**JOINT
VENTURE AGREEMENT**








DATE:
August 24, 2004





PARTIES:





TRANS MAX
TECHNOLOGIES, INC.


7473 West
Lake Mead Boulevard,


Las
Vegas, Nevada 89128








ADAPTIVE
PROPULSION SYSTEMS, LLC


16633
Ventura Blvd.


Sixth
Floor


Encino,
CA 91436





THIS
AGREEMENT is made this 24 th day of
August, 2004, to be effective August 24, 2004, by and between Trans Max
Technologies, Inc. (hereinafter Trans Max) and Adaptive Propulsion Systems, LLC,
(hereinafter Adaptive) for the development, production and marketing of
vehicular Water Air Machines (WAM) in various locations worldwide.





**RECITALS**





**1.**
    Trans
      Max, a Nevada corporation, is primarily engaged in developing water
      production technology.





**2.**
    Adaptive
      is seeking water production technologies for potential military
      use.





**3.**
    Trans
      Max is seeking to market its water producing technologies (hereinafter the
      Technology) for potential commercial uses.





**4.**
    Adaptive
      and Trans Max are desirous of entering into a relationship by way of this
      Joint venture Agreement wherein Adaptive will assist Trans Max in the
      improvement, marketing and sales of trans Max’s invention (hereinafter
      WAM) for military and commercial uses.





**5.**
    All
      of the above recitals are herby 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 WAM, build prototypes, test and upgrade WAM and
market it for military use, contemporaneously with Trans Max marketing the
Technology for commercial non-military uses, and where it is deemed to the
mutual benefit of Adaptive and Trans Max to enter into the 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.**  **R** **ELATIONSHIP** **B** **ETWEEN** **A** **DAPTIVE** **A** **ND** **T** **RANS** **M** **AX**








a.
    Adaptive
      will finance the further development of WAM (**W**ater**A**ir**M**achine),
      including design for integration or retrofitting into military vehicles,
      building one or more prototypes, testing and marketing WAM to the military
      of the United States and the military of all NATO countries (hereinafter
      the Military).





b.
    Adaptive
      will expend its best efforts to improve and optimize WAM performance and
      its production including optimization of specifics such as, but not
      limited to: process flow, heat capture, heat exchanger, water
      disinfection, improvement and optimization of absorbent
      performance.





c.
    Adaptive
      will develop and incorporate a security system for WAM to reduce the risk
      of unauthorized reverse engineering. This might include microprocessors,
      memory, circuit boards or software that are “zero-ized” whenever they are
      tampered with.





d.
    Adaptive
      will undertake modifications of WAM to allow for maximum promotion,
      marketing and sales.





e.
    Trans
      Max will grant Adaptive the exclusive right to use the Technology for the
      Military. Trans Max will keep the exclusive rights to WAM, including any
      patentable rights that may be developed by Adaptive. Trans Max will retain
      ownership of all of the Technology, including upgrades, developments and
      modifications by Adaptive.








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f.
    Trans
      Max will retain the right to sell the Technology commercially for
      non-Military purposes.





g.
    Trans
      Max shall receive twenty percent (20%) of the gross revenue from the sales
      of WAM to the Military by Adaptive. Adaptive shall receive five percent
      (5%) of the gross revenue from commercial non-Military sales of WAM by
      Trans Max.





h.
    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.





i.
    Automatic
      renewal language to be inserted upon receipt of language from Adaptive as
      briefly discussed with Adaptive President. This will be essentially the
      same language as used in the Adaptive - Aero Marine
    agreement.





j.
    Trans
      Max and Adaptive will use their best efforts to perform their duties and
      responsibilities pursuant to this
Agreement.





k.
    Trans
      Max will, within thirty (30) days of the execution of this Agreement,
      provide to Adaptive the Technology, including all information, data,
      schematics, files, etc. regarding WAM.





l.
    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
WAM.





m.
    Within
      ninety (90) days of the execution of this Agreement, Adaptive will make a
      decision as to whether to continue with the development of WAM. If not,
      Adaptive will return to Trans Max 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 WAM. Any technologies developed by this
      Joint Venture shall belong solely to Trans
Max.





n.
    If
      Adaptive desires to continue with the development of WAM, then in
      Adaptive’s shop, and at Adaptive’s expense, Adaptive will design suitable
      military applications; such military applications may also have commercial
      applications that are to be exploited by Tran Max. Adaptive will bring on
      at its expense appropriately skilled engineers and managers, if not
      presently on staff, as full time employees to help develop WAM as







3





well as
eliciting further assistance from existing academia relationships as may be
required. Adaptive shall be responsible for the organization and execution of
all the testing and marketing of WAM free of charge for Trans Max, while working
toward the development of systems for military vehicles and other military
related applications.





o.
    If
      Adaptive reaches a point where it is determined that the military
      application of WAM 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 Trans
Max.





p.
    Trans
      Max agrees not to release any publicity concerning any part of this
      Agreement, other than press releases approved in advance by
      Adaptive.




**2.**  **N** **ON** **-C** **OMPETITION**








a.
    During
      the term of this Agreement, neither Adaptive nor Trans Max nor any person
      employed or engaged by Adaptive or Trans Max to fulfill its duties under
      this Agreement, shall, directly or indirectly, compete with this Agreement
      in the promotion, marketing, sales and production of Trans Max 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
      Trans Max nor persons employed or engaged by Trans Max 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’ business or the products, technology and process of
      which Trans Max 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 record, 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 or the company signing this
Agreement.






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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 relation to
      Trans Max 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, sales 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 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.**  **C** **ONFIDENTIALITY** **:
N** **ON** **-D** **ISCLOSURE**








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





5





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.





d.
    Neither
      the receiving party nor any employees 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 others 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 the 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.





6
   e.
    This
      non-disclosure and confidentiality covenant shall not affect Trans Max 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.**   **T** **ERMINATION**





a.  
Either party may terminate this Agreement upon the occurrence of any of the  following events. Termination may not occur until written notice has
been given to
the other party and the 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, provincial 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)










7








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 to Adaptive’ active management, which change, in the opinion of
      Trans Max, will have a material adverse effect on Trans Max’s ability to
      market and promote the products.





vii.
    Any
      change to Trans Max’s active management, which change, in the opinion of
      Adaptive, will have a material adverse effect on Adaptive’ 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.




**5.**  **D** **ISPUTES** **;
P** **ROVISIONS** **F** **OR** **A** **RBITRATION**





The
parties hereto agree that any dispute shall be arbitrated under the rules of the  American
Arbitration Association.




**6.**
    **S****PECIFIC****P****ERFORMANCE**








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.** **B** **INDING** **** **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,





8





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** .  **G** **OVERNING** **L** **AW**





This
Agreement shall be governed by and interpreted by the laws of the State of  Nevada.





**9** .  **F** **ORCE** **M** **AJEURE**





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 Trans
Max, 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 circumstances  prevail
and Adaptive continues to attempt to recommence performance to the  greatest
extent possible without delay.




**10.**
    **N****OTICES**








All
notices provided for 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: 16633
Ventura Blvd


Sixth
Floor


Encino,
CA 91436





Trans
Max: 7673 West
Lake Mead Boulevard,


Las
Vegas, Nevada 89128





And


Richard
Fowlks


Attorney
at Law


1607 NE
41 st Avenue


Portland,
OR 97232





9
 
 ****
 **11.**   **A** **TTORNEY’S** **F** **EES**
 
 In the
even 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.**  **R** **EMEDIES**





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 the  Agreement,
a retraining order or an injunction may be issued or a decree of  specific
performance by ordered by court of equity, in addition to any other right  or
remedies which the parties may have at law or in equity.




**13.**   **S** **UBJECT** **H** **EADINGS**





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.**   **A** **MENDMENTS**





No
supplement, modifications or amendment of this Agreement shall be binding  unless
executed in writing by the parties hereto.




**15.**  **P** **ERSONAL** **N** **ATURE** **O** **F** **A** **GREEMENT** **;
L** **IMITATIONS** **O** **F** **A** **SSIGNMENT**





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 basks, 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





10





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.**  **E** **NTIRE** **A** **GREEMENT** **A** **ND** **W** **AIVER**





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 instance, 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.**  **R** **EPRESENTATION** **O** **F** **A** **UTHORITY** **T** **O** **E** **XECUTE** **A** **GREEMENT**





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.**  **C** **OUNTERPARTS**





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.**  **A** **DDITIONAL** **D** **OCUMENTS**





Both
parties agree to execute any additional documents or agreements  contemplated
by this Agreement or required hereunder.











11

















IN
WITNESS WHEREOF, the parties hereto have entered into and caused this Agreement
to be executed by persons duly authorized.





ADAPTIVE
PROPULSION SYSTEMS,
LLC                                                   
TRANS MAX TECHNOLOGIES, INC.





By:/s/ 
William F.
Silhan                                              By:/s/
Raymond
Brouzes


William F. Silhan,
President Raymond
Brouzes, President





Dated:   August 24,
2004 Dated:
August 24, 2004










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