**MINUTES OF A MEETING** **EXHIBIT 10.46****OF THE BOARD OF DIRECTORS****OF****TORVEC, INC.****HELD ON OCTOBER 19, 2004**     The meeting of the board of Torvec was held at the offices of the company. All directors werepresent, either in person or by telephonic conference. Also present were Richard Ottalagana, CEO,Philip Fain, CFO, Sam Bronsky, CAO and Richard Sullivan, counsel.     The minutes of the previous meeting were approved.**OLD AND EXISTING BUSINESS**     1. FTV — There is a delay in moving the vehicle to the Basket Road facility since part of thebay which will be used for the FTV is currently needed for some of the work we are doing on theIVT;     2. Isuzu — Peters is out of town; Jim Gleasman will contact him the beginning of next week;     3. Iso-Torque — The Nominating Committee, per Read McNamara its chairman, recommended that thedirectors and officers of our new subsidiary, Iso-Torque Corporation, be as follows: **•** Richard E. Ottalagana-Co-Managing Director;  **•** Keith E. Gleasman-Co-Managing Director;  **•** Andrew Gleasman-Vice-President of Administration;  **•** Robert Green-Vice President of Operations     After discussion, upon motion duly made and seconded, it was**RESOLVED,**that this Board hereby accepts the recommendations of the Nominating Committee,and hereby appoints the persons recommended to the offices for which in each case therecommendation was made.     The Board indicated that initially Keith Gleasman’s primary focus should remain on the IVTuntil our testing is complete. Richard Ottalagana and Robert Green will immediately begin to buildthe subsidiary. To this end after discussion upon motion duly made and seconded, it was**RESOLVED,**that Torvec hereby agrees to fund Iso-Torque Corporation initially with$212,500, which monies were raised for this purpose, and hereby agrees to and hereby doestransfer all of the company’s right, title and interest to the Iso-Torque technology,including Patent No. US6,783,476B2, and all of the claims recited therein as well as allknow-how, goodwill and other intangibles associated with the Iso-Torque technology,including but not limited to trade names, trademarks, and the right to the name“Iso-Torque”, all in exchange for a 100% interest in the common equity of Iso-TorqueCorporation.     Richard Sullivan, counsel, stated that, at management’s direction, he had filed theCertificate of Incorporation of Iso-Torque Corporation with the Secretary of State of the State ofNew York on October 19, 2004, that a Certificate of Amendment to Torvec’s Certificate ofIncorporation to formally create the Class B non-voting

 

cumulative convertible preferred stock would be filed as approved by the Board with the New YorkSecretary of State’s office on or about October 20, 2004, and that the Board would receive a draftcopy of the By-Laws and other organizational documents to review and adopt at the next Boardmeeting.     Keith Gleasman reported that we have completed all gear and hobb design and that we are in aposition to build a production ready model of the Iso-Torque, which he estimated would be completedby the end of February 2005. We are working with Gear Resources Technology, who is actuallycutting the hobb in accordance with our proprietary formula so that we will be able to assemble theproduction ready model.     4. ZT Technologies — Richard Sullivan advised the Board that management had received twoletters from Milan Klucko, Managing Director of ZT, stating that ZT’s position is that the July 21,2004 agreement constitutes a valid contract between Torvec and ZT, that it was Torvec’sresponsibility under the contract to provide ZT with engineering drawings, specifications, pricingand similar information under Section 4 under the agreement. ZT has in fact provided notice toTorvec that, in accordance with the agreement, Torvec had 30 days from the date of the notice onOctober 1, 2004 to provide such documentation. Mr. Sullivan explained that Torvec has consistentlytaken the position that all of the provisions of the July 21 agreement (including Section 4) onlybecome effective if ZT provides Torvec with at least five factorable purchase orders as set forthin Sections 1 and 17.     James Gleasman then explained that he has sent a response to Milan Klucko stating that wewanted the relationship to move forward, that we needed a $350,000 advance on purchase orders toprovide the requisite documentation and other forms of assistance implicit in complying withSection 4 of the agreement, and that ZT had known of our financial needs prior to July 28, 2004.He concluded the letter by inviting Milan Klucko to Rochester to discuss what steps could be takenby the parties to move forward.     Milan has not responded to date. Jim Gleasman then explained that under these circumstancesthere was a possibility that ZT could sue or threaten to sue Torvec on the grounds that Torvec hadrefused, and was continuing to refuse to provide ZT with documents necessary to enable ZT toperform its duties under the agreement. Based upon this possibility he explained and then invitedthe Board to authorize a “preemptive strike” against ZT consisting of a Petition to the UnitedStates District Court for the Western District of New York for a Declaratory Judgment that since ZThas failed to provide and upon notice and demand has refused to provide at least five factorablepurchase orders for Torvec’s full terrain vehicle, the July 21 agreement between the parties hasbecome unenforceable by its terms, and that neither party to such agreement bears anyresponsibility or obligation as between themselves or to third parties as a result of the July 21agreement.     After further discussion, including a specific affirmation by each member of the Board, uponmotion duly made and seconded, it was

 

**RESOLVED,**that management is authorized to take all legal action to protect and enforcethe company’s position that the July 21 agreement between ZT and Torvec is unenforceableby its terms, including the filing of a Petition for a Declaratory Judgment to sucheffect by a court of competent jurisdiction.     5. GM — Jim Gleasman and Phil Fain read to the Board John Maten’s letter requesting that weprovide him with a schedule of gear ratios governing the IVT. They also read our response. Thecritical portion of our response was our statement that after we have completed testing the IVTusing GM’s ECU, we would repeat the same tests using our own ECU manufactured according to ourspecifications by Motortron.     6. Governance Committee Report — The Governance Committee submitted the attached reportconcerning the compensation of our non-management directors solely for service as members of theboard of directors and of its committees. Read McNamara stated that while he was in agreement withthe objectives set forth in the report, he wished the committee provide for its background andrecords a profile of the compensation levels accorded to non-management directors of one or morecompanies similarly situated to Torvec. It was also agreed that to qualify each year for thewarrants, non-management directors would have to attend in person or by telephonic conference atleast 75% of the meetings of the Board and of each committee of which he was a member. Subject tothis proviso and modification, the Board accepted the Governance Committee’s report and providedthat the non-management director compensation plan would become effective October 1, 2004.     It was next agreed that the duties and responsibilities of the Governance Committee should beexpanded so that the committee would be responsible for all director, officer, employee andconsultant compensation. After discussion, upon motion made and seconded, it was**RESOLVED,**that the Governance Committee, currently composed of Joseph Alberti, chairman,Gary Siconolfi and Daniel Bickel, shall be responsible for all aspects of Torveccompensation to all Directors, officers, employees and consultants, and to this end theGovernance Committee shall be renamed the Compensation and Governance Committee.     8. Variable Gear — Robert C. Horton has indicated that he will accommodate us with respect toour entering into an agreement with one or more companies (e.g. Brunswick) to utilize our IVTtechnology in the marine industry. The specific terms of this “accommodation” were not discussed.     9. ICE Technology — John Tobias, Jake Brooks and David Marshall are meeting with Dupont onOctober 18, 2004 to discuss the possible involvement of Dupont and the Dupont Capital Fund.**NEW BUSINESS**     1. Jim Gleasman, Phil Fain and Richard Sullivan will visit our independent accounting firm,Eisner LLP, to discuss accounting issues for our forthcoming 10-QSB and to meet withrepresentatives of JPMorgan Chase to discuss a possible underwriting for an IPO in connection withour Iso-Torque technology.

 

     2. We have received two proposals from accounting firms relating to SOX 404 Internal ControlsCompliance. After an examination of both proposals by the Board, upon motion duly made andseconded, it was:**RESOLVED,**that the company hereby engages the accounting firm of Rotenberg &Company in accordance with the terms and conditions of the proposal submitted tothe company by Rotenberg & Company for all compliance issues relating to SOX 404.     3. There is some confusion regarding the exact compensation payable to CXO on the GO under ourJune 30, 2004 agreement in certain circumstances. After discussion, the matter was referred tocounsel for review.     4. Richard Sullivan handed out a Memorandum delineating the background and terms governingpayments made to him by Torvec for business consulting services.          The board reviewed the Memorandum and discussed its contents. The discussion centered on theaccounting treatment to be accorded the prepayment of business consultants fees, the need forgreater communication amongst board members, and the need for enhanced internal control over allissuances of our equity securities.          After further discussion, upon motion duly made and seconded, it was:**RESOLVED,**that CFO Philip Fain is hereby authorized and instructed to discussand resolve all accounting issues with respect to business consultant’sprepayments with Eisner, LLP; and be it further**RESOLVED,**that effective immediately all equity issuances, whether common orpreferred, must be approved in advance by the Chairman of the Compensation andGovernance Committee (currently Joseph Alberti), and separately by at least oneofficer of the company, and be it further**RESOLVED,**that the Board reaffirm its current policy to hold board meetingsevery two weeks in order to further communication amongst board members, thateach committee of the board meet at least once per quarter, and that theindependent directors meet at least once per quarter in Executive Session.     Based upon the foregoing discussion and resolutions the board, upon motion duly made andseconded**RESOLVED,**that the Board hereby accepts the report submitted by Richard Sullivan withrespect to business consultant’s fees, and subject to the resolutions set forth abovehereby renews the business consulting arrangement with Richard Sullivan for the fiscalyear commencing January 1, 2005, such arrangement to be reviewed from time to time bythe board in accordance with its normal policy.     5. It was agreed that the annual meeting of shareholders be held at Casa Larga on Thursday,January 27, 2005, and Keith Gleasman was instructed to initiate all discussions with Casa Larga inorder to facilitate such meeting.There being no further business, the meeting was adjourned.     Respectfully submitted,                                                         Gary A. Siconolfi, Secretary