Document:

ex41.htm

Exhibit 4.1

AVT, INC.

2011 STOCK COMPENSATION PLAN

 

1.    Purpose.    The purpose of the AVT, Inc. 2011 Stock Compensation Plan is to further align the interests of employees, directors and non-employee Consultants with those of the stockholders by providing incentive compensation opportunities tied to the performance of the Common Stock and by promoting increased ownership of the Common Stock by such individuals. The Plan is also intended to advance the interests of the Company and its stockholders by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent.

 

2.    Definitions.    Wherever the following capitalized terms are used in the Plan, they shall have the meanings specified below:

 

“Affiliate” means (i) any entity that would be treated as an “affiliate” of the Company for purposes of Rule 12b-2 under the Exchange Act and (ii) any joint venture or other entity in which the Company has a direct or indirect beneficial ownership interest representing at least one-third (1/3) of the aggregate voting power of the equity interests of such entity or one-third (1/3) of the aggregate fair market value of the equity interests of such entity, as determined by the Committee.

 

“Award” means an award of a Stock Option, Stock Award, or Restricted Stock Award granted under the Plan.

 

“Award Agreement” means a written or electronic agreement entered into between the Company and a Participant setting forth the terms and conditions of an Award granted to a Participant.

 

“Board” means the Board of Directors of the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Common Stock” means the Company’s common stock, no par value per share.

 

“Committee” means the Compensation Committee of the Board, or such other committee of the Board appointed by the Board to administer the Plan, or if no such committee exists, the Board.

 

“Company” means AVT, Inc., a Nevada corporation.

“Consultant” means any person which is a consultant or advisor to the Company and which is a natural person and who provides bona fide services to the Company which are not in connection with the offer or sale of securities in a capital-raising transaction for the Company, and do not directly or indirectly promote or maintain a market for the Company’s securities.

“Date of Grant” means the date on which an Award under the Plan is made by the Committee, or such later date as the Committee may specify to be the effective date of an Award.

 

“Disability” means a Participant being considered “disabled” within the meaning of Section 409A(a)(2)(C) of the Code, unless otherwise provided in an Award Agreement.

 

“Eligible Person” means any person who is an employee of the Company or any Affiliate or any person to whom an offer of employment with the Company or any Affiliate is extended, as determined by the Committee, or any person who is a Non-Employee Director, or any person who is Consultant to the Company.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means the mean between the highest and lowest reported sales prices of the Common Stock on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Company’s common stock is listed or on The Nasdaq Stock Market, or, if not so listed on any other national securities exchange or The Nasdaq Stock Market, then the average of the bid price of the Company’s common stock during the last five trading days on the OTC Bulletin Board immediately preceding the last trading day prior to the date with respect to which the Fair Market Value is to be
determined. If the Company’s common stock is not then publicly traded, then the Fair Market Value of the Common Stock shall be the book value of the Company per share as determined on the last day of January, April, July, or October in any year closest to the date when the determination is to be made. For the purpose of determining book value hereunder, book value shall be determined by adding as of the applicable date called for herein the capital, surplus, and undivided profits of the Company, and after having deducted any reserves theretofore established; the sum of these items shall be divided by the number of shares of the Company’s common stock outstanding as of said date, and the quotient thus obtained shall represent the book value of each share of the Company’s common stock. 

“Incentive Stock Option” means a Stock Option granted under Section 6 hereof that is intended to meet the requirements of Section 422 of the Code and the regulations thereunder.

 

“Non-Employee Director” means any member of the Board who is not an employee of the Company.

 

“Nonqualified Stock Option” means a Stock Option granted under Section 6 hereof that is not an Incentive Stock Option.

 

“Participant” means any Eligible Person who holds an outstanding Award under the Plan.

 

“Plan” means the AVT, Inc. 2011 Stock Compensation Plan as set forth herein, as amended from time to time.

“Restricted Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 8 hereof that is issued subject to such vesting and transfer restrictions as the Committee shall determine and set forth in an Award Agreement.

 

“Service” means a Participant’s employment with the Company or any Affiliate or a Participant’s service as a Non-Employee Director with the Company, as applicable.

 

“Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 7 hereof that are issued free of transfer restrictions and forfeiture conditions.

 

“Stock Option” means a contractual right granted to an Eligible Person under Section 6 hereof to purchase shares of Common Stock at such time and price, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement.

 

3.    Administration.

 

3.1    Committee Members.    The Plan shall be administered by a Committee comprised of one or more members of the Board, or if no such committee exists, the Board.

 

3.2    Committee Authority.    The Committee shall have such powers and authority as may be necessary or appropriate for the Committee to carry out its functions as described in the Plan. Subject to the express limitations of the Plan, the Committee shall have authority in its discretion to determine the Eligible Persons to whom, and the time or times at which, Awards may be granted, the number of shares, units or other rights subject to each Award, the exercise, base or purchase price of an Award (if any), the time or times at which an Award will become vested, exercisable or payable, the performance goals and other
conditions of an Award, the duration of the Award, and all other terms of the Award. Subject to the terms of the Plan, the Committee shall have the authority to amend the terms of an Award in any manner that is not inconsistent with the Plan, provided that no such action shall adversely affect the rights of a Participant with respect to an outstanding Award without the Participant’s consent. The Committee shall also have discretionary authority to interpret the Plan, to make factual determinations under the Plan, and to make all other determinations necessary or advisable for Plan administration, including, without limitation, to correct any defect, to supply any omission or to reconcile any inconsistency in the Plan or any Award Agreement hereunder. The Committee may prescribe, amend, and rescind rules and regulations relating to the Plan. The Committee’s determinations
under the Plan need not be uniform and may be made by the Committee selectively among Participants and Eligible Persons, whether or not such persons are similarly situated. The Committee shall, in its discretion, consider such factors as it deems relevant in making its interpretations, determinations and actions under the Plan including, without limitation, the recommendations or advice of any officer or employee of the Company or such attorneys, consultants, accountants or other advisors as it may select. All interpretations, determinations and actions by the Committee shall be final, conclusive, and binding upon all parties.  

3.3    Delegation of Authority.    The Committee shall have the right, from time to time, to delegate to one or more officers of the Company the authority of the Committee to grant and determine the terms and conditions of Awards granted under the Plan, subject to the requirements of state law and such other limitations as the Committee shall determine. In no event shall any such delegation of authority be permitted with respect to Awards to any members of the Board or to any Eligible Person who is subject to Rule 16b-3 under the Exchange Act or Section 162(m) of the Code. The Committee shall also be permitted to delegate, to
any appropriate officer or employee of the Company, responsibility for performing certain ministerial functions under the Plan. In the event that the Committee’s authority is delegated to officers or employees in accordance with the foregoing, all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to such officer or employee for such purpose. Any action undertaken in accordance with the Committee’s delegation of authority hereunder shall have the same force and effect as if such action was undertaken directly by the Committee and shall be deemed for all purposes of the Plan to have been taken by the Committee.

 

4.    Shares Subject to the Plan.

 

4.1    Maximum Share Limitations.    Subject to Section 4.3 hereof, the maximum aggregate number of shares of Common Stock that may be issued and sold under all Awards granted under the Plan shall be one million (1,000,000) shares. Shares of Common Stock issued and sold under the Plan may be either authorized but unissued shares or shares held in the Company’s treasury. To the extent that any Award involving the issuance of shares of Common Stock is forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements or other conditions of the Award, or otherwise terminates without an issuance of
shares of Common Stock being made thereunder, the shares of Common Stock covered thereby will no longer be counted against the foregoing maximum share limitations and may again be made subject to Awards under the Plan pursuant to such limitations. Any Awards or portions thereof that are settled in cash and not in shares of Common Stock shall not be counted against the foregoing maximum share limitations.

 

4.2    Adjustments.    If there shall occur any change with respect to the outstanding shares of Common Stock by reason of any recapitalization, reclassification, stock dividend, extraordinary dividend, stock split, reverse stock split or other distribution with respect to the shares of Common Stock, or any merger, reorganization, consolidation, combination, spin-off or other similar corporate change, or any other change affecting the Common Stock, the Committee may, in the manner and to the extent that it deems appropriate and equitable to the Participants and consistent with the terms of the Plan, cause an adjustment to be
made in (i) the maximum number and kind of shares provided in Section 4.1 hereof, (ii) the number and kind of shares of Common Stock, or other rights subject to then outstanding Awards, (iii) the exercise or base price for each share or other right subject to then outstanding Awards, and (iv) any other terms of an Award that are affected by the event. Notwithstanding the foregoing, in the case of Incentive Stock Options, any such adjustments shall, to the extent practicable, be made in a manner consistent with the requirements of Section 424(a) of the Code.

4.3 Anti-Dilution. Notwithstanding anything contained in the Plan to cover the contrary, including any adjustments discussed in this Section 4, the maximum aggregate number of shares of Common Stock that may be issued and sold under all Awards granted under the Plan shall be anti-dilutive in the event of a reverse stock split by the Company and shall not result in any reduction in the number of shares available and authorized under the Plan at the effective time of such reverse stock split(s).

5.    Participation and Awards.

 

5.1    Designations of Participants.    All Eligible Persons are eligible to be designated by the Committee to receive Awards and become Participants under the Plan. The Committee has the authority, in its discretion, to determine and designate from time to time those Eligible Persons who are to be granted Awards, the types of Awards to be granted and the number of shares of Common Stock or units subject to Awards granted under the Plan. In selecting Eligible Persons to be Participants and in determining the type and amount of Awards to be granted under the Plan, the Committee shall consider any and all factors that it deems
relevant or appropriate.  

5.2    Determination of Awards.    The Committee shall determine the terms and conditions of all Awards granted to Participants in accordance with its authority under Section 3.2 hereof. An Award may consist of one type of right or benefit hereunder or of two or more such rights or benefits granted in tandem or in the alternative. In the case of any fractional share or unit resulting from the grant, vesting, payment or crediting of dividends or dividend equivalents under an Award, the Committee shall have the discretionary authority to (i) disregard such fractional share or unit, (ii) round such fractional share or unit to
the nearest lower or higher whole share or unit, or (iii) convert such fractional share or unit into a right to receive a cash payment. To the extent deemed necessary by the Committee, an Award shall be evidenced by an Award Agreement as described in Section 11.1 hereof.

 

6.    Stock Options.

 

6.1    Grant of Stock Options.    A Stock Option may be granted to any Eligible Person selected by the Committee. Subject to the provisions of Section 6.8 hereof and Section 422 of the Code, each Stock Option shall be designated, in the discretion of the Committee, as an Incentive Stock Option or as a Nonqualified Stock Option.

 

6.2    Exercise Price.    The exercise price per share of a Stock Option shall not be less than 85 percent of the Fair Market Value of the shares of Common Stock on the Date of Grant, provided that the Committee may in its discretion specify for any Stock Option an exercise price per share that is higher than the Fair Market Value on the Date of Grant, except that the price shall not be less than 110 percent of the Fair Market Value in the case of any person who owns securities possessing more than 10 percent of the total combined voting power of all classes of securities of the Company.

 

6.3    Vesting of Stock Options.    The Committee shall in its discretion prescribe the time or times at which, or the conditions upon which, a Stock Option or portion thereof shall become vested and/or exercisable, and may accelerate the vesting or exercisability of any Stock Option at any time, provided, however, that any Stock Option shall vest at the rate of at least twenty percent (20%) per year over five (5) years from the date the Stock Option is granted, subject to reasonable conditions as may be provided for in the Award Agreement. However, in the case of a Stock Option granted to officers, Non-employee Directors,
managers or Consultants of the Company, the Stock Option may become fully exercisable, subject to reasonable conditions, at anytime or during any period established by the Company. The requirements for vesting and exercisability of a Stock Option may be based on the continued Service of the Participant with the Company or its Affiliates for a specified time period (or periods) or on the attainment of specified performance goals established by the Committee in its discretion.

 

6.4    Term of Stock Options.    The Committee shall in its discretion prescribe in an Award Agreement the period during which a vested Stock Option may be exercised, provided that the maximum term of a Stock Option shall be ten years from the Date of Grant. Except as otherwise provided in this Section 6 or as otherwise may be provided by the Committee, no Stock Option issued to an employee or a Non-Employee Director of the Company may be exercised at any time during the term thereof unless the employee or a Non-Employee Director Participant is then in the Service of the Company or one of its Affiliates.

 

6.5    Termination of Service.    Subject to Section 6.8 hereof with respect to Incentive Stock Options, the Stock Option of any Participant whose Service with the Company or one of its Affiliates is terminated for any reason shall terminate on the earlier of (A) the date that the Stock Option expires in accordance with its terms or (B) unless otherwise provided in an Award Agreement, and except for termination for cause (as described in Section 10.2 hereof), the expiration of the applicable time period following termination of Service, in accordance with the following: (1) twelve months if Service ceased due to Disability,
(2) eighteen months if Service ceased at a time when the Participant is eligible to elect immediate commencement of retirement benefits at a specified retirement age under a pension plan to which the Company or any of its Affiliates had made contributions, (3) eighteen months if the Participant died while in the Service of the Company or any of its Affiliates, or (iv) three months if Service ceased for any other reason. During the foregoing applicable period, except as otherwise specified in the Award Agreement or in the event Service was terminated by the death of the Participant, the Stock Option may be exercised by such Participant in respect of the same number of shares of Common Stock, in the same manner, and to the same extent as if he or she had remained in the continued Service of the Company or any Affiliate during the first three months of such period; provided that no
additional rights shall vest after such three months. The Committee shall have authority to determine in each case whether an authorized leave of absence shall be deemed a termination of Service for purposes hereof, as well as the effect of a leave of absence on the vesting and exercisability of a Stock Option. Unless otherwise provided by the Committee, if an entity ceases to be an Affiliate of the Company or otherwise ceases to be qualified under the Plan or if all or substantially all of the assets of an Affiliate of the Company are conveyed (other than by encumbrance), such cessation or action, as the case may be, shall be deemed for purposes hereof to be a termination of the Service.

            6.6    Stock Option Exercise; Tax Withholding.    Subject to such terms and conditions as shall be specified in an Award Agreement, a Stock Option may be exercised in whole or in part at any time during the term thereof by notice in the form required by the Company, together with payment of the aggregate exercise price therefor and applicable withholding tax. Payment of the exercise price shall be made in the manner set forth in the Award Agreement, unless otherwise provided by the Committee: (i) in cash or by cash equivalent acceptable to the Committee,
(ii) by payment in shares of Common Stock that have been held by the Participant for at least six months (or such period as the Committee may deem appropriate, for accounting purposes or otherwise) valued at the Fair Market Value of such shares on the date of exercise, (iii) through an open-market, broker-assisted sales transaction pursuant to which the Company is promptly delivered the amount of proceeds necessary to satisfy the exercise price, (iv) by a combination of the methods described above or (v) by such other method as may be approved by the Committee and set forth in the Award Agreement. In addition to and at the time of payment of the exercise price, the Participant shall pay to the Company the full amount of any and all applicable income tax, employment tax and other amounts required to be withheld in connection with such exercise, payable under such of the methods described
above for the payment of the exercise price as may be approved by the Committee and set forth in the Award Agreement.

 

6.7    Limited Transferability of Nonqualified Stock Options.    All Stock Options shall be nontransferable except (i) upon the Participant’s death, in accordance with Section 11.2 hereof or (ii) in the case of Nonqualified Stock Options only, for the transfer of all or part of the Stock Option to a Participant’s “family member” (as defined for purposes of the Form S-8 registration statement under the Securities Act of 1933), as may be approved by the Committee in its discretion at the time of proposed transfer. The transfer of a Nonqualified Stock Option may be subject to such terms and conditions as
the Committee may in its discretion impose from time to time. Subsequent transfers of a Nonqualified Stock Option shall be prohibited other than in accordance with Section 11.2 hereof.

 

6.8    Additional Rules for Incentive Stock Options.

 

(a)    Eligibility.    An Incentive Stock Option may only be granted to an Eligible Person who is considered an employee for purposes of Treasury Regulation §1.421-7(h) with respect to the Company or any Affiliate that qualifies as a “subsidiary corporation” with respect to the Company for purposes of Section 424(f) of the Code.

 

(b)     Termination of Employment.    An Award of an Incentive Stock Option may provide that such Stock Option may be exercised not later than 3 months following termination of employment of the Participant with the Company and all Subsidiaries, or not later than one year following a permanent and total disability within the meaning of Section 22(e)(3) of the Code, as and to the extent determined by the Committee to comply with the requirements of Section 422 of the Code.

 

(c)    Other Terms and Conditions; Nontransferability.    Any Incentive Stock Option granted hereunder shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as are deemed necessary or desirable by the Committee, which terms, together with the terms of the Plan, shall be intended and interpreted to cause such Incentive Stock Option to qualify as an “incentive stock option” under Section 422 of the Code. An Award Agreement for an Incentive Stock Option may provide that such Stock Option shall be treated as a Nonqualified Stock Option to the extent that certain requirements
applicable to “incentive stock options” under the Code shall not be satisfied. An Incentive Stock Option shall by its terms be nontransferable other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of a Participant only by such Participant.

 

(d)    Disqualifying Dispositions.    If shares of Common Stock acquired by exercise of an Incentive Stock Option are disposed of within two years following the Date of Grant or one year following the transfer of such shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Company may reasonably require.

6.9    Repricing Prohibited.    Subject to the adjustment provisions contained in Section 4.2 hereof, without the prior approval of the Company’s stockholders, evidenced by a majority of votes cast, neither the Committee nor the Board shall cause the cancellation, substitution or amendment of a Stock Option that would have the effect of reducing the exercise price of such a Stock Option previously granted under the Plan, or otherwise approve any modification to such a Stock Option that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements.

 

7.    Stock Awards.

 

7.1    Grant of Stock Awards.    A Stock Award may be granted to any Eligible Person selected by the Committee. A Stock Award may be granted for past services, in lieu of bonus or other cash compensation, as directors’ compensation or for any other valid purpose as determined by the Committee. A Stock Award granted to an Eligible Person represents shares of Common Stock that are issued without restrictions on transfer and other incidents of ownership and free of forfeiture conditions, except as otherwise provided in the Plan and the Award Agreement. The deemed issuance price of shares of Common Stock subject to each
Stock Award shall not be less than 85 percent of the Fair Market Value of the Common Stock on the date of the grant. In the case of any person who owns securities possessing more than ten percent of the combined voting power of all classes of securities of the issuer or its parent or subsidiaries possessing voting power, the deemed issuance price of shares of Common Stock subject to each Stock Award shall be at least 100 percent of the Fair Market Value of the Common Stock on the date of the grant. The Committee may, in connection with any Stock Award, require the payment of a specified purchase price.

 

7.2    Rights as Stockholder.    Subject to the foregoing provisions of this Section 7 and the applicable Award Agreement, upon the issuance of the Common Stock under a Stock Award the Participant shall have all rights of a stockholder with respect to the shares of Common Stock, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto.

8.    Restricted Stock Awards.

 

8.1    Grant of Restricted Stock Awards.    A Restricted Stock Award may be granted to any Eligible Person selected by the Committee. The deemed issuance price of shares of Common Stock subject to each Restricted Stock Award shall not be less than 85 percent of the Fair Market Value of the Common Stock on the date of the grant. In the case of any person who owns securities possessing more than ten percent of the combined voting power of all classes of securities of the issuer or its parent or subsidiaries possessing voting power, the deemed issuance price of shares of Common Stock subject to each Restricted Stock Award
shall be at least 100 percent of the Fair Market Value of the Common Stock on the date of the grant. The Committee may require the payment by the Participant of a specified purchase price in connection with any Restricted Stock Award.

 

8.2    Vesting Requirements.    The restrictions imposed on shares granted under a Restricted Stock Award shall lapse in accordance with the vesting requirements specified by the Committee in the Award Agreement, provided that the Committee may accelerate the vesting of a Restricted Stock Award at any time. Such vesting requirements may be based on the continued Service of the Participant with the Company or its Affiliates for a specified time period (or periods) or on the attainment of specified performance goals established by the Committee in its discretion. If the vesting requirements of a Restricted Stock Award
shall not be satisfied, the Award shall be forfeited and the shares of Common Stock subject to the Award shall be returned to the Company.

 

8.3    Restrictions.    Shares granted under any Restricted Stock Award may not be transferred, assigned or subject to any encumbrance, pledge, or charge until all applicable restrictions are removed or have expired, unless otherwise allowed by the Committee. Failure to satisfy any applicable restrictions shall result in the subject shares of the Restricted Stock Award being forfeited and returned to the Company. The Committee may require in an Award Agreement that certificates representing the shares granted under a Restricted Stock Award bear a legend making appropriate reference to the restrictions imposed, and that
certificates representing the shares granted or sold under a Restricted Stock Award will remain in the physical custody of an escrow holder until all restrictions are removed or have expired.

 

8.4    Rights as Stockholder.    Subject to the foregoing provisions of this Section 8 and the applicable Award Agreement, the Participant shall have all rights of a stockholder with respect to the shares granted to the Participant under a Restricted Stock Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto. The Committee may provide in an Award Agreement for the payment of dividends and distributions to the Participant at such times as paid to stockholders generally or at the times of vesting or other payment of the Restricted Stock
Award.

 8.5    Section 83(b) Election.    If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted Stock Award, the Participant shall file, within 30 days following the Date of Grant, a copy of such election with the Company and with the Internal Revenue Service, in accordance with the regulations under Section 83 of the Code. The Committee may provide in an Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the Award under Section 83(b) of the Code.

 

9.    Change in Control.

 

9.1    Effect of Change in Control.    Except to the extent an Award Agreement provides for a different result (in which case the Award Agreement will govern and this Section 9 of the Plan shall not be applicable), notwithstanding anything elsewhere in the Plan or any rules adopted by the Committee pursuant to the Plan to the contrary, if a Triggering Event shall occur within the 12-month period beginning with a Change in Control of the Company, then, effective immediately prior to such Triggering Event, each outstanding Stock Option, to the extent that it shall not otherwise have become vested and exercisable, shall
automatically become fully and immediately vested and exercisable, without regard to any otherwise applicable vesting requirement.

 

9.2    Definitions

 

(a)    Cause.    For purposes of this Section 9, the term “Cause” shall mean a determination by the Committee that a Participant (i) has been convicted of, or entered a plea of nolo contendere to, a crime that constitutes a felony under Federal or state law, (ii) has engaged in willful gross misconduct in the performance of the Participant’s duties to the Company or an Affiliate or (iii) has committed a material breach of any written agreement with the Company or any Affiliate with respect to confidentiality, noncompetition, nonsolicitation or similar restrictive covenant. Subject to the first sentence of
Section 9.1 hereof, in the event that a Participant is a party to an employment agreement with the Company or any Affiliate that defines a termination on account of “Cause” (or a term having similar meaning), such definition shall apply as the definition of a termination on account of “Cause” for purposes hereof, but only to the extent that such definition provides the Participant with greater rights. A termination on account of Cause shall be communicated by written notice to the Participant, and shall be deemed to occur on the date such notice is delivered to the Participant.

 

(b)    Change in Control.    For purposes of this Section 9, a “Change in Control” shall be deemed to have occurred upon:

 

(i) the occurrence of an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a percentage of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Company Voting Securities”) (but excluding (1) any acquisition directly from the Company (other than an acquisition by virtue of the exercise of a conversion privilege of a security that was not acquired directly from the Company), (2)
any acquisition by the Company or an Affiliate and (3) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate) (an “Acquisition”) that is thirty percent (30%) or more of the Company Voting Securities;

 

(ii) at any time during a period of two (2) consecutive years or less, individuals who at the beginning of such period constitute the Board (and any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was so approved) cease for any reason (except for death, Disability or voluntary retirement) to constitute a majority thereof;

            (iii) an Acquisition that is fifty percent (50%) or more of the Company Voting Securities;

 

(iv) the consummation of a merger, consolidation, reorganization or similar corporate transaction, whether or not the Company is the surviving company in such transaction, other than a merger, consolidation, or reorganization that would result in the Persons who are beneficial owners of the Company Voting Securities outstanding immediately prior thereto continuing to beneficially own, directly or indirectly, in substantially the same proportions, at least fifty percent (50%) of the combined voting power of the Company Voting Securities (or the voting securities of the surviving entity) outstanding immediately after such merger, consolidation or
reorganization;

 

(v) the sale or other disposition of all or substantially all of the assets of the Company;

 

(vi) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company; or

 

(vii) the occurrence of any transaction or event, or series of transactions or events, designated by the Board in a duly adopted resolution as representing a change in the effective control of the business and affairs of the Company, effective as of the date specified in any such resolution.

 

(c)    Constructive Termination.    For purposes of this Section 9, a “Constructive Termination” shall mean a termination of employment by a Participant within sixty (60) days following the occurrence of any one or more of the following events without the Participant’s written consent (i) any reduction in position, title (for Vice Presidents or above), overall responsibilities, level of authority, level of reporting (for Vice Presidents or above), base compensation, annual incentive compensation opportunity, aggregate employee benefits or (ii) a request that the Participant’s location of employment be
relocated by more than fifty (50) miles. Subject to the first sentence of Section 9.1 hereof, in the event that a Participant is a party to an employment agreement with the Company or any Affiliate (or a successor entity) that defines a termination on account of “Constructive Termination,” “Good Reason” or “Breach of Agreement” (or a term having a similar meaning), such definition shall apply as the definition of “Constructive Termination” for purposes hereof in lieu of the foregoing, but only to the extent that such definition provides the Participant with greater rights. A Constructive Termination shall be communicated by written notice to the Committee, and shall be deemed to occur on the date such notice is delivered to the Committee, unless the circumstances giving rise to the Constructive Termination are cured within five (5) days of
such notice.

 

(d)    Triggering Event.    For purposes of this Section 9, a “Triggering Event” shall mean (i) the termination of Service of a Participant by the Company or an Affiliate (or any successor thereof) other than on account of death, Disability or Cause, (ii) the occurrence of a Constructive Termination or (iii) any failure by the Company (or a successor entity) to assume, replace, convert or otherwise continue any Award in connection with the Change in Control (or another corporate transaction or other change effecting the Common Stock) on the same terms and conditions as applied immediately prior to such
transaction, except for equitable adjustments to reflect changes in the Common Stock pursuant to Section 4.2 hereof.

 

9.3    Excise Tax Limit.    In the event that the vesting of Awards together with all other payments and the value of any benefit received or to be received by a Participant would result in all or a portion of such payment being subject to the excise tax under Section 4999 of the Code, then the Participant’s payment shall be either (i) the full payment or (ii) such lesser amount that would result in no portion of the payment being subject to excise tax under Section 4999 of the Code (the “Excise Tax”), whichever of the foregoing amounts, taking into account the applicable Federal, state, and local employment
taxes, income taxes, and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code. All determinations required to be made under this Section 9 shall be made by an Accounting Firm which is selected by the Company’s outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax (the “Accounting Firm”). The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Participant. All fees and expenses of the Accounting Firm shall be borne solely by the Company. The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code). For the
purposes of all calculations under Section 280G of the Code and the application of this Section 9.3, all determinations as to present value shall be made using 120 percent of the applicable Federal rate (determined under Section 1274(d) of the Code) compounded semiannually, as in effect on December 30, 2004.

 10.    Forfeiture Events.

 

10.1    General.    The Committee may specify in an Award Agreement at the time of the Award that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events shall include, but shall not be limited to, termination of Service for cause, violation of material Company policies, breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, or other
conduct by the Participant that is detrimental to the business or reputation of the Company.

 

10.2    Termination for Cause.    Unless otherwise provided by the Committee and set forth in an Award Agreement, if a Participant’s employment with the Company or any Affiliate shall be terminated for cause, the Company may, in its sole discretion, immediately terminate such Participant’s right to any further payments, vesting or exercisability with respect to any Award in its entirety. In the event a Participant is party to an employment (or similar) agreement with the Company or any Affiliate that defines the term “cause,” such definition shall apply for purposes of the Plan. The Company shall have
the power to determine whether the Participant has been terminated for cause and the date upon which such termination for cause occurs. Any such determination shall be final, conclusive and binding upon the Participant. In addition, if the Company shall reasonably determine that a Participant has committed or may have committed any act which could constitute the basis for a termination of such Participant’s employment for cause, the Company may suspend the Participant’s rights to exercise any option, receive any payment or vest in any right with respect to any Award pending a determination by the Company of whether an act has been committed which could constitute the basis for a termination for “cause” as provided in this Section 10.2.

 

11.    General Provisions.

 

11.1    Award Agreement.    To the extent deemed necessary by the Committee, an Award under the Plan shall be evidenced by an Award Agreement in a written or electronic form approved by the Committee setting forth the number of shares of Common Stock or units subject to the Award, the exercise price, base price, or purchase price of the Award, the time or times at which an Award will become vested, exercisable or payable and the term of the Award. The Award Agreement may also set forth the effect on an Award of termination of Service under certain circumstances. The Award Agreement shall be subject to and incorporate, by
reference or otherwise, all of the applicable terms and conditions of the Plan, and may also set forth other terms and conditions applicable to the Award as determined by the Committee consistent with the limitations of the Plan. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code. The grant of an Award under the Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in the Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the Award Agreement. The Committee need not require the execution of an Award Agreement by a Participant, in which case, acceptance of the Award by the Participant shall constitute agreement by the Participant to
the terms, conditions, restrictions and limitations set forth in the Plan and the Award Agreement as well as the administrative guidelines of the Company in effect from time to time.

 

11.2    No Assignment or Transfer; Beneficiaries.    Except as provided in Section 6.7 hereof, Awards under the Plan shall not be assignable or transferable by the Participant, except by will or by the laws of descent and distribution, and shall not be subject in any manner to assignment, alienation, pledge, encumbrance or charge. Notwithstanding the foregoing, the Committee may provide in the terms of an Award Agreement that the Participant shall have the right to designate a beneficiary or beneficiaries who shall be entitled to any rights, payments or other benefits specified under an Award following the Participant’s
death. During the lifetime of a Participant, an Award shall be exercised only by such Participant or such Participant’s guardian or legal representative. In the event of a Participant’s death, an Award may to the extent permitted by the Award Agreement be exercised by the Participant’s beneficiary as designated by the Participant in the manner prescribed by the Committee or, in the absence of an authorized beneficiary designation, by the legatee of such Award under the Participant’s will or by the Participant’s estate in accordance with the Participant’s will or the laws of descent and distribution, in each case in the same manner and to the same extent that such Award was exercisable by the Participant on the date of the Participant’s death.

11.3    Deferrals of Payment.    The Committee may in its discretion permit a Participant to defer the receipt of payment of cash or delivery of shares of Common Stock that would otherwise be due to the Participant by virtue of the exercise of a right or the satisfaction of vesting or other conditions with respect to an Award. If any such deferral is to be permitted by the Committee, the Committee shall establish rules and procedures relating to such deferral in a manner intended to comply with the requirements of Section 409A of the Code, including, without limitation, the time when an election to defer may be made, the time
period of the deferral and the events that would result in payment of the deferred amount, the interest or other earnings attributable to the deferral and the method of funding, if any, attributable to the deferred amount.

 

11.4    Rights as Stockholder.    A Participant shall have no rights as a holder of shares of Common Stock with respect to any unissued securities covered by an Award until the date the Participant becomes the holder of record of such securities. Except as provided in Section 4.2 hereof, no adjustment or other provision shall be made for dividends or other stockholder rights, except to the extent that the Award Agreement provides for dividend payments or dividend equivalent rights.

 

11.5    Employment or Service.    Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any Eligible Person any right to continue in the Service of the Company or any of its Affiliates, or interfere in any way with the right of the Company or any of its Affiliates to terminate the Participant’s employment or other service relationship for any reason at any time.

 

11.6    Securities Laws.    No shares of Common Stock will be issued or transferred pursuant to an Award unless and until all then applicable requirements imposed by Federal and state securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction, and by any exchanges upon which the shares of Common Stock may be listed, have been fully met. As a condition precedent to the issuance of shares pursuant to the grant or exercise of an Award, the Company may require the Participant to take any reasonable action to meet such requirements. The Committee may impose such conditions on any shares of
Common Stock issuable under the Plan as it may deem advisable, including, without limitation, restrictions under the Securities Act of 1933, as amended, under the requirements of any exchange upon which such shares of the same class are then listed, and under any blue sky or other securities laws applicable to such shares. The Committee may also require the Participant to represent and warrant at the time of issuance or transfer that the shares of Common Stock are being acquired only for investment purposes and without any current intention to sell or distribute such shares.

 

11.7    Tax Withholding.    The Participant shall be responsible for payment of any taxes or similar charges required by law to be withheld from an Award or an amount paid in satisfaction of an Award, which shall be paid by the Participant on or prior to the payment or other event that results in taxable income in respect of an Award. The Award Agreement may specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of Award.

 

11.8    Unfunded Plan.    The adoption of the Plan and any reservation of shares of Common Stock or cash amounts by the Company to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement. Except upon the issuance of Common Stock pursuant to an Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor of the Company, and neither a Participant nor the Participant’s permitted transferees or estate shall have any other interest in any assets of the Company by virtue of the Plan. Notwithstanding the foregoing, the Company shall have the
right to implement or set aside funds in a grantor trust, subject to the claims of the Company’s creditors or otherwise, to discharge its obligations under the Plan.

 

11.9    Other Compensation and Benefit Plans.    The adoption of the Plan shall not affect any other share incentive or other compensation plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing any other forms of share incentive or other compensation or benefit program for employees of the Company or any Affiliate. The amount of any compensation deemed to be received by a Participant pursuant to an Award shall not constitute includable compensation for purposes of determining the amount of benefits to which a Participant is entitled under any other compensation or benefit
plan or program of the Company or an Affiliate, including, without limitation, under any pension or severance benefits plan, except to the extent specifically provided by the terms of any such plan.

 

11.10    Plan Binding on Transferees.    The Plan shall be binding upon the Company, its transferees and assigns, and the Participant, the Participant’s executor, administrator and permitted transferees and beneficiaries.

11.11    Severability.    If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

 

11.12    Foreign Jurisdictions.    The Committee may adopt, amend and terminate such arrangements and grant such Awards, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to comply with any tax, securities, regulatory or other laws of other jurisdictions with respect to Awards that may be subject to such laws. The terms and conditions of such Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose. Moreover, the Board may approve such supplements to or amendments, restatements or alternative
versions of the Plan, not inconsistent with the intent of the Plan, as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of the Plan as in effect for any other purpose.

 

11.13    Substitute Awards in Corporate Transactions.    Nothing contained in the Plan shall be construed to limit the right of the Committee to grant Awards under the Plan in connection with the acquisition, whether by purchase, merger, consolidation or other corporate transaction, of the business or assets of any corporation or other entity. Without limiting the foregoing, the Committee may grant Awards under the Plan to an employee or director of another corporation who becomes an Eligible Person by reason of any such corporate transaction in substitution for awards previously granted by such corporation or entity to such
person. The terms and conditions of the substitute Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose.

 

11.14 Governing Law. The Plan and all rights hereunder shall be subject to and interpreted in accordance with the laws of the State of Nevada, without reference to the principles of conflicts of laws, and to applicable Federal securities laws.

11.15 Financial Statements. All Participants shall receive the financial statements of the Company at least annually.  

11.16Performance Based Awards.    For purposes of Stock Awards and Restricted Stock Awards granted under the Plan that are intended to qualify as “performance-based” compensation under Section 162(m) of the Code, such Awards shall be granted to the extent necessary to satisfy the requirements of Section 162(m) of the Code.

11.17 Stockholder Approval. The Plan must be approved by the stockholders by a majority of all shares entitled to vote within twelve (12) months after the date the Plan was adopted by the Board. Any Incentive Stock Options granted before stockholder approval is obtained shall be converted into Nonqualified Stock Options if stockholder approval is not obtained within twelve (12) months before or after the Plan was adopted.

 

12.    Effective Date; Amendment and Termination.

 

12.1    Effective Date.    The Plan shall become effective following its adoption by the Board. The term of the Plan shall be ten (10) years from the date of adoption by the Board, subject to Section 12.3 hereof.

 

12.2    Amendment.     The Board may at any time and from time to time and in any respect, amend or modify the Plan. The Board may seek the approval of any amendment or modification by the Company’s stockholders to the extent it deems necessary or advisable in its discretion for purposes of compliance with Section 162(m) or Section 422 of the Code, or exchange or securities market or for any other purpose. No amendment or modification of the Plan shall adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award.

 

12.3    Termination.    The Plan shall terminate on the tenth anniversary of the date of its adoption by the Board. The Board may, in its discretion and at any earlier date, terminate the Plan. Notwithstanding the foregoing, no termination of the Plan shall adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award.ex10-12.htm

Exhibit 10.12

 

TECHNOLOGY LICENSE AGREEMENT

THIS
TECHNOLOGY LICENSE
AGREEMENT ("Agreement") is entered into as of March 24, 2006, (the "Effective Date") by and between Cyclone Technologies LLLP, a Florida limited liability limited partnership, having its offices located at 601 NE 26th Court, Pompano Beach, Florida 33064(the. "Licensor"), and Advent Power Systems, Inc. ("APS"), a Florida
corporation, having its offices located at 2904 Victoria Place, Suite F3, Coconut Creek, Florida 33066 (the "Licensee").

In consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties do hereby agree as follows:

1. Background

1.1 Licensor is the owner of certain proprietary technology related to a heat 'regenerative engine that uses water as the working fluid as well as the lubricant as defined in Section 2.1 below as the "Licensed Technology".

1.2 Licensee wishes to acquire a license to use, make, sell, offer to sell, and import the Licensed Technology (as hereafter defined) in accordance with the terms of this Agreement.

1.3 As Licensee has represented that, its parent co1npany, Advent International Management Company of Florida, Inc. and its President Dr. Phillip F. Myers are highly skilled and experienced in all aspects of business management and manufacturing, with special expertise in product development and commercialization of new technologies, including extensive experience and special expertise in marketing to and contracting with the U.S. Military Establishment (ashereafterdefined),andLicensee. herebyacknowledges thatsuch representations have induced Licensor to enter into this Agreement in reasonabie reliance thereon and that such representations are true and correct and made by Licensee in good
faith. Licensor and Licensee may from time to time enter into separate Consulting Agreements whereby Licensor will provide consulting services to Licensee to obtain government and other contracts for further developn1ent and application of the Licensed Technology (as that tem1 is defined below); provided, however, that until and unless such Consulting Agreements are expressly entered into between Licensor and Licenseeno commission, royalty or "finders fee" shall be due from Licensor to Licensee for any agreement, contract, letter of intent or other document entered into between Licensor and any third party, including, but not limited to, any third party who is recognized as affiliated or associated with any branch of the armed forces of any nation or any business which is in whole or in part recognized as a military contractor or subcontractor or otherwise performs services under
contract for the military of any nation. Furtherany Consulting Agreements entered into by and between the Licensor and Licensee are hereby incorporated by reference. If there is a conflict between this Agreement and the terms of any Consulting Agreement, the terms of this Agreement shall govern.

 

  

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2. Definitions

2.1 Licensed
Technology means Licensor's proprietary technology related to a heat regenerative engine that uses water as the working fluid as well as the lubricant and includes any Information, inventions, Innovations, discoveries, improvements, ideas, know-how, developments, methods, designs, reports, charts, drawings, diagrams, analyses, concepts, technology, records, brochures,
instructions, manuals, programs, manufacturing techniques, expertise, inventions whether or not reduced to practice or the subject of a patent application, test-protocols,. test results, descriptions, parts lists, bills of materials, documentation whether in written or electronic format, prototypes, molds, models, assemblies, and any similar intellectual property and information, whether or not protected or protectable by patent or copyright, any related research and development information, inventions, trade secrets, and technical data in the possession of Licensor that is useful or is needed in the design or manufacture of such heat regenerative engine that uses water as the working fluid as well as the lubricant as identified in Exhibit "A", attached hereto and incorporated herein by reference and which may be amended from time to time by the parties. This includes without
limitation, U.S. P tent Application Serial No. 111225,422, entitled Heat Regenerative Engine, filed September 14, 2005, all patents that may issue under this patent application and their divisions, continuations, continuation-in-patis, reissues, reexaminations, inventor's certificates, utility models, patents of addition, extensions, as well as certain research and development information, inv ntions, know-how, and technical data that relate to and/or are disclosed in said patent application, and any other patent applications, patents divisions, continuations, continuation-in-parts, reissues, reexaminations, inventor 's certificates, utility models, patents of addition, extensions that may issue or be filed that relate to said Licensed Technology and/or said Patent Application.

2.2 Licensed
Products means products in the Field of Use (as· hereafter defined) made using in any manner the Licensed Technology in the Territory (as hereafter defined) and identified in Exhibit B, which may be amended by mutual agreement of the parties from time to time to include additional products. Licensed Product specifically excludes, without limitation, motive power and/or generator units in the automotive and truck industries.
Licensee hereby agrees that in the event Licensee develops any Additional Licensed Products as defined in Section 6.1, Licensee shall notify Licensor within 10 days after the first sale of any Additional Licensed Products and upon the date such notification is sent such Additional Licensed Products shall be deemed included among the Licensed Products on Exhibit "B'' and such Exhibit shall be expressly amended by the parties to add such Additional Licensed Products within 30
calendar days after such notification. If Licensee fails to timely notify Licensor of such Additional Licensed Products then the License of Section 3.1 of this Agreement shall not apply to such product and such product shall be deemed infringing and this Agreement will terminate and the License for all Licensed Products shall be deemed null and void unless Licensor agrees in writing to waive termination of the Agreement and the License due to such failure, in Licensor 's sole and absolute discretion. At such time as the Additional Licensed Product is deemed included in Exhibit B Licensee agrees that it thereby sells, assigns, and transfers unto Licensor all of Licensee's .full and exclusive right, title, and interest in and to any and all intellectual property rights associated with such Additional
Licensed Products, including; without limitation, to any and all inventions arising from the Additional Licensed Products ("Inventions") and all letters patent of the United States and other foreign countries which may be or have been issued on the Invention, all divisions, reissues, and continuations thereof, and all other inventions disclosed therein, together with all claims for damages by 'reason of past or future infringement, with the right to sue for and collect the same for the use and benefit of Licensor and its successors and assigns, to any copyrights, and any proprietary intellectual property rights in such Additional Licensed Products, and at Licensor's request, will cause to be executed and delivered any applications,
affidavits, assignments, and other instruments as may be deemed necessary or desirable by Licensor to secure for or vest in Licensor, its successors or assigns, all right, title, and interest in and to any application, patent, or other right or property covered by this Section.

 

  

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1.2, including the right to apply for and obtain patents in the United States or any foreign countries under the provisions of the International Convention; and Licensee hereby requests and authorizes the United States Commissioner of Patents and Trademarks to issue any and all United States patents granted on the Inventions to Licen_sor as owner of the entire right, title, and interest in and to the same, and authorizes appropriately empowered officials of foreign countries to issue any letters patent granted on the Inventions to Licensor as owner of the entire right, title, and interest in and to the same.. Licensee shall have the right to use the Licensed Technology for such Additional
Licensed Product in accordance with the License provided under this Agreement but no royalty shall be thereafter due to Licensor for such Additional Licensed Product.

2.3 U.S. Military
Establishment means those branches of the Armed Forces, which are military branches of the U.S. Department of Defense.

2.4 Biomass Fuels means fuels where petroleum
based fuels constitute twenty percent (20%) or less of the energy content of the fuel used. Biomass fuels include crop wastes such as stalks and leaves, wood, food wastes, manure and refuse (including tires).

2.5 Field of
Use means electrical power generation that uses Biomass Fuels as a fuel source (“Biomass Use”) and electoral power generation solely for the U.S. Military Establishment that uses any fuel source (“Military Use”).

 

2.6 Territory means the United States and Canada for Biomass Use; and world-wide for the
Military Use, but may be an1ended from time to time upon written agreement between the parties

2.7 Gross Selling
Price means the total arms length selling price of a Licensed Product or the selling price as set forth on the invoice therefore, whichever is greater, net of any charges for shipping and insurance.

3. Grant of
License

 

3.1 Licensor grants to Licensee an exclusive, non-transferable, non-sublicenseable license to use the Licensed Technology to make, use, sell, offer to sell, and import Licensed Products solely for the Field of Use and solely in the Territory ("License"). Notwithstanding the foregoing, the License may be transferred or sublicensed to a third party solely upon the prior written consent of the Licensor, which consent may be withheld at Licensor 's sole and absolute discretion. This License will automatically expire upon
termination of this Agreement. . Licensee may sublicense to a subsidiary of Licensee which is at least 50% owned by Licensee; so long as such subsidiary first agrees in writing to abide by all of the terms and conditions of this Agreen1ent and fully discloses to Licensor in a manner acceptable to Licensor as determined in Licensor's sole discretion, all of the ownership interests held by all owners of such subsidiary and Licensee such that Licensor may determine whether to consent to such sublicense; if approved, Licensee ·shall guarantee all license payments due from such subsidiary
under such sublicense.

 

  

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3.2 Unless terminated earlier pursuant to other provisions of this Agreement, this Agreement . and the License granted herein will take effect on the Effective Date and will continue in force and effect until December 31, 2030; provided, however, that the License is for the Licensed Technology and as such the parties agree that all License Fee, Royalties or , other payments required hereunder shall not be abated in the event of the termination or abandonment of any patent referenced herein or hereafter issued related to the Licensed Technology.

4. License
Fee/R oyalty

4.1 Licensee will pay to Licensor in consideration for the License granted above, $100,000 dollars (“License Fee”) by September 30, 2007, unless accelerated by the subsequent points of Clause 6.a thru I, according to the following schedule:

a. Licensee will pay $5,000 to Licensor at the signing of this Agreement.

b. In an effort to help accelerate payment due to Licensor hereunder, Licensee will use its best efforts to raise investment capital for Licensees company as soon as possible. Licensor shall retain for working capital and other purposes the first $125,000 of such funds raised by Licensee for Licensee’s business.

 

c. Thereafter, until the balance of the $100,000 has been paid in full, 50% of the subsequent net proceeds of investment capital in Licensee's business shall go to Licensor.

d. Any balance of the $100,000 not already paid shall be due and payable on September 30, 2007. However, if Licensor successfully completes 200 hours of continuous operation of a two cylinder engine embodying the Licensed Technology, then the balance of the $100,000 shall be due and payable 90 days from the completion of such 200 hour testing, but not in any case earlier than March 31, 2007. Licensor shall notify Licensee in writing within seven calendar days of the successful completion of such tests. If such notice is later than seven
days, then the clock shall not start - running toward 90 days until the notice is received by Licensee.

e. If the full $100,000 has not been paid by September 30, 2007, (or earlier if accelerated as per clause 6.d., above) Licensor may terminate this Agreement by written notice to Licensee, but is not obligated to do so.

f. Any payments made under this Section 4.1 are non-refundable and shall be considered as an expense of Licensee when incurred, and as income when received by Licensor.

 

  

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g. Payments made under this Section shall be made within fifteen days of the end of any month in which funds have been received under this Section.

h. Once the $100,000 License Fee has been paid by Licensee to Licensor, then Licensee shall thereafter only be liable for the Royalty (as hereafter · defined), as subsequently specified; and/or minimum royalties.

 

4.2 In addition to the License Fee, Licensee will pay to Licensor a royalty of 3% percent of the Gross Selling Price per Licensed Product sold or otherwise disposed of by Licensee ("Royalty"). For purposes of this Agreement, Gross Selling Price shall have the m eaning se t forth in Section 2.7 above. In the event of any sublicense permitted under Section 3.1 the following additionalprovisionsshall apply: 1) The sublicenseshall be conditioned and contingent upon the sale by the sublicense of a specific number of Licensed Products in an amount and time period to be agreed upon by the parties as set fort in the applicable
sublicense agreement ("Sublicense Sales Quota") and Licensor, in addition to any royalty received pursuant to any such sublicense agreement shall also participate and share in any commission, bonus, or other payment made to Licensee by any sublicensee in a percentage amount to be determined between Licensor and Licensee before the execution and delivery of any sublicense agreement ("Participation Amount"). The failure of the parties to agree on any Sublicense Sales Quota or Participation Amount may be grounds for Licensor to withhold its consent to any sublicense in its sole and absolute discretion.

4.3 Within 30 days after the first day of each month hereafter during Agreement Licensee will pay to Licensor royalties at the rate specified in Section 4.2 of this Agreement in immediately availabe U.S. funds.

4.4 If Licensor does not receive from Licensee the full amounts due on or before the day upon which such amounts are due and payable, such outstanding amounts will thereafter bear interest until payment at the rate of 1.25% per month, but in no event to exceed 25% per annum Amounts received by Licensor will first be credited against any unpaid interest and accrual of such interest will be in addition to and without limitation of any and all additional rights o remedies that Licensor may have under this Agreement or at law or in equity. Licensee agrees to pay all reasonable expenses in
connection with the collection of any late payment.

 

5.
Confidentiality

 

5.1 Confidential Information means information in oral and/or written form that (a) relates to - Licensed Technology, including, without limitation past, present and future research, development, business ·activities, products, and services, and (b) has been identified, either orally or in writing, as confidential by Licensor.

5.2 Licensee may use the Confidential Information only for the purpose of producing the Licensed Products. Licensee will not, at any time, use the Confidential Information in any other fashion, fonn, or manner for any other purpose.

 

  

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

5.4 Any Confidential Information in whatever form is the property of Licensor and will remain so at all times. Licensee may not copy any Confidential Information for any purpose without the express prior written consent of Licensor, and if consent is granted, any such copies will retain such proprietary rights notices as appear on the original thereof. Any copies of the Confidential Information that Licensor may have permitted Licensee to make, or other written materials incorporating Confidential Information, will be the sole property of Licensor and must be returned to Licensor or destroyed upon the first to occur of (a) termination or expiration of this Agreen1ent or (b) request by
Licensor.

 

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

5.6 Licensee acknowledges that the Confidential Information disclosed and/or made available 'to Licensee hereunder is owned solely by Licensor and that the threatened or actual breach of this Agreement will cause irreparable injury to Licensor, for which monetary damages would be inadequate. A.ccordingly, Licensee agrees that Licensor is entitled to an immediate injunction enjoining any such breach or threatened breach .of this Agreement. Licensee agrees to be responsible for all costs, including attorneys' fees, incurred by Licensor 1n any action enforcing the terms of this Section.

 

5.7 Licensee will promptly advise Licensor in writing of any unauthorized use or disclosure of Confidential Information of which Licensee becomes aware and will provide reasonable assistance to Licensor to terminate such unauthorized use or disclosure.

 

6.
Reports/Audit/Referral
Fees

6.1 Licensee agrees to make and provide written reports to Licensor concurrently with making each royalty payment due in Section 4.2.· Each report will state the number of Licensed Products. sold or otherwise disposed of during the preceding three calendar
months and on which a royalty is payable as provided in Section 4.2. Each report shall also include notification of any Licensee Improvements (as defined in Section 9 below) incorporating the Licensed Technology in whole or in part which are proposed to be sold for the first time in the month following the month of the report (each an "Additional Licensed Product", and collectively, the "Additional Licensed Products"). All Additional Licensed Products shall be promptly added to the Licensed Products set forth on Exhibit " B", and shall be deemed to be included as part of the Licensed Products set forth on Exhibit
"B" by virtue of this provision until such time as the official amendment to E x hib it "B" occurs in accordance with Section 2.2.

 

  

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6.2 Licensor (or its authorized representative) may;upon reasonable notice and during Licensee's normal business hours, enter Licensee's premises for the purposes of auditing any and all books of account, documents, records, papers and files relating to Licensee's manufacture and sale of the Licensed Product ("Licensee Documents").Licensee Documents will be made available to Licensor (or its authorized representative)·solely for · such auditing purpose. Licensor will bear the expense of any such audit unless such audit reveals that royalties and fees paid by Licensee pursuant to this Agreement for any payment period are less than 95% of what should have been paid by Licensee
during such payment period. In such event the costs of the audit will be borne by Licensee, in addition to and without limitation of any other rights or remedies Licensor may have. Prompt payment of any amounts found due and owing Licensor, including audit fees and expenses due Licensor under this Section, will be made by Licensee.

6.3 Subject to the confidentiality provisions of Section 5, in the course of their business dealings both Licensor and Licensee may communicate with companies, governmental units, other entities and/or individuals who may express an interest in entering into an agreement relating to the business of the other party, sublicense the technology, and/or invest in their business. Where such interest appears serious and specific, and subject to compliance with all state and federal securities laws to the extent applicable, then either entity shall inform the other in
writ ing within seven days of such contact (the "Referred Party") and the specific nature of their expressed interest.If the notified entity (either Licensor or Licensee) can reasonably demonstrate that it has already been in touch with the Referred Party, then it shall notify the other
in writing within 10 days thereafter, and shall have no obligation for any business or investment resulting from such referral. If no such notice is sent within such 10 day periods and business or investment does actually result with the Referred Party in the form of a closing on an transaction, payment under an executed agreement, grant, investment, loan, licensing agreement or other sale, then the party having made the referral shall be paid by the party· to whom the referral was made (the "Benefited Party") a referral fee of three and one half (3.5%) percent of the amount actually received, paid within 30 days after such funds are received. Where such referral generates a stream of payments over time, then the
referral fee shall be paid for three years from the time the initial payment in such stream of payments is received. No obligation shall be incurred for generalized references or broad lists, such as "Talk to the Governor" or "here is a list of wealthy investors".Referrals shall be paid only where direct contact and discussion provided by the referring party between the prospect and the Benefited Party resulted, and not based on generalized information in the trades, other press, or otherwise.

7.
Representations and
Warranties.

7.1 Licensor . represents and warrants to Licensee that Licensor is the owner of the Licensed Technology and has the right to grant the License to Licensee.

7.2 THIS SECTION IS LICENSOR'S ONLY WARRANTY CONCERNING THE LICENSED PRODUCT AND IS MADE IN LIEU OF ALL OTHER REPRESENTATION AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE, OR OTHERWISE.

 

  

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7.3 Licensee represents and warrants that it has full power and authority to enter into this Agreement.

7.4 Licensee represents and warrants that neither the execution nor delivery of this Agreement by Licensee, nor the consummation of the transactions contemplated herein, will constitute a violation or breach of Licensee's constituent documents or violate, conflict with, result in any breach of any material provisions of or constitute a default under any other contract or commitment made by Licensee, any law, rule or regulation, or any order, judgment or decree, applicable to or involving Licensee.

 

7.5 Licensee represents, covenants and agrees that it will comply with all applicable federal, state and local laws, regulations or other requirements, and agrees to indemnify Licensor against any liability arising from Licensee's violation of or noncmpliance with laws or regulations while using the Licensed Technology. 

7.6 Licensee represents and warrants that no order, consent, filings or other authorization or approval of or with any court, public board or governmental body is required for the execution, delivery and performance of this Agreement by Licensee.

8.
Identification
of Infringers

8.1 Licensee will, without delay, inform Licensor of any infringement, unauthorized use, misappropriation, ownership claim, threatened infringement or other such claim (collectively, an
"Infringement") by a third party with respect to the Licensed Products and/or the Licensed Technology, and will provide
Licensor with any evidence available to Licensee of such Infringement. Upon receipt of such information, Licensor and Licensee shall mutually agree upon what action should be taken with respect to any such disclosed Infringement, whether o not litigation should be pursued against an alleged infringer, the jurisdiction in which any such litigation should be pursued, whether or not litigation should be settled or pursued to final resolution against an alleged infringer, and the terms of settlement; provided, however, that Licensor n1ay in its sole and absolute discretion decide to pursue litigation while Licensee declines to so proceed; and provided, further if Licensee so declines to participate in litigation and Licensor must proceed alone to protect the Licensed Technology, then the license to the Licensed Technology provided to Licensee under this Agreement shall no longer be
exclusive. Licensee agrees that it shall be fully responsible for the costs of all enforcement to protect the Licensed Technology for the Licensed Products as has been agreed mutually between Licensee and Licensor and shall pay all expenses incurred in any action Licensor decides should be taken to protect the Licensed Technology as used in the Licensed Products from Infringement or to defend any claim against Licensor or the Licensed Technology from Infringement relating to the Licensed Products ("Infringement Action"), including all attorney, paralegal, accountant or other professional fees from the date of notice of such Infringement Action through all trial and appellate levels. The parties shall cooperate with each other and provide all advice and assistance reasonably requested by each other in pursuit of such Infringement matters.

 

  

8

  

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

9. Improvements

9.1 Licensee will timely inform Licensor, in writing, of any improvements, changes, advances and/or modifications to the Licensed Products or Licensed Technology, and the purpose(s) therefor, made by Licensee. Any and all such improvements, changes, advances and/or modifications to the Licensed Products or Licensed Technology made by Licensee ("Licensee Improvements") shall become the property of Licensor and Licensee hereby assigns all of its right, title and interest in and to such Licensee Improvements to Licensor regardless if developed or invented by Licensee or Licensor or any of their employees. Further, Licensor will
own the entire right, title and interest in any and all patent applications resulting from or relating to any and all improvements and/or; modifications to the Licensed Products or the Licensed Technology, whether filed in the United States or countries other than the United States, related to said improvements and/or modifications; and in and to any and all patents which may be issued/granted on any and all said applications and any and all reissues thereof.

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

9.3 Licensor does have and will continue to have sole and absolute discretion to make decisions with respect to the procurement and prosecution of the patents and patent applications identified on Exhibit "A'' including the right to abandon any such patent application. Licensor's abandonment of or any failure to obtain or maintain an issued patent originating from any of the patents or patent applications identified on Exhibit "A" will not relieve or release Licensee from its obligation to pay the License Fee and Royalty provided in this Agreement. Similarly, a holding or decision by a court of law that any
such issued patent is invalid or unenforceable will not relieve or release Licensee from its obligation to pay the License Fee or Royalty provided in this Agreement. If any of such events occur, Licensee must continue to pay any License Fee and Royalty due during the Term.

 

  

9

  

 

9.4 Licensee will not contest the validity or enforceability of any patents that issue from or as a result of any of the patents or patent applications identified on Exhibit "A" or any continuations, divisionals or .continuations-in-part of such applications. Licensee will not assert as a defense in any litigation with respect to Licensed Products that any patents that issue from or as a result of any , of the patent · applications identified on Exhibit "A" (including any continuations, divisionals orcontinuations-in-part ofsuch applications) areinvalid or unenforceable.

 

9.5 Should Licensor, prior to December 31, 2010, find a large organization that wishes to purchase all of Licensor's right, title and interest in the Licensed Technology, including the rights provided under this agreement and of Licensee therein, then Licensee . hereby agrees to such sale to such entity provided the following conditions are met:

a. The purchase consideration for Licensee is in such combination of cash, notes and securities as shall be acceptable to Licensee.

b. The purchase price of Licensee's rights and interest shall be determined by a completely independent appraiser not regularly used by the prospective buyer, and who is mutually acceptable to Licensor and Licensee. Such appraiser must have a specialty in the appraisal of high tech entities where much of the value is vested in intellectual capital, projected sales, and projected profits, reasonably discounted.

10. Default

10.1 If Licensee is in default of any material obligation under this Agreement, then Licensor may give written notice thereof to Licensee. If within 30 days after the date of such notice such default is not cured, then Licensor may terminate this Agreement with notice and all rights and licenses under this Agreement will revert to Licensor.

10.2 Upon expiration or termination of this Agreement for any reason, any remaining portion of any unpaid License Fee outstanding and all accrued Royalties under Section 4.2 and other sums due hereunder will become due and payable within 30 days of such expiration or termination. Upon expiration or termination of this Agreement for any reason, Licensee shall not thereafter make, use, sell, offer to sell, or import the Licensed Products or use the Licensed Technology for any purpose.

10.3 This Agreement will terminate immediately if Licensee is dissolved or liquidated. This Agreement wi11 also terminate immediately absent an adequate written assurance of future performance if: (i) any bankruptcy or insolvency proceedings under any federal or state bankruptcy or insolvency code or similar law, whether voluntary or involuntary, is properly commenced by or against Licensee; or (ii) Licensee becomes insolvent, is unable to pay debts as they come due or ceases to so pay, or makes an assignment for the benefit of creditors; or (iii) a 
trustee or receiver is appointed for any or all of Licensee's assets.

 

  

10

  

  

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

 

(a) All rights of Licensee granted hereunder will terminate and automatically revert to Licensor, and Licensee will discontinue all use of the Licensed Technology and will no longer have the right to use the Licensed Technology or any variation or simulation thereof for any purpose whatsoever.

 

(b) Licensee will be permitted to sell and dispose of its remaining inventory of Licensed Product on hand or in process on the date of such termination or expiration, for a period of ninety (90) days following the date of such expiration or termination (the "Sale Period"). Licensee expressly agrees that it will not market or sell any Licensed Product after the end of the Sale Period.

 

(c) All sums owed by Licensee to Licensor will become due and payable imn1ediately.

 

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

 

(e) Licensee retains no rights whatsoever to any of Licensor's Licensed Technology.

10.5 Notwithstanding the foregoing, or any other provisions of this Agreement to the contrary, Sections 5 thorough 7 and 9 through 12 will survive the expiration or termination of this Agreement.

 

11. Risk of
Loss

 

11.1 Commencing with the start of sales of Licensed Products, Licensee will acquire and maintain at its sole cost and expense throughout the term of this Agreement, and for a period of five (5) years following the termination or expiration of this Agreement, Comprehensive Genera Liability Insurance, including product liability, advertiser's liability (1986
ISO form of advertising injury rider), contractual liability and property coverage, including property of others (hereinafter collectively,
"Comprehensive
Insurance") underwritten by an insurance company qualified to cover liability associated with activities in the Territory of this Agreement. This
insurance coverage will provide liability protection of not less than $3,000,000 combined single limit for personal injury and property damage including products/completed operations coverage (on a per occurrence basis) with Licensor named as an additional insured party on the general liability coverage and as loss payee on the property coverage, and the policy will purport to provide adequate protection for Licensee and Licensor against any and all claims, demands, causes of action or damages, including attorney's fees, arising out of this Agreement including, but not limited to, any alleged defects in, or any use of, the Licensed Products or the Licensed Technology. Licensor will furnish to Licensee certificates issued by the insurance company (ies) setting forth the amount of the Comprehensive Insurance, the policy number(s), the date(s) of expiration,. and a provision that Licensor
will receive thirty (30) days written notice prior to termination, reduction or modification of the coverage. Licensee's purchase and maintenance of the Comprehensive Insurance or furnishing of the certificates of insurance will not relieve Licensee of any of its obligations or liabilities under this Agreement.

 

  

11

  

11.2 In the event of cancellation of any insurance required to be carried by Licensee under this Agreement, Licensor will be notified thirty (30) days prior to· cancellation of same. Additionally, notwithstanding anything else to the contrary, in the event Licensee's insurance is canceled and replacement Comprehensive Insurance meeting the requirements set forth above is not in place, then Licensor will have the right to terminate this Agreement.

11.3 Licensee assumes sole ' responsibility for any commitments, obligations, or representations made by it in connection with the use of the Licensed Products, Technical Information, and/or Confidential Information to manufacture, sell, market or advertise the Licensed Products, and Licensor will have no liability to Licensee, or any third parties, with respect to economic and/or personal injury, including wrongful death, caused by or resulting from the use of the Licensed Products, Licensed Technology and/or Confidential Information by Licensee, its agents,
employees, or customers.

11.4 Licensee agrees to indemnify, defend and hold harmless Licensor, its shareholders, officers, directors, employees, affiliates, . successors and assigns from and against any and all expenses, damages, proceedings, direct or consequential claims, liabilities, suits, actions, causes of action of any character or nature, penalties, fines, judgments or expenses (including all attorneys' fees), arising out of, or related to Licensee's use, sale, manufacture, importation, offer to sell, distribution, disposal of, operation, etc. of the Licensed Product and/or attributable to Licensee's use of the Licensed Technology and/or Licensee's performance or breach of this
Agreement. Agreement. This indemnity provision will survive the expiration or termination of this

 

11.5 All of Licensee's contracts, if any, with any person relating or pertaining to the Licensed Products will notify all such parties that Licensor has no such liability and will further include all such parties' acknowledgment and agreement that Licensor is excluded from any and all such liability.

11.6 Licensee acknowledges that · Licensor's liability for direct damages arising out or related to Licensee's use, sale, 1nanufacture, importation, offer to sell, distribution, disposal of, operation, etc. of the Licensed Product regardless of the form of action (i.e., whether in contract or tort, including without lin1itation, negligence or strict liability) will not exceed the Royalties paid by Licensee to Licensor.LICENSEE ALSO ACKNOWLEDGES THAT IN NO EVENT WILL LICENSOR BE LIABLEFOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL,
INCIDENT AL OR PUNITIVE DAMAGE, LOSS OR EXPENSE, EVEN IF LICENSOR HAS BEEN ADVISED OF THEIR POSSIBLE EXISTENCE.

12.
Miscellaneous

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

 

  

12

  

 

12.2 Licensee will conspicuously mark directly on each Licensed Product it sells that the Licensed Product is "covered by U.S. Patent No. [ALL APPLICABLE PATENTS TO BE INSERTED AS SET FORTH ON COMPOSITE EXHIBIT A, AS AMENDED FROM TIME TO TIME]" or "Patent Pending" as applicable.

 

12.3 All notices required by this Agreement will be in writing and be sent by certified mail, return receipt requested, by hand or overnight courier, to the following addresses:

 

	If to Licensor: 	
Cyclone Technologies 

	 	601 NE 26th Ct.
	  	
Pompano Beach, FL 33064

	  	
Tel: (954) 788-5655 Fax: (954) 788-6565

	  	  
	With a copy to:	
McDonald Hopkins Co., LPA 

	 	One Clearlake Center
	  	
250 Australian Ave., S.

	  	
West Palm Beach, FL 33401

	  	
Attn: Scott Austin

	  	  
	If to Licensee:	
Advent Power Systems, Inc.

	  	
2904 Victoria Place

	  	
Suite F3

	  	
Coconut Creek, Florida 33066

	  	
Tel: 954-979-6510 Fax: 954-977-4460

 

unless either party will at any time by notice in writing designate a different address. Notice will be effective three days after the date officially recorded as .having been deposited in the mails, or upon receipt by hand delivery or the next day by overnight courier.

12.4 Licensee shall not assign, convey, encumber, or otherwise dispose of any of its rights or obligations under this Agreement, except as stated in Section 3.1, without the prior written consent of Licensor and any such purported assignment will be invalid.

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

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

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

 

  

13

  

 

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

12.9 This Agreement, including its formation, all of the parties' respective rights and duties in connection herewith and all disputes that might arise from or in connection with this Agreement or its subject matter, will be governed by and construed in accordance with the laws of the State of Florida, without giving effect to that State's conflict of laws rules, and will be subject to the exclusive jurisdiction of courts located in Broward County, Florida, and their applicable courts of appeal, each party agreeing to such jurisdiction
exclusively.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers on the respective dates hereinafter set forth.

 

[TBIS SPACE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]

 

 

	"LICENSOR"	 	 	"LICENSEE"	 
	
 

Cyclone Technologies, LLLP

	 	 	
 

ADVENT POWER SYSTEMS, INC.

 

	 
	
By: Schoell Consulting, Inc.

Its General Partner

	 	 	 	 
	 	 	 	 	 
	
By: /s/ Harry Schoell

Harry Schoell, President

Date: 3/24/06

	 	 	
 
By: /s/ Phillip F. Myers

Phillip F. Myers, President

Date: 3/24/06

	 
	 	 	 	 	 
	
By: /s/ Frankie Fruge

Frankie Fruge, COO

Date: 3/24/06

	 	 	 	 

  

14

  

 

EXHIBIT A

Licensed
Technology

Exhibit A

 

The proprietary technology related to a heat regenerative engine that uses water as the working fluid was well as the lubricant as more specifically defined and set forth in Section 2.1 of the Agreement to which this Exhibit A is attached.

 

  

15

  

EXHIBITB

LICENSED
PRODUCTS

	
•

	
The following products in the Field of Use made using in any manner the Licensed Technology in the Territory, as all such terms are defined in the Technology License Agreement to which this Exhibit B is attached.

 

  

16

  

 

	Advent License Agreement Amendment #1	 	01/18/2007

 

This document represents an Amendment to clarify the Licensing agreement between Advent Power Systems, Inc, (“APS”) a Florida Corporation located at 2904 Victoria Place, suite F3, Coconut Creek, Florida 33066 and Cyclone Technologies LLLP (“Cyclone”) located at 601 NE 26th Court, Suite C, Pompano Beach, Florida 33064.

 

Whereas, APS and Cyclone agree to modify page 3 Section 2.6 of the Technology License Agreement titled Territory. Signed license agreement now reads “Territory means the United Stated and Canada for biomass use; and world-wide for the Military use, but may be amended from time upon written agreement between the parties.” This amendment replaces the above underlined sentence with: “Territory means worldwide for U.S. Military use; Non Exclusive for Biomass Generators 1 MGW (one mega watt) and above for the United States, Canada, the Caribbean Islands and Israel; as well as exclusive rights for all generators and engines for any Israeli Military
applications.”

 

	 	 	 	 	 
	
Signed:

	 	 	
Signed:

	 
	 	 	 	 	 
	
/s/ Harry Schoell

Harry Schoell

General Partner/Cyclone Technologies LLLP

	 	 	
 
/s/ Phillip F. Myers

Dr. Phillip F. Myers

Advent Power Systems, Inc.

	 
	 	 	 	 	 
	
/s/ Frankie Fruge

Frankie Fruge

General Partner/Cyclone Technologies LLLP

	 	 	 	 

 

  

17

  

 

	Advent License
Agreement Amendment
#2	 	March 6, 2007

 

This document is an Amendment to include the below captioned Paragraph in the Licensing agreement between Advent Power System, Inc. ("APS") a Florida Corporation located at 2904 Victoria Place, Suite C2, Coconut Creek, Florida 33077 and Cyclone Technologies LLLP ("Cyclone") located at 601 NE 26th Court, Suite C, Pompano Beach, Florida 33064.

The Paragraph:

Advent Power Systems, Inc. ("APS") shall have a non-exclusive right to obtain contracts and/or purchase orders from the United States military for motive power engines (also called drive engines) from the date of this amendment for $1,000,000.00 (One million dollars). At anytime APS secures a contact, APS is required to pay 7% seven percent, of said contract at funding until these 7% payment reach a total paid to Cyclone Technologies LLLP in the amount of $1,000,000.00. The7% is royalties in addition to the base 3% production royalty provided in base Licensing agreement as captioned above. This non-exclusive Amendment #2 becomes a permanent Amendment when full payment is made.

 

	 	 	 	 	 
	
Signed:

	 	 	
Signed:

	 
	 	 	 	 	 
	
/s/ Harry Schoell

Harry Schoell    Date 3/6/07

General Partner/Cyclone Technologies LLLP

	 	 	
 
/s/ Phillip F. Myers

Dr. Phillip F. Myers    Date 3/6/07

Advent Power Systems, Inc.

	 
	 	 	 	 	 
	
/s/ Frankie Fruge

Frankie Fruge    Date 3/6/07

General Partner/Cyclone Technologies LLLP

	 	 	 	 

 

  

18

  

 

	Advent License
Agreement
Amendment #3	 	April 30, 2007

 

This document is an Amendment to include the below captioned Paragraph in the Licensing agreement between Advent Power System, Inc. ("APS") a Florida Corporation located at 2904 Victoria 'Place, Suite C2, Coconut Creek, Florida 33077 and Cyclone Technologies LLLP ("Cyclone") located at 601 NE 26th Court, Suite C, Pompano Beach, Florida 33064.

 

Advent Power Systems, Inc. ("APS") shall have a non-exclusive right to obtain contracts and/or purchase orders from the United States Postal Service for motive power engines (also called drive engines) from the date of this amendment until March 31, 2008, for $1,000,000.00 (One million Dollars). In the event of contracts pending or in process with the U.S. Postal Service for motive power engines then in effect or in process of being formalized they shall survive March 31, 2008. If there are no contracts pending or in process on March 31, 2008 this amendment will automatically renew in six-month increments
until Cyclone Technologies LLLP cancels within a fifteen-day notice on either side of any automatic renewal date. At anytime APS secures a contract, APS is required to pay 7% seven percent, of said contract at funding until these 7% payments reach a total paid to Cyclone Technologies LLLP in the amount of $1,000,000.00. The 7% is royalties in addition to the base 3% · production royalty provided in base licensing agreement as captioned above. This non-exclusive Amendment #2 becomes a permanent Amendment when full payment is made.

 

	 	 	 	 	 
	
Signed:

	 	 	
Signed:

	 
	 	 	 	 	 
	
/s/ Harry Schoell

Harry Schoell    Date 4/30/07

General Partner/Cyclone Technologies LLLP

	 	 	
 
/s/ Phillip F. Myers

Dr. Phillip F. Myers    Date 4/30/07

Advent Power Systems, Inc.

	 
	 	 	 	 	 
	
/s/ Frankie Fruge

Frankie Fruge    Date 4/30/07

General Partner/Cyclone Technologies LLLP

	 	 	 	 

 

  

19

  

 

	Advent License
Agreement
Amendment #4 	 	May 9, 2007

 

This document is an Amendment to include the below captioned Paragraph in the Licensing Agreement between Advent Power Systems, Inc. (“APS”), a Florida corporation located at 2904 Victoria Place, Suite C2, Coconut Creek, Florida 33066 and Cyclone Technologies LLLP (Cyclone) located at 601 NE 26th Court, Suite C, Pompano Beach, Florida 33064.

The Paragraph:

Advent Power Systems, Inc. ("APS") hereby has a one year option for a non-exclusive license to manufacture and sell in the United States generator sets or auxiliary power units (hereinafter referred to as "gensets") up to 20 kilowatts, on the following terms and conditions:

 

	
  

	
a.

	
The payment is hereby made of $5,000 on behalf of APS to Cyclone as a non refundable consideration for this option.

	
  

	
b.

	
APS shall have until May 7, 2008 to pay an additional $100,000 to convert this option into a supplemental license for the manufacture and sale of genets up to 20 kilowatts. Payment of said $100,000 shall automatically convert this option in to a supplemental non-exclusive license.

	
  

	
c.

	
The total payment for the supplemental non-exclusive license for gensets shall be a total of $2,500,000 (2.5 million dollars) consisting of the initial $5,000, the option exercises payment of $100,000, and an additional $2,395,000 ($2.395 million). Said additional $2.395 million shall be paid by an
additional royalty of seven percent on sales of Cyclone engines within gensets until the full amount of said $2.395 million has been paid in full. The underlying three percent royalty shall be paid during this period until the
full $2.5 million has been paid, and shall continue thereafter.

 

	
  

	
d.

	
As long as this remains an option and not exercised should another party secure an exclusive license for gensets which includes the U.S., then at the request of Cyclone, this option shall be terminated. In such case the new exclusive license holder may agree as part of their transaction to pick up and honor any dealer agreements already signed by APS, or make alternative arrangements acceptable to APS, with such alternative arrangements reasonable to the circumstances. In the event of such termination during the option period,.then Cyclone shall give a credit to APS for all monies paid on this option with such credit to be applied first to APS's underlying licensing balances (if any due), and then to advance royalties to the extent of any remaining credit balance.

 

	 	 	 	 	 
	
Signed:

	 	 	
Signed:

	 
	 	 	 	 	 
	
/s/ Harry Schoell

Harry Schoell    Date: May 9, 2007

General Partner/Cyclone Technologies LLLP

	 	 	
 
/s/ Phillip F. Myers

Dr. Phillip F. Myers    Date: May 9, 2007

Advent Power Systems, Inc.

	 
	 	 	 	 	 
	
/s/ Frankie Fruge

Frankie Fruge    Date: May 9, 2007

General Partner/Cyclone Technologies LLLP

	 	 	 	 

 

  

20

  

 

	
Advent
License Agreement
Amendment #5 

	 	September 7, 2007

 

This document is an Amendment to include the below captioned Paragraph in the Licensing agreement between Advent Power System, Inc. ("APS") a Florida Corporation located at 2904 Victoria Place, Suite C2, Coconut Creek, Florida 33077 and Cyclone Technologies LLLP ("Cyclone") located at 601 NE 26th Court, Suite C, Pompano Beach Florida 33064. Who on July 2, 2007, was bought by and is now know as Cyclone Power Technologies, Inc. ('Cyclone")

For value consideration of $1,000.00 US, the Licensing agreement termination date is extended until September 30, 2008. If by September 30, 2008, the balance of $95,000.00 US has not been paid then the licensing agreement shall be null and void in its entirety subject only to any additional mutual agreed Amendments.

 

	 	 	 	 	 
	
Signed:

	 	 	
Signed:

	 
	 	 	 	 	 
	
/s/ Harry Schoell

Harry Schoell, CEO    Date:9-7-07

Cyclone Power Technologies, Inc.

	 	 	
 
/s/ Phillip F. Myers

Dr. Phillip F. Myers    Date:9-7-07

Advent Power Systems, Inc.

	 
	 	 	 	 	 
	
/s/ Frankie Fruge

Frankie Fruge, COO   Date:9-7-07

Cyclone Power Technologies, Inc.

	 	 	 	 

 

  

21

  

 

Page 1of 1

 

	Advent License Agreement Amendment #6 	 	November 20, 2007

 

This document is an Amendment to extend the kilowatts on Amendment #4 paragraph b. between Advent Power Systems, Inc. (APS), a Florida corporation located at 2904 Victoria Place, Suite C2, Coconut Cree , Florida 33066 and Cyclone Technologies LLLP (Cyclone) located at 601 NE 26th Court, Suite C, Pompano Beach, Florida 33064, now assumed by Cyclone Power Technologies, Inc. at the same address.

The Paragraph:

The paragraph b. is now to read:

b. APS shall have until May 7, 2008 to pay an additional $100,000 to convert this option into a supplement a l license for the manufacture and sale of gensets up to 100 kilowatts. Payment of said $1 00,000 shall automatically convert this option into a supplemental non-exclusive license.

APS, here wit h pays Cyclone $1000.00 US non-refundable to include this amendment.

 

	 	 	 	 	 
	
/s/ Harry Schoell,

CEO

 

Cyclone Power Technologies, Inc.

Date: November 20, 2007

	 	 	
 
/s/ Phillip F. Myers,

CEO

 

Advent Power Systems, Inc.

 
Date: November 20, 2007

	 

 

  

22

  

 

	Advent License
Agreement
Amendment #7	 	January 23, 2008

 

This document is an Amendment to include the below captioned Paragraph in the Licensing agreement between Advent Power System, Inc. ("APS") a Florida Corporation located at 2904 Victoria Place, Suite C2, Coconut Creek, Florida 33077 and Cyclone Technologies LLLP now known as Cyclone Power Technologies, Inc. ("Cyclone") located at 601 NE 26th Court, Suite C Pompano Beach, Florida 33064. Who on July 2, 2007, was bought by and is now know as Cyclone Power Technologies, Inc. ('Cyclone")

For payment consideration of $1,000.00 US, the Licensing agreement termination date is extended until March 31, 2009. If by March 31, 2009 the balance (as of January 23, 2008) of $94,000.00 USD has not been paid then the licensing agreement shall be null and void in its entirety subject only to any additional mutual agreed Amendments.

 

	 	 	 	 	 
	
Signed:

	 	 	 	 
	 	 	 	 	 
	
/s/ Harry Schoell

Harry Schoell, CEO    Date:1-23-08 

Cyclone Power Technologies, Inc.

	 	 	
 
/s/ Phillip F. Myers

Dr. Phillip F. Myers    Date:1-23-08 

Advent Power Systems, Inc.

	 
	 	 	 	 	 
	
/s/ Frankie Fruge

Frankie Fruge, COO   Date:1-23-08 

Cyclone Power Technologies, Inc.

	 	 	 	 

 

  

23

  

 

	Advent License Agreement Amendment #8	 	 

 

March 13,2008

This document is an Amendment to include the below captioned Paragraph in the Licensing Agreement between Advent Power Systems, Inc. ("APS"), a Florida corporation located at 2904 Victoria Place, Suite C2, Coconut Creek, Florida 33066 and Cyclone Technologies LLLP (Cyclone) located at 601 NE 26th Court, Suite C, Pompano Beach, Florida 33064.

 

The Paragraph:

 

Advent Power Systems, Inc. ("APS") hereby has a one year option for a exclusive license to sell in the European Union Cyclone Engines for motive power or power generation (generator sets or auxiliary power units) (hereinafter referred to as "engines") for their military activities and applications, on the following terms and conditions:

a. The payment is hereby made of $1,000 on behalf of APS to Cyclone as a non refundable consideration for this option.

b. APS shall have until March 13, 2009 to pay an additional $120,000 to convert this option into a supplemental license for the manufacture and sale of Cyclone Engine. Payment of said $120,000 shall automatically convert this option into a supplemental an exclusive license.

c. The
total payment for
the supplemental
non-exclusive
license for
Cyclone engines shall be a
total of $500,000 ($500 Thousand US Dollars) consisting of the initial $1,000, the option exercises payment of $120,000, and an additional $500,000 ($5 Hundred Thousand). Said additional $500 thousand shall be paid by an additional royalty of seven
percent on sales of Cyclone engines until the full amount of said $500 thousand has been paid in full. The underlying three percent royalty shall be paid during this period until the full $500 thousand has been paid, and shall continue thereafter.

 

	 	 	 	 	 
	
Signed:

	 	 	 	 
	 	 	 	 	 
	
/s/ Harry Schoell

Harry Schoell, CEO    Date:3-13-08

Cyclone Power Technologies, Inc.

	 	 	
 
/s/ Phillip F. Myers

Dr. Phillip F. Myers    Date:3-13-08 

Advent Power Systems, Inc.

	 
	 	 	 	 	 
	
/s/ Frankie Fruge

Frankie Fruge, COO   Date:3-13-08 

Cyclone Power Technologies, Inc.

	 	 	 	 

 

  

24

  

 

	Advent Technology License Agreement - Amendment #9	 

 

This Amendment shall replace in its entirety Amendment #8 to the Technology License Agreement (the "Agreement") between Advent Power Systems, Inc. ("APS"), a Florida corporation located at 2904 Victoria Place, Suite C2, Coconut Creek, Florida 33066 and Cyclone Power Technologies Inc. (the "Company") located at 601NE 26th Court, Suite C, Pompano Beach, Florida 33064. The following provision shall be made part of the Agreement:

APS hereby is granted an exclusive license to sell in the countries of the European Union as stated in the attached Amendment #9 Exhibit A, Cyclone Engines for motive power or power generation (generator sets or auxiliary power units) (hereinafter referred to as "Engines") specifically for their military activities and applications, on the following terms and conditions:

a. Payment is hereby made to the Company of $20,000 toward the balance due of $94,000 on the base Agreement, making the balance due on March 31, 2009, to be $74,000. If this payment is not made in full by that date, the original Agreement inclusive of the supplemental license set forth herein shall expire at the discretion of the Company. The total payment for the supplemental license set forth in this Amendment #9 for military- purpose Cyclone Engines shall be $1,000,000 (One Million US Dollars) plus $1,000 which was received by the Company on March 13, 2008. This additional $1,000,000 shall be paid by means of an additional
royalty of seven percent (7%) on APS's sales of Cyclone Engines (on top of the base royalty of 3%) until the full amount of said $1,000,000 has been paid in full.

b. Should APS receive any rights fees, distribution fees, sub-license fees, investment proceeds (net of commissions . &/or finders fees paid) or other non-sales payments from any customer, sub-licensee, distributor, agent, investor or otherwise, then 100% of such payments shall be delivered to the Company to be applied first against the $74,000 due by March 31, 2009 on the base Agreement, and then 50% of all net proceeds related to this agreement shall be applied against the $1,000,000 due on this supplemental license, unless otherwise agreed to by both APS and the Company in writing.

c. Except as expressly set forth in this Amendment #9, all terms and conditions in the Agreement and any other Amendments thereto shall survive in full force (except for the terms of Amendment #8, which have been replaced hereby).

 

	 	 	 	 	 
	
Signed:

	 	 	 	 
	 	 	 	 	 
	
/s/ Harry Schoell

Harry Schoell,    Date:9-02-2008

Cyclone Power Technologies, Inc.

	 	 	
 
/s/ Phillip F. Myers

Dr. Phillip F. Myers    Date:9-02-2008

Advent Power Systems, Inc.

	 
	 	 	 	 	 
	
/s/ Frankie Fruge

Frankie Fruge,    Date:9-02-2008

Cyclone Power Technologies, Inc.

	 	 	 	 

 

  

25

  

AMENDMENT 9

EXIBIT A

 

Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom, Croatia, the former Yugoslav Republic of Macedonia, Turkey, Albania, Bosnia and Herzegovina, Montenegro, Serbia, Kosovo, Iceland, Liechtenstein, Norway, Switzerland, Andorra, Liechtenstein, Monaco, San Marino, and Vatican City

 

  

26

  

 

Page 1 of 2

 

	Advent License
Agreement
Amendment #10.	 	November 5, 2009

 

This is Amendment #10 to the Technology
License Agreement (the
"License”)
originally dated March 24, 2006,
between
Advent
Power
Systems,
Inc.
(''APS'),
a Florida
corporation
located at
2904 Victoria
Place,
Suite C2,
Coconut
Creek,
Florida 33066
and Cyclone
Power
Technologies,
Inc.
("Cyclone"
f/k/a
Cyclone
Technologies
LLLP)
located at
60 l NE
26th
Court,
Suite C,
Pompano
Beach,
Florida 33064.

 

WHEREAS, Cyclone has successfully completed the testing of its heat regenerative external combustion engine (the "Engine") per the specifications of its Independent Research & Development
contract with Raytheon Integrated Defense Systems, a business of Raytheon Company ("Raytheon"); and

 

WHEREAS, Raytheon and Cyclone have had preliminary discussion concerning the next phases of a busitiess relationship which may include a Teaming Agreement or
some similar agreement; and

 

WHEREAS, Raytheon has expressed its requirement that it contracts directly with Cyclone, as the · developer of the Engine technology, and that on an ongoing basis, Cyclone assumes contractual
responsibility and
oversight
of the development and manufacturing of the Engines and the License Technology (as such term is defined in the License).

 

NOW THEREFORE, for good and valuable consideration receivethe
parties
hereby agree as follows:

 

1. Advent hereby assigns back to Cyclone on a non-exclusive basis its rights under the License to make, use, sell, offer to sell, manufacture or have manufactured the Licensed Technology with
respect to
Engines purchased1 ordered, contracted, sub-contracted or licensed by Raytheon or any of its business divisions for its
Military Establishment customers. Advent acknowledges that Raytheon's non-Military Establishment customers are not covered under Advent's License..

 

2. Advent understands that Cyclone expects to enter into
agreements with Raytheon and other subcontractors of Raytheon which may provide for the sale of production Engines to Raytheon s Military Establishment customers, and with respect to this, Advent acknowledges and agrees
that Cyclone has full and absolute authority to negotiate and execute such agreements as it determines in the best interest of Cyclone and its shareholders. This exclusion does not allow for said subcontractors to sell Cyclone Engines to other defense contractors (other than Raytheon) or directly to
the Military Establishment.

 

3. For its
assignment of its
rights
hereunder,
Advent shall
receive a
commission
equal to
ten
percent
(10%) of
the
royalties
or 2% of
the sale
price
received by
Cyclone from
the sale
of production
Engines to
Raytheon or its
customers. ·

 

a. "Royalties" are defined as fees paid to Cyclone by a licensee manufacturer for the rights to sell Engines to Raytheon U.S. The 2% fee of the sales price shall be calculated against the invoice sale price to Raytheoneither directly
by Cyclone or by other Cyclone designated manufacturer.

 

  

27

  

 

Page 2 of 2

 

 

b. This commission shall not apply to fees received by Cyclone for prototype Engines, development services, or other fees in the R&D stage of its agreement with Raytheon, as such rights have been expressly reserved
by Cyclone in the License.

 

c. The commission may be paid in cash, common stock of Cyclone, or some combination of the two, at the reasonable agreement of Cyclone and Advent.

 

4. Advent has expressed its plans to outsource the manufacturing of the Engines under its License to qualified machine shops,· engine manufacturers or other similar parties. Cyclone hereby approves of this approach.

 

5. Cyclone will continue to provide full marketing and technological cooperation to Advent in the pursuit of new customers, maintenance of current customers and the overall development of its business.

 

6. Nothing in this Amendment shall limit or abrogate the rights of MEO Products (Advent's sub-
licensee for the European military) to contract directly
with Raytheon subsidiaries or affiliates located within MEO's designated European military territory, provided such contracts do not conflict with this Amendment.

 

The parties hereby agree to the terms and conditions set forth
in this Amendment to the License.

 

	 	 	 	 	 
	
Signed:

	 	 	 	 
	 	 	 	 	 
	
/s/ Harry Schoell                                             

Harry Schoell, CEO    Date:11-6-09

Cyclone Power Technologies, Inc.

	 	 	
 
/s/ Phillip F. Myers                                                   

Dr. Phillip F. Myers, CEO    Date:11-6-09

Advent Power Systems, Inc.

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