JOINT VENTURE AGREEEMENT
This Joint Venture Agreement ("Agreement") dated and effective as of
July 15,1998 is entered INTO by and between Xxxxxxx Xxxxxx, individually, and as
Trustee of the Xxxxxxx Xxxx Shelby Trust dated March 28, 1985, (hereinafter
"SHELBY"); and Advanced Engine Technologies, Inc., a Colorado corporation,
(hereinafter "AET"); (collectively referred to as the "Parties" and separately
as "Party").
WHEREAS, AET has developed and has ownership of, and the rights to the
OX2 Engine, a state-of-the-art, uniquely designed, internal combustion (OX2
engine), and AET was established to effect the commercial introduction of the
0X2 Engine, including licensing of the OX2 Engine technology to approved
manufacturers;
WHEREAS, Xxxxxxx Xxxxxx is a world-renowned designer and manufacturer
of motor vehicles and engines for use in motor vehicles with an emphasis on high
performance, such as the Shelby Cobra and the Shelby Series 1, and his companies
are involved in the cutting-edge design and manufacture of state-of-the art
motor vehicles and engines, and Shelby has an outstanding reputation and
personal contacts within the automotive industry, which he has established
through over forty years of success in the industry;
WHEREAS, the Parties previously executed a 'Letter of Intent' wherein
the Parties state that it is the intention of AET and Shelby to form a Joint
Venture for the purpose of developing the OX2 Engine for use in a standard
application for motor vehicles and to promote the OX2 Engine to and within the
automotive industry (Joint Venture); and
NOW, THEREFORE, it is hereby agreed as follows:
1) The Parties will work together under this Agreement for the purpose
of developing the 0X2 engine for use in a specific application for motor
vehicles and to promote the OX2 Engine to and within the automotive industry.
The Parties will agree on which motor vehicle(s) will be selected for
development of such a standard application, ("Nominated Vehicle") with the
objective of this Joint Venture being the development of a Nominated Vehicle
utilizing the 0X2 Engine that is capable of being operated on a public street
('Objective"). Shelby will arrange for the development and testing of the 0X2
Engine for use in a Nominated Vehicle and the construction and development of a
minimum of two prototype vehicles of the first Nominated Vehicle Category,
Shelby will also use his personal relationships and contacts within the
automotive industry to promote the commercial development of the 0X2 Engine for
use in a standard application for motor vehicles.
2) AET will provide all technical, (including engineering and design)
knowledge and assistance to Shelby as Is reasonably necessary for Shelby to
accomplish the Objective set forth in paragraph 1 above.
3) AET shall, immediately upon execution of this Agreement, assign,
transfer, and convey to Shelby, three hundred thousand (300,000) restricted
shares of the currently issued and outstanding stock of AET, and, furthermore,
upon completion of the Objective of this Agreement, AET shall forthwith assign,
transfer, and convey to Shelby, or his designated assignee, an additional two
hundred and fifty thousand (250,000) restricted shares of the currency issued
and outstanding stock of AET. Shelby shall subsequently notify AET in writing of
the appropriate Parties or designees to whom the 250,000 shares shall be
conveyed.
4) AET will approve in writing, all technical or engineering
developments of the O)(2 Engine developed during this Joint Venture, and all
material decisions of the Joint Venture will be mutually agreed upon in writing
by the Parties, All amendments or modifications to the 0X2 Engine developed
during the term of the Joint Venture agreement, whether patentable or not, will
be owned exclusively by AET or its nominee.
5) On or before December 31, 1998, Shelby will complete his review and
analysis of the 0X2 Engine technology, and make his own independent
determination as to its suitability and feasibility for use in a Nominated
Vehicle. During this period of time, Shelby will endeavor to build at least one
prototype engine for testing purposes only (Review Phase). Upon completion of
this Review Phase, Shelby, the Parties shall have a period of two years from
January 1,1999 through and including January 1, 2002 to develop, build, and
adapt the 0X2 Engine for use in a motor vehicle, unless such time period is
extended by mutual agreement of the Parties. Progress reviews will be scheduled
and carried out every six (6) months. Shelby's obligations under this Agreement
cease once the Objective is reached and AET's obligations cease once all shares
of stock are assigned, transferred, and conveyed to Shelby pursuant to paragraph
3, above.
6) Should extensions of time be reasonably necessary for the Parties to
accomplish the Objective of this Agreement, the Parties agree that their consent
to such extensions shall not be unreasonably withheld. Any claims, differences,
or disputes arising out of or in connection with this Agreement shall be settled
by an amicable effort on the part of the Parties. An attempt to arrive at a
settlement shall be deemed to have failed as soon as one of the Parties notifies
the other Party in writing If an attempt at settlement has failed, any dispute
shall be finally settled under the California Arbitration Act and shall be
conducted by the American Arbitration Association, or qualified alternative
dispute resolution entity, whose decision shall be final. The place of
arbitration shall be Los Angeles County, State of California. The arbitration
award shall be substantiated in writing. The arbitrator(s) shall also decide on
the matter of costs of the arbitration and on the allocation of expenditures
among the respective Parties to the arbitration proceedings. This agreement
shall be governed under the Laws of the State of California.
7) Upon the termination of this Joint Venture Agreement, for any
reason, all amendments to or developments of the 0X2 Engine technology will be
owned by AET, at no additional cost to AET.
8) In the event Shelby is incapacitated for any reason for a period
longer than four consecutive weeks, the management of the Joint Venture shall be
carried out by AET until such time as Shelby is no longer incapacitated. During
any such period of Shelby's incapacitation, the nominated legal representative
of Shelby is to have full access to the books and records of the Joint Venture
and is to be kept fully informed in writing, of any and all material decisions
by AET which may effect the Joint Venture
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(9) This Agreement shall not be construed as granting any type of
license or permission for the use, for any purpose, by AET, of trademarks,
tradenames, or trade dress of Xxxxxxx Xxxxxx, without prior written permission.
(10) Among and between themselves, each Party shall be liable solely
for the agreed upon share of the work and contributions necessary to meet the
Objective of this Agreement. In the case of third-Party claims, the Party
responsible for the event causing the claim shall be solely liable to such
third-Party and shall indemnify and hold the other Party harmless against such
third-Party claims.
(11) It is expected that the Parties will exchange confidential trade
secret technical information in connection with their performance under this
Agreement. The Parties shall use all business and technical information received
from other Parties in connection with this Agreement, and which is expressly
stated or understood to be confidential or of a confidential nature, or which
can be assumed to be confidential on the basis of the circumstances of its
disclosure or its contents, solely for the purposes for which it was provided to
further the Objective of this Agreement, shall treat such information in the
same way as their own trade secrets ("Confidential Information"), and shall not
use or disclose such Confidential Information to any third-Party without the
prior written consent of the disclosing Party. Confidential Information, as used
herein, is defined not to include information that is (i) generally available
from public sources or in the public domain; (ii) is received at any time from
any third-Party without nondisclosure obligation to the disclosing Party; or
(iii) is shown to have been developed independently by the receiving Party
without reliance on the disclosing Party's confidential Information or to have
been known to the receiving Party prior to its disclosure by the disclosing
Party.
(12) This agreement shall be wound up when production of a Nominated
Vehicle adapted to the 0X2 Engine operates on a public street.
(13) Any written notices, reports or other communications sent or
delivered under or pursuant to this Agreement shall be addressed to the Party at
its address set forth below and/or at any alternative or additional address as
provided by that Party of such notice:
Mr. Xxxxxxx Xxxxxx Advanced Engine Technologies, Inc.
Shelby American, Inc. Attn: Chief Executive Officer
00000 Xxxxxxxx Xxxxxx 0000 Xxxxx Xxxx XX
Xxxxxxx, XX 00000 Xxxxxxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-X000 Fax: (000) 000-0000
cc: M. Xxxx Xxxxxxxx, Esq.
1800 Avenue of the Stars, #1000
Xxx Xxxxxxx, XX 00000
In Witness whereof, the Parties hereby have caused this Agreement to be
executed by their duly authorized representatives on the dates set forth below.
By: /s/ Xxxxxx Xxxx Shelby
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Xxxxxxx Xxxx Xxxxxx, Individually &
as Trustee of the Xxxxxxx Xxxx Shelby
Trust
Date: 8/6/98
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Advanced Engine Technologies, Inc.
By: /s/ X. Xxxxxx
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X. Xxxxxx
Title: CEO/Chairman
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Date: 8/6/98
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