LICENSE AGREEMENT 1. DEFINITIONS 1

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“FTE” means full-time equivalent;

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

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

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

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

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

“Licensed Patents” means:

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

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

“Patents” means:

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

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

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

all foreign counterparts of any of the foregoing;

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

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

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

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

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

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

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

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

Right to Sub-License.

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

each such sublicense shall be by written agreement;

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

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

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

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

each such sublicense shall be by written agreement; and

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

(c)

Designation of Designated Magna Applications.

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

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

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

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

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

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

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

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

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

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

COMMERCIALIZATION

Diligence in Commercialization.

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

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

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

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

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

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

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

the royalties payable to Licensor for the calendar quarter.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

the Ikona Gears, or

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

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

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

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

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

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

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

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

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

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

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

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

(i)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(i)

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

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

by the Corporation:

to an entity which is an Affiliate of the Corporation; or

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

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

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

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

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

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

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

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

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

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

extend the time for payment or performance of the Licensor Obligations;

accept partial payment or performance of the Licensor Obligations;

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

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

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