performance of the Licensor
      Obligations;

	 	 	 	 
	 		(iii) 	
      release, partially or completely, any other guarantor of
      the Licensor Obligations; and

	 	 	 	 
	 		(iv) 	
      settle, release, compromise, collect or otherwise
      liquidate the Licensor Obligations, in any
manner.







- 34 -

	 	(f) 	
      The obligations pursuant to this Section 18.18 shall
      continue until all of the Licensor Obligations have been fully performed.
      The preceding sentence notwithstanding, Ikona agrees that, to the extent
      Licensor makes a payment or payments on account of the Licensor
      Obligations, which payment or payments or any part thereof are
      subsequently invalidated, declared to be fraudulent or preferential, set
      aside or required to be repaid to Licensor, its estate, trustee(s) or
      receiver(s) or any other party, including, without limitation, under any
      bankruptcy law, common law or equitable cause, then to the extent of any
      such repayments or invalidation, Ikona’s obligations under this Agreement
      with respect thereto shall be reinstated and continued in full force and
      effect as of the time immediately preceding such initial payment,
      reduction or satisfaction.




	IN WITNESS WHEREOF, this Agreement has been
      executed by the parties hereto on this 15th day of December, 2005. 
		  
	  	  
	MAGNA Drivetrain AG & Co KG 	IKONA GEAR USA, INC. 
	by its authorized signatories: 	by its authorized signatories: 
	  	  
	By: /s/ Günther Apfalter	By: /s/ Laith I. Nosh
	Name: Günther Apfalter	Name: Laith I. Nosh
	Title: President	Title: President, CEO
	  	  
	By: /s/ Andreas Wimler	By: /s/ Raymond L. Polman
	Name: Andreas Wimler	Name: Raymond L. Polman, CA
	Title: Director Finance	Title: Chief Financial Officer
	  	  
	IKONA GEAR INTERNATIONAL, INC. 	  
	by its authorized signatories: 	  
	  	  
	By: /s/ Laith I. Nosh	  
	Name: Laith I. Nosh	  
	Title: President, CFO	  
	  	  
	By: /s/ Raymond L. Polman	  
	Name: Raymond L. Polman, CA	  
	Title: Chief Financial Officer	  






SCHEDULE A

LICENSED PATENTS 

	Jurisdiction 	Patent Number 	Title 
	Canada 	Canadian Patent No. 2,129,188 	Gear System 








	United States 	U.S. Patent No. 5,505,668 	Gear System 



	Germany 	German Patent No. 69505983 	Gear System 





	Sweden 	European Patent No. 0770192 	Gear System 





	Italy 	European Patent No. 0770192 	Gear System 





	United Kingdom 	European Patent No. 0770192 	Gear System 





	France 	European Patent No. 0770192 	Gear System 








SCHEDULE B

DESIGNATED MAGNA APPLICATION 
DESIGNATION ADDENDUM

This Designation Addendum forms a part of the License Agreement
between Magna Drivetrain AG & Co KG, Ikona Gear USA, Inc. and Ikona Gear
International, Inc. dated __________, 2005 (the “License Agreement”).

Pursuant to the terms and conditions of the License Agreement,
the parties hereby designate the following application or module a “Designated
Magna Application”, within the meaning set out in the License Agreement, on a
[non-exclusive / exclusive] basis. 

[Insert name of Designated Magna Application]

This Designation Addendum is agreed to between the parties as
of the ______day of ___________, ______.

Licensor hereby certifies that all of the representations and
warranties in Article 9 of the License Agreement are true and correct on the
date hereof as if made on and as of the date hereof, except as Licensor has
otherwise informed the Corporation in writing.

	MAGNA Drivetrain AG & Co KG 	IKONA GEAR USA, INC. 
	by its authorized signatories: 	by its authorized signatories: 
	  	  
	By: __________________________ 	By: __________________________ 
	Name: 	Name: 
	Title: 	Title: 
	  	  
	By: __________________________ 	By: __________________________ 
	Name: 	Name: 
	Title: 	Title: 
	  	  
	IKONA GEAR INTERNATIONAL, INC. 	  
	by its authorized signatories: 	  
	  	  
	By: __________________________ 	  
	Name: 	  
	Title: 	  
	  	  
	By: __________________________ 	  
	Name: 	  
	Title: