Document:

Exhibit 10.2

EXECUTION
COPY

	
	
	
	
	

REGISTRATION
RIGHTS AGREEMENT

Dated July 23,
2003

between

EMPRESA
NACIONAL DE ELECTRICIDAD S.A.,

 acting through its Cayman Islands branch

and

MORGAN STANLEY
& CO. INCORPORATED and

 Santander Investment Limited,

 acting severally on behalf of themselves and

 the several Initial Purchasers named in

 the Purchase Agreement

    

	
	
	
	
	

EXECUTION
COPY

REGISTRATION
RIGHTS AGREEMENT

THIS REGISTRATION
RIGHTS AGREEMENT (the "Agreement") is made and entered into July 23, 2003, between EMPRESA NACIONAL DE ELECTRICIDAD S.A., a Chilean corporation (sociedad anonima abierta), acting through its Cayman Islands branch (the "Company"), and MORGAN STANLEY & CO. INCORPORATED and SANTANDER INVESTMENT
LIMITED ("the Representatives"), as Representatives of the initial purchasers (the "Initial Purchasers") named in the Purchase Agreement dated July 18, 2003, between the Company and the Representatives (the "Purchase Agreement").

This Agreement is
made pursuant to the Purchase Agreement, which provides for the sale by the Company to the Initial Purchasers of $400,000,000 aggregate principal amount of its 8.35% Notes due 2013 and $200,000,000 aggregate principal amount of its 8.625% Notes due 2015 (together, the "Securities"). In order to
induce the Representatives to enter into the Purchase Agreement, the Company has agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the
Purchase Agreement.

In consideration
of the foregoing, the parties hereto agree as follows:

1.
Definitions.

As used in this
Agreement, the following capitalized defined terms shall have the following meanings:

"1933 Act" shall
mean the Securities Act of 1933, as amended from time to time.

"1934 Act" shall
mean the Securities Exchange Act of 1934, as amended from time to time.

"Closing Date"
shall mean the Closing Date as defined in the Purchase Agreement.

"Company" shall
have the meaning set forth in the preamble and shall also include the Company's successors.

"Exchange Dates"
shall have the meaning set forth in Section 2(a)(ii) hereof.

"Exchange Offer"
shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof.

"Exchange Offer
Registration" shall mean a registration under the 1933 Act effected pursuant to Section 2(a) hereof.

"Exchange Offer
Registration Statement" shall mean an exchange offer registration statement on Form F-4 (or, if applicable, on another appropriate form) under the 1933 Act and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.

"Exchange
Securities" shall mean securities issued by the Company under the Indenture containing terms identical to the Securities (except that (i) Special Interest shall not accrue and be payable thereon, (ii) interest thereon shall accrue from the last date on which interest was paid on the Securities or,
if no such interest has been paid, from July 23, 2003 and (iii) the Exchange Securities will not contain restrictions on transfer) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer.

"Holder" shall
mean the Initial Purchasers, for so long as they own any Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture; provided that for purposes of Sections 4 and 5 of this Agreement,
the term "Holder" shall include Participating Broker-Dealers (as defined in Section 4(a)).

"Indenture" shall
mean the Indenture relating to the Securities dated as of January 1, 1997 between the Company and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as trustee, as the same may be amended from time to time in accordance with the terms thereof.

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"Initial
Purchasers" shall have the meaning set forth in the preamble.

"Majority
Holders" shall mean the Holders of a majority of the aggregate principal amount of outstanding Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or
any of its affiliates (as such term is defined in Rule 405 under the 1933 Act) (other than the Initial Purchasers or subsequent Holders of Registrable Securities if such subsequent holders are deemed to be such affiliates solely by reason of their holding of such Registrable Securities) shall not
be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount.

"Person" shall
mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

"Prospectus"
shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including all material incorporated by reference therein.

"Purchase
Agreement" shall have the meaning set forth in the preamble.

"Registrable
Securities" shall mean the Securities; provided, however, that the Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities shall have been declared effective under the 1933 Act and such Securities shall have been disposed of pursuant to
such Registration Statement, (ii) when such Securities have been sold to the public pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the 1933 Act or (iii) when such Securities shall have ceased to be outstanding.

"Registration
Expenses" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with blue sky qualification of any of the Exchange Securities or Registrable Securities), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements and other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and, in the case of a
Shelf Registration Statement, the fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Initial Purchasers) and (viii) the fees and disbursements of the independent public accountants of the
Company, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, but excluding fees and expenses of counsel to the underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.

"Registration
Statement" shall mean any registration statement of the Company that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

"SEC" shall mean
the Securities and Exchange Commission.

"Securities"
shall have the meaning set forth in the preamble.

"Shelf
Registration" shall mean a registration effected pursuant to Section 2(b) hereof.

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"Shelf
Registration Statement" shall mean a "shelf" registration statement of the Company pursuant to the provisions of Section 2(b) of this Agreement which covers all of the Registrable Securities (but no other securities unless approved by the Holders whose Registrable Securities are covered by such
Shelf Registration Statement) on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference therein.

"Special
Interest" shall have the meaning set forth in Section 2(d).

"Trustee" shall
mean the trustee with respect to the Securities under the Indenture.

"Underwriter"
shall have the meaning set forth in Section 3 hereof. "Underwritten Registration" or "Underwritten Offering" shall mean a registration in which Registrable Securities are sold to an Underwriter for reoffering to the public.

2. Registration
Under the 1933 Act.

(a) To the extent
not prohibited by any applicable law or applicable interpretation of the Staff of the SEC, the Company shall prepare and cause to be filed with the SEC no later than 90 days following the date of the original issuance of the Securities an Exchange Offer Registration Statement covering the offer by
the Company to the Holders to exchange all of the Registrable Securities for Exchange Securities and shall use its reasonable best efforts to cause such Registration Statement to be declared effective under the 1933 Act by the SEC no later than December 20, 2003 and remain effective until the
closing of the Exchange Offer. The Company shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement has been declared effective by the SEC and shall have the Exchange Offer consummated not later than January 19, 2004. The Company shall commence the Exchange Offer
by mailing the related exchange offer Prospectus and accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law:

(i) that the
Exchange Offer is being made pursuant to this Registration Rights Agreement and that all Registrable Securities validly tendered and not withdrawn will be accepted for exchange;

(ii) the dates
of acceptance for exchange (which shall be a period of at least 20 business days from the date such notice is mailed) (the "Exchange Dates");

(iii) that any
Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this Registration Rights Agreement;

(iv) that
Holders electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with the enclosed letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York)
specified in the notice prior to the close of business on the last Exchange Date; and

(v) that Holders
will be entitled to withdraw their election, not later than the close of business on the last Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice a telegram, telex, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing his election to have such Securities exchanged.

As soon as
practicable after the last Exchange Date (but in any event no later than January 19, 2003, the Company shall:

(i) accept for
exchange Registrable Securities or portions thereof validly tendered and not validly withdrawn pursuant to the Exchange Offer; and

(ii) deliver, or
cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and mail to each Holder, an Exchange Security equal in principal amount to the principal amount of
the Registrable Securities surrendered by such Holder.

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The Company shall
comply with the applicable requirements of the 1933 Act, the 1934 Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than (i) that the Exchange Offer does not violate applicable law or any applicable
interpretation of the Staff of the SEC and (ii) the tendering of Registrable Securities in accordance with the Exchange Offer. Each Holder of Registrable Securities (other than Participating Broker-Dealers) who wishes to exchange such Registrable Securities for Exchange Securities in the Exchange
Offer (a) shall have represented (or by tendering its Registrable Securities, be deemed to have represented) that (i) it is not an affiliate (as defined in Rule 405 under the 1933 Act) of the Company, (ii) any Exchange Securities to be received by it were acquired in the ordinary course of its
business and (iii) at the time of the commencement of the Exchange Offer, it has no arrangement with any person to participate in the distribution (within the meaning of the 1933 Act) of the Exchange Securities and (b) shall have made such other representations as may reasonably be necessary under
applicable SEC rules, regulations or interpretations to render the use of Form F-4 or another appropriate form under the 1933 Act available. The Company shall inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall
have the right, subject to applicable law, to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer.

(b) In the event
that (i) the Company determines that the Exchange Offer Registration provided for in Section 2(a) above is not available or may not be consummated as soon as practicable after the last Exchange Date because it would violate applicable law or the applicable interpretations of the Staff of the SEC,
or (ii) the Exchange Offer has been completed and in the opinion of counsel for the Initial Purchasers a Registration Statement must be filed and a Prospectus must be delivered by the Initial Purchasers in connection with any offering or sale of Registrable Securities constituting any portion of an
unsold allotment, the Company shall cause to be filed as soon as practicable after such determination or notice of such opinion of counsel is given to the Company, as the case may be, a Shelf Registration Statement providing for the sale by the Holders of all of the Registrable Securities and to
use its reasonable best efforts to have such Shelf Registration Statement declared effective by the SEC. In the event the Company is required to file a Shelf Registration Statement solely as a result of the matters referred to in clause (ii) of the preceding sentence, the Company shall file and use
its reasonable best efforts to have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion of the Exchange Offer. The Company agrees to use its reasonable best efforts to keep the Shelf Registration Statement continuously effective until the expiration of the period
referred to in Rule 144(k) with respect to the Registrable Securities or such shorter period that will terminate when all of the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement. The Company further agrees to supplement
or amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the 1933 Act or by any other rules and regulations thereunder for shelf registration or if reasonably
requested by a Holder with respect to information relating to such Holder, and to use its reasonable best efforts to cause any such amendment to become effective and such Shelf Registration Statement to become usable as soon as thereafter practicable. The Company agrees to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC.

(c) The Company
shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) and Section 2(b). Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the
Shelf Registration Statement.

(d) An Exchange
Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is interfered

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with by any stop
order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement will be deemed not to have become effective during the period of such interference until the offering of Registrable Securities pursuant to such Registration Statement
may legally resume. In the event the Exchange Offer is not consummated or the Shelf Registration Statement is not declared effective on or prior to January 19, 2004 the interest rate on the Securities will be increased by 0.50% per annum until the Exchange Offer is consummated or the Shelf
Registration Statement is declared effective by the SEC (such additional interest, the "Special Interest").

(e) Without
limiting the remedies available to the Initial Purchasers and the Holders, the Company acknowledges that any failure by the Company to comply with its obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Section
2(a) and Section 2(b) hereof.

3. Registration
Procedures.

In connection
with the obligations of the Company with respect to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the Company shall as expeditiously as possible (but in any event subject to the requirements of Section 2 hereof):

(a) prepare and
file with the SEC a Registration Statement on the appropriate form under the 1933 Act, which form (x) shall be selected by the Company and (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and (z) shall comply as
to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section
2 hereof;

(b) (i) prepare
and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented,
to be filed pursuant to Rule 424 under the 1933 Act; and (ii) to keep each Prospectus current during the period described under Section 4(3) and Rule 174 under the 1933 Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities; in
each case (i) and (ii) above, in the case of a Shelf Registration, subject to the Company's right under the penultimate paragraph of Section 3 to require Holders to suspend their disposition of Registrable Securities.

(c) in the case
of a Shelf Registration, furnish to each Holder of Registrable Securities, to counsel for the Initial Purchasers, to counsel for the Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or Underwriter may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities; and subject to the Company's right under the penultimate
paragraph of Section 3 to require Holders to suspend their disposition of Registrable Securities, the Company consents to the use of such Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the selling Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law;

(d) use its best
efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement
is declared effective by the SEC, to cooperate with such Holders in connection with any filings required to be made with the National Association of Securities Dealers, Inc. and do any and

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all other acts
and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (ii) file any general consent to service of process or (iii) subject itself to taxation in any such jurisdiction if it is not so subject;

(e) in the case
of a Shelf Registration, notify each Holder of Registrable Securities, counsel for the Holders and counsel for the Initial Purchasers promptly and, if requested by any such Holder or counsel, confirm such advice in writing (i) when a Registration Statement has become effective and when any
post-effective amendment thereto has been filed and becomes effective, (ii) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement and Prospectus or for additional information, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and correct in all material respects or if the Company receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event during the period a Shelf Registration Statement is effective which makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading and (vi) of any determination by the Company that a post-effective amendment to a Registration Statement would be
appropriate;

(f) use its
reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment and provide immediate notice to each Holder of the withdrawal of any such order;

(g) in the case
of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested);

(h) in the case
of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the Indenture) and registered in such names as the selling Holders may reasonably request at least one business day prior to the closing of any sale of Registrable Securities;

(i) in the case
of a Shelf Registration, subject to the Company's right under the penultimate paragraph of Section 3 to require Holders to suspend their disposition of Registrable Securities, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, prepare and file with the SEC a supplement or
post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company agrees to notify the Holders to suspend use of the Prospectus as promptly as practicable after the occurrence
of such an event, and the Holders hereby agree to suspend use of the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission;

(j) a reasonable
time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or any

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document which is
to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) and make
such of the representatives of the Company as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) available for discussion of such document, and shall not at any time file or make any amendment
to the Registration Statement, any Prospectus or any amendment of or supplement to a Registration Statement or a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus, of which the Initial Purchasers and their counsel (and, in the case of
a Shelf Registration Statement, the Holders and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) shall object;

(k) obtain a
CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement;

(l) cause the
Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of the TIA and execute, and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;

(m) in the case
of a Shelf Registration, make reasonably available for inspection by a representative of the Holders of the Registrable Securities, any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and attorneys and accountants designated by the Holders, at reasonable
times and in a reasonable manner, all financial and other records, pertinent documents and properties of the Company, and cause the respective officers, directors, attorneys and employees of the Company to supply all information reasonably requested by any such representative, Underwriter, attorney
or accountant in connection with a Shelf Registration Statement; provided that such persons shall first agree in writing with the Company that any information that is reasonably and in good faith designated by the Company in writing as confidential at the time of delivery of such information shall
be kept confidential by such persons unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to
Federal securities laws in connection with the filing of the Shelf Registration Statement or the use of any Prospectus) (iii) such information becomes generally available to the public other than as a result of disclosure or failure to safeguard by any such person or (iv) such information becomes
available to any such person from a source other than the Company and such source is not bound by a confidentiality agreement or other obligation not to disclose such information.

(n) in the case
of a Shelf Registration, use its best efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which similar securities issued by the Company are then listed if requested by the Majority Holders, to the extent such Registrable
Securities satisfy applicable listing requirements;

(o) use its best
efforts to cause the Exchange Securities or Registrable Securities, as the case may be, to be rated by two nationally recognized statistical rating organizations (as such term is defined in Rule 436(g)(2) under the 1933 Act);

(p) if
reasonably requested by any Holder of Registrable Securities covered by a Registration Statement, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment as soon as the Company has received notification of the matters to be incorporated in such filing; and

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(q) in the case
of a Shelf Registration, use its reasonable best efforts to enter into such customary agreements and take all such other customary actions in connection therewith (including those requested by the Holders of a majority of the Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities including, but not limited to, an Underwritten Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Securities with respect to the business of the
Company and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if
and when requested, (ii) obtain opinions of counsel to the Company (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of Registrable
Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) obtain "cold comfort" letters from the independent certified public accountants of the Company (and, if necessary, any other certified public accountant of any subsidiary of the Company, or
of any business acquired by the Company for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with primary underwritten offerings, and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and
which are customarily delivered in primary underwritten offerings, to evidence the continued validity of the representations and warranties of the Company made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in an underwriting agreement.

In the case of a
Shelf Registration Statement, the Company may require each Holder of Registrable Securities to furnish to the Company such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Company may from time to time reasonably request in
writing.

In the case of a
Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by the Company, such Holder will deliver to the Company (at its expense) all copies in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. If the Company shall give any such notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary
to resume such dispositions. The Company may give any such notice only twice during any 365 day period and any such suspensions may not exceed 30 days for each suspension and there may not be more than two suspensions in effect during any 365 day period.

The Holders of
Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the "Underwriters") that will administer the
offering will be selected by the Majority Holders of the Registrable Securities included in such offering, subject to the Company's consent (which shall not be unreasonably withheld). No Holder of Registrable Securities may participate in any Underwritten Offering hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting agreements approved by the Majority Holders of Registrable Securities included in such offering and (b) completes

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and executes all
customary and appropriate questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting agreements.

4. Participation
of Broker-Dealers in Exchange Offer.

(a) The Staff of
the SEC has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a "Participating Broker-Dealer"), may be
deemed to be an "underwriter" within the meaning of the 1933 Act and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities.

The Company
understands that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming
the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the 1933 Act in connection with resales of Exchange Securities for their own
accounts, so long as the Prospectus otherwise meets the requirements of the 1933 Act.

(b) In light of
the above, notwithstanding the other provisions of this Agreement, the Company agrees that the provisions of this Agreement as they relate to a Shelf Registration shall also apply to an Exchange Offer Registration to the extent, and with such reasonable modifications thereto as may be, reasonably
requested by the Initial Purchasers or by one or more Participating Broker-Dealers, in each case as provided in clause (ii) below, in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in
Section 4(a) above; provided that:

(i) the Company
shall not be required to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 3(i), for a period exceeding 90 days after the last Exchange Date (as such period may be extended pursuant to the penultimate paragraph
of Section 3 of this Agreement) and Participating Broker-Dealers shall not be authorized by the Company to deliver and shall not deliver such Prospectus after such period in connection with the resales contemplated by this Section 4; and

(ii) the
application of the Shelf Registration procedures set forth in Section 3 of this Agreement to an Exchange Offer Registration, to the extent not required by the positions of the Staff of the SEC or the 1933 Act and the rules and regulations thereunder, will be in conformity with the reasonable
request to the Company by the Initial Purchasers or with the reasonable request in writing to the Company by one or more broker-dealers who certify to the Initial Purchasers and the Company in writing that they anticipate that they will be Participating Broker-Dealers; and provided further that, in
connection with such application of the Shelf Registration procedures set forth in Section 3 to an Exchange Offer Registration, the Company shall be obligated (x) to deal only with one entity representing the Participating Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless
it elects not to act as such representative, (y) to pay the fees and expenses of only one counsel representing the Participating Broker-Dealers, which shall be counsel to the Initial Purchasers unless such counsel elects not to so act and (z) to cause to be delivered only one, if any, "cold
comfort" letter with respect to the Prospectus in the form existing on the last Exchange Date and with respect to each subsequent amendment or supplement, if any, effected during the period specified in clause (i) above.

(c) The Initial
Purchasers shall have no liability to the Company or any Holder with respect to any request that it may make pursuant to Section 4(b) above.

5.
Indemnification and Contribution.

(a) The Company
agrees to indemnify and hold harmless the Initial Purchasers, each Holder and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common control with, or is controlled by, any
Initial Purchaser or any Holder, from and against all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by the Initial Purchaser, any Holder

10

or any such
controlling or affiliated Person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) pursuant to which Exchange Securities or
Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or caused by
any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make
the statements therein in light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to the Initial
Purchasers or any Holder furnished to the Company in writing by Morgan Stanley & Co. Incorporated or any selling Holder expressly for use therein. In connection with any Underwritten Offering permitted by Section 3, the Company will also indemnify the Underwriters, if any, selling brokers,
dealers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the 1933 Act and the 1934 Act) to the same extent as provided above with respect to the indemnification of the
Holders, if requested in connection with any Registration Statement.

(b) Each Holder
agrees, severally and not jointly, to indemnify and hold harmless the Company, the Initial Purchasers and the other selling Holders, and each of their respective directors, officers who sign the Registration Statement and each Person, if any, who controls the Company, any Initial Purchaser and any
other selling Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Company to the Initial Purchasers and the Holders, but only with reference to information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in any Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto).

(c) In case any
proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the "indemnified party") shall promptly notify the Person against whom such indemnity may
be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Initial Purchasers and all Persons, if any, who control any Initial Purchaser within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement and each Person, if any, who controls the Company within the meaning of either such Section and (c) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Holders and all Persons,
if any, who control any Holders within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In such case involving the Initial Purchasers and Persons who control the Initial Purchasers, such firm shall be designated in writing by Morgan
Stanley & Co. Incorporated. In such case involving the Holders and such Persons who control Holders, such firm shall be designated in writing by the Majority Holders. In all other cases, such firm shall be designated by the Company. The indemnifying party shall not be liable for any settlement
of any

11

proceeding
effected without its written consent but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement
of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party for such fees and expenses of counsel in
accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which such indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.

(d) If the
indemnification provided for in paragraph (a) or paragraph (b) of this Section 5 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or
parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Holders shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Holders and the parties" relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Holders' respective obligations to contribute pursuant to this Section 5(d) are several in proportion to the respective principal amount of Registrable Securities of such Holder that were registered pursuant to a Registration Statement.

(e) The Company
and each Holder agree that it would not be just or equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5, no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which Registrable Securities were sold by such Holder exceeds the amount of
any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

The indemnity and
contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchasers, any Holder or any Person controlling any Initial Purchaser or any
Holder, or by or on behalf of the Company, its officers or directors or any Person controlling the Company, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement.

6.
Miscellaneous.

(a) No
Inconsistent Agreements. The Company has not entered into, and on or after the date of this Agreement will not enter into, any agreement which is inconsistent with the rights granted to the Holders

12

of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's other issued and outstanding securities under any such
agreements.

(b) Amendments
and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of at least a
majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; provided, however, that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall
be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder.

(c) Notices. All
notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means
of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Initial Purchasers, the address set forth in the Purchase Agreement; and (ii) if to the Company, initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c).

All such notices
and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business
day if timely delivered to an air courier guaranteeing overnight delivery.

Copies of all
such notices, demands, or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture.

(d) Successors
and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. The
Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Company with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement.

(e) Purchases and
Sales of Securities. The Company shall not, and shall use its best efforts to cause its affiliates (as defined in Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise transfer any Registrable Securities.

(f) Third Party
Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.

(g) Counterparts.
This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(h) Headings. The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(i) Governing
Law. This Agreement shall be governed by the law of the State of New York.

(j) Severability.
In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and

13

enforceability of
any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(k) Consent to
Jurisdiction.

(i) The Company
irrevocably submits to the nonexclusive jurisdiction of any court of the State of New York or any United States Federal court sitting in the Borough of Manhattan, the City of New York, New York, United States, and any appellate court from any thereof, and waives any immunity from the jurisdiction
of such courts over any suit, action or proceeding that may be brought in connection with this Agreement. The Company irrevocably waives, to the fullest extent permitted by law, any objection to any suit, action, or proceeding that may be brought in connection with this Agreement in such courts
whether on the grounds of venue, residence or domicile or on the ground that any such suit, action or proceeding has been brought in an inconvenient forum. The Company agrees that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the
Company and may be enforced in any court to the jurisdiction of which the Company is subject by a suit upon such judgment; provided that service of process is effected upon the Company in the manner provided by this Agreement. Notwithstanding the foregoing, any suit, action or proceeding brought in
connection with this Agreement against the Company may be instituted in any competent court in the Republic of Chile.

(ii) The Company
agrees that service of all writs, process and summonses in any suit, action or proceeding brought in connection with this Agreement against the Company in any court of the State of New York or any United States Federal court, in each case, sitting in the Borough of Manhattan, The City of New York,
may be made upon CT Corporation System at 111 Eighth Avenue, New York, New York 10011, whom the Company irrevocably appoints as its authorized agent for service of process. The Company represents and warrants that CT Corporation System has agreed to act as its agent for service of process. The
Company agrees that such appointment shall be irrevocable until the irrevocable appointment by the Company, of a successor in The City of New York as its authorized agent for such purpose and the acceptance of such appointment by such successor. The Company further agrees to take any and all
action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. If CT Corporation System shall cease to act as the agent for service of process for the Company, the Company shall appoint without delay
another such agent and provide prompt written notice to the Initial Purchasers of such appointment. With respect to any such action in any court of the State of New York or any United States Federal court, in each case, in the Borough of Manhattan, The City of New York, service of process upon CT
Corporation System, as the authorized agent of the Company for service of process, and written notice of such service to the Company shall be deemed, in every respect, effective service of process upon the Company.

(iii) Nothing in
this Section shall affect the right of any party to serve legal process in any other manner permitted by law or affect the right of any party to bring any action or proceeding against any other party or its property in the courts of other jurisdictions.

(l) Waiver of
Immunity. To the extent that the Company or any of its properties, assets or revenues may have or may hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief
in any thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution of judgment, or from execution of judgment, as relief or for the enforcement of any judgment, in any jurisdiction
in which the proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives and agrees not to
plead or claim any such immunity and consents to such relief and enforcement.

[Signature Page
Follows]

14

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written above.

		EMPRESA NACIONAL DE

 ELECTRICIDAD S.A.

		By: /s/ Manuel Irarrazaval Aldunate

		  ________________________________

  Name: Manuel Irarrazaval Aldunate

  Title: Asesor del Gerente de Finanzas

Confirmed and
accepted as of

 the date first above written:

MORGAN STANLEY
& CO. INCORPORATED,

 and SANTANDER INVESTMENT LIMITED

Acting severally
on behalf of themselves and the

    several Initial Purchasers named in the

    Purchase Agreement

Morgan Stanley
& Co. Incorporated

By: /s/
Francisco C. Pujol

  ________________________________

  Name: Francisco C. Pujol

  Title: Managing Director

Santander
Investment Limited

By: /s/
Marcelo Castro

  ________________________________

  Name: Marcelo Castro

  Title: Authorized Signatory

By: /s/
Andres Barbosa

  ________________________________

  Name: Andres Barbosa

  Title: Authorized Signatory

15<PAGE>
                            PATENT LICENSE AGREEMENT

                                  --EXCLUSIVE--

                                   Cover Page

     Patent License Issued: May 27, 2003

     Serial Numbers of Licensed Patents: U.S. Design Patent no. D 475,161

     Licensee: Sport Technologies, Inc., of Plant City, Florida

     Additional Remarks: Sport Technologies, Inc. intends to be acquired by
     GloTech Industries, Inc., of Gainesville, Florida within 30 days of the
     execution of this license agreement

This Patent License Agreement, hereinafter referred to as the "AGREEMENT,"
consists of this Cover Page, an attached AGREEMENT, a Signature Page, Appendix A
(List of Patent(s) or Patent Application(s)), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Modifications), Appendix E
(Benchmarks), and Appendix F (Commercial Development Plan). The Parties to this
AGREEMENT are:

1)   Paul D. Mundy ("PDM"), Inventor, hereinafter singly referred to as "PDM";
     and

2)   The person, corporation, or institution identified ABOVE AND/OR ON THE
     Signature Page, having offices at the address indicated on the Signature
     Page, hereinafter referred to as "Licensee."

                                  Page 1 of 21
<PAGE>

                       PATENT LICENSE AGREEMENT--EXCLUSIVE

PDM and LICENSEE agree as follows:

1.       BACKGROUND

         1.01     In the course of conducting investigative work and research,
                  PDM made inventions that may have commercial applicability.

         1.02     By assignment of patent rights from US Patent Office, PDM owns
                  intellectual property rights claimed in any United States and
                  foreign patent applications or patents corresponding to the
                  assigned inventions.

         1.03     PDM has the authority to enter into this AGREEMENT for the
                  licensing of rights to this invention.

         1.04     PDM desires to transfer these inventions to the private sector
                  through commercialization licenses to facilitate the
                  commercial development of products and processes for public
                  use and benefit.

         1.05     LICENSEE desires to acquire commercialization rights to
                  certain of these inventions in order to develop processes,
                  methods, or marketable products for public use and benefit.

2.       DEFINITIONS

         2.01     "BENCHMARKS" mean the performance milestones that are set
                  forth in Appendix E.

         2.02     "COMMERCIAL DEVELOPMENT PLAN" means the written
                  commercialization plan attached as Appendix F.

         2.03     "FIRST COMMERCIAL SALE" means the initial transfer by or on
                  behalf of LICENSEE or its sublicensees of LICENSED PRODUCTS or
                  the initial practice of a LICENSED PROCESS by or on behalf of
                  LICENSEE or its sublicensees in exchange for cash or some
                  equivalent to which value can be assigned for the purpose of
                  determining NET SALES.

         2.05     "LICENSED FIELDS OF USE" means the fields of use identified in
                  Appendix B.

         2.06     "LICENSED PATENT RIGHTS" shall mean:

                  a)       U.S. patent applications and patents listed in
                           Appendix A, all divisions and continuations of these
                           applications, all patents issuing from such
                           applications, divisions, and continuations, and any
                           reissues, reexaminations, and extensions of all such
                           patents;

                  b)       to the extent that the following contain one or more
                           claims directed to the invention or inventions
                           disclosed in a) above: i) continuations-in-part of a)
                           above; ii) all divisions and continuations of these
                           continuations-in-part; iii) all patents issuing from
                           such continuations-in-part, divisions, and

                                  Page 2 of 21
<PAGE>

                           continuations; and iv) any reissues, reexaminations,
                           AND EXTENSIONS OF ALL SUCH PATENTS;

                  c)       to the extent that the following contain one or more
                           claims directed to the invention or inventions
                           disclosed in a) above: all counterpart foreign
                           applications and patents to a) and b) above,
                           including those listed in Appendix A.

                  LICENSED PATENT RIGHTS shall NOT include b) or c) above to the
                  extent that they contain one or more claims directed to new
                  matter which is not the subject matter disclosed in a) above.

         2.07     "LICENSED PROCESS(ES)" means processes which, in the course of
                  being practiced would, in the absence of this AGREEMENT,
                  infringe one or more claims of the LICENSED PATENT RIGHTS that
                  have not been held invalid or unenforceable by an unappealed
                  or unappealable judgment of a court of competent jurisdiction.

         2.08     "LICENSED PRODUCT(S)" means tangible materials which, in the
                  course of manufacture, use, or sale would, in the absence of
                  this AGREEMENT, infringe one or more claims of the LICENSED
                  PATENT RIGHTS that have not been held invalid or unenforceable
                  by an unappealed or unappealable judgment of a court of
                  competent jurisdiction.

         2.09     "LICENSED TERRITORY" means the geographical area identified in
                  Appendix B.

         2.10     "NET SALES" means the total gross receipts for sales of
                  LICENSED PRODUCTS or practice of LICENSED PROCESSES by or on
                  behalf of Licensee or its sublicensees, and from leasing,
                  renting, or otherwise making LICENSED PRODUCTS available to
                  others without sale or other dispositions, whether invoiced or
                  not, less returns and allowances actually granted, packing
                  costs, insurance costs, freight out, taxes or excise duties
                  imposed on the transaction (if separately invoiced), and
                  wholesaler and cash discounts in amounts customary in the
                  trade. No deductions shall be made for commissions paid to
                  individuals, whether they be with independent sales agencies
                  or regularly employed by LICENSEE, or sublicensees, and on its
                  payroll, or for the cost of collections.

         2.11     "PRACTICAL APPLICATION" means to manufacture in the case of a
                  composition or product, to practice in the case of a process
                  or method, or to operate in the case of a machine or system;
                  and in each case, under such conditions as to establish that
                  the invention is being utilized and that its benefits are to
                  the extent permitted by law.

         2.12     "RESEARCH LICENSE" means a nontransferable, nonexclusive
                  license to make and to use the LICENSED PRODUCTS OR LICENSED
                  PROCESSES as defined by the LICENSED PATENT RIGHTS for
                  purposes of research and not for purposes of commercial
                  manufacture or distribution or in lieu of purchase.

                                  Page 3 of 21
<PAGE>

3.       GRANT OF RIGHTS

         3.01     PDM hereby grants and LICENSEE accepts, subject to the terms
                  and conditions of this AGREEMENT, an exclusive license under
                  the LICENSED PATENT RIGHTS in the LICENSED TERRITORY to make
                  and have made, to use and have used, and to sell and have sold
                  any LICENSED PRODUCTS in the LICENSED FIELDS OF USE and to
                  practice and have practiced any LICENSED PROCESSES in the
                  LICENSED FIELDS OF USE.

         3.02     This AGREEMENT confers no license or rights by implication,
                  estoppel, or otherwise under any patent applications or
                  patents of PDM other than LICENSED PATENT RIGHTS regardless of
                  whether such patents are dominant or subordinate to LICENSED
                  PATENT RIGHTS.

4.       SUBLICENSING

         4.01     Upon written approval by PDM, which approval will not be
                  unreasonably withheld, LICENSEE may enter into sublicensing
                  agreements under the LICENSED PATENT RIGHTS.

         4.02     LICENSEE agrees that any sublicenses granted by it shall
                  provide that the obligations to PDM of Paragraph 7.01, 9.01,
                  9.02, 11.05 and 12.07-12.09 of this AGREEMENT shall be binding
                  upon the sublicensee as if it were a party to this AGREEMENT.
                  LICENSEE further agrees to attach copies of these Paragraphs
                  to all sublicense agreements.

         4.03     Any sublicenses granted by LICENSEE shall provide for the
                  termination of the sublicense, or the conversion to a license
                  directly between such sublicensees and PDM, at the option of
                  the sublicensee, upon termination of this AGREEMENT under
                  Article 13. Such conversion is subject to PDM approval and
                  contingent upon acceptance by the sublicensee of the remaining
                  provisions of this AGREEMENT.

         4.04     LICENSEE agrees to forward to PDM a copy of each fully
                  executed sublicense agreement postmarked within thirty (30)
                  days of the execution of such agreement. To the extent
                  permitted by law, PDM agrees to maintain each such sublicense
                  agreement in confidence.

5.       ROYALTIES AND REIMBURSEMENT

         5.01     LICENSEE agrees to pay to PDM a noncreditable, nonrefundable
                  license issue royalty fee as set forth in Appendix C within
                  thirty (30) days from the date that this AGREEMENT becomes
                  effective.

         5.02     LICENSEE agrees to pay to PDM a nonrefundable minimum annual
                  royalty as set forth in Appendix C. The minimum annual royalty
                  is due and payable on January 1 of each calendar year and may
                  be credited against any earned royalties due for sales made in
                  that year. The minimum annual royalty due for the first
                  calendar year of this AGREEMENT may be prorated according to
                  the fraction of the calendar year remaining between the
                  effective date of this AGREEMENT and the next subsequent
                  January 1.

         5.03     LICENSEE agrees to pay PDM earned royalties as set forth in
                  Appendix C.

                                  Page 4 of 21
<PAGE>

         5.04     LICENSEE agrees to pay PDM benchmark royalties as set forth in
                  Appendix C.

         5.05     LICENSEE agrees to pay PDM sublicensing royalties as set forth
                  in Appendix C.

         5.06     A claim of a patent or patent application licensed under this
                  AGREEMENT shall cease to fall within the LICENSED PATENT
                  RIGHTS for the purpose of computing the minimum annual royalty
                  and earned royalty payments in any given country on the
                  earliest of the dates that a) the claim has been abandoned but
                  not continued, b) the patent expires or irrevocably lapses, or
                  c) the claim has been held to be invalid or unenforceable by
                  an unappealed or unappealable decision of a court of competent
                  jurisdiction or administrative agency.

         5.07     No multiple royalties shall be payable because any LICENSED
                  PRODUCTS or LICENSED PROCESSES are covered by more than one of
                  the LICENSED PATENT RIGHTS.

         5.08     On sales of LICENSED PRODUCTS by LICENSEE to sublicensees or
                  affiliated parties or on sales made in other than an
                  arm's-length transaction, the value of the NET SALES
                  attributed under this Article 6 to such a transaction shall be
                  that which would have been received in an arm's-length
                  transaction, based on sales of like quantity and quality
                  products on or about the time of such transaction.

         5.09     With regard to expenses associated with the preparation,
                  filing, prosecution, and maintenance of all patent
                  applications and patents included within the LICENSED PATENT
                  RIGHTS incurred by PDM prior to the effective date of this
                  AGREEMENT, LICENSEE shall not be liable to PDM.

         5.10     With regard to expenses associated with the preparation,
                  filing, prosecution, and maintenance of all patent
                  applications and patents included within the LICENSED PATENT
                  RIGHTS incurred by PDM on or after the effective date of this
                  AGREEMENT, PDM, at its sole option, may require LICENSEE:

                  (a) to pay PDM on an annual basis, within sixty (60) days of
                  PDM'S submission of a statement and request for payment, a
                  royalty amount equivalent to all such patent expenses incurred
                  during the previous calendar year(s); or

                  (b) to pay such expenses directly to the law firm employed by
                  PDM to handle such functions. However, in such event, PDM and
                  not LICENSEE shall be the client of such law firm.

                  Under exceptional circumstances, LICENSEE may be given the
                  right to assume responsibility for the preparation, filing,
                  prosecution, or maintenance of any patent application or
                  patent included with the LICENSED PATENT RIGHTS. In that
                  event, LICENSEE shall directly pay the attorneys or agents
                  engaged to prepare, file, prosecute or maintain such patent

                                  Page 5 of 21
<PAGE>

                  applications or patents and shall provide to PDM copies of
                  each invoice associated with such services as well as
                  documentation that such invoices have been paid.

         5.11     LICENSEE may elect to surrender its rights in any country of
                  the LICENSED TERRITORY under any LICENSED PATENT RIGHTS upon
                  sixty (60) days written notice to PDM and owe no payment
                  obligation under Article 5.10 for patent-related expenses
                  incurred in that country after the effective date of such
                  written notice.

         5.12     This AGREEMENT will be null and void if the noncreditable,
                  nonrefundable license issue royalty fee is not paid within 30
                  days of the execution of this AGREEMENT.

6.       PATENT FILING, PROSECUTION, AND MAINTENANCE

         6.01     Except as otherwise provided in this Article 6, PDM agrees to
                  take responsibility for, but to consult with, the LICENSEE in
                  the preparation, filing, prosecution, and maintenance of any
                  and all patent applications or patents included in the
                  LICENSED PATENT RIGHTS and shall furnish copies of relevant
                  patent-related documents to LICENSEE.

         6.02     Upon PDM'S written request, LICENSEE shall assume the
                  responsibility for the preparation, filing, prosecution, and
                  maintenance of any and all patent applications or patents
                  included in the LICENSED PATENT RIGHTS and shall on an ongoing
                  basis promptly furnish copies of all patent-related documents
                  to PDM. In such event, LICENSEE shall, subject to the prior
                  approval of PDM, select registered patent attorneys or patent
                  agents to provide such services on behalf of LICENSEE and PDM.
                  PDM shall provide appropriate powers of attorney and other
                  documents necessary to undertake such actions to the patent
                  attorneys or patent agents providing such services. LICENSEE
                  and its attorneys or agents shall consult with PDM in all
                  aspects of the preparation, filing, prosecution and
                  maintenance of patent applications and patents included within
                  the LICENSED PATENT RIGHTS and shall provide PDM sufficient
                  opportunity to comment on any document that LICENSEE intends
                  to file or to cause to be filed with the relevant intellectual
                  property or patent office.

         6.03     At any time, PDM may provide LICENSEE with written notice that
                  PDM wishes to assume control of the preparation, filing,
                  prosecution, and maintenance of any and all patent
                  applications or patents included in the LICENSED PATENT
                  RIGHTS. If PDM elects to assume such responsibilities,
                  Licensee agrees to cooperate fully with PDM, its attorneys and
                  agents in the preparation, filing, prosecution, and
                  maintenance of any and all patent applications or patents
                  included in the LICENSED PATENT RIGHTS and to provide PDM with
                  complete copies of any and all documents or other materials
                  that PDM deems necessary to undertake such responsibilities.
                  LICENSEE shall be responsible for all costs associated with
                  transferring patent prosecution responsibilities to an
                  attorney or agent of PDM'S choice.

         6.04     Each party shall promptly inform the other as to all matters
                  that come to its attention that may affect the preparation,
                  filing, prosecution, or maintenance of the LICENSED PATENT

                                  Page 6 of 21
<PAGE>

                  RIGHTS and permit each other to provide comments and
                  suggestions with respect to the preparation, filing, and
                  prosecution of LICENSED PATENT RIGHTS, which comments and
                  suggestions shall be considered by the other party.

7.       RECORD KEEPING

         7.01     LICENSEE agrees to keep accurate and correct records of
                  LICENSED PRODUCTS made, used, or sold and LICENSED PROCESSES
                  practiced under this Agreement appropriate to determine the
                  amount of royalties due PDM. Such records shall be retained
                  for at least five (5) years following a given reporting
                  period. They shall be available during normal business hours
                  for inspection at the expense of PDM by an accountant or other
                  designated auditor selected by PDM for the sole purpose of
                  verifying reports and payments hereunder. The accountant or
                  auditor shall only disclose to PDM information relating to the
                  accuracy of reports and payments made under this AGREEMENT. If
                  an inspection shows an underreporting or underpayment in
                  excess of five percent (5%) for any twelve (12) month period,
                  then LICENSEE shall reimburse PDM for the cost of the
                  inspection at the time LICENSEE pays the unreported royalties,
                  including any late charges as required by Paragraph 8.08 of
                  this AGREEMENT. All payments required under this Paragraph
                  shall be due within thirty (30) days of the date PDM provides
                  LICENSEE notice of the payment due.

         7.02     LICENSEE agrees to conduct an independent audit of sales and
                  royalties at least every two years if annual sales of the
                  LICENSED PRODUCT or LICENSED PROCESSES are over two (2)
                  million dollars. The audit shall address, at a minimum, the
                  amount of gross sales by or on behalf of LICENSEE during the
                  audit period, the amount of funds owed to the PDM under this
                  AGREEMENT, and whether the amount owed has been paid to the
                  PDM and is reflected in the records of the Licensee. A report
                  by the auditor shall be submitted promptly to PDM on
                  completion. LICENSEE shall pay for the entire cost of the
                  audit.

8.       REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

         8.01     Prior to signing this AGREEMENT, LICENSEE has provided to PDM
                  the COMMERCIAL DEVELOPMENT PLAN at Appendix F, under which
                  LICENSEE intends to bring the subject matter of the LICENSED
                  PATENT RIGHTS to the point of PRACTICAL APPLICATION. This
                  COMMERCIAL DEVELOPMENT PLAN is hereby incorporated by
                  reference into this Agreement. Based on this plan, performance
                  BENCHMARKS are determined as specified in Appendix E.

         8.02     LICENSEE shall provide written annual reports on its product
                  development progress or efforts to commercialize under the
                  COMMERCIAL DEVELOPMENT PLAN for each of the LICENSED FIELDS OF
                  USE within sixty (60) days after December 31 of each calendar
                  year. These progress reports shall include, but not be limited
                  to: progress on research and development, status of
                  applications for regulatory approvals, manufacturing,
                  sublicensing, marketing, and sales during the preceding
                  calendar year, as well as plans for the present calendar year.

                                  Page 7 of 21
<PAGE>

                  PDM also encourages these reports to include information on
                  any of LICENSEE'S public service activities that relate to the
                  LICENSED PATENT RIGHTS. If reported progress differs from that
                  projected in the COMMERCIAL DEVELOPMENT PLAN and BENCHMARKS,
                  LICENSEE shall explain the reasons for such differences. In
                  any such annual report, LICENSEE may propose amendments to the
                  COMMERCIAL DEVELOPMENT PLAN, acceptance of which by PDM may
                  not be denied unreasonably. LICENSEE agrees to provide any
                  additional information reasonably required by PDM to evaluate
                  LICENSEE'S performance under this AGREEMENT. LICENSEE may
                  amend the BENCHMARKS at any time upon written consent by PDM.
                  PDM shall not unreasonably withhold approval of any request of
                  LICENSEE to extend the time periods of this schedule if such
                  request is supported by a reasonable showing by LICENSEE of
                  diligence in its performance under the COMMERCIAL DEVELOPMENT
                  PLAN and toward bringing the LICENSED PRODUCTS to the point of
                  practical application as defined in 37 CFR 404.3(d). LICENSEE
                  shall amend the COMMERCIAL DEVELOPMENT PLAN and BENCHMARKS at
                  the request of PDM to address any LICENSED FIELDS OF USE not
                  specifically addressed in the plan originally submitted.

         8.03     LICENSEE shall report to PDM the date of the FIRST COMMERCIAL
                  SALE in each country in the LICENSED TERRITORY within thirty
                  (30) days of such occurrence.

         8.04     LICENSEE shall submit to PDM within sixty (60) days after each
                  calendar half-year ending June 30 and December 31 a royalty
                  report setting forth for the preceding half-year period the
                  amount of the LICENSED PRODUCTS sold or LICENSED PROCESSES
                  practiced by or on behalf of LICENSEE in each country within
                  the LICENSED TERRITORY, the NET SALES, and the amount of
                  royalty accordingly due. With each such royalty report,
                  LICENSEE shall submit payment of the earned royalties due. If
                  no earned royalties are due to PDM for any reporting period,
                  the written report shall so state. The royalty report shall be
                  certified as correct by an authorized officer of LICENSEE and
                  shall include a detailed listing of all deductions made under
                  Paragraph 2.10 to determine NET SALES made under Article 5 to
                  determine royalties due.

         8.05     LICENSEE agrees to forward semi-annually to PDM a copy of such
                  reports received by LICENSEE from its sublicensees during the
                  preceding half-year period as shall be pertinent to a royalty
                  accounting to PDM by LICENSEE for activities under the
                  sublicense.

         8.06     Royalties due under Article 5 shall be paid in U.S. dollars.
                  For conversion of foreign currency to U.S. dollars, the
                  conversion rate shall be the New York foreign exchange rate
                  quoted in THE WALL STREET JOURNAL on the day that the payment
                  is due. All checks and bank drafts shall be drawn on United
                  States banks and shall be payable, as appropriate, to Paul D.
                  Mundy, 2813 W. Lorraine Avenue, Tampa, Florida 33614. Any loss
                  of exchange, value, taxes, or other expenses incurred in the
                  transfer or conversion to U.S. dollars shall be paid entirely
                  by LICENSEE. The royalty report required by Paragraph 8.04 of
                  this AGREEMENT shall accompany each such payment and a copy of
                  such report shall also be mailed to PDM at its address for
                  notices indicated on the Signature Page of this AGREEMENT.

                                  Page 8 of 21
<PAGE>

         8.07     LICENSEE shall be solely responsible for determining if any
                  tax on royalty income is owed outside the United States and
                  shall pay any such tax and be responsible for all filings with
                  appropriate agencies of foreign governments.

         8.08     Late charges will be assessed by PDM as additional royalties
                  on any overdue payments at a rate of one (1) percent per month
                  compounded monthly. The payment of such late charges shall not
                  prevent PDM from exercising any other rights it may have as a
                  consequence of the lateness of any payment.

         8.09     All plans and reports required by this Article 8 and marked
                  "confidential" by LICENSEE shall, to the extent permitted by
                  law, be treated by PDM as commercial and financial information
                  obtained from a person and as privileged and confidential and
                  any proposed disclosure of such records by the PDM under the
                  Freedom of Information Act, 5 U.S.C. ss. 552 shall be subject
                  to the predisclosure notification requirements of 45 CFR ss.
                  5.65(d).

9.       PERFORMANCE

         9.01     LICENSEE shall use its reasonable best efforts to bring the
                  License Products and Licensed Processes to Practical
                  Application. "Reasonable best efforts" for the purposes of
                  this provision shall include adherence to the COMMERCIAL
                  DEVELOPMENT PLAN at Appendix F and performance of the
                  BENCHMARKS at Appendix E. The efforts of a sublicensee shall
                  be considered the efforts of LICENSEE.

         9.02     Upon the FIRST COMMERCIAL SALE, until the expiration of this
                  Agreement, LICENSEE shall use its reasonable best efforts to
                  make LICENSED PRODUCTS and LICENSED PROCESSES reasonably
                  accessible to the United States public.

10.      INFRINGEMENT AND PATENT ENFORCEMENT

         10.01    PDM and LICENSEE agree to notify each other promptly of each
                  infringement or possible infringement of the LICENSED PATENT
                  RIGHTS, as well as any facts which may affect the validity,
                  scope, or enforceability of the LICENSED PATENT RIGHTS of
                  which either Party becomes aware.

         10.02    Pursuant to this AGREEMENT and the provisions of Chapter 29 of
                  title 35, United States Code, LICENSEE may a) bring suit in
                  its own name, at its own expense, and on its own behalf for
                  infringement of presumably valid claims in the LICENSED PATENT
                  RIGHTS; b) in any such suit, enjoin infringement and collect
                  for its use, damages, profits, and awards of whatever nature
                  recoverable for such infringement; and c) settle any claim or
                  suit for infringement of the LICENSED PATENT RIGHTS provided,
                  however, that PDM shall have the first right to take such
                  actions. If LICENSEE desires to initiate a suit for patent
                  infringement, LICENSEE shall notify PDM in writing. If PDM
                  does not notify LICENSEE of its intent to pursue legal action
                  within ninety (90) days, LICENSEE will be free to initiate
                  suit. PDM shall have a continuing right to intervene in such
                  suit. In all cases, LICENSEE agrees to keep PDM reasonably

                                  Page 9 of 21
<PAGE>

                  apprised of the status and progress of any litigation. Before
                  LICENSEE commences an infringement action, LICENSEE shall
                  notify PDM and give careful consideration to the views of PDM
                  and to any potential effects of the litigation on the public
                  health in deciding whether to bring suit.

         10.03    In the event that a declaratory judgment action alleging
                  invalidity or non-infringement of any of the LICENSED PATENT
                  RIGHTS shall be brought against LICENSEE or raised by way of
                  counterclaim or affirmative defense in an infringement suit
                  brought by LICENSEE under Paragraph 10.02, pursuant to this
                  AGREEMENT and the provisions of Chapter 29 of Title 35, United
                  States Code or other statutes, LICENSEE may a) defend the suit
                  in its own name, at its own expense, and on its own behalf for
                  presumably valid claims in the LICENSED PATENT RIGHTS; b) in
                  any such suit, ultimately to enjoin infringement and to
                  collect for its use, damages, profits, and awards of whatever
                  nature recoverable for such infringement; and c) settle any
                  claim or suit for declaratory judgment involving the LICENSED
                  PATENT Rights-provided, however, that PDM shall have the first
                  right to take such actions and shall have a continuing right
                  to intervene in such suit. If PDM does not notify LICENSEE of
                  its intent to respond to the legal action within a reasonable
                  time, LICENSEE will be free to do so. If LICENSEE elects not
                  to defend against such declaratory judgment action, PDM, at
                  its option, may do so at its own expense. In all cases,
                  LICENSEE agrees to keep PDM reasonably apprised of the status
                  and progress of any litigation. Before LICENSEE commences an
                  infringement action, LICENSEE shall notify PDM and give
                  careful consideration to the views of PDM and to any potential
                  effects of the litigation on the public health in deciding
                  whether to bring suit.

                  In the event that fifty percent (50%) of such expenses exceed
                  the amount of royalties payable by LICENSEE in any calendar
                  year, the expenses in excess may be carried over as a credit
                  on the same basis into succeeding calendar years. A credit
                  against litigation expenses, however, may not reduce the
                  royalties due in any calendar year to less than the minimum
                  annual royalty. Any recovery made by LICENSEE, through court
                  judgment or settlement, first shall be applied to reimburse
                  PDM for royalties withheld as a credit against litigation
                  expenses and then to reimburse LICENSEE for its litigation
                  expense. Any remaining recoveries shall be shared equally by
                  LICENSEE and PDM.

         10.04    PDM shall cooperate fully with LICENSEE in connection with any
                  action under Paragraph 10.02 or 10.03. PDM agrees promptly to
                  provide access to all necessary documents and to render
                  reasonable assistance in response to a request by LICENSEE.

11.      NEGATION OF WARRANTIES AND INDEMNIFICATION

         11.01 PDM offers no warranties other than those specified in Article 1.

         11.02    PDM does not warrant the validity of the LICENSED PATENT
                  RIGHTS and makes no representations whatsoever with regard to
                  the scope of the LICENSED PATENT RIGHTS, or that the LICENSED
                  PATENT RIGHTS may be exploited without infringing other
                  patents or other intellectual property rights of third
                  parties.

         11.03    PDM MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF
                  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
                  SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT
                  RIGHTS.

                                 Page 10 of 21
<PAGE>

         11.04    PDM does not represent that it will commence legal actions
                  against third parties infringing the LICENSED PATENT RIGHTS.

         11.05    LICENSEE shall indemnify and hold PDM, its employees,
                  students, fellows, agents, and consultants harmless from and
                  against all liability, demands, damages, expenses, and losses,
                  including but not limited to death, personal injury, illness,
                  or property damage in connection with or arising out of a) the
                  use by or on behalf of LICENSEE, its sublicensees, directors,
                  employees, or third parties of any LICENSED PATENT RIGHTS, or
                  b) the design, manufacture, distribution, or use of any
                  LICENSED PRODUCTS, LICENSED PROCESSES or materials by
                  LICENSEE, or other products or processes developed in
                  connection with or arising out of the LICENSED PATENT RIGHTS.
                  LICENSEE agrees to maintain a liability insurance program
                  consistent with sound business practice.

12.      TERM, TERMINATION, AND MODIFICATION OF RIGHTS

         12.01    This AGREEMENT is effective when signed by all parties and
                  shall extend to the expiration of the last to expire of the
                  LICENSED PATENT RIGHTS unless sooner terminated as provided in
                  this Article 12.

         12.02    In the event that LICENSEE is in default in the performance of
                  any material obligations under this AGREEMENT, including but
                  not limited to the obligations listed in Article 12.05, and if
                  the default has not been remedied within ninety (90) days
                  after the date of notice in writing of such default, PDM may
                  terminate this AGREEMENT by written notice.

         12.03    In the event that LICENSEE becomes insolvent, files a petition
                  in bankruptcy, has such a petition filed against it,
                  determines to file a petition in bankruptcy, or receives
                  notice of a third party's intention to file an involuntary
                  petition in bankruptcy, LICENSEE shall immediately notify PDM
                  in writing.

         12.04    LICENSEE shall have a unilateral right to terminate this
                  AGREEMENT and/or any licenses in any country by giving PDM
                  sixty (60) days written notice to that effect.

         12.05    PDM shall specifically have the right to terminate or modify,
                  at its option, this AGREEMENT, if PDM determines that the
                  LICENSEE: 1) is not executing the COMMERCIAL DEVELOPMENT PLAN
                  submitted with its request for a license and the LICENSEE
                  cannot otherwise demonstrate to PDM's satisfaction that the
                  LICENSEE has taken, or can be expected to take within a
                  reasonable time, effective steps to achieve practical
                  application of the LICENSED PRODUCTS or LICENSED Processes; 2)
                  has not achieved the Benchmarks as may be modified under
                  Paragraph 8.02; 3) has willfully made a false statement of, or
                  willfully omitted, a material fact in the license application
                  or in any report required by the license agreement; 4) has
                  committed a material breach of a covenant or agreement

                                 Page 11 of 21
<PAGE>

                  contained in the license; 5) is not keeping LICENSED PRODUCTS
                  or LICENSED PROCESSES reasonably available to the public after
                  commercial use commences; 6) cannot reasonably satisfy unmet
                  health and safety needs. In making this determination, PDM
                  will take into account the normal course of such commercial
                  development programs conducted with sound and reasonable
                  business practices and judgment and the annual reports
                  submitted by LICENSEE under Paragraph 8.02. Prior to invoking
                  this right, PDM shall give written notice to LICENSEE
                  providing LICENSEE specific notice of, and a ninety (90) day
                  opportunity to respond to, PDM's concerns as to the previous
                  items 1) to 7). If LICENSEE fails to alleviate PDM's concerns
                  as to the previous items 1) to 7) or fails to initiate
                  corrective action to PDM's satisfaction, PDM may terminate
                  this AGREEMENT.

         12.06    When the public health and safety so require, and after
                  written notice to LICENSEE providing LICENSEE a sixty (60) day
                  opportunity to respond, PDM shall have the right to require
                  LICENSEE to grant sublicenses to responsible applicants, on
                  reasonable terms, in any Licensed Fields of Use under the
                  Licensed Patent Rights, unless LICENSEE can reasonably
                  demonstrate that the granting of the sublicense would not
                  materially increase the availability to the public of the
                  subject matter of the LICENSED PATENT RIGHTS. PDM will not
                  require the granting of a sublicense unless the responsible
                  applicant has first negotiated in good faith with LICENSEE.

         12.07    PDM reserves the right according to 35 U.S.C. ss. 209(f)(4) to
                  terminate or modify this AGREEMENT if it is determined that
                  such action is necessary to meet requirements for public use
                  specified by federal regulations issued after the date of the
                  license and such requirements are not reasonably satisfied by
                  LICENSEE.

         12.08    Within thirty (30) days of receipt of written notice of PDM'S
                  unilateral decision to modify or terminate this Agreement,
                  LICENSEE may, consistent with the provisions of 37 CFR 404.11,
                  appeal the decision by written submission to the designated
                  PDM official. The decision of the designated PDM official
                  shall be the final agency decision. LICENSEE may thereafter
                  exercise any and all administrative or judicial remedies that
                  may be available.

         12.09    Within ninety (90) days of termination of this AGREEMENT under
                  this Article 12 or expiration under Paragraph 3.02, a final
                  report shall be submitted by LICENSEE. Any royalty payments,
                  including those related to patent expense, due to PDM shall
                  become immediately due and payable upon termination or
                  expiration. If terminated under this Article 12, sublicensees
                  may elect to convert their sublicenses to direct licenses with
                  PDM pursuant to Paragraph 4.03.

13.      GENERAL PROVISIONS

         13.01    Neither Party may waive or release any of its rights or
                  interests in this AGREEMENT except in writing.

         13.02    This AGREEMENT constitutes the entire agreement between the
                  Parties relating to the subject matter of the LICENSED PATENT
                  RIGHTS, and all prior negotiations, representations,

                                 Page 12 of 21
<PAGE>

                  agreements, and understandings are merged into, extinguished
                  by, and completely expressed by this AGREEMENT.

         13.03    The provisions of this AGREEMENT are severable, and in the
                  event that any provision of this AGREEMENT shall be determined
                  to be invalid or unenforceable under any controlling body of
                  law such determination shall not in any way affect the
                  validity or enforceability of the remaining provisions of this
                  AGREEMENT.

         13.04    If either Party desires a modification to this AGREEMENT, the
                  Parties shall, upon reasonable notice of the proposed
                  modification by the Party desiring the change, confer in good
                  faith to determine the desirability of such modification. No
                  modification will be effective until a written amendment is
                  signed by the signatories to this AGREEMENT or their
                  designees.

         13.05    The construction, validity, performance, and effect of this
                  AGREEMENT shall be governed by Federal law as applied by the
                  Federal courts in the State of Florida.

         13.06    All notices required or permitted by this AGREEMENT shall be
                  given by prepaid, first class, registered or certified mail
                  properly addressed to the other Party at the address
                  designated on the following Signature Page, or to such other
                  address as may be designated in writing by such other Party,
                  and shall be effective as of the date of the postmark of such
                  notice.

         13.07    This AGREEMENT shall not be assigned by LICENSEE except a)
                  with the prior written consent of PDM, such consent not to be
                  withheld unreasonably; or b) as part of a sale or transfer of
                  substantially the entire business of LICENSEE relating to
                  operations which concern this Agreement. LICENSEE shall notify
                  PDM within ten (10) days of any assignment of this Agreement
                  by LICENSEE. It is the intent of the LICENSEE, and with
                  approval by PDM, to be acquired in its entirety by GloTech
                  Industries, Inc., of Gainesville, Florida, within 30 days of
                  the execution of this AGREEMENT.

         13.08    LICENSEE acknowledges that it is subject to and agrees to
                  abide by the United States laws and regulations (including the
                  Export Administration Act of 1979 and Arms Export Control Act)
                  controlling the export of technical data, computer software,
                  laboratory prototypes, biological material, and other
                  commodities. The transfer of such items may require a license
                  from the cognizant Agency of the U.S. GOVERNMENT or written
                  assurances by LICENSEE that it shall not export such items to
                  certain foreign countries without prior approval of such
                  agency. PDM neither represents that a license is or is not
                  required or that, if required, it shall be issued.

         13.09    LICENSEE agrees to mark the LICENSED PRODUCTS or their
                  packaging sold in the United States with all applicable U.S.
                  patent numbers and similarly to indicate "Patent Issued"
                  status. All LICENSED PRODUCTS manufactured in, shipped to, or
                  sold in other countries shall be marked in such a manner as to
                  preserve PDM patent rights in such countries.

         13.10    The Parties agree to attempt to settle amicably any
                  controversy or claim arising under this Agreement or a breach

                                 Page 13 of 21
<PAGE>

                  of this Agreement, except for appeals of modifications or
                  termination decisions provided for in Article 13. LICENSEE
                  agrees first to appeal any such unsettled claims or
                  controversies to the designated PDM official, or designee,
                  whose decision shall be considered the final agency decision.
                  Thereafter, LICENSEE may exercise any administrative or
                  judicial remedies that may be available.

         13.11    Nothing relating to the grant of a license, nor the grant
                  itself, shall be construed to confer upon any person any
                  immunity from or defenses under the antitrust laws or from a
                  charge of patent misuse, and the acquisition and use of rights
                  pursuant to 37 CFR Part 404 shall not be immunized from the
                  operation of state or Federal law by reason of the source of
                  the grant.

         13.12    Paragraph 4.03, 7.01, 8.06-8.08, 11.01-11.05, 12.08, 12.09,
                  and 13.12 of this AGREEMENT shall survive termination of this
                  AGREEMENT.

                          SIGNATURES BEGIN ON NEXT PAGE

                                 Page 14 of 21
<PAGE>

                     PDM PATENT LICENSE AGREEMENT--EXCLUSIVE

                                 SIGNATURE PAGE

For PDM:

---------------------------------------      ------------
Signature of Authorized PDM Official              Date

PAUL D. MUNDY

INVENTOR
Title

MAILING ADDRESS FOR NOTICES:

2813 W. Lorraine Avenue
Tampa, Florida 33614

For LICENSEE (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of LICENSEE made or referred to
in this document are truthful and accurate.):

by:

--------------------------------------       ------------
Signature of Authorized Official                    Date

SAM REIBER, ESQ.
Printed Name

PRESIDENT
Title

MAILING ADDRESS FOR NOTICES:

202 South Wheeler Street
Plant City, Florida 33563

                                 Page 15 of 21
<PAGE>

                 APPENDIX A--Patent(s) or Patent Application(s)

PATENT(S) OR PATENT APPLICATION(S):

UNITED STATES DESIGN PATENT NO. D475,161

DATE OF PATENT: MAY 27, 2003

TITLE: "SPORTS ENTHUSIAST'S HELMET WITH BATTERY POWERED STROBE UNIT"

INVENTOR: PAUL D. MUNDY

TERM:  14 YEARS

APPL. NO.: 29/165,480

FILED: AUG. 12, 2002

                                 Page 16 of 21
<PAGE>

                APPENDIX B--Licensed Fields of Use and Territory

Licensed Fields of Use: All

Licensed Territory: Worldwide

                                 Page 17 of 21
<PAGE>

                              APPENDIX C--Royalties

ROYALTIES:

LICENSEE agrees to pay to PDM a noncreditable, nonrefundable license issue fee
in the amount

of $10,000.

LICENSEE agrees to pay to PDM a nonrefundable minimum annual royalty in the
amount

of 3%.

LICENSEE agrees to pay PDM earned royalties on NET SALES as follows:

         ----------------------------------- ----------------------------
         Year                                Minimum Payment (creditable)
         ----------------------------------- ----------------------------
         1st                                 $   0
         ----------------------------------- ----------------------------
         2nd                                 $   7,500
         ----------------------------------- ----------------------------
         3rd                                 $ 10,000
         ----------------------------------- ----------------------------
         4th plus each year thereafter until $ 15,000
         the end of the patent life
         ----------------------------------- ----------------------------

LICENSEE agrees to pay PDM benchmark royalties as follows:

A one-time payment of:

  $  25,000 due upon cumulative sales benchmark of $ 1,000,000
  $  75,000 due upon cumulative sales benchmark of $ 3,000,000
  $ 100,000 due upon cumulative sales benchmark of $ 6,000,000

Benchmark payments are in addition to royalty payments

LICENSEE agrees to pay PDM sublicensing royalties as follows:

    50% of all royalties, payments, fees and income received from sublicensees.

                                 Page 18 of 21
<PAGE>

                            APPENDIX D--Modifications

PDM and LICENSEE agree to the following modifications to the Articles and
Paragraph of this AGREEMENT:

                                 Page 19 of 21
<PAGE>

                     APPENDIX E--Benchmarks and Performance

LICENSEE agrees to the following BENCHMARKS for its performance under this
AGREEMENT and, within ten (10) days of achieving a BENCHMARK, shall notify PDM
that the BENCHMARK has been achieved.

     1)   Work with PDM under the previously fully paid and agreed upon
          consulting service under a separate arrangement.

     2)   Under mutually agreeable terms, continue to work together with PDM to
          achieve desired result of bringing licensed technology to the market.

                                 Page 20 of 21
<PAGE>

                     APPENDIX F--Commercial Development Plan

         With the desire to bring the licensed technology to the marketplace,
LICENSEE will work together with PDM to construct an agreeable commercial
development plan in the immediate future, exploring any and all contacts and
leads presented by PDM to achieve this goal, including marketing agents,
manufacturing, suppliers, endorsements, sports and entertainment venues, etc.

                                 Page 21 of 21

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