JOINT VENTURE AGREEMENT
DATE:
August ____, 2004
PARTIES:
AERO
MARINE ENGINE, INC.
One World
Trade Center
000 XX
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx,
XX 00000
ADAPTIVE
PROPULSION SYSTEMS, INC.
000 Xxx
Xxxxxxxxx Xxxx, Xxxxx 00
Xxxxxxxxxxx
Xxxxx, XX 00000
THIS
AGREEMENT is made
this ____ day of August, 2004, to be effective ___________, 2004, by and
between Aero Marine Engine, Inc. (hereinafter Aero Marine) and Adaptive,
(hereinafter Adaptive) for the development, production and marketing Aero Marine
Dyna Cam engines in various locations worldwide.
RECITALS
1. Aero
Marine, a Nevada corporation, is primarily engaged in developing engine
technology.
2. Adaptive
is seeking engine technologies for potential military use.
3. Aero
Marine is seeking to market their engine technologies for potential commercial
uses.
4. Adaptive
and Aero Marine are desirous of entering into a relationship by way of this
Agreement wherein Adaptive will assist Aero Marine in the improvement, marketing
and sales of Aero Marine’s invention (hereinafter the Engine) for military and
commercial uses.
5. All of
the above recitals are hereby made an integral part of this Agreement and shall
have substantive effect in interpreting the provisions of this
Agreement.
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TERMS
AND CONDITIONS
WHEREAS, Adaptive
represents that it possesses the skill and ability to use the Technology to
further develop the Engine, build prototypes, test and upgrade the Engine and
market it for military use, contemporaneously with Aero Marine marketing the
Technology for commercial uses, and where it is deemed to the mutual benefit of
Adaptive and Aero Marine to enter into this Agreement upon the terms and
conditions set forth.
NOW
THEREFORE, in
consideration for the mutual covenants and promises herein contained, the
undersigned hereby agree to the following:
1. Relationship
Between
Adaptive and
Aero
Marine
a. Adaptive
will finance the further development of the Engine, including upgrades and
building a prototype, testing and marketing the Engine to the military of the
United States and all NATO countries.
b. Adaptive
will expend its best efforts in production and modification of the Engine to
allow for maximum promotion, marketing and sales.
c. Aero
Marine will grant Adaptive the exclusive rights to use the Technology for
Military Purposes. Aero Marine will keep the exclusive rights to the Engine,
including any patentable rights that may be developed by Adaptive. Aero Marine
will retain ownership of all of the Technology, including upgrades, developments
and modifications by Adaptive.
d. Aero
Marine will retain the right to sell the Technology commercially for
non-military purposes.
e. Aero
Marine shall receive twenty percent (20%) of the gross revenue from the sales of
the Engine to the military by Adaptive. Adaptive shall receive five percent (5%)
of the gross revenue from commercial non-military sales of the Engine by Aero
Marine.
f. The terms
of this Agreement shall last for a period of twenty (20) years unless terminated
by joint agreement of the parties or pursuant to the terms of this Agreement and
will be renewable for additional twenty-year periods upon agreement of the
parties. This Agreement and any renewals shall be exclusive.
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g. Aero
Marine and Adaptive will use their best efforts to perform their duties and
responsibilities pursuant to this Agreement.
h. Aero
Marine will, within thirty (30) days of the execution of this Agreement, provide
to Adaptive the Technology, including all information, data, schematics, CAD
files, engine prototypes, etc. regarding the Engine.
i. Adaptive
will, within sixty (60) days of the execution of this Agreement, present a plan
of execution which includes a statement as to whether or not Adaptive wishes to
continue with the development of the Engine.
j. Within
ninety (90) days of the execution of this Agreement, Adaptive will make a
decision as to whether to continue on with the development of the Engine. If
not, Adaptive will return to Aero Marine the Technology and all of the data and
technology developed up to the point at which Adaptive ceases to be involved in
the development of the Engine. Any technologies developed by this Joint Venture
shall belong solely to Aero Marine.
k. If
Adaptive desires to continue with the development of the Engine, then in
Adaptive’s shop, and at Adaptive’s expense, Adaptive will design suitable for
military applications; such military applications may also have commercial
applications that are to be exploited by Aero Marine. Adaptive will bring on at
its expense an internal combustion engineer as a full time employee to help
develop the Engine as well as eliciting as required further assistance from
existing academia relationships. Adaptive shall be responsible for the
organization and execution of all the testing and marketing for the Engine free
of charge for Aero Marine, while working toward the development of a 40 hp
multi-fuel application of potential interest to the military.
l. If
Adaptive reaches a point where it is determined that the military application of
the Engine will not work or is not feasible, Adaptive may terminate this
Agreement and there will be no liabilities between the parties, as long as all
existing and new intellectual property, technologies and information is returned
to Aero Marine.
m. Aero
Marine agrees not to release any publicity concerning any part of this
Agreement, other than press releases approved in advance by
Adaptive.
2. Non-Competition
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a. During
the term of this Agreement, neither Adaptive nor Aero Marine, nor any person
employed or engaged by Adaptive or Aero Marine to fulfill its duties under this
Agreement, shall, directly or indirectly, compete with this Agreement in the
promotion, marketing, sales and production of Aero Marine technology. The term
“indirectly,” as used above, includes acting as a paid or unpaid director,
officer, agent, employee of, or consultant to any enterprise, or acting as a
proprietor or an enterprise, or holding any direct or indirect participation in
any enterprise as an owner, partner, limited partner, joint venture, shareholder
or creditor. This provision shall not be construed to affect either parties
performance under this agreement
b. Neither
Aero Marine nor persons employed or engaged by Aero Marine to fulfill its duties
under this Agreement shall, directly or indirectly, disclose or use at any time,
whether during the term of this Agreement or after its expiration or
termination, any confidential information, knowledge or data relating to
Adaptive’s business or the products, technology and process of which Aero Marine
or its employees, agents or contractors become aware in the course of their
activities under this Agreement. Such information, knowledge or data includes,
but is not limited to, client and customer lists, sale files or records, price
information, Product specifications, trademark files or records, and warranty
claims or reports, mailing lists and good will or other intangible property used
or useful in connection with the business of the company signing this Agreement.
c. Neither
Adaptive nor persons employed or engaged by Adaptive to fulfill its duties under
this Agreement shall, directly or indirectly, disclose or use at any time,
whether during the term of this Agreement or after its expiration or
termination, any confidential information, knowledge or data relating to Aero
Marine’s business or the products, technology and process of which Adaptive or
its employees, agents or contractors become aware in the course of their
activities under this Agreement. Such information, knowledge or data includes,
but is not limited to, client and customer lists, sale files or records, price
information, Product specifications, trademark files or records, and warranty
claims or reports, mailing lists and good will or other intangible property used
or useful in connection with the business of the company signing this
Agreement.
d. If, in
any judicial proceeding, a court of competent jurisdiction shall refuse to
enforce any of the separate covenants deemed included in this Agreement, or
shall find that the term or geographic scope of one or more of the separate
covenants is unreasonably broad, the parties shall use their best good faith
efforts to attempt to agree on a valid provision which shall be a reasonable
substitute for the invalid provision. The reasonableness of the substitute
provision shall be considered in light of the purpose of the covenants and the
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reasonable
interests of the parties signing this Agreement. The substitute provision, then
the invalid or unreasonably broad provision shall be deemed deleted or modified
to the minimum extent necessary to permit enforcement.
3. Confidentiality:
Non-Disclosure
a. The
parties understand that each party may have access to customer lists, credit
information, customer contracts, trade secrets, research data, drawings, product
specifications, warranty information, production processes, supply sources,
supply contracts, plans, models, sales data, cost, price and other financial
information, and other materials of the other party and its customers and
suppliers as they may exist from time to time. The parties agree that such
information and materials are valuable and unique assets of each party’s
business, and that disclosure of such items would be detrimental to the other
party. Each party, therefore, agrees:
b. The
parties will not at any time, or in any fashion, form or manner, either directly
or indirectly, divulge, disclose or communicate to any person, firm or
corporation in any manner whatsoever, any information of any kind, nature or
description concerning any matters affecting or relating to the business of the
other party, including without limiting the generality of foregoing the names of
any of its customers, the prices it obtains or has obtained or at which it sells
or has sold its products or at which it buys or has bought materials, components
or other supplies, the methods or processes of production or manufacture of its
products or any other information of, about or concerning the business of the
other party, its relations with its employees, and its manner of operation, its
plans, or other data of any kind, nature or description, the parties hereby
stipulating that as between them the same are important, material, confidential
and are trade secrets and gravely affect the effective and successful conduct of
the business of the other party and its goodwill, and that any breach of the
terms of this section is a material breach hereof.
c. During
and after the term of this Agreement, not to take, without the written consent
of the other party, any notes, reports, calculations, plans, models, sales data,
papers, drawings, documents, contracts, customer and supplier lists, diaries,
phone information, trade secrets, research data, production processes, product
specifications, blueprints, correspondence, memoranda, or other written records
or materials belonging to the other party or in its possession. Both parties
also covenant and warrant not to take any computer diskettes, magnetic tapes or
other storage media in any tangible form containing such information. Upon
termination of this Agreement, each party shall immediately deliver all the
materials described in this paragraph to the other party.
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d. Neither
the receiving party nor any employee of the receiving party nor any outside
consultant to whom said items are disclosed shall be liable to the disclosing
party under this Agreement for use or disclosure to other of the items or
information pertaining thereto disclosed to any of them if the
same:
| i. |
Was
published or in the public domain on or before the date of this Agreement
or at the time disclosed or used; or |
| ii. |
Was
known to or otherwise belonged to the receiving party on or before the
date of this Agreement; or |
| iii. |
Is
disclosed by the receiving party inadvertently despite the exercise of the
same degree of care as the receiving party takes to preserve its own
proprietary information; or |
| iv. |
Is
disclosed or used by the receiving party after three (3) years from the
date of this Agreement. |
e. This
non-disclosure and confidentiality covenant shall not affect Aero Marine or
Adaptive or their assigns from making normal-course disclosures pursuant to SEC
regulations or from issuing press releases or from providing such information as
may be necessary to carry out the terms and conditions of this Agreement and the
obligations and duties contemplated thereunder.
f. Injunction. Each
party agrees that it would be difficult to measure damage to the other party
from any breach by either party of this section, and that monetary damages are
an inadequate remedy for such breach. Accordingly, each party agrees that if the
other party shall breach the terms of this section, the non-breaching party
shall be entitled, in addition to all other remedies it may have at law or in
equity, to an injunction or other appropriate orders to restrain such breach
without showing or proving any actual damage sustained by the breaching
party.
4. Termination
a. Either
party may terminate this Agreement only after the occurrence of any of the
following events. Termination may not occur until written notice has been given
6
to the
other party and the other party has been given sixty (60) days to cure the
breach:
i. Either
party’s failure to perform any of its obligations secured by this
Agreement.
ii. Either
party’s engaging in any practice with respect to the products, technology and
process which is determined to be an illegal or unfair trade practice in
violation of any applicable federal, state, provisional or local law, or, which
in the opinion of counsel to a party, is an illegal or unfair trade practice in
violation of any applicable federal, state, provincial or local law for a period
of twenty (20) days after Adaptive has notice of said violation;
iii. Either
party’s falsification of any records or reports provided to the other
party;
iv. Either
party’s failure to act in good faith and in a commercially reasonable manner in
connection with its obligations under this Agreement;
v. Either
party’s loss through failure to renew or because of suspension, cancellation or
revocation for a period of fifteen (15) days or more, of any federal, state or
local license required by law and necessary in carrying out the provisions of
this Agreement.
vi. Any
change in Adaptive’s active management, which change, in the opinion of Aero
Marine, will have a material effect on Aero Marine’s ability to market and
promote the products.
vii. Any
change in Aero Marine’s active management, which change, in the opinion of
Adaptive, will have a material effect on Adaptive’s ability to market and
promote the products.
b. In the
event of termination, the parties may still assert any other remedies against
the other that they would have had in the event of a breach of this
Agreement.
c. After the
expiration of this Agreement, or termination of this Agreement in accordance
with this Section 4, neither party shall have any other rights or obligations in
respect of each other except that any such expiration or termination shall be
without prejudice to the rights and obligations of the parties in respect to the
prospects already leased or developed.
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5. Disputes;
Provisions for
Arbitration
The
parties hereto agree that any dispute shall be arbitrated under the rules of the
American Arbitration Association.
6. Specific
Performance
The
parties understand and agree that the subject matter and mutual commitments set
forth in this Agreement are unique and, for that reason among others, the
respective parties will be irreparably damaged in the event that this Agreement
is not specifically enforced. Accordingly, in the event of any breach or default
in this Agreement or any of its terms or provisions hereof by any party hereto,
the other party hereto shall have the right to demand and have specific
performance of this Agreement.
7. Binding
Effect
Except as
otherwise expressly provided in this Agreement, this Agreement shall be binding
upon and shall inure to the benefit of the parties to this Agreement and their
heirs, personal representatives, successors and assigns. Each party to this
Agreement covenants that he will execute such reasonable documents and perform
such reasonable acts as may be required from time to time to carry out the terms
and conditions of this Agreement.
8. Governing
Law
This
Agreement shall be governed by and interpreted by the laws of the State of
Nevada.
9. Force
Majeure
Adaptive
shall use its best efforts to fill orders promptly and to meet requested dates
of shipment. Adaptive shall not be liable for delays in delivery or failure to
manufacture due to causes beyond its reasonable control, such as acts of God,
acts of Aero Marine, acts of civil or military authorities, terrorism, fires,
strikes, floods, wars, riots and other causes of any similar nature. Upon the
occurrence of a force Majeure event, Adaptive shall be excused from any further
performance or observance of any such affected obligation for as long as such
circumstance prevail and Adaptive continues to attempt to recommence performance
to the greatest extent possible without delay.
10. Notices
8
All
notices provided for by this Agreement shall be made in writing by delivering
personally or by mailing of such notice to the parties hereon, registered or
certified mail, postage prepaid, at the following addresses or at such other
addresses designated in writing by one party to the other:
Adaptive:
000 Xxx
Xxxxxxxxx Xxxx, Xxxxx 00
Xxxxxxxxxxx
Xxxxx, XX 00000
Aero
Marine:
One World
Trade Center
000 XX
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx,
XX 00000
and
Xxxxxxx
X. Xxxxxx
Attorney
at Law
0000 XX
00xx
Xxxxxx
Xxxxxxxx,
XX 00000
11. Attorney’s
Fees
In the
event an action shall be brought by any party hereto to enforce the terms
referred to in this Agreement, or any controversy arising therefrom, the
prevailing party in each suit shall be entitled to the payment of reasonable
attorney’s fees which shall be fixed by the court or the
arbitrator.
12. Remedies
The
parties hereto agree and acknowledge that the obligations of the parties
described in this Agreement herein are of a unique and special nature and the
aggrieved party will not have an adequate remedy at law in the event of failure
of a party to abide by such terms and conditions nor will money damages
adequately compensate for such injury. It is, therefore, agreed between the
parties that for any violation by the other party of the terms and conditions of
this Agreement, a restraining order or an injunction may be issued or a decree
of specific performance be ordered by court of equity, in addition to any other
right or remedies which the parties may have at law or in equity.
13. Subject
Headings
9
The
subject headings of the paragraphs and subparagraphs of this Agreement are
included solely for the purpose of convenience only, and shall not affect the
construction or interpretation of any of the provisions of this
Agreement.
14. Amendments
No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by the parties hereto.
15. Personal
Nature of
Agreement;
Limitations
on Assignment
The
benefits of this Agreement may be assigned to an entity or entities which are
owned and/or controlled by one or more of the parties hereto. However, this
Agreement is made on a personal level among the parties and each party agrees
that, on an individual basis, there will be no substitution or authorization of
a third party to become a party to this Agreement or to perform services on
behalf of the other party except with the
prior written agreement and authorization of all parties to this Agreement. The
parties are very comfortable with their relationship with each other but neither
party wants to become involved with a third party without first receiving
written notice and giving their prior written consent thereto.
16. Entire
Agreement and
Waiver
This
Agreement contains the entire Agreement between the parties hereto, and
supersedes all prior and contemporaneous agreements, arrangements, negotiations
and understandings between the parties hereto relating to the subject matter
hereof. There are no other understandings, statements, promises or inducements,
oral or otherwise, contrary to the terms of this Agreement. There are no
representations, covenants or conditions, express or implied, whether by statute
or otherwise, other than as set forth herein by any party hereto. No supplement,
modification or termination of any term or condition shall be binding unless
executed in writing by the parties to be bound thereby. No waiver of any term,
provision or condition of this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be or shall constitute a
continuing waiver, and no waiver shall be binding unless executed in writing by
the party making the waiver.
17. Representation of
Authority to
Execute
Agreement
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Each
party to this Agreement represents that he has full power and authority to
execute this Agreement and that the execution of this Agreement is not contrary
to any existing security agreement or obligation of the undersigned.
18. Counterparts
This
Agreement may be executed under one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.
19. Additional
Documents
Both
parties agree to execute any additional documents or agreements contemplated by
this Agreement or required hereunder.
IN
WITNESS WHEREOF, the parties hereto have entered into and caused this Agreement
to be executed by persons duly authorized.
Adaptive
Propulsion
Systems,
Inc.
Aero
Marine
Engine,
Inc.
By:/s/
Xxxxx
Xxxxxx
By:/s/
Xxxxxxxx
Xxxxxxx
Xxxxx
Xxxxxx
Xxxxxxxx
Xxxxxxx, President
Dated:
August 24,
2004
Dated:
August 24, 2004
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