TECHNOLOGY LICENSE AGREEMENT FOR KOREA

TECHNOLOGY LICENSE AGREEMENT FOR KOREA

October 20, 2008

(Hereinafter referred to as “Licensor”)

(“Hereinafter referred to as “Licensee”)

(“Hereinafter referred to as “Guarantor”)

WHEREAS Licensor is now and has been in the business of bringing technological solutions to a wide variety of environmental problems and more particularly, the areas of materials reduction, waste reduction and global recycling;

WHEREAS Licensor has developed and is the owner of material reduction and dewatering technology and know-how named the “ KDS Micronex (tm)” referred to herein as the “Licensor’s Technology” which is patented in a number of countries as specified in Annex A (collectively referred to herein as “the Patents”);

WHEREAS Licensee is desirous of profiting by using Licensor’s Technology which is the subject matter of the Patents and of securing an exclusive license from the Licensor to use the Licensor’s Technology for the manufacture, sale and use of the KDS Micronizing Machine in Korea to be used in any industry.

WHEREAS Licensee has a permanent business in Korea and has represented that they have the technical capability and market knowledge to actively pursue the successful introduction and marketing of the KDS Micronizing Machine into Korea ,

NOW THEREFORE, in consideration of the premises and of the mutual covenants of the parties hereto to be faithfully performed as hereinafter specified, the parties hereto hereby covenant and agree as follows:

1.              PREAMBLE/RECITALS/DEFINITIONS

The preamble and recitals described at the beginning of this agreement shall form an integral part of this agreement as if recited at length herein;

The following terms shall have the following meanings, unless the context implies otherwise:

“Applications” shall mean all application of Licensor's Technology using a KDS Micronizing Machine

“KDS Micronizing Machine” shall mean that micronizing and dewatering machine created by Licensor as it exists at the date of execution of this Agreement, utilising the Licensor’s Technology, the specifications of which are described in Annex B hereto and shall include any and all improvements thereto from time to time,

“Licensor’s Technology” shall mean all information and rights concerning the KDS Micronizing Machine, the Patents, and the Know-How and shall include any improvements thereto made from time to time,

“Know-How” shall mean all the engineering, design, manufacturing, installation, commissioning and operation knowledge, written or oral, whether in the form of unpatented inventions, formulae, procedures and methods or current and accumulate skills which the Licensor has acquired, and Licensor will acquire, concerning the KDS Micronizing Machine and shall include Technical Information.

“Technical Information” shall mean all documents, drawings, diagrams, specifications, instructions, and lists listed in Annex C hereto

“Patents” shall mean those patents granted to or owned by Licensor, including all patent applications which are subsequently approved after the date of this agreement, the list of which appears in Annex A attached hereto, and includes any new patents filed from time to time that pertain to improvements to the KDS Micronizing Machine or the Licensor’s Technology,

“Territory” shall mean the country of Korea

“US$” shall mean the lawful currency of the United States of America.

“Date of signing ”shall mean the date of signing of this Agreement.

Licensor hereby grants to the Licensee the exclusive, non-transferable right to use the Licensor’s Technology in the Territory for the Applications and more particularly with regard to the Patents and Know-How for the manufacture, sale, operation and use of KDS Micronizing Machines for a period of twelve years from the date of signing this Agreement subject to the terms and conditions set out herein.

As  consideration for this grant of license, the Licensee shall pay a Marketing License Fee of  $300,000 USD payable as follows:

a)        Carry   over credit for funds received from predecessor licensee  $43,500 USD

b)        Balance due of $ 256,500 USD payable by the issuance of 49 % of the outstanding shares of JP FAS Korea Ltd. to the    Licensor

c)        There will be a minimum annual sales quota to maintain the license in good standing as follows:

Year  1  -   zero

Year  2  -   five

Year 3   -   five

Year 4   -   five

Year 5   -   five

d)        There will be no minimum sales quota once 20 machines have been sold and all royalty payments due thereon have been paid.

e)              Both parties acknowledge that one KDS machine has been previously sold to Daeyun Enterprises by theLicensor, but has not yet been delivered, that this sale will continue to be under the control of the Licensor,and that there will be no infringements on the exclusivity provisions herein by so doing. However, once the machine is delivered, the Licensee agrees to monitor and safeguard the Licensor’s  intellectual property rights visa vis the Daeyun machine, and to provide service to  Daeyun, if required, on a fee for service basis as if Daeyun were its own customer. Any future purchase(s) by Daeyun will be handled by the Licensee.

3.              OBLIGATIONS OF LICENSOR

a)              Licensor agrees to supply Licensee with all technical information regarding the use and operation of the KDS Micronizing Machine.

It is understood and agreed that the Technical Information in respect of the KDS Micronizing Machine, which is listed in Annex B, will be furnished by Licensor to Licensee within 30 days of the signing of this Agreement and that details of improvements to the Licensor’s technology made from time to time will be made available to the Licensee without additional charge.

The Licensee’s engineers shall be given adequate advice and schooling from the Licensor on how to use the Technical Information for engineering, designing, manufacturing, installation, and commissioning of the KDS Micronizing Machine. This schooling of Licensee’s engineers, which will take place in Canada and/or in Korea, shall be performed in accordance with the Schooling Program specified in Annex E, at no cost for time. The travel and accommodation expense for it in case of Korea shall be paid by the Licensee.

The Licensor shall send a technician to Korea for up to 5 working days to assist in the set-up and start-up operation of the demonstration machine at no cost for time, but travel and accommodation costs will be paid by the Licensee.

In furtherance of the program for development of Licensor’s Technology by Licensee, Licensor grants to Licensee permission at any time to send, at Licensee’s expense, a reasonable number of technicians for a reasonable time, to Licensor’s plant to obtain any instructions or information which Licensee may reasonably require to enable Licensee to use the Licensor’s Technology

Licensor shall, at the request by Licensee, furnish literature, mats of artwork and advertising films, slides, and other promotional and training materials available to Licensee at cost.

Licensor shall permit throughout the life of this agreement the exclusive use by Licensee of the trademark “KDS Micronex” owned by Licensor.

Both parties will freely exchange all current and updated KDS technical data and information between themselves without cost

For any commercial project, on a case-by-case basis, the additional assistance will be provided on agreed daily rate plus expenses.

In the event Licensor receives any inquiry from any third party in respect of the KDS Micronizing Machine from within the Territory, Licensor shall refer such to Licensee.

4.              OBLIGATIONS OF LICENSEE

Licensee agrees to use every reasonable commercial effort to fully exploit Licensor’s Technology to the greatest extent possible throughout the Territory, including providing its marketing, technical and business expertise to adapt the technology to local conditions and local customers needs, and to seek out new uses and applications that will enhance the value of the Technology and the business opportunity for both parties.

Licensee agrees that it will not do or permit any act or thing whereby any of the rights granted herein or the proprietary rights to use any trademark, trade name, or design of the Licensor may be endangered and that it will not claim any proprietary interest in the rights granted herein or the trademark “KDS Micronex” except as a licensee and then only during the life of this agreement. Licensee, if at any time required, shall execute any and all proper papers necessary to the protection of these rights and the KDS trademark the cost of which shall be borne by the Licensor.

In the event that any improvements to KDS Micronizing Machine are made or discovered as a result of the Licensee’s work,  the Licensee shall inform such improvements in writing to the Licensor, then said improvements will become the property of the Licensor, and form  part of the Licensor’s Technology  which is licensed herein.

For purposes of obtaining a Korean patent, these new improvements may be patented in Korea only in the name of the licensee, but will form part of FASC core technology to be used by them without restriction.  This patent may not be sold to a third party without the express written consent of FASC. Should the joint venture cease business or be discontinued for any reason whatsoever, or if this license is terminated or expires, the patent will be transferred back to FASC without cost or recourse.

Licensee agrees to keep all technical information, drawings, specifications, manufacturing instruction, and other information relating to Licensor’s Technology, as strictly confidential according Article 9 hereof and will provide copies to the Licensor of all information, documents, drawings, programs, instructions and specifications regarding improvements, design changes and advancements made to the KDS Micronizing Machine by the Licensee upon request. Licensee will not communicate, without the written consent of Licensor first obtained, the same to anyone except to its officers, employees, authorized agents or representatives, and to the extent necessary for the proper exploitation of Licensor’s Technology (includes disclosure to sub-contractors) in accordance with the provisions of this agreement.

As exclusive Licensee, the Licensee will take full responsibility for managing and protecting FASC’s patents and intellectual property in Korea, The Licensee will provide the Licensor with in-house technical / legal support regarding patent issues related to intellectual property and patent protection in Korea at no charge for time.  Any outside legal fees incurred in this regard will be paid for by the Licensor..

All products manufactured by the Licensee will meet or exceed all quality standards as established from time to time by the parties, and at all times be in compliance with local regulations.

In the event Licensee receives any inquiry from any third party in respect of the KDS Micronizing Machine from outside the Territory, Licensee shall refer such to Licensor.

Licensee agrees that it will at all times during the existence of this agreement keep accurate books of account and other record in which will be entered all details relating to the sale of KDS Micronizing Machines in the Territory, including the names and addresses of each purchaser.  Licensee agrees that these books of account and other records will be kept in accordance with generally accepted accounting principles in Korea and carefully preserved for at least ten (10) years.

Licensee agrees that it will furnish to Licensor a written statement within thirty (30) days following the close of each quarter showing the amount of periodic royalties due for the corresponding period.

The statement will be broken down to show sales of KDS Micronizing Machines by the Licensee and names and addresses of customers to whom sold.  Licensee further agrees to pay to Licensor within thirty (30) days the royalty fees described above computed from the date of delivery of the KDS Micronizing Machine.

Licensee hereby grants to Licensor or its duly accredited representative the right to inspect and make copies of Licensee’s books of account, for the purpose of ascertaining or confirming the accuracy of statements rendered hereunder.  The cost of such inspection will be borne by Licensor.

All amounts due herein to the Licensor will be paid absolutely net to the Licensor without any deduction or holdback whatsoever.

Licensee shall be responsible to any Korean authority for the payment of any taxes, duties, or any governmental charges of any nature whatsoever that may become due as a result of any present or future transaction anticipated herein.

5.              ROYALTIES

The Licensee hereby agrees to pay to Licensor a royalty fee as agreed for each completed manufacture and sale of a KDS machine sold by the Licensee pursuant to this agreement.

It is understood that there may be a 10 % Korean withholding tax on royalties paid to foreign entities that the licensee must deduct from the payments due and remit to the Korean taxation authority.

6.              WARRANTIES AND REPRESENTATIONS

6.1            Licensor hereby represents and warrants that it has the full and sole right to enter into this Agreement with the Licensee and it is the sole, exclusive and unencumbered owner of the Licensor’s Technology and all the rights, title and interest in the Patents, and has the right to license the Licensor’s Technology and Know-How.

6.2            Licensor warrants that as of the date of execution of this agreement, there is in effect no license granted by it to any other person or entity in the Territo