exv10w7






EXHIBIT 10.7




	 	 	 
	

	 	 






LICENSE AGREEMENT



     THIS LICENSE AGREEMENT (this “Agreement”) dated as of February 14, 2008 (the “Effective
Date”), is entered into between FALLBROOK TECHNOLOGIES INC., a Delaware corporation (“Fallbrook”),
having a place of business at 9444 Waples St., Suite 410, San Diego, California 92121, and VIRYD
TECHNOLOGIES INC., a Delaware corporation (“Manufacturer”), having a place of business at 9444
Waples Street, Suite 410, San Diego, California 92121.



     WHEREAS, Fallbrook owns or has rights in certain technology regarding the NuVinciTM
continuously variable transmission technology that is disclosed in the patents and patent
applications listed on Exhibit A.



     WHEREAS, Manufacturer desires to obtain an exclusive license to such technology to develop,
manufacture and sell products that utilize such technology all on the terms and conditions set
forth in this Agreement.



     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, the parties agree as follows:


1. DEFINITIONS




     1.1 “Affiliate” shall mean, with respect to any entity, any other entity that directly
or indirectly controls, is controlled by, or is under common control with, such entity. An entity
shall be regarded as in control of another entity if it owns, or directly or indirectly controls,
at least fifty percent (50%) of the voting stock or other ownership interest of the other entity,
or if it directly or indirectly possesses the power to direct or cause the direction of the
management and policies of the other entity by any means whatsoever.



     1.2 “Confidential Information” shall mean (a) all information of any kind whatsoever,
and all tangible and intangible embodiments thereof of any kind whatsoever, that is disclosed by
Fallbrook to Manufacturer and is marked, identified as or otherwise acknowledged to be confidential
at the time of disclosure, (b) all information regarding an Improvement, or (c) the terms of this
Agreement. Notwithstanding the foregoing, Confidential Information described in clause (a) above
shall not include information which Manufacturer can establish by written documentation (i) has
been publicly known prior to disclosure of such information by Fallbrook, (ii) has become publicly
known, without fault on the part of Manufacturer, subsequent to disclosure of such information by
Fallbrook, (iii) has been received by Manufacturer at any time from a source, other than Fallbrook,
rightfully having possession of and the right to disclose such information, or (iv) has been
otherwise known by Manufacturer prior to disclosure of such information by Fallbrook.



     1.3 “Field of Use” shall mean drive trains used in wind turbines designed for the
conversion of wind energy into electrical power.



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     1.4 “Improvement” shall mean any improvement, invention, discovery, composition,
enhancement, technology, data or information (whether or not patentable) (a) made or conceived by
employees or others on behalf of Manufacturer during the term of this Agreement and (b) arising or
resulting from the exercise of Manufacturer’s rights under this Agreement (including without
limitation any improvements, modifications or derivatives to the inventions disclosed in the
patents and patent applications listed on Exhibit A), but shall not include developments of either
party that are applicable for their intended purpose in products other than Products.



     1.5 “Licensed IP Rights” shall mean, collectively, all of Fallbrook’s rights in and to
the Licensed Patents.



     1.6 “Licensed Mark” means, collectively, (a) the trademark(s) set forth on Exhibit B,
(b) the respective stylistic marks and distinctive logotypes for such trademark(s), and (c) other
marks and logotypes as Fallbrook may from time to time designate during the course of this
Agreement.



     1.7 “Licensed Patents” shall mean (a) those certain patent applications and patents
listed on Exhibit A hereto (as such list may be amended from time to time by the parties in
writing); (b) all patent applications heretofore or hereafter filed or having legal force in any
country within the Territory that claim an Improvement; (c) all patents that have issued or in the
future issue from any of the foregoing patent applications, including utility, model and design
patents and certificates of invention; and (d) all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions or additions to any of the foregoing patent
applications and patents.



     1.8 “Product” shall mean any product intended for the Field of Use and that the
making, using, selling, offering for sale or importation of such product, but for the licenses
granted hereunder, infringes the pending or issued claims of the Licensed Patents.



     1.9 “Sales Price” shall mean with respect to any Transmission Product (a) where such
Transmission Product is separately itemized or invoiced, the price Manufacturer or its Affiliate
charges its customer for such Transmission Product, or (b) where not separately itemized or
invoiced, the sum of (i) the fully burdened cost to manufacture such Transmission Product, and
(ii) an amount equal to the average profit margin Manufacturer or its Affiliate realizes with its
products and services (but in no case less than an amount equal to *** of the fully
burdened cost to manufacture such Transmission Product).



     1.10 “Shares” shall mean *** shares of Manufacturer’s Series A preferred stock.



     1.11 “System Sales Price” shall mean the Sales Price of a wind turbine product that
incorporates a Transmission Product. Notwithstanding the foregoing, System Sales Price shall
exclude the cost of labor to assemble and install the wind turbine product, other than the cost to
assemble the Transmission Product, and shall include the cost of land and the cost of permits for
the wind turbine product.





 




			
	***	 	Portions of this page have been omitted
pursuant to a request for Confidential Treatment filed separately with the
Commission.





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     1.12 “Territory” shall mean worldwide.



     1.13 “Third Party” shall mean any person or entity other than Fallbrook or
Manufacturer.



     1.14 “Transmission” shall mean the transmission and variator portion of a product,
including (1) the control actuator, including the electromechanical or mechanical device that
mechanically, or with fluid, shifts the transmission, but not including the mechanism that
transmits signals to the control actuator, such as electronic or mechanical signal transmission
lines or cables; and in instances where the actuator and the signal transmission mechanism overlap,
then Fallbrook in its sole and reasonable discretion shall determine the termination boundary
between the transmission and the control signal transmission mechanism, (2) the case or housing of
the transmission, except, as determined by Fallbrook in its sole and reasonable discretion, that
portion of any such case or housing determined to be unassociated with the transmission, and (3) in
cases where a generator is integrated with the transmission, as determined by Fallbrook in its sole
and reasonable discretion, the generator of the wind turbine.



     1.15 “Transmission Product” shall mean a Product that consists solely of a
Transmission.


2. REPRESENTATIONS AND WARRANTIES




     Each party hereby represents and warrants to the other party as follows:



     2.1 Corporate Existence. Such party is a corporation duly organized, validly existing
and in good standing under the laws of the state in which it is incorporated.



     2.2 Authorization and Enforcement of Obligations. Such party (a) has the corporate
power and authority and the legal right to enter into this Agreement and to perform its obligations
hereunder, and (b) has taken all necessary corporate action on its part to authorize the execution
and delivery of this Agreement and the performance of its obligations hereunder. This Agreement
has been duly executed and delivered on behalf of such party, and constitutes a legal, valid,
binding obligation, enforceable against such party in accordance with its terms.



     2.3 No Consents. All necessary consents, approvals and authorizations of all
governmental authorities and other persons or entities required to be obtained by such party in
connection with this Agreement have been obtained.



     2.4 No Conflict. The execution and delivery of this Agreement and the performance of
such party’s obligations hereunder (a) do not conflict with or violate any requirement of
applicable laws or regulations, and (b) do not conflict with, or constitute a default under, any
contractual obligation of it.



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3. LICENSE GRANT




     3.1 License Grants.



          (a) Fallbrook hereby grants to Manufacturer an exclusive, nontransferable, limited license
(without the right to grant sublicenses) under the Licensed IP Rights in the Territory and only for
the Field of Use to use, develop, make, have made and import Products; and to offer for sale and
sell or lease Products, all for any legal purpose. As used herein “have made” shall mean that
Manufacturer shall have the right to utilize a Third Party to manufacture Products solely for the
benefit, and under the direction, of Manufacturer; provided, however, that Manufacturer has first
entered into a written agreement with such Third Party that contains terms and conditions regarding
confidentiality and ownership of any intellectual property resulting from such manufacturing
substantially similar to those contained herein.




          (b) Fallbrook hereby grants to Manufacturer a royalty-free, nonexclusive, nontransferable,
limited license (without the right to grant sublicenses) in the Territory to reproduce, use and
display the Licensed Marks in connection with the developing, making, having made, offering for
sale and selling Products as set forth in Section 3.1(a) above.




          (c) If at any time during the term of this Agreement Manufacturer desires to expand the Field
of Use to include other areas of fluid energy conversion or generation, Manufacturer shall provide
to Fallbrook written notice of such desire, describing in reasonable detail such additional
field(s) of use. If such additional field(s) of use is(are) available for licensing by Fallbrook,
Fallbrook and Manufacturer shall enter into good faith negotiations for a period of ninety (90)
days (or such additional time as the parties may agree) and attempt to reach mutual agreement upon
terms and conditions to be included in an amendment to the Agreement to include such additional
field(s) of use within the Field of Use. Such good faith negotiations shall take into account
Manufacturer’s ability to research, develop and commercialize Products in the current Field of Use,
as well as Manufacturer’s then-current ability, and its ability in the future, to research, develop
and commercialize Products in such additional field(s) of use. If, following such good faith
negotiations, the parties are unable to reach agreement on such terms and conditions, Fallbrook
shall have no obligation to include such additional field(s) of use within the scope of this
Agreement.




     3.2 No Implied Licenses. Except as otherwise provided in this Agreement, under no
circumstances shall Manufacturer, as a result of this Agreement, obtain any ownership interest or
other right in any invention, discovery, composition or other technology, or in any patent right or
other intellectual property right, of Fallbrook (including without limitation those owned,
controlled or developed by Fallbrook at any time pursuant to this Agreement).


4. FEES




     4.1 License Fees. As partial consideration for the license granted under this
Agreement, Manufacturer shall issue the Shares to Fallbrook within thirty (30) days following the
Effective Date.



     4.2 Royalty Rate. Manufacturer shall pay royalties to Fallbrook in accordance with
the following:



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          (a) with respect to the sale of Products, Manufacturer shall pay to Fallbrook a royalty equal
to the greater of (i) *** of the Sales Price of the Transmission Product, and (ii)
*** of the System Sales Price; provided, however, that such royalty shall not be due on any
Sales Price or System Sales Price that is refunded to the applicable customer; and




          (b) with respect to revenue and consideration received by Manufacturer or its Affiliates from
leases or other transactions regarding the Products (other than the sale of Products described in
Section (a) above), Manufacturer shall pay to Fallbrook a royalty equal to the greater of (i)
*** of such gross revenue and consideration, and (ii) ***
of the gross profit from such gross revenue and consideration (the “gross profit” being
calculated as the gross revenue and consideration less direct costs that Manufacturer actually
incurs and that are directly attributable to the specific revenue or consideration generating
transaction).




          (c) Royalties owing on the sale of Products shall accrue on the date upon which the applicable
payment is invoiced by, or otherwise owing, Manufacturer for such sale.




          (d) Royalties owing under Section 4.2(b) shall accrue when Manufacturer receives payment for
pertinent transactions.




     4.3 Payment Terms. Except for the License Fee under Section 4.1, payments under this
Agreement shall be made in United States dollars within thirty (30) days after the end of the
calendar month in which they accrue and shall be considered late thirty (30) days past the due
date. Late payments for all payments under this Agreement shall bear interest at a rate of fifteen
percent (15%) effective annual percentage rate of the past due amount.



     4.4 Royalty Reports and Accounting.



          (a) Royalty Reports. Manufacture shall furnish to Fallbrook a monthly written report
showing in reasonably specific detail the calculation of royalties owing for the reporting period,
wherein such detailed information shall include at least that information required to verify the
basis and amount of the royalty including itemized costs and revenues necessary to determine the
proper royalty payment. By way of example, and not limiting the type or amount of information
required hereunder, for royalties owing for the sale of Products, the report shall include at least
the following information: customer name, number of Products shipped, invoice date (along with any
other terms or information that affect the accrual date), price per unit, extended price, nets and
the calculation of the royalties. Furthermore, the royalty report shall include a detailed report
of the shipping activities for the subject month, including customer names, number of units
shipped, customer location, quantity on back order, shipping dates and any other pertinent shipping
information. With respect to sales of Products invoiced in United States dollars, all amounts
shall be expressed in United States dollars. With respect to sales of Products invoiced in a
currency other than United States dollars, all amounts shall be expressed in the domestic currency
of the party making the sale together with the United States dollar equivalent. The United States
dollar equivalent shall be calculated using the average of the exchange rate (local currency per
US$1) published in The Wall Street Journal, Western Edition, under the heading “Currency Trading”
averaged over each month during the applicable






 




			
	***	 	Portions of this page have been omitted
pursuant to a request for Confidential Treatment filed separately with the
Commission.





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calendar quarter. Reports shall be due on the twentieth (20th) calendar day following the end
of each calendar month. Manufacturer shall keep complete and accurate records of units of Product
sold in sufficient detail to enable the royalties payable hereunder to be determined.




          (b) Audits. Upon the written request of Fallbrook, Manufacturer shall permit
Fallbrook or its representatives access during normal business hours to such of the records of
Manufacturer as may be reasonably necessary to verify the accuracy of the payment reports
hereunder. If such audit shows that additional amounts were owed during the audited period,
Manufacturer shall pay such additional amounts within thirty (30) days following receipt of notice
of such discrepancy. Fallbrook shall pay for such audit; provided, however, if the audit discloses
that the royalties actually owing by Manufacturer for such period are more than one hundred five
percent (105%) of the royalties actually paid for such period, then Manufacturer shall pay the
reasonable fees and expenses incurred by Fallbrook for such audit.



5. DEVELOPMENT AND COMMERCIALIZATION EFFORTS




     5.1 Development Efforts. In order for Manufacturer to maintain the exclusivity rights
set forth in Section 3.1(a), Manufacturer shall meet each of the following milestones (“Exclusivity
Requirements”).



          (a) Develop and deliver to Fallbrook within three (3) months an acceptable plan, in
Fallbrook’s sole and reasonable discretion, describing in reasonable detail the design and
fabrication steps necessary to deliver the other Exclusivity Requirements, including pre-production
and production intent designs, within the timeframe required for each of the other Exclusivity
Requirements.




          (b) Modify an existing bicycle Transmission design for wind turbine use within twelve (12)
months of the Effective Date.




          (c) Complete a statistically significant amount of field testing of the modified Transmission
with a summary report of the results comparing it to a comparable standard unit within eighteen
(18) months of the Effective Date.




          (d) Design, fabrication and initial performance and quality testing of a wind-specific,
preproduction Transmission including a specification document for the design, a conceptual design,
a detail design including release of part drawings, and prototype fabrication within twenty-eight
(28) months of the Effective date.




          (e) Complete a production intent design and production intent prototype fabrication within
thirty-six (36) months.




          (f) Manufacture a first production unit within forty-two (42) months of the Effective Date.




     5.2 Alternate Milestones. If Manufacturer fails to meet any of the Exclusivity
Requirements provided under Section 5.1, Manufacturer may still maintain exclusivity for so long at
it achieves and maintains any of the following business milestones (each an “Alternative
Milestone”):



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          (a) The execution and performance under a bona fide contract with a total value to
Manufacturer of five million US dollars ($5,000,000), with at least one million US dollars
($1,000,000) of that being up front, for the manufacture of, or for a joint venture (of the same
value to Manufacturer) for the manufacture of, a Transmission specifically for wind power
generation.




          (b) Close within nine (9) months of the opening, of a second round of financing for
Manufacturer that results in at least fifteen million US dollars ($15,000,000) in new capital.




          (c) Receipt of, and continuing production work under, a bona fide purchase agreement or
purchase order from a third party for at least one million US dollars ($1,000,000) worth of Product
over a period no longer than twenty four (24) months after the purchase agreement or purchase order
submission date.




          (d) Execution of and performance under a bona fide agreement for the acquisition or
manufacture of Transmissions specifically for the generation of wind power from a government agency
or primary contractor for the benefit of a government agency with a value to Manufacturer of at
least five million US dollars ($5,000,000).



If Manufacturer is able to achieve any of the Alternate Milestones, then the exclusivity granted
under Section 3.1(a) shall continue for so long as the activity in the subject Alternative
Milestone is being undertaken in good faith. If at any point the activity under the Alternative
Milestone is no longer being conducted (whether by termination of the applicable agreement or joint
venture, or by cancellation of the purchase agreement or purchase order), then the exclusivity
under Section 3.1(a) shall not be extended pursuant to this Section 5.2, and shall only remain in
effect if all of the Exclusivity Requirements under Section 5.1 have been satisfied in accordance
with their associated timeline.




     5.3 Failure of Development Efforts. If Manufacturer fails to satisfy any of the
Exclusivity Requirements under Section 5.1, subject to the opportunity to extend exclusivity by
achieving and maintaining an Alternative Milestone under Section 5.2, then upon written notice from
Fallbrook to Manufacturer, Manufacturer shall have a period of thirty (30) days following such
notice to provide Fallbrook with a plan for curing such failures that is acceptable to Fallbrook in
its sole good faith discretion. If Manufacturer is unable to provide such an acceptable plan to
Fallbrook during such thirty (30) day period, then upon the expiration of such thirty (30) day
period the license grants to Manufacturer under Section 3.1(a) shall become non-exclusive. If
Manufacturer is able to provide an acceptable plan to Fallbrook, but subsequently fails to
materially satisfy the obligations set forth in such plan, then Fallbrook shall have the right to
terminate the exclusivity under Section 3.1(a) of this Agreement by written notice to Manufacturer.



     5.4 Records. Manufacturer shall maintain records, in sufficient detail and in good
scientific manner, which shall reflect all work done and results achieved in the performance of its
research and development regarding the Licensed IP Rights, Improvements and the Products (including
all data in the form required under all applicable laws and regulations). Fallbrook shall have the
right to access and review such records upon reasonable written notice.



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     5.5 Reports.



          (a) Within thirty (30) days following the end of each calendar quarter during the term of this
Agreement, Manufacturer shall prepare and deliver to Fallbrook a written report describing in
detail any Improvements made or conceived during such calendar quarter.




          (b) Within ninety (90) days following the end of each calendar year during the term of this
Agreement, Manufacturer shall prepare and deliver to Fallbrook a written summary report which shall
describe the research, development and commercialization of Products during such year.




          5.6 Quality. In order to maintain the quality of the Products manufactured by
Manufacturer under this Agreement, to develop a method of continuously reducing the cost of
producing Products, and to protect the value of the Licensed Marks, Manufacture shall establish a
quality management system (QMS) and quality operating standards (QOS) that govern each process in
the manufacture of Products to add value in the overall manufacturing process, to obtain results of
process performance and effectiveness and to achieve continual improvement of each process based
upon an objective measurement. At a minimum, the QOS shall include at least all of the following:
(i) a continuous improvement plan aimed at the elimination of manufacturing defects,
(ii) documentation of all process and procedures, including root cause analysis, corrective action
development and tracking plans, recovery and communication plan, and a statistical measurement
process. The documentation of the documented QOS processes and procedures, and any reports
generated by these shall be made available to Fallbrook upon request for auditing purposes for
compliance with requirements hereunder, which audits shall occur on no more frequent basis than
quarterly.




          (a) Inspections. At its discretion, Fallbrook shall have access to Products
manufactured by or on behalf of Manufacturer under this Agreement, either at any manufacturing
facilities or at Fallbrook’s own facilities, in Fallbrook’s sole and reasonable discretion, to
ensure Products are manufactured with reasonable quality for the Field of Use.




          (b) Reports. Fallbrook may at is discretion submit quality reports indicating
insufficiencies in the manufacturing process or quality to Manufacturer. If such a quality report
is submitted to Manufacturer, then Manufacturer must correct the stated insufficiencies or submit
to Fallbrook a plan for correcting the insufficiencies suitable to Fallbrook within thirty (30)
days. Failure to submit a timely response suitable to Fallbrook in its sole and reasonable
discretion shall be considered a material breach.



6. HONORABLE BEHAVIOR




     6.1 Conduct. Fallbrook and Manufacturer shall act honorably towards each other and
towards all other NuVinci Licensees (as defined below).



     6.2 Covenant Not To Sue. Manufacturer will not assert any claims or rights, by
commencing, or causing to be commenced, any action or proceeding that alleges infringement by any
NuVinci Licensee under the Manufacturer IP Rights (as defined below) based in whole or in part on
the use, making, having made, offering for sale, selling, or importing NuVinci Products (as defined
below). In addition, Manufacturer grants to each NuVinci Licensee under the



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Manufacturer IP Rights immunity from suit for infringement based in whole or in part on the on
the use, making, having made, offering for sale, selling or importing NuVinci Products. This
covenant will be binding on all successors in interest to, all transferees or assignees of and any
exclusive licensee of any Manufacturer IP Rights. Any NuVinci Licensee that has agreed with
Fallbrook to the same or a similar covenant will be regarded as an intended third party beneficiary
of this covenant with the right to enforce this covenant.




     6.3 Definitions. As used in this Section 6, (a) “NuVinci Licensee” shall mean
any manufacturer, OEM or other entity, in each case that has agreed to a covenant the same as or
substantially similar to the terms of the covenant set forth above, and each of their customers,
(b) “Manufacturer IP Rights” shall mean any patents or other intellectual property rights,
other than trademarks or trade dress, owned or controlled by Manufacturer prior to or during the
term of this Agreement which are useful to use, make, have made, offer for sale, sell or import
NuVinci Products, and (c) “NuVinci Products” shall mean any product that uses or
incorporates the NuVinci continuously variable transmission technology and that uses, incorporates
or is read upon by any Fallbrook intellectual property (including without limitation patents and
know-how).


7. CONFIDENTIALITY




     7.1 Confidential Information. During the term of this Agreement and following the
expiration or earlier termination of this Agreement, Manufacturer shall maintain in confidence all
Confidential Information disclosed by Fallbrook, and shall not use, disclose or grant the use of
such Confidential Information without express written permission of Fallbrook except on a
need-to-know basis to those directors, officers, employees, consultants, contractors or permitted
assignees, to the extent such disclosure is reasonably necessary in connection with Manufacturer’s
activities as expressly authorized by this Agreement. To the extent that disclosure is authorized
by this Agreement, prior to disclosure, Manufacturer shall obtain agreement of any such person or
entity to hold in confidence and not make use of the Confidential Information for any purpose other
than those permitted by this Agreement. Manufacturer shall notify Fallbrook promptly upon
discovery of any unauthorized use or disclosure of the Confidential Information.



     7.2 Permitted Disclosures. The confidentiality obligations contained in this
Section 6 shall not apply to the extent that Manufacturer is required to disclose information by
law, order or regulation of a governmental agency or a court of competent jurisdiction, provided
that the Manufacturer shall provide written notice thereof to Fallbrook and sufficient opportunity
to object to any such disclosure or to request confidential treatment thereof.


8. INTELLECTUAL PROPERTY




     8.1 Assignment of Improvements. All right, title and interest in the Improvements to
Transmissions, together with all patent rights and other intellectual property rights therein,
shall be owned by Fallbrook, but such Improvements shall become part of the Licensed IP Rights
hereunder and shall thereby be available to Manufacturer. Manufacturer hereby assigns and
transfers to Fallbrook all of Manufacturer’s right, title and interest therein and thereto.
Manufacturer shall cause all employees and other persons or entities acting on its behalf in



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performing any research and development conducted pursuant to the rights granted under this
Agreement to be obligated under a binding written agreement to assign to it, or as it shall direct,
all Improvements made or conceived by such employees or other persons or entities. Manufacturer
shall perform, during and after the term of this Agreement, all acts that Fallbrook deems necessary
or desirable to permit and assist Fallbrook, at Fallbrook’s expense, in obtaining, perfecting and
enforcing the full benefits, enjoyment, rights and title throughout the world in the Improvements
as provided in this Agreement. If Fallbrook is unable for any reason to secure Manufacturer’s
signature to any document required to file, prosecute, register or memorialize the assignment of
any rights as provided under this Agreement, Manufacturer hereby irrevocably designates and
appoints Fallbrook and Fallbrook’s duly authorized officers and agents as Manufacturer’s agents and
attorneys-in-fact to act for and on Manufacturer’s behalf and instead of Manufacturer to take all
lawfully permitted acts to further the filing, prosecution, registration, memorialization of
assignment, issuance and enforcement of such rights, all with the same legal force and effect as if
executed by Manufacturer. The foregoing is deemed a power coupled with an interest and is
irrevocable.




     8.2 Patents.



          (a) Fallbrook shall have the right (but not the obligation) at its sole expense and in its
sole discretion to control the preparation, filing, prosecution, maintenance and enforcement of the
Licensed Patents. Manufacturer shall notify Fallbrook of any infringement in the Territory known
to Manufacturer of the Licensed Patents and shall provide Fallbrook with the available evidence, if
any, of such infringement.




          (b) Manufacturer shall mark each Product with the appropriate notices of issued patents and
pending patent applications covering such Product as necessary under applicable law or regulation
in order for Fallbrook to fully exploit its applicable patent rights.




     8.3 Trademark.



          (a) All right, title, and interest in and to the Licensed Mark, other than Manufacturer’s
right to use as described in Section 3.1(b), above, shall remain with Fallbrook. During the term
of this Agreement and thereafter, Manufacturer will not contest Fallbrook’s exclusive right, title
and interest in and to, or the validity of, the Licensed Mark. In addition, Manufacturer will not
in any manner represent that it has any interest in the Licensed Mark, except for the limited
license provided herein. Use of the Licensed Mark by Manufacturer shall not confer upon
Manufacturer any right, title or interest in or to the Licensed Mark, and all such use by
Manufacturer of the Licensed Mark, including any goodwill generated therefrom, shall inure to the
sole benefit of and be on behalf of Fallbrook.




          (b) Manufacturer shall incorporate the Licensed Mark on each Product. Manufacturer agrees
that use by Manufacturer of the Licensed Mark, as provided herein, shall be in accordance with all
applicable law and regulations, shall conform with all style and other guidelines provided by
Fallbrook from time to time, shall be of high quality and standards and shall not adversely affect
the good name of Fallbrook.




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          (c) Manufacturer will not use any marks or names similar to Fallbrook, as Fallbrook may
determine. Manufacturer agrees (i) not to use any other trademark, service mark or trade name on
the materials or in close proximity to any Licensed Mark and (ii) not to combine the marks so as to
possibly create a unitary composite mark, as Fallbrook may determine in its discretion.




          (d) Manufacturer agrees to notify Fallbrook of any unauthorized use of the Licensed Mark by
others promptly as it comes to Manufacturer’s attention. Fallbrook shall have the sole right and
discretion to bring infringement or unfair competition proceedings involving the Licensed Mark.




          (e) Fallbrook shall have the right, but not the obligation, to file in the appropriate
offices, at its own expense, trademark or design applications relating to the Licensed Marks, such
filings to be made in the name of Fallbrook or in the name of any third party selected by
Fallbrook. To assist Fallbrook with its registration of the Licensed Mark in the name of
Fallbrook, Manufacturer, at Fallbrook’s request and expense, shall promptly perform any act
necessary for Fallbrook to secure or maintain any and all Fallbrook trademark rights. Manufacturer
agrees not to register any Licensed Mark in Manufacturer’s name or any confusingly similar
trademark in any country, in any character form, as Fallbrook may determine in its discretion.




          (f) With respect to each Product that Manufacturer proposes to offer for sale or sell under
this Agreement, and each marketing, promotional or sales literature relating to the Product that
Manufacturer intends to use (including without limitation any materials that use or incorporate the
Licensed Mark), Manufacturer shall first submit to Fallbrook a sample of such Product or literature
for Fallbrook’s prior review and written approval or disapproval, which review shall be based upon
those standards for all Products and Licensed Marks that are attached as Exhibit C hereto (as
amended from time to time by Fallbrook). Fallbrook agrees to use reasonable efforts to notify
Manufacturer in writing of its approval or disapproval of any Product or literature submitted to it
under this Section 8.3(f) within thirty (30) business days after receipt. Manufacturer shall not
have the right to offer for sale or sale any Product, or use or distribute any such literature, in
each case which has not been approved by Fallbrook as provided herein. Notwithstanding the
foregoing, Manufacturer will comply with all reasonable procedures which Fallbrook may from time to
time adopt regarding performance criteria of the Products and the display of registration notices,
legends, or symbols in connection with the Licensed Mark.



9. TERMINATION




     9.1 Expiration. Unless earlier terminated pursuant to Sections 5.3, 9.2 or 9.3, the
term of this Agreement shall commence on the Effective Date and shall continue for seven (7) years.



     9.2 Termination by Manufacturer. Manufacturer may terminate this Agreement, in its
sole discretion, upon thirty (30) days prior written notice to Fallbrook.



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     9.3 Termination for Cause. Fallbrook may terminate this Agreement upon or after the
material breach of this Agreement by Manufacturer if Manufacturer has not cured such material
breach within thirty (30) days after written notice thereof by Fallbrook.



     9.4 Effect of Expiration or Termination. Expiration or termination of this Agreement
shall not relieve the parties of any obligation accruing prior to such expiration or termination,
and the provisions of Sections 5.4, 5.5, 6, 7, 8, 9.4, 10 and 11 shall survive the expiration or
termination of this Agreement.


10. INDEMNIFICATION




     10.1 Indemnification. Manufacturer shall defend, indemnify and hold the Fallbrook
harmless from all losses, liabilities, damages and expenses (including reasonable attorneys’ fees
and costs) resulting from any claims, demands, actions and other proceedings by any Third Party to
the extent resulting from Manufacturer’s use, of the Licensed IP Rights or Licensed Mark, or the
import or export of technology or products under this Agreement.



     10.2 Procedure. Fallbrook promptly shall notify Manufacturer of any claim, demand,
action or other proceeding for which Fallbrook intends to claim indemnification. Manufacturer
shall have the right to participate in, and to the extent Manufacturer so desires jointly with any
other indemnitor similarly noticed, to assume the defense thereof with counsel selected by
Manufacturer; provided, however, that Fallbrook shall have the right to retain its own counsel,
with the fees and expenses to be paid by Manufacturer, if representation of Fallbrook by the
counsel retained by Manufacturer would be inappropriate due to actual or potential differing
interests between Fallbrook and any other party represented by such counsel in such proceedings.
Manufacturer may not settle or otherwise consent to an adverse judgment in any such claim, demand,
action or other proceeding, that diminishes the rights or interests of Fallbrook without the prior
express written consent of Fallbrook.



     10.3 Insurance. Manufacturer shall, within ninety (90) days of the Effective Date,
maintain insurance in an amount that is at least one million ($1,000,000.00) US dollars with
respect to the research, development and commercialization of Products by Manufacturer or, if
greater, in such amount as Manufacturer customarily maintains with respect to the research,
development and commercialization of its similar products. Manufacturer shall maintain such
insurance for so long as it continues to research, develop or commercialize any Products, and
thereafter for so long as Manufacturer customarily maintains insurance covering the research,
development or commercialization of its similar products.


11. MISCELLANEOUS




     11.1 Notices. Any consent, notice or report required or permitted to be given or made
under this Agreement by one of the parties to the other shall be in writing and addressed to such
other party at its address indicated below, or to such other address as the addressee shall have
last furnished in writing to the addressor, and shall be effective upon receipt by the addressee.



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LICENSE AGREEMENT




	 	 	 	 	 
	     If to Fallbrook:

	 	Fallbrook Technologies Inc.	 	 
	 

	 	9444 Waples St., Suite 410	 	 
	 

	 	San Diego, California 92121	 	 
	 

	 	Attention: Vice President, Intellectual Property	 	 
	 
	 	 	 	 
	With a copy to:
	 	 	 	 
	 

	 	Morrison Foerster LLP	 	 
	 

	 	12531 High Bluff Drive	 	 
	 

	 	San Diego, CA 92130	 	 
	 

	 	Attention: Jake Handy	 	 
	 
	 	 	 	 
	     If to Manufacturer:

	 	Viryd Technologies Inc.	 	 
	 

	 	 
 

	 	 
	 

	 	 
 

	 	 
	 

	 	 
 

	 	 





     11.2 Assignment. Neither this Agreement nor any right or obligation hereunder may be
assigned or otherwise transferred (whether voluntarily, by operation of law, in connection with a
change in control or otherwise) by Manufacturer, without the prior express written consent of
Fallbrook. Upon request for transfer or assignment of any right or duty hereunder by Manufacturer,
Fallbrook shall be entitled to request, and Manufacturer shall deliver, whatever corporate
documents Fallbrook may desire in order to determine the existing and proposed ownership structure.
Any permitted assignee shall assume all obligations of Manufacturer under this Agreement. Any
purported assignment or transfer in violation of this Section 11.2 shall be void.



     11.3 Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to the conflicts of law principles
thereof.



     11.4 Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. All express or implied representations,
agreements and understandings, either oral or written, heretofore made are expressly superseded by
this Agreement.



     11.5 Independent Contractors. Each party hereby acknowledges that the parties shall
be independent contractors and that the relationship between the parties shall not constitute a
partnership, joint venture or agency. Neither party shall have the authority to make any
statements, representations or commitments of any kind, or to take any action, which shall be
binding on the other party, without the prior consent of the other party to do so.



     11.6 Waiver. The waiver by a party of any right hereunder, or of any failure to
perform or breach by the other party hereunder, shall not be deemed a waiver of any other right
hereunder or of any other breach or failure by the other party hereunder whether of a similar
nature or otherwise.



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     11.7 Force Majeure.Neither party shall be held liable or responsible to the other
party nor be deemed to have defaulted under or breached this Agreement for failure or delay in
fulfilling or performing any term of this Agreement to the extent, and for so long as, such failure
or delay is caused by or results from causes beyond the reasonable control of the affected party
including but not limited to fire, floods, embargoes, war, acts of war (whether war be declared or
not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts
of God or acts, omissions or delays in acting by any governmental authority or the other party.



     11.8 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.



	 	 	 	 	 
	 	FALLBROOK TECHNOLOGIES INC.

 	 
	 	By  	/s/ William Klehm
 	 
	 	Title CEO 	 
	 	 	 	 
	 
	 	VIRYD TECHNOLOGIES INC.

 	 
	 	By  	/s/ Nicole Nicks
 	 
	 	Title  CFO 	 
	 	 	 	 
	 



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EXHIBIT A




Licensed Patents



	 	 	 	 	 	 	 	 	 	 	 
	Country:	 	Application No.	 	Filing Date:	 	Patent No:	 	Date Issued:
	US

	 	09/133284
	 	8/12/1998
	 	 	6241636	 	 	6/5/2001
	US

	 	09/823620
	 	3/30/2001
	 	 	6322475	 	 	11/27/2001
	US

	 	09/695757
	 	10/24/2000
	 	 	6419608	 	 	7/16/2002
	US

	 	10/141652
	 	5/7/2002
	 	 	6551210	 	 	4/22/2003
	US

	 	10/903617
	 	7/29/2004
	 	 	7032914	 	 	4/25/2006
	US

	 	10/134097
	 	4/25/2002
	 	 	6689012	 	 	2/10/2004
	US

	 	10/770966
	 	2/3/2004
	 	 	6949049	 	 	9/27/2005
	US

	 	11/006341
	 	12/6/2004
	 	 	7175566	 	 	2/13/2007
	US

	 	11/006026
	 	12/6/2004
	 	 	7147586	 	 	12/12/2006
	US

	 	11/006315
	 	12/6/2004
	 	 	7175565	 	 	2/13/2007
	US

	 	11/005915
	 	12/6/2004
	 	 	7172529	 	 	2/6/2007
	US

	 	11/005916
	 	12/6/2004
	 	 	7112159	 	 	9/26/2006
	US

	 	11/006115
	 	12/6/2004
	 	 	7131930	 	 	11/7/2006
	US

	 	11/006448
	 	12/6/2004
	 	 	7192381	 	 	3/20/2007
	US

	 	11/006021
	 	12/6/2004
	 	 	7166057	 	 	1/23/2007
	US

	 	11/006355
	 	12/6/2004
	 	 	7166058	 	 	1/23/2007
	US

	 	11/007531
	 	12/7/2004
	 	 	7153233	 	 	12/26/2006
	US

	 	10/788736
	 	2/26/2004
	 	 	7011600	 	 	3/14/2006
	US

	 	11/030372
	 	1/5/2005
	 	 	7238136	 	 	7/3/2007
	US

	 	11/030415
	 	1/5/2005
	 	 	7238137	 	 	7/3/2007
	US

	 	11/030361
	 	1/5/2005
	 	 	7036620	 	 	5/2/2006
	US

	 	11/030624
	 	1/5/2005
	 	 	7238138	 	 	7/3/2007
	US

	 	11/030209
	 	1/5/2005
	 	 	7232395	 	 	6/19/2007
	US

	 	11/030625
	 	1/5/2005
	 	 	7125297	 	 	10/24/2006
	US

	 	11/030018
	 	1/5/2005
	 	 	7198585	 	 	4/3/2007
	US

	 	11/030210
	 	1/5/2005
	 	 	7166056	 	 	1/23/2007
	US

	 	11/030535
	 	1/5/2005
	 	 	7169076	 	 	1/30/2007
	US

	 	10/844821
	 	5/12/2004
	 	 	7166052	 	 	1/23/2007
	US

	 	11/051364
	 	2/3/2005
	 	 	7214159	 	 	5/8/2007
	US

	 	11/051115
	 	2/3/2005
	 	 	7201695	 	 	4/10/2007
	US

	 	11/051052
	 	2/3/2005
	 	 	7204777	 	 	4/17/2007
	US

	 	11/051611
	 	2/3/2005
	 	 	7198584	 	 	4/3/2007
	US

	 	11/051093
	 	2/3/2005
	 	 	7198583	 	 	4/3/2007
	US

	 	11/051063
	 	2/3/2005
	 	 	7201694	 	 	4/10/2007
	US

	 	10/418509
	 	4/16/2003
	 	 	6945903	 	 	9/20/2005
	US

	 	11/006114
	 	12/6/2004
	 	 	7063640	 	 	6/20/2006
	US

	 	11/006216
	 	12/6/2004
	 	 	7044884	 	 	5/16/2006
	US

	 	11/005673
	 	12/6/2004
	 	 	7014591	 	 	3/21/2006






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	Country:	 	Application No.	 	Filing Date:	 	Patent No:	 	Date Issued:
	US
	 	11/006213
	 	12/6/2004
	 	7074154
	 	7/11/2006
	BE
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	CA
	 	2306557
	 	10/22/1998
	 	2306557
	 	12/12/2006
	CH
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	CN
	 	98812170
	 	10/22/1998
	 	ZL98812170.0
	 	4/21/2004
	CN
	 	00818383.X
	 	10/24/2000
	 	ZL 00818383.X
	 	11/16/2005
	DE
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	DK
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	EP
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	ES
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	FI
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	FI
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	FR
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	GB
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	HK
	 	3109065.8
	 	10/24/2000
	 	HK1056764
	 	5/26/2006
	IE
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003
	RU
	 	2003129641
	 	4/25/2002
	 	2289045
	 	12/10/2006
	SE
	 	988508.8
	 	10/24/2000
	 	1235997
	 	12/17/2003






Licensed Patent Applications




	 	 	 	 	 
	Country:	 	Application No.	 	Filing Date:
	US

	 	11/330425
	 	1/11/2006
	US

	 	11/688124
	 	3/19/2007
	US

	 	11/030442
	 	1/5/2005
	US

	 	11/030211
	 	1/5/2005
	US

	 	11/030627
	 	1/5/2005
	US

	 	11/176545
	 	7/7/2005
	US

	 	10/949741
	 	9/24/2004
	US

	 	11/243484
	 	10/4/2005
	US

	 	11/509789
	 	8/23/2006
	US

	 	11/585677
	 	10/24/2006
	US

	 	11/562317
	 	11/21/2006
	US

	 	11/543311
	 	10/3/2006
	US

	 	60/864941
	 	11/8/2006
	US

	 	60/889512
	 	2/12/2007
	US

	 	60/890438
	 	2/16/2007
	US

	 	60/913771
	 	4/24/2007
	US

	 	60/915872
	 	5/3/2007
	US

	 	60/943273
	 	6/11/2007
	US

	 	60/948152
	 	7/5/2007
	US

	 	11/694145
	 	3/30/2007












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	US
	 	11/694492	 	3/30/2007
	US
	 	11/694049	 	3/30/2007
	US
	 	11/694044	 	3/30/2007
	US
	 	11/694016	 	3/30/2007
	US
	 	11/694066	 	3/30/2007
	US
	 	11/693998	 	3/30/2007
	US
	 	11/694107	 	3/30/2007
	US
	 	11/694119	 	3/30/2007
	AU
	 	2002303524	 	4/25/2002
	AU
	 	2004217514	 	2/27/2004
	AU
	 	2005269791	 	7/19/2005
	AU
	 	2005294611	 	10/3/2005
	AU
	 	2004212584	 	10/24/2000
	BR
	 	PI0407856-0	 	2/27/2004
	CA
	 	2559944	 	10/22/1998
	CA
	 	2388988	 	10/24/2000
	CA
	 	2443808	 	4/25/2002
	CA
	 	2516494	 	2/27/2004
	CA
	 	2582562	 	10/3/2005
	CN
	 	200510074338.2	 	10/24/2000
	CN
	 	2809761	 	4/25/2002
	CN
	 	200480011347	 	2/27/2004
	CN
	 	200580038511.1	 	10/3/2005
	CN
	 	200610100176.X	 	10/24/2000
	CN
	 	200610100175.5	 	10/24/2000
	CN
	 	200610100194.8	 	10/24/2000
	CN
	 	200610100193.3	 	10/24/2000
	CN
	 	200610100180.6	 	10/24/2000
	EP
	 	98953912.7	 	10/22/1998
	EP
	 	2731549.8	 	4/25/2002
	EP
	 	4715691.4	 	2/27/2004
	EP
	 	5800165.2	 	10/3/2005
	EP
	 	5028709.3	 	12/30/2005
	HK
	 	6107559.2	 	10/24/2000
	HK
	 	5104944.4	 	4/25/2002
	HK
	 	6105840.5	 	2/27/2004
	IN
	 	1755/KNOLP/2005	 	2/27/2004
	IN
	 	1225/KOLNP/2007	 	10/3/2005
	JP
	 	2000-517205	 	10/22/1998
	JP
	 	2002-585835	 	4/25/2002
	JP
	 	2006-508892	 	2/27/2004
	KR
	 	10-2003-7014061	 	4/25/2002
	KR
	 	10-2005-7016056	 	2/27/2004
	KR
	 	10-2007-7010267	 	10/3/2005
	MX
	 	PA/a/2003/009830	 	4/25/2002








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	MX
	 	MX/a/2007/004449	 	4/25/2002
	MX
	 	MX/a/2007/004453	 	4/25/2002
	MX
	 	MX/a/2007/004452	 	4/25/2002
	MX
	 	MX/a/2007/00448	 	4/25/2002
	MX
	 	MX/a/2007/004451	 	4/25/2002
	MX
	 	PA/a/2005/009106	 	2/27/2004
	MX
	 	MX/a/2007/003828	 	10/3/2005
	TW
	 	94134761	 	10/5/2005
	TW
	 	95131108	 	8/24/2006
	TW
	 	95139495	 	10/26/2006
	TW
	 	95142962	 	11/21/2006
	TW
	 	95143152	 	11/22/2006
	TW
	 	95137289	 	10/11/2006
	TW
	 	96122902	 	6/25/2007






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EXHIBIT B




Licensed Mark



NuVinci

(word mark or stylized)



	 	 	 
	

	 	











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EXHIBIT C




Standards



Graphics Standards:





	 	ð	 	The Licensed Mark must be used in accordance with Fallbrook’s Graphic Standard as
it may be amended from time to time





NuVinci® Technology Name Usage





	 	ð	 	In all copy, transcripts, and content, NuVinci® Technology must be spelled out with
a capital letter “V”, must include a ® symbol after NuVinci in at least its first or most
conspicuous usage, should be distinguished from the rest of the text it is used with
preferably by use of an italicized font, and must always be followed by words such as:
Technology, Compound Variable Planetary, Continuously Variable Planetary drive, CVP, CVP
drive, CVP transmission, transmission, Brand or other suitable noun.
	 
	 	ð	 	Correct usage: NuVinci® technology...NuVinci CVP... NuVinci brand
	 
	 	ð	 	Incorrect usage: Nuvinci...NuVinci TM ...it’s a NuVinci and... .





Company and NuVinci® Technology Signature Logo Guidelines





	 	ð	 	Corporate and NuVinci Technology signature logos must be used directly from a stat
sheet or an official digital logo file obtained directly from Fallbrook Technologies Inc.
Logos may not be made from “scrap” or from printed collateral material, and must not be
recreated or regenerated.
	 
	 	ð	 	The Fallbrook Technologies and NuVinci Technology signature logos must be used as
presented. They can never be hand drawn in illustrations. Logos must be properly stripped
into place in all ads, collateral and electronic materials.
	 
	 	ð	 	There can be no distortion of logos in any design element at any time. All
illustrations must be prepared to be consistent with the appearance and tone of the logos
or variations authorized herein.
	 
	 	ð	 	All Fallbrook Technologies trademarks are either trademarks or registered trademarks and
any unauthorized use, including use that is not in accordance with these guidelines is
prohibited.
	 
	 	ð	 	All reproduction of Fallbrook Technologies and/or NuVinci Technology logos must be
pre-approved by Fallbrook Technologies Inc. prior to publication. Reasonable business
efforts shall be made to expedite the approval process.





Corporate and NuVinci Technology Logo Color Guide





	 	ð	 	Two-color: PMS Black + PMS179 sphere.
	 
	 	ð	 	Three-color: PMS Black + PMS 179 sphere + PMS 134 sphere highlight.
	 
	 	ð	 	Logos may be reproduced as one-color in PMS Black against a white or light field of
color; or reversed out as a single white image out of a black or solid color field.





Dos & Don’ts Guidelines





	 	ð	 	Do provide attribution to Fallbrook Technologies Inc. as the owner of the
trademarks when you utilize them.
	 
	 	ð	 	Do use the full company name: Fallbrook Technologies Inc. or the trademark Fallbrook
Technologies.
	 
	 	ð	 	Do use NuVinci Technology trademark properly: NuVinciTM CVP (first usage) or
NuVinci CVP (subsequent usage).
	 
	 	ð	 	Do use only the approved colors for 2 and 3 color logos.
	 
	 	ð	 	Do provide an area of isolation of white space immediately around the logos equal to a
minimum of half the height of the logo above, below and beside the mark.
	 
	 	ð	 	Don’t alter logo artwork and electronic files.
	 
	 	ð	 	Don’t place logo in any containment shape.
	 
	 	ð	 	Don’t use the logos without trademark attribution and marking.
	 
	 	ð	 	Don’t reproduce without artwork approval by Fallbrook Technologies Inc.





Proprietary Information





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