SUBSCRIPTION AND INVESTMENT AGREEMENT



To:      Advanced Engine Technologies, Inc.
         11150 W. Olympic Boulevard, Suite 1020
         Los Angeles, California 90064

From:    Robert E. Petersen, Margaret M. Petersen, Trustee
         R.E. & M. Petersen Living Trust DTD 1/17/83 ("Petersen Trust")

Gentlemen:

         The undersigned, Petersen Trust having previously received and read the
offering  Memorandum  dated May 22,  1997,  the  valuation  opinion  letter from
Pattersen Travis,  Inc.,  Investment Banker and Brokers,  dated August 17, 2000,
having previously had numerous direct and indirect  contacts and  communications
with  directors  and  officers  of  Advanced  Engine  Technologies,   Inc.  (the
"Company"),  and having previously  discussed  on-going  operations and proposed
operations  of the  Company,  hereby  makes an  irrevocable  offer  to  purchase
10,000,000  (Ten  Million)  shares or  securities  of the company  ("Shares"  or
"Securities").  Tendered  herewith  from the  Petersen  Trust is the  amount  of
$10,000,000.  (Ten Million dollars)  (hereinafter  "Funds"), in return for which
the Company shall  forthwith  issue  10,000,000  (Ten Million)  shares of common
stock of the Company to Petersen Trust.

         Please accept this document as a fully executed Subscription Agreement,
in connection with which Petersen Trust hereby represents and agrees as follows:

         1.  The  funds   tendered   herewith  are   irrevocable.   Should  this
subscription  be rejected by the Company,  the Company shall  promptly and fully
return the subscription  price tendered,  without interest or deduction and this
Subscription  Agreement shall be rendered null and void, and of no further force
or effect.

         2.  This  subscription  is made  subject  to the  following  terms  and
conditions:

         (a) The Company has the right to reject this  subscription  in whole or
in part;

         (b)  No  obligation  exists  on  the  part  of the  Company  to  accept
subscriptions in any particular order;

         (c) The certificate evidencing the Shares subscribed to herein shall be
issued only in the name of Petersen Trust, and only to Petersen Trust;

         (d) The offering  will be  terminated  on August 25, 2000 subject to an
extension;  or at any time by the Company,  prior to the final acceptance of the
subscription.

<PAGE>

         3. In making the decision to  subscribe  to shares of the Company,  the
Petersen  Trust has relied  upon the  documents  referred  in this  Subscription
Agreement as well as its own  familiarity  with the Company,  its operations and
its management.  Further, Petersen Trust's reliance has been placed upon its own
independent investigation and opinions.

         4. The  Securities  are being offered and sold under an exemption  from
registration  provided by the  Securities  Act of 1993 (the "1993 Act,") and the
rules and  regulations  promulgated  thereunder,  and  certain  exemptions  from
registration provided by state securities laws.

         5. This transaction has not been reviewed by, passed on or submitted to
the United  States  Securities  and Exchange  Commission or to any state agency;
accordingly,  the Petersen Trust makes the following additional  representations
and warranties:

         (a) Petersen  Trust is a bona fide resident or domiciliary of the State
of California,  and has its principal  residence and domicile in such state; the
trustee of the  Petersen  Trust (to wit:  Robert  Petersen) is a resident of the
State of California  and a United States citizen of at least twenty one years of
age.

         (b) Petersen Trust understands and has fully  considered,  for purposes
of this investment, all the risks of investing in the Company, which has to date
developed only prototype engines and has no other history of operations.

         (c)  Petersen  Trust  understands  the  Company  has  a  limited  or no
operating  history or profits and the  Securities  are  speculative  investments
which involve a high degree or risk of loss by the subscriber;  therefore,  this
investment is more suitable for one who is sufficiently wealthy to afford a loss
of his or her entire investment.

         (d) Petersen Trust is able to afford this  investment  and  understands
that it may lose the entire  investment.  Petersen  Trust can bear the  economic
consequences thereof.

         (e) Petersen Trust understands that substantial  restrictions  exist on
the  transferability of the Securities,  for which there may be no market,  and,
accordingly, Petersen Trust understands that it will probably not be possible to
liquidate its investment in the Securities in the case of emergency.

         (f)  The  Company  is  relying  on  the  truth  and   accuracy  of  the
representations,  declarations  and  warranties  made  herein  in  offering  the
Securities for sale to Petersen  Trust,  and is further  relying upon applicable
federal and state exemptions.

         (g) The Securities subscribed to herein are being acquired for Petersen
Trust's  account,  for investment  only, and are not being purchased with a view
toward resale,  distribution,  subdivision or fractionalization.  Petersen Trust
has no contract, understanding, undertaking, agreement or arrangement, formal or
informal, with any person or persons to sell, transfer or pledge the Securities,
and  Petersen  Trust has no  present  plan to enter  into any such  contract  or
agreement.  The legal  consequences  of these  representations  is that Petersen
Trust must bear the economic risks of this  investment for an indefinite  period
of time, since the underlying  Securities have not been registered in accordance
with the 1933 Act or any other  securities  laws,  and therefore  cannot be sold
unless they are subsequently  registered  (which the Company is not obligated to
do), or if an exemption can be relied upon.

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<PAGE>

         (h) The  undersigned  agrees  that a legend  reading  substantially  as
follows  may be  placed  on any or  every  certificate  representing  all or any
portion of the Securities of the Company to be issued to Petersen Trust pursuant
to this Agreement:

         THE SHARES  RESPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE ACT), AND ARE  "RESTRICTED  SECURITIES" AS
THAT TERM IS  DEFINED  IN RULE 144 UNDER THE ACT.  THE SHARES MAY NOT BE OFFERED
FOR  SALE,  SOLD  OR  OTHERWISE  TRANSFERRED  EXCEPT  PURSUANT  TO AN  EFFECTIVE
REGISTRATION   STATEMENT  UNDER  THE  ACT  OR  PURSUANT  TO  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE ACT, THE  AVAILABILITY  OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE COMPANY.

         The undersigned  further agrees that the Company will place on its book
and the books of the transfer agent such "Stop Transfer"  notice or order as may
be necessary for the purpose of implementing the terms,  covenants,  conditions,
and provisions of this investment letter.

         6.  Petersen  Trust makes the within  representations,  warranties  and
undertakings  with the  intent  that  they  may be  relied  upon in  determining
Petersen   Trust's   suitability   to   purchase   the   Securities,   and  such
representations and warranties shall survive the within subscription.

         7.  Petersen  Trust agrees to indemnify  and save  harmless the Company
from any claims,  liabilities,  damages, expenses, losses or actions directly or
indirectly  arising  out  of or  in  connection  with  the  representations  and
warranties, and agreements contained herein.

         8.  Petersen   Trust  is  not  entitled  to  transfer  or  assign  this
Subscription  Agreement,  or any interest herein, and the issuance of Securities
pursuant hereto shall be made only in accordance with the applicable laws.

         9. Petersen  Trust is not entitled to cancel,  terminate or revoke this
Subscription Agreement or any agreements contained herein, and the provisions of
this  Subscription  Agreement  shall  survive (i)  purchase  and issuance of the
Subscription  subscribed  to  herein;  and (ii) the death or  disability  of the
current  trustee of the Petersen  Trust.  However,  if the Company  rejects this
Subscription,  this  Subscription  Agreement  shall  automatically  be canceled,
terminated and revoked.

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<PAGE>

         10. Petersen Trust has read Appendix A hereto,  defining an "Accredited
Investor" as set forth in Rule 501 of Regulation D of the Securities Act of 1933
and certifies that Petersen Trust qualifies as an "Accredited  Investor" in that
its net worth is greater than ten (10) time the proposed investment contemplated
by this Subscription Agreement.

         11. This  agreement  shall be governed by and  construed in  accordance
with the laws of the State of California.

         IN WITNESS  WHEREOF,  the  undersigned  has executed this  Subscription
Agreement this 21st day of August 2000.


                                    Robert E. Petersen, Margaret M. Petersen,
                                    Trustee
                                    R.E.& M. Petersen Living Trust DTD 1/17/83
                                    ("Petersen Trust")

                                    By:     /s/ Robert E. Petersen
                                            ----------------------------------
                                            Robert E. Petersen
                                            Trustee of the Petersen Trust


                                            ----------------------------------
                                            Taxpayer Identification No.
                                            or Social Security Number.


         Subject to the approval of the Company,  the foregoing  Subscription is
hereby  accepted on behalf of the Company,  subject to the terms and  conditions
hereof, as of the 24th day of August, 2000.

                                    Advanced Engine Technologies, Inc.

                                    By:           /s/ Carroll Shelby
                                            ---------------------------------
                                                    Carroll Shelby
                                                      President



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<PAGE>


                                   APPENDIX A


         ACCREDITED  INVESTOR:  "Accredited  investor" shall mean any person who
comes  within any of the  following  categories,  or who the  issuer  reasonably
believes comes within any of the following  categories,  at the time of the sale
of the securities to that person:

         (1) Any bank as defined in Section 3(a) (2) of the  Securities  Act, or
of any savings and loan  association or other  institution as defined in Section
3(a) (5) (A) of the Act any broker or dealer  registered  pursuant to Section 15
of the  Securities  Exchange Act of 1934;  any  insurance  company as defined in
Section 2(13) of the Act; any investment company registered under the Investment
Company  Act of 1940 or a business  development  company as defined in Section 2
(a) (48) of that Act; any Small Business Investment Company licensed by the U.S.
Small Business  Administration;  any established and maintained by a state,  its
political  subdivisions,  or any  agency  or  instrumentality  of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000;  any employee benefit plan within the meaning of
the Employee Retirement Security Act of 1974 if the investment decisions is made
by a plan fiduciary,  as defined in Section 3(21) of such Act, which is either a
bank, savings and loan association,  insurance company, or registered investment
adviser,  or if the  employee  benefit  plan  has  total  assets  in  excess  of
$5,000,000 or, if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;

         (2) Any  private  business  development  company  as defined in Section
202(a) (22) of the Investment Advisers Act of 1940;

         (3) Any  organization  described in Section 501 (c) (3) of the internal
Revenue  Code,   corporation,   Massachusetts  or  similar  business  trust,  or
partnership,  not formed for the specific  purpose of acquiring  the  securities
offered, with total assets in excess of $5,000.000;

         (4) Any director,  executive officer,  or general partner of the issuer
of the securities being offered or sold, or any director,  executive officer, or
general partner of a general partner of that issuer;

         (5) Any natural person whose  individual net worth,  or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;

         (6) Any  natural  person  who had an  individual  income  in  excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse  in  excess  of  $300,000  in each of those  years  and has a  reasonable
expectation of reaching the some income level in the current year;

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<PAGE>

         (7) Any trust,  with total assets in excess of  $5,000,000,  not formed
for the specific purpose of acquiring the securities offered,  whose purchase is
directed by a sophisticated person as described in Rule 506(b) (2) (ii); and

         (8) Any  entity  in  which  all of the  equity  owners  are  accredited
investors.




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