Document:

Certificate of Designation of Preference and Right

 Exhibit 4.2 
  
 CERTIFICATE OF DESIGNATIONS OF PREFERENCES AND 
 RIGHTS OF SERIES C CONVERTIBLE
PREFERRED STOCK 
 OF 
 NEW CENTURY COMPANIES, INC.

  
 Pursuant to Section 151 of the General Corporation Law

 of the State of Delaware 
  
 The undersigned, being the duly elected Chief Executive Officer and Secretary of New Century Companies, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware in accordance with the provisions of Section 103 thereof (the “Corporation”), DO HEREBY CERTIFY: 
  
 That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, as amended, the Board of Directors has duly adopted the following recitals
and resolutions: 
  
 “WHEREAS, the Certificate of Incorporation of this corporation, as amended, provides for a
class of shares known as Preferred Stock, par value $1.00 per share, of the Corporation (the “Preferred Stock”), issuable from time to time in one or more series; 
  
 WHEREAS, the Board of Directors of this corporation is authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock, to fix the number of shares constituting any such series, and to determine the designation thereof, or any of them; and 
  
 WHEREAS, the Board of Directors of this corporation desires, pursuant to its authority, to determine and fix the rights, preferences, privileges and restrictions relating
to this series of Preferred Stock and the number of shares constituting and the designation of such series; 
  
 NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and determines the designation of, the number of shares constituting, and the rights, preferences, privileges and restrictions relating to, a new series of Preferred Stock as
follows: 
  
 (1)  Designation.    This series of Preferred Stock shall be
designated “Series C Preferred Stock”. 
  
 (2)  Number.    The number
of shares constituting the Series C Preferred Stock shall be 75,000. None of the Series C Preferred Stock have been issued. 
  
 (3)  Dividends.    Commencing on the date of issuance (the “Issuance Date”), each issued and outstanding share of Series C Preferred Stock shall entitle the holder of record thereof to
receive, when, as and if declared by the Board of Directors, out of any funds legally available therefor, dividends in preference to the holders of Common Stock, par value $0.10 per share (the “Common Stock”), of the Corporation, and any
other junior stock, until conversion, at the rate (the “Dividend Rate”) of $1.25 per annum per share of Series C Preferred Stock, subject to adjustment in each case as hereinafter set forth, payable semi-annually on each December 15 and
June 15 (the “Dividend Payment
 

 Date”), to holders of record on November 30 and May 31 (“Dividend Record Date”). Dividends shall accrue from the Issuance Date
and shall accrue from day to day, whether or not earned or declared. Dividends shall be paid on the Series C Preferred Stock only when, as and if declared by the Board of Directors, out of funds legally available therefor. Dividends shall be
cumulative so that, if such dividends in respect of any previous or current semi-annual period, at the annual rate specified above (subject to adjustment as herein provided), shall not have been paid or declared and a sum sufficient for payment
thereof set apart, the deficiency shall first be fully paid before any dividend or other distribution shall be paid on or set apart for any equity securities of the Corporation which is junior to the Series C Preferred Stock. Any accumulation of
dividends on the Series C Preferred Stock shall not bear interest. Unless full cumulative dividends on the Series C Preferred Stock for all past dividend periods and the then current dividend period shall have been paid or declared and a sum
sufficient for the payment thereof set apart: (i) no dividend whatsoever shall be paid or declared, and no distribution shall be made, on any equity security of the Corporation which is junior to the Series C Preferred Stock, and (ii) no shares of
any equity security which are junior to the Series C Preferred Stock of the Corporation shall be purchased, redeemed, or acquired by the Corporation and no funds shall be paid into or set aside or made available for a sinking fund for the purchase,
redemption, or acquisition thereof. If any dividend previously due on the Series C Preferred Stock has not been paid in full, then no dividends shall be paid or declared upon any shares of any class or series of stock of the Corporation ranking on a
parity with the Series C Preferred Stock in the payment of dividends for any period unless a like proportionate dividend for the current period, ratably in proportion to the respective annual dividend rates fixed thereupon, shall be paid upon or
declared for the Series C Preferred Stock then issued and outstanding. In the event of a split or subdivision of the outstanding shares of Series C Preferred Stock, or the combination or the outstanding shares of Series C Preferred Stock, as the
case may be, the dividends provided for herein shall automatically and without any further action be decreased, in the case of a split or subdivision, or increased, in the case of a combination, in proportion to the increase or decrease in the
number of shares of Series C Preferred Stock outstanding immediately before such split, subdivision or combination. 
  
 (4)  Liquidation Preference. 
  
 (i)  In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series C Preferred Stock shall each be entitled to receive, prior and in preference to any distribution of any of the assets or surplus
funds of the Corporation to the holders of the Common Stock or any class or series of shares except any class or series of shares which is entitled to priority over the Series C Preferred Stock, by reason of their ownership thereof, a liquidation
preference (the “Liquidation Preference”) in the amount of $25.00 per share (as adjusted for any stock dividends, combinations or splits with respect to such shares). If upon the occurrence of such event, the remaining assets and funds
thus distributed (after taking into account any payment to any class or series of shares having priority over or parity with the Series C Preferred Stock) among the holders of the Series C Preferred Stock shall be insufficient to permit the payment
to such holders of the full Liquidation Preference, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series C Preferred Stock in proportion to the shares of
Series C Preferred Stock then held by them. 
  
 (ii)  For purposes of this Section (d), (A)
any acquisition of the Corporation by means of merger or other form of corporate reorganization in which outstanding shares of the Corporation are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring
corporation or its subsidiary (other than a mere reincorporation transaction) or (B) a sale of all or substantially all of the assets of the Corporation, shall be treated as a liquidation, dissolution or
 

 
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 winding up of the Corporation and shall entitle the holders of Series C Preferred
Stock and Common Stock to receive at the closing in cash, securities or other property (valued as provided in Section (d)(iii) below) amounts as specified in Section (d)(i) above. 
  
 (iii) Whenever the distribution provided for in this Section (d) shall be payable in securities or property other than cash, the value of such distribution
shall be the fair market value of such securities or other property as determined in good faith by the Board of Directors. 
  
 (5)  Voting Rights. 
  
 Except as otherwise expressly provided by law or this
Certificate of Designation, the holders of the Series C Preferred shall have no voting rights. Notwithstanding the foregoing, so long as any shares of the Series C Preferred Stock remain outstanding, the consent of two-thirds of the holders of the
then outstanding Series C Preferred Stock, voting as one class, either expressed in writing or at a meeting called for that purpose, shall be necessary to repeal, amend or otherwise change this Certificate of Designation, or the Certificate of
Incorporation of the Company, as amended, in a manner which would alter or change the powers, preferences, rights, privileges, restrictions and conditions of the Series C Preferred Stock so as to adversely affect the Series C Preferred Stock. Each
share of the Series C Preferred Stock shall entitle the holder thereof to one vote on all matters to be voted on by the holders of the Series C Preferred Stock, as set forth above. 
  
 (6)  Conversion.    The holders of the Series C Preferred Stock shall have conversion rights as follows (the “Conversion
Rights”): 
  
 (i) Right to Convert.    Each share of Series C Preferred
Stock shall be convertible, at the option of the holder thereof, at any time, at the office of the Corporation or any transfer agent for such stock, into 16.667 fully paid and nonassessable shares of Common Stock on and subject to the terms and
conditions hereinafter set forth. The conversion rate in effect at any time herein is hereinafter referred to as the “Conversion Rate”. 
  
 (ii) Automatic Conversion.    Each share of Series C Preferred Stock then outstanding shall, by virtue of such conditions and without any action on the part of the holder thereof,
be deemed automatically converted into that number of Common Stock into which the Series C Preferred Stock would then be converted at the then effective Conversion Rate as of the date that a registration statement covering the shares of Common Stock
issuable upon conversion of the Series C Preferred Stock has been declared effective by the Securities and Exchange Commission. 
  
 (iii) Mechanics of Conversion.    Before any holder of Series C Preferred Stock shall be entitled to receive certificates for shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for such stock, and shall give written notice to the Corporation at such office that he elects to convert the same and shall state therein
the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series C Preferred Stock, a
certificate or certificates for the number of shares of Common Stock to which he shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of
Series C Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such
date. Upon receipt of evidence reasonably 

 
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 satisfactory to the Corporation of the loss, theft, destruction or mutilation of
certificate or certificates representing the Series C Preferred Stock from any holder therefor, and (if lost, stolen or destroyed) of indemnity reasonably satisfactory to the Corporation, and (if mutilated) upon surrender and cancellation of the
certificate or certificates, each such holder shall be entitled to convert the Series C Preferred Stock held by such holder into Common Stock in the manner as aforesaid. 
  
 (iv)  Adjustments to Conversion Rate for Combinations or Subdivisions of Common Stock. In the event that this Corporation at any time or from time
to time after the original issue date of the Series C Preferred Stock shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment
of a dividend in Common Stock or in any right to acquire Common Stock), or in the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then
the Conversion Rate in effect immediately prior to such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. 
  
 (v)  Adjustment for Reclassification and Reorganization. If the Common Stock issuable upon conversion of the Series C Preferred Stock shall be
changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for in Section (f)(iv) above
or a merger or other reorganization referred to in Section (d)(ii) above), the Conversion Rate then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted so that the Series C
Preferred Stock shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares
of Common Stock that would have been subject to receipt by the holders upon conversion of the Series C Preferred Stock immediately before that change. 
  
 (vi)  No Impairment. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times
in good faith assist in the carrying out of the provisions of this Section (f) and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series C Preferred Stock against
impairment. 
  
 (vii)  Certificates as to Adjustments. Upon the occurrence of each
adjustment or readjustment of any Conversion Rate pursuant to this Section (f), the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of
Series C Preferred Stock a certificate executed by the Corporation’s President or Chief Financial Officer setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series C Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustments and readjustments, (B) the Conversion Rate for
the Series C Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of the Series C Preferred Stock. 

 
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 (viii)  Notices of Record Date. In the event that the
Corporation shall propose at any time (A) to effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock, or (B) to merge or consolidate with or into any other corporation, or sell, lease or
convey all or substantially all of its assets, or to liquidate, dissolve or wind up; then, in connection with each such event, the Corporation shall send to the holders of Series C Preferred Stock: 
  
 (x)  at least twenty (20) days’ prior written notice of the date on which a record shall be taken for
determining rights to vote, if any, in respect of the matters referred to in (A) and (B) above; 
  
 (y)  in the case of the matters referred to in (A) and (B) above, at least twenty (20) days’ prior written notice of the date when the same shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event). 
  
 (ix)  Issue Taxes. The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of Series C
Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion. 
  
 (x)  Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series C Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding shares of the Series C Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of
the Series C Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such
purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate of Designation. 
  
 (xi)  Fractional Shares. No fractional share shall be issued upon the conversion of any share or shares of Series C Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series C Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a share of Common Stock, the Corporation shall, in lieu of issuing any fractional share, pay the holder otherwise entitled to
such fraction a sum in cash equal to the fair market value of such fraction on the date of conversion (as determined in good faith by the Board of Directors). 
  
 (xii)  Notices. Any notice required by the provisions of this Section (f) to be given to the holders of shares of Series C Preferred Stock shall
be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at such holder’s address appearing in the records of the Corporation. 
  
 (7)  Rank. 

 
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 The Series C Preferred Stock shall rank, with respect to the payment of dividends
and the distribution of assets, prior and superior to all series of the Corporation’s Preferred Stock and any other class of the Corporation’s securities, including the Common Stock. 
  

RESOLVED FURTHER, that the Chief Executive Officer or any Vice President, and the Secretary or the Chief Financial Officer of this corporation be, and each of them
hereby is, authorized, empowered and directed, for and on behalf of this corporation, to execute, verify and file a certificate of determination of preferences with respect to the Series C Preferred Stock in accordance with Delaware law; and

  
 RESOLVED FURTHER, that any officer of this corporation, acting alone, be, and hereby is, authorized, empowered
and directed, for and on behalf of this corporation, to execute any and all further documents or instruments and to take any further actions as may be necessary, proper or advisable in order to effectuate the intent and purposes of the foregoing
resolutions.” 
  
 The undersigned further declare under penalty of perjury under the laws of the State of
Delaware that the matters set forth in this Certificate of Designation of Preferences and Rights are true and correct of our own knowledge. 
  
  
 
	 
	 By:
 	 	 /s/    DAVID DUQUETTE
        
 

	  	 	 David Duquette,
 President and
Chief Executive Officer
 

 
  
 
	 
	 By:
 	 	 /s/    JOSEF CZIKMANTORI
        
 

	  	 	 Josef Czikmantori,
 Secretary
 

 
  
 DATED:    June 7, 2002

 
 6Agreement for Performance of Technology

  
 Exhibit 10.6 
  
 AGREEMENT FOR PERFORMANCE OF TECHNOLOGY DEVELOPMENT 
 SERVICES BY INDEPENDENT
CONTRACTORS 
  
 This Agreement for Performance of technology development services by independent contractors
(hereinafter referred to as the “Agreement”) is entered into and executed this 15th day of October, 2001, by, among and between: 
  
 STEVEN CHARLES MANTHEY, an individual (hereinafter “First Contractor”), with a principal place of business located at 1 Promenade Offices, Robina Town Centre, Gold Coast, Queensland, Australia; and

  
 OX2 ENGINE DEVELOPMENT PTY LTD (ACN 098 024 992) an Australian company (“hereinafter “Second
Contractor”) whose registered office is 1 Promenade Offices, Robina Town Centre, Gold Coast, Queensland, Australia; and 
  
 ADVANCED ENGINE TECHNOLOGIES, INC., (hereinafter “AET”), whose corporate headquarters is located at 11150 West Olympic Boulevard, Suite 1050, Los Angeles, California, United States. 
  
 (“the Parties” ) 
  
 WITHESSETH: 
  
 A.  WHEREAS AET and the First Contractor have previously entered into an agreement dated May 23, 2000 (“May 2000 Agreement”), pursuant to which the First Contractor, the inventor of a revolutionary combustion
engine known as the OX2 Engine (“OX2 Engine”), agreed to design, manufacture, and deliver to AET, at substantially his own expense, the following OX2 Engine products: 
  
 (1)  A front port assembly with a direct fuel injection system for the OX2 Engine, 
  
 (2)  A Second OX2 prototype engine for performance testing purposes (“Second Performance Testing OX2 Engine”), the First Contractor
having previously (in or about March 2000) delivered to AET the first OX2 

 
 1 

 prototype engine for performance testing (“First Performance Testing OX2 Engine), and 
  
 (3)  A Third OX2 prototype engine capable of being adapted to run on a 25 KW Caterpillar generator set, this
Gen-Set prototype engine to have been delivered to AET on or before May 22, 2002; and 
  
 B.  WHEREAS, the
First Contractor and AET recognize and acknowledge that it would be in the best interests of AET and its shareholders, and the commercial development and sale of the OX2 Engine, if the May 2000 Agreement were superseded and replaced by a new
agreement between the Parties which significantly and substantially accelerates and enhances the research, design development deliveries and testings of the OX2 Engine (s) so as to optimize the feasibility of the OX2 Engine being ready for
commercial use and sale within the next 12 to 18 months; and 
  
 C.  WHEREAS, until the OX2 Engine is ready
for commercial use and sale, it will not be possible for AET to generate any income or profit; 
  
 D.  WHEREAS, it is and shall remain the contractual obligation and liability of AET-under a four-party agreement dated May 12, 1999, entered into by, among and between, AET, Advanced Engine Technology Pty Ltd (an
Australian company), OX2 Engine Distribution ( a Vanuatu company) and, OX2 Intellectual Property, (a Vanuatu company)- that AET is (i) responsible for the design, development, testing, marketing, and commercial exploitation of the OX2 Engine
worldwide, and (ii) responsible for the registration and protection of all intellectual property rights, including patents, worldwide. And unless AET takes reasonable steps to assure the fulfillment of its obligations under this May 12, 1999
agreement, then AET, and its shareholders, cold be irreparably harmed and damaged; and 
  
 E.  WHEREAS, the
First and Second Contractor are prepared to enter into a new agreement with AET, which will provide AET with new components requested by AET along with three (3) additional OX2 prototype engines; all of which shall be designed, developed,
manufactured, and delivered to AET, to wit: 
  
 (1)  A Third Performance Testing OX2
Engine; 
  
 (2)  A Fourth Performance Testing OX2 Engine; 

 
 2 

  
 (3)  A First Gen-Set OX2 Engine. 

 
 F.  WHEREAS, based upon all the facts and circumstances existing as of the date of this Agreement, it is in the
exercise of the best business judgment of AET that the entering into a new agreement with the First Contractor and Second Contractor (the Second Contractor being a design, development and manufacturing company carrying on business at 1 Greg Chappel
Drive, Burleigh Gardens, in the State of Queensland), will result in greatly accelerated and enhanced engine development activities, and potential substantial value to AET and its shareholders, thereby also (i) assuring AET’s performance under
the May 12, 1999 agreement and (ii) optimizing the commercial development, exploitation, marketing, and sale of the OX2 Engine in the marketplace, worldwide, within the next 12-18 months. 
  
 NOW, THEREFORE, the Parties 
  
 ARTICLE 1 
  
 TERM OF CONTRACT 
  
 SECTION 1.01  Effective Date.    This Agreement will become effective on October 15, 2001 and will continue in effect
for a period of three (3) years thereafter, unless renewed or extended pursuant to section 1.02 below. 
  
 SECTION 1.02  Renewal/Extension.    Any renewal of this Agreement for an additional period of time must be in writing and on mutually agreeable terms and conditions. 

 
 ARTICLE 2 
  
 SERVICES TO BE PERFORMED BY FIRST AND SECOND CONTRACTORS 
  
 SECTION
2.01  Specific Services and Products.    The First and Second Contractors agree to design, develop, and manufacture and deliver to AET the below listed services and products (“Services and Products”).
Said Services and Products shall include the continued maintenance and development of the First Performance Testing OX2 Engine and Second Performance Testing OX2 Engine, as well as the design, manufacture, and 

 
 3 

  
 delivery to AET and continued maintenance and development of components and three (3) additional OX2
Engines (as described further hereinbelow). 
  
 SECTION
2.01.1  Delivery of New Components and Prototype Engines.    The initial deliveries of all such OX2 Engines shall take place by no later than the dates specified below, and all such OX2 Engines shall
be functional and in good operating condition, capable of performing the purpose(s) for which they were designed and manufactured. AET’s actual receipt of the said OX2 Engines constitutes “delivery”. TIME IS OF THE ESSENCE, in
connection with the meeting for said delivery dates, and the First and Second Contractors’ failure to make timely delivery to AET of all, or any of the said OX2 Engines shall constitute a material breach of this Agreement unless such delivery
is rendered impracticable by circumstances beyond the control of the First and Second Contractors. AET’s waiver of any such deliver date(s) must be in advance and in writing, and the waiver of one delivery date is not and must not be construed
as a waiver of any subsequent delivery date. 
  
 SECTION
2.01.2  Design and manufacture of New Components.    The First and Second Contractors agree to design, develop, and manufacture and deliver to AET within three (3) months from the date of this
Agreement the following new components: 
  
 (1)  Twelve (12) single ring pistons for
retro-fit to No. 3 Engine. To be delivered within thirty (30) days from the date of this Agreement. 
  
 (2)  Test Rig for “port seals” so as to test and optimize performance. Initial Rig within sixty (60) days. 
  
 (3)  Three (3) “High Compression Machined Blocks”. First machined block within thirty (30) days from the date of receipt of heat treated blocks. Second machined block within
forty-five (45) days of receiving heat treated blocks. Third Machined Block within seventy (70) days of receiving heat treated blocks. 

 
 4 

  
 (4)  Twenty-four (24) Cyclinder Sleeves fitted to suit
High Compression Machined Blocks. First eight (8) sleeves to be delivered with first block and second eight (8) sleeves to be delivered with second Machined Block, and third eight (8) sleeves to be delivered with third Machined Block. 

 
 (5)  One (1) set of single ring pistons to suit High Compression Machined Blocks. To be delivered
within forty-five (45) days from the date of this Agreement 
  
 (6)  Ten (10) twenty
millimeter port seals to be delivered within fifty-five (55) days and then additional port seals as versions improve. 
  
 (7)  One (1) Port Plate Insert to suit High Compression Machined Block to be delivered with first machined Block. 
  
 SECTION 2.01.3  Advanced Version of Components.    If requested by AET, the First and Second Contractors agree to design, manufacture, produce and
deliver to AET advance versions of the new components identified in section 2.01.2 within six (6) months and ten (10) days from the date of this Agreement. The number of Components to be provided is not to exceed the number of components provided
under section 2.01.2. 
  
 SECTION 2.01.4  Manufacture of Third Prototype OX2
Engine.    If requested by AET, the First and Second Contractors agree to deliver to AET a Third OX2 Engine within nine (9) months from the date of this Agreement which will be designed, manufactured, produced and delivered
for the primary purpose of AET conducting performance testing and/or design modifications. This engine is to be known as the “Third Performance Testing OX2 Engine” and will incorporate all new advanced components arising our of the Product
and Services provided under section 2.01.2 and 2.01.3. 

 
 5 

  
 SECTION 2.01.5  Manufacture of Fourth and Fifth
Prototype OX2 Engine.    If requested by AET, the First and Second Contractors agree to deliver to AET a Fourth OX2 Engine and Fifth OX2 Engine; to wit: 
  
 (A)  A Fourth OX2 Engine, which will be designed, manufactured, produced and delivered for the primary purpose of AET conducting durability
testing (W.O.T). This engine is to be known as the “First Durability Testing OX2 Engine”. The First and Second Contractor shall deliver said First Durability Testing OX2 Engine to AET within ten (10) months from the date of this Agreement.

  
 (B)  A Fifth OX2 Engine, which will be designed, manufactured and produced and
delivered to AET for the special purpose of operating a generator in a commercial context with the goal of operating a 25/30 KW Caterpillar generator. This engine is to be known as the “First Gen-Set OX2 Engine”. This First and Second
Contractors shall deliver said First Gen-Set OX2 Engine to AET within twelve (12) months from the Date of this Agreement. 
  
 The Parties hereto agree that a fundamental goal and objective of this Agreement is that the operational capabilities and characteristics of the OX2 Engine shall, by no later than September 19, 2002, be developed such that the OX2
Engine is ready to be manufactured and sold as a viable commercial product in the marketplace. During the term of this Agreement, AET and the First and Second Contractors shall work together in good faith to formulate, develop and implement these
operational capabilities and characteristics. 
  
 SECTION 2.01.6.1  AET Request
for Prototypes.    The First and Second Contractors will not be required to perform the services set out in section 2.01.3 (manufacture of advanced versions of components) unless requested by AET. Such request is to be
provided by AET pursuant to written notice signed by either the Chief Operating Officer or President of AET, which notice must be received by the First and Second Contractors within three (3) months and ten (10) days 

 
 6 

  
 from the date of this Agreement. However, if the First and Second Contractors fail to make timely
delivery to AET of the new components required by section 2.01.2, then the time period by which AET must give the notice required by this paragraph is tolled by the same number of the days that said delivery under section 2.01.2 is untimely.

  
 SECTION 2.01.6.2  AET Request for Prototypes.    The First
and Second Contractors will not be required to perform the services set out in section 2.01.4 (manufacture of Third Prototype OX2 Engine) unless requested by AET. In the event the First and Second Contractors have previously provided Products and
Services under section 2.01.3, AET Board may request the First and Second Contractors provide Product and Services under section 2.01.4. Such request is to be provided by AET pursuant to written notice signed by either the Chief Operating Officer or
President of AET, which notice must be received by the First and Second Contractors within six (6) months and ten (10) days from the date of this Agreement. However, if the First and Second Contractors fail to make timely delivery to AET of the
Products and Services set out in section 2.01.3, then the time period by which AET must give the notice required by this paragraph is tolled by the same number of days that said delivery under section 2.01.3 is untimely. 
  
 SECTION 2.01.6.3  AET Request for Prototypes.    The First and Second Contractors will
not be required to perform the services set out in section 2.01.5 (manufacture of Fourth and Fifth Prototype OX2 Engines) unless requested by AET. In the event the First and Second Contractors have previously provided Products and Services under
section 2.01.3 and section 2.01.4, AET has the option of requesting that the First and Second Contractors provide Product and Services under section 2.01.5. Such request is to be provided by AET pursuant to written notice signed by either the Chief
Operating Officer or President of AET, which notice must be received by the First and Second Contractors within nine (9) months and ten (10) days from the date of this Agreement. However, if the 

 
 7 

  
 First and Second Contractors fail to make timely delivery to AET of the Products and Services set out in
section 2.01.4, then the time period by which AET must give the notice required by this paragraph is tolled by the same number of days that said delivery under section 2.01.4 is untimely. 
  
 SECTION 2.01.7  Definitions Regarding Services and Products.    For the purposes of this Agreement, the term
“Performance Testing”, as used in the context of OX2 Engine design, development, and manufacture, means testing of the OX2 Engines, which includes, but is not necessarily limited to, the following types of testing: 
  

	 	•
	 
	Fuel Economy 
 

  

	 	•
	 
	Emissions 
 

  

	 	•
	 
	Torque  
 

  

	 	•
	 
	Size (packaging); and 
 

  

	 	•
	 
	Weight. 
 

  
 For the purposes of this Agreement, the term “Durability Testing”, as used in the context of OX2 Engine design, development, and manufacture, means testing, which includes, but is not limited necessarily limited to, the
following types of testing: 
  

	 	•
	 
	100 hours at W.O.T and rated speed; 
 

  

	 	•
	 
	300 hours cycling between idle conditions; and 
 

  

	 	•
	 
	80% of rated power (1 hour at idle and 4 hours at rated power). 
 

  
 SECTION 2.01.8.1  Maintenance and Development by Second Contractor of all OX2 Engines.    The First and Second
Contractors agree to and shall maintain, improve, and/or modify, as reasonably necessary for a period of up to twelve (12) months, all OX2 Engines previously delivered to AET by the First 

 
 8 

  
 Contractor (or otherwise) (including the First Performance Testing OX2 Engine and Second Performance
Testing OX2 Engine), as well as all three (3) of the OX2 Engines to be supplied under this Agreement, all of which OX2 Engines the First and Second Contractors acknowledge and agree are owned or to be owned solely by AET (collectively referred to
hereinafter as “All OX2 Engines Owned or To Be Owned by AET”). Such services shall include: 
  

	 	•
	 
	Preventative maintenance to assure that all OX2 Engines owned or to be owned by AET remain in good working order; and 
 

 

	 	•
	 
	Remedial maintenance to be carried out on all OX2 Engines owned or to be owned by AET, as necessary to replace parts and/or rectify all
malfunctions. 
 

  
 SECTION 2.01.8.2  Obligation To Provide Ongoing
Maintenance.    The First and Second Contractors will only be required to provide ongoing maintenance, as defined by section 2.01.8.1 above, during there (3) month periods where they are also required to provide Product and
Services as set out in sections 2.01.2 to 2.01.5 herein. 
  
 SECTION 2.01.9  Definition
of Maintenance and Development.    The First and Second Contractors’ obligations set out in section 2.01.6 are limited to parts and components that are or have been manufactured by the First or Second Contractors or that
are capable of being manufactured by the First or Second Contractors. The obligations set out in section 2.01.6 expressly exclude the maintenance of the electronic control system used for the OX2 prototypes. 
  
 SECTION 2.01.10  Modification of OX2 Engines.    The First and Second Contractors
agree to provide consistent, continual and timely modifications, changes and/or enhancements to the design, manufacture, and development of the aforementioned OX2 Engines throughout the Performance Testing and Durability Testing processes for the
purpose of improving all performance and/or durability testing results (“Engine Modifications”). In this context, the First and Second Contractors represent that there are two aspects to the research and development 

 
 9 

 process concerning the OX2 Engines. One is performance-based and the other durability-based. These two aspects can and should be tested
simultaneously through the use of multiple engines and dynamometers. 
  
 SECTION
2.01.11  New Components—Testing and Manufacturing.    The First and Second Contractors, over the term of this Agreement, agree to provide all those services necessary to the testing and manufacturing of new
components for all of the aforementioned and described OX2 Engines (“New Components”). In this regard, the First and Second Contractor represent and warrant to redesign patterns to facilitate casting of engine block(s), housing and
end-plates for the purpose of reducing the overall packaging size and weight of the engine and to achieve better oil, cooling and fuel system performance along with engine aspiration. 
  
 SECTION 2.02  Method of Performing Services.    The First and Second Contractors will determine the method, details and
means of performing the above-described Services. 
  
 SECTION 2.03  Employment of
Subcontractors/Assistants.    The Second Contractor, may, at the Second Contractor’s own expense, employ or retain such subcontractors or assistants, as the First and Second Contractors deem necessary to perform the
Services required of the First and Second Contractors by this Agreement. The First and Second Contractors, as well as any subcontractor or assistant employed or retained by the subcontractor, must execute (prior to commencing work for the Second
Contractor) a confidentiality, non-disclosure and non-circumvention agreement with AET or the Second Contractor agreeing that AET’s patents, designs, rights, plan, strategies, products, processes, engineering and technical information now or
heretofore existing are the valuable proprietary and/or intellectual property belonging to AET (“AET’s Property”) and that the First and Second Contractors or the Second Contractor’s employees, agents, subcontractors, assistants,
representatives and/or assigns, shall not 

 
 10 

  
 circumvent, or attempt to circumvent AET with respect to AET’s customers or potential customers
with respect to the OX2 Engine Technology. The First and Second Contractors agree that AET’s property shall not be used or disclosed, directly or indirectly, to any other person or used in any way by the First or Second Contractor, or the
Second Contractor’s employees, agents, subcontractors, assistants, representatives and/or assigns except as required in the course of the First and Second Contractors performing there Services under this Agreement. 
  
 SECTION 2.04  Reporting, Limited Authority.    The First and Second Contractors shall
provide written reports drawings and other documents to AET (“Reports”) on a monthly basis (including but not limited to, on an occasion that AET requests written or on any occasion that the Second Contractor submits an Invoice to AET for
payment of Compensation) of the nature, extent, and results of its Services being rendered under this Agreement. 
  
 These Reports shall be delivered to AET’s Board member Noel Holmes (who resides in Australia), who shall in turn be responsible for dispensing the Compensation to the Second Contractor called for under this Agreement. The
Reports shall be completed using the form attached hereto as Exhibit A. 
  
 SECTION
2.04.1  First Contractor’s reports.    The First Contractor’s obligations as set out in section 2.04 herein shall continue for the duration of this Agreement. 
  
 SECTION 2.04.2  Second Contractor’s reports.    The Second Contractor’s
obligations as set out in section 2.04 herein shall continue for a period of twelve (12) months from the date of execution of this Agreement. 
  
 SECTION 2.05  Competitive Activities.    Unless otherwise consented to in writing by AET, in advance, for the period of this Agreement, the First and
Second Contractors, and the Second Contractor’s employees, agents, assistants, representatives and/or assigns shall not, during the term of this Agreement, directly or indirectly, engage in any 

 
 11 

 activities or business that is in competition with the business of AET in connection with all OX2 Engines owned or to be owned by AET, the
Engine Modifications or the New Components (“AET Business”). AET shall have full discretion in the granting or withholding of such consent. 
  
 SECTION 2.06  Intellectual Property Rights.    The Parties agree that AET wholly owns, and the First and Second Contractors hereby irrevocably
assign to AET, any right, title or interest they now or may have in or to all intellectual property rights, including but not limited to all patent and/or trademark rights, in or to 
  
 (1)  all OX2 Engines owned or to be owned by AET; 
  
 (2)  all Engine Modifications; and 
  
 (3)  all New Components 
  
 (“Intellectual Property”).

  
 The First and Second Contractors agree to execute and deliver to AET any documents, and/or take any other
action(s) reasonably necessary to confirm, reflect or perfect AET’s ownership interest in the Intellectual Property. 
  
 SECTION 2.06.1  Exclusion of Trademark.    The Parties agree that the mark [SM] (as constituted on the second OX2 Engine previously delivered to AET) does not form part of
Intellectual Property as defined in section 2.06 and remains the exclusive property of the First Contractor to assign or exploit in any manner whatsoever. 
  
 SECTION 2.07  Uniqueness of First and Second Contractors’ Services.    The First and Second Contractors hereby represent and agree that
the Services to be performed under the terms of this Agreement are of a special, unique, unusual, extraordinary, and/or intellectual character that gives them peculiar value, the loss of which, in most instances, can not be reasonably or adequately
compensated in damages in an action at law. The First and Second Contractors therefore expressly agree that AET may possess and shall be entitled to seek injunctive and/or other equitable relief (in addition to remedies at law for damages) to
prevent or remedy any breach of this Agreement by the First and or Second Contractor. 

 
 12 

  
 SECTION 2.08  Proprietary Information Confidentiality
Non-Circumvention. 
  
 (a)  The Parties acknowledge and agree that during the term of
this Agreement and during the course of the discharge of its obligations and duties hereunder, the First and Second Contractor may have access to and become acquainted with information concerning the
Intellectual Property, planning, strategies, customer lists and contacts, financial plans and operation of AET and all technical information and rights related thereto that are either owned, controlled or possessed by AET and used in
connection with AET” business, and that this information constitutes AET’s Intellectual Property, proprietary information and/or trade secrets (“Proprietary Information”). 
  
 (b)  The First and Second Contractors agree that it shall not disclose any such Proprietary
Information, directly or indirectly, to any other person or use such Proprietary Information in any way, either during the term of this Agreement or at any other time thereafter, except as is required in the course of
providing Services to AET under this Agreement with AET, and furthermore, that the First and Second Contractors shall not circumvent, or attempt to circumvent, AET with respect to such Proprietary Information, or AET’s customers,
potential customers, or consultants. 
  
 (c)  The First and Second
Contractors further agree that all files, records, documents, equipment, and similar items relating to AET’s business, including but not limited to all OX2 Engines Owned or To Be Owned by AET, Engine Modifications and/or New Components,
whether prepared by the First or Second Contractor or others, are and shall remain exclusively the property of AET. 
  
 ARTICLE 3 
  
 COMPENSATION 
  
 SECTION 3.01.1  Fixed Price/Share Transfer.    In consideration for the Services and Products to be
performed and delivered by the First and Second Contractors under 

 
 13 

  
 sections 2.01.2 and 2.01.8.1 (Manufacture of new components and ongoing maintenance) of this Agreement
and in further consideration of the Second Contractor’s summary of outlays and expenses contained in Exhibit B of this Agreement, AET agrees to purchase from the First Contractor’s nominee, Sixty Thousand AET shares (60,000) for two (2)
dollars (US) per share with a total purchase price of One Hundred Twenty Thousand Dollars (US $120,000.00) payable as follows: 
  

	 	•
	 
	Twenty Thousand Dollars (U.S. $20,000.00) upon execution of this Agreement; 
 

  

	 	•
	 
	Twenty Thousand Dollars (U.S. $20,000.00) continuing every fourteen (14) days thereafter until the total purchase price of One
Hundred Twenty Thousand Dollars (U.S. $120,000.00) is paid in full. 
 

  
 SECTION 3.01.2   Fixed Price/Share Transfer.     In consideration for the Services and Products to be performed and delivered by the First and Second
Contractors under sections 2.01.3 and 2.01.8.1 (Manufacture of Advanced Versions of Components and ongoing maintenance) of this Agreement, if any, and in further consideration of the Second Contractor’s summary of outlays and
expenses contained in Exhibit B of this Agreement, AET agrees to purchase from the First Contractor’s nominee, Sixty Thousand AET shares (60,000) for two (2) dollars (U.S.) per share with a total purchase price of One Hundred Twenty Thousand
Dollars (US $120,000.00) payable as follows: 
  

	 	•
	 
	Twenty Thousand Dollars (U.S. $20,000.00) concurrent with AET giving the written notice set forth in section 2.01.6.1, above; and 

  

	 	•
	 
	Twenty Thousand Dollars (U.S. $20,000.00) continuing every fourteen (14) days thereafter until the total purchase price of One Hundred Twenty Thousand
Dollars (U.S. $120,000.00) is paid in full. 
 

  
 SECTION
3.01.3   Fixed Price/Share Transfer.     In consideration for the Services and Products to be performed and delivered by the First and Second Contractors under sections 2.01.4 and 2.01.8.1
(Manufacture of Third OX2 Engine and ongoing 

 
 14 

 maintenance) of this Agreement, if any, and in further consideration of the Second Contractor’s summary of outlays and expenses contained
in Exhibit B of this Agreement, AET agrees to purchase from the First Contractor’s nominee, Sixty Thousand AET shares (60,000) for two (2) dollars (US) per share with a total purchase price of One Hundred Twenty Thousand Dollars (US
$120,000.00) payable as follows: 
  

	 	•
	 
	Twenty Thousand Dollars (U.S. $20,000.00) concurrent with AET giving the written notice set forth in section 2.01.6.2, above; and 

  

	 	•
	 
	Twenty Thousand Dollars (U.S. $20,000.00) continuing every fourteen (14) days thereafter until the total purchase price of One Hundred Twenty Thousand Dollars
(U.S. $120,000.00) is paid in full. 
 

  
 SECTION 3.01.4  Fixed
Price/Share Transfer.    In consideration for the Services and Products to be performed and delivered by the First and Second Contractors under sections 2.01.5 and 2.01.8.1 (Manufacture of Fourth and Fifth OX2 Engine and
ongoing maintenance) of this Agreement, if any and in further consideration of the Second Contractor’s summary of outlays and expenses contained in Exhibit B of this Agreement, AET agrees to purchase from the First Contractor’s nominee,
Sixty Thousand AET shares (60,000) for two (2) dollars (US) per share with a total purchase price of One Hundred Twenty Thousand Dollars (US $120,000.00) payable as follows: 
  

	 	•
	 
	Twenty Thousand Dollars (U.S. $20,000.00) concurrent with AET giving the written notice set forth in section 2.01.6.3, above; and 

  

	 	•
	 
	Twenty Thousand Dollars (U.S. $20,000.00) continuing every fourteen (14) days thereafter until the total purchase price of One Hundred Twenty Thousand Dollars
(U.S. $120,000.00) is paid in full. 
 

  
 SECTION 3.01.5  Compensation
for Reports.    In consideration for the timely delivery of Reports by the First and/or Second Contractors, AET agrees to pay the Second Contractor the sum of Eighty Thousand Dollars, (US $80,000.00) per year payable monthly
at the rate of Six Thousand Six Hundred Sixty-six Dollars (US 

 
 15 

  
 $6,666.00) per month commencing on the first day of the first month following execution of this
Agreement by all Parties, and continuing for the duration of this Agreement as set out in section 1.01 herein, subject to there being timely delivery of Reports by the First and/ or Second Contactor to AET. 
  
 (“Compensation”) 
  
 SECTION 3.01.6  Expenses contemplated by Agreement.    The Compensation shall be deemed to cover any and all expenses incurred by the First and Second Contractors under or
pursuant to this Agreement, with the exceptions of (i) expenses to be borne by AET as contemplated by section 3 of the May 2000 Agreement which includes the costs of delivery of OX2 prototype engines and new components to AET, and (ii) expenses
related to the First Contractor’s travel/accommodation/car hire when the First Contractor is required by AET to travel in connection with the services provided under this Agreement, provided that such expenses shall be limited to the cost of
one round trip airline ticket (coach class) for First Contractor and the published per diem rate published periodically for the Los Angeles Metropolitan Area by the federal Government Services Association (GSA), which, as of the date of this
Agreement equals One Hundred Forty five dollars (U.S. $145.00) per day (i.e., U.S. $99.00 for lodging and U.S. $46.900 for meals and entertainment). The Second Contractor shall otherwise be responsible for payment of all its own expenses incurred in
connection with the Services and Products provided hereunder, unless otherwise agreed in writing executed by AET. 
  
 SECTION 3.02  Tax Obligations.    It is understood by the Second Contractor, that, as an independent contractor, it is the Second Contractor’s sole responsibility and
obligation to pay to the relevant Federal, State and local governments any and all taxes that become due as a result of the Compensation paid to the Second Contractor under this Agreement (“The Second Contractor’s Tax Liability”). The
Second Contactor agrees to indemnify and hold AET, its officers and directors, harmless in connection with the Second Contractor’s Tax Liability. 

 
 16 

  
 ARTICLE 4 
  
 OBLIGATION OF CONTRACTORS 
  
 SECTION 4.01  Reporting/Accountability.    The First and Second Contractors agree that they, and the Second Contractor’s employees, representatives, agents and assigns shall
report, and be accountable to AET for all Services and Products to be provided hereunder. 
  
 SECTION
4.02  Minimum Amount of Service.    The First and Second Contractors agree to devote sufficient hours and funds per week necessary to accomplish performance and delivery of the above described Services and
Products in a timely manner, TIME BEING OF THE ESSENCE. 
  
 SECTION 4.03  Hours and
locations.    The First Second Contractors agree to perform the abovementioned Services and Products on the Second Contractor’s leased premises during regular business hours. It is understood and agreed, however, that
this Agreement does not prohibit the First and Second Contractors from performing their Services at a location other then the Second Contractor’s leased premises. 
  
 SECTION 4.04  Tools and Instrumentalities.    The Second Contractor will supply all office space, personnel, supplies,
documents, equipment and instrumentalities required to perform and deliver its Services and Products under this Agreement. 
  
 SECTION 4.05  Worker’s Compensation/Indemnification.    The Second Contractor agrees to provide worker’s compensation insurance for the Second Contractor’s employees
and agents, if any, and agrees to hold harmless and indemnify AET for any and all claims arising out of any injury, disability, or death of any of the Second Contractor’s employees or agent that occur on the Second Contractor’s leased
premises. The Second Contractor further agrees to hold AET, its shareholders, employees, representatives, officers, directors, attorneys or their assigns, free and harmless from any and all claims arising in Australia out of or related in any manner
to 

 
 17 

  
 (i) the First and Second Contractor’s performance or delivery of Services and Production under this
Agreement, and/or (ii) any negligent, reckless or intentional acts or omissions committed by the First or Second Contractor, or the Second Contractor’s employees, subcontractors, representatives or agents, if any, 
  
 ARTICLE 5 
  
 GENERAL PROVISIONS 
  
 SECTION
5.01  Assignment.    Neither this Agreement nor any duties or obligations under this Agreement may be assigned by the First or Second Contractor, as it is understood and agreed that
the First Contractor, is uniquely qualified to perform and deliver the Services and Products called for under this Agreement. 
  
 SECTION 5.02  Indemnification.    The Second Contractor agrees to indemnify and hold AET, its officers, directors, attorneys,
agents, shareholders and employees, harmless in connection with any claim or action which arises in Australia from or out of the First or Second Contractor’s performance, or non-performance of the Services and
Products required by this Agreement. 
  
 SECTION
5.03  Notices.    Any notices to be given by either party to the other shall be in writing and shall be transmitted by facsimile and by mail, registered, certified or sent via express
mail, postage prepaid, to the parties as follows, unless changed by written notice mailed or faxed to either Party, and such notice shall be deemed received by the other Party one (1) day after the date of transmission by facsimile: 

 
 To AET:    Advanced Engine Technologies Inc 
  Attn.: John Luft 
  11150 West
Olympic Blvd., Suite 1050 
  Los Angeles, California 90064 
  Phone (310) 914 9599 
  Fax (310) 914 1853 

 
 18 

  
 Copy To:    M. Neil Cummings &
Associates, APLC 
 Attn.:  M. Neil Cummings, Esq. 
 11150 West Olympic Blvd., Suite 1050 
 Los Angeles, California 90064 
 Phone (310) 914 1849 
 Fax (310) 914 1853

  
 To First and Second Contractors: 
 OX2 Engine Development Pty Ltd 
 C/- 1 Promenade Offices, Robina Town Centre 

Gold Coast, Queensland, 4320 
 AUSTRALIA

 Phone (07) 55220578 
 Fax
(07) 55220638 
  
 SECTION 5.04  Arbitration.    Any controversy
between AET and First and Second Contractors, or any of them, involving the construction or application of any of the terms, provisions, or condition of this Agreement shall on the written request of either party served on the other, be submitted to
arbitration. Arbitration shall comply with and be governed by the provisions of the California Arbitration Act and shall be conducted in accordance with the American Arbitration Association Commercial Dispute Resolution Procedures, at Los Angeles,
California. The prevailing party in any such Arbitration shall be entitled to recover its reasonable attorneys’ fees and costs from the other party. 
  
 SECTION 5.05  Entire Agreement.    This Agreement supersedes any and all other agreements and contracts, whether oral or in writing, between the
Parties hereto with respect to the contracting of the First and Second Contractors by AET to perform all or any part of the Services and Products, and contains all of the covenants and agreements between the parties concerning the Services and
Products. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, oral or 

 
 19 

 otherwise, have been made by any party concerning the Services and Products. Each party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, oral or otherwise, have been made by any party, which are not embodied herein. Without limiting the foregoing, it is expressly understood and agreed that this Agreement supersedes the May 23, 2000 Agreement
between the First Contractor and AET, with the exceptions of paragraphs 3 and 9 of the May 2000 Agreement, specifically, which remain in full force and effect. 
  
 SECTION 5.06  Modifications, Amendments, and Consents.    Any modification or amendment of this Agreement will be effective only if it is in writing
signed by the party to be charged. Wherever the consent of a party(s) is required or contemplated by this Agreement, such consent of the party(s) shall be of no force or effect unless it is in writing, signed by and on behalf of the party(s).

  
 SECTION 5.07.1  Termination by AET for Default of First
Contractor.    Should the First Contractor default in the performance of this Agreement or breach any of its material provisions, AET, at AET’s option, may terminate this Agreement by giving ten (10) days written notice
to the First Contractor to cure such material breach, and if such breach is not cured within ten (10) days of AET giving such notice, then this Agreement is deemed terminated. 
  
 SECTION 5.07.2  Termination of AET for Default of Second Contractor.    Should the Second Contractor default in the
performance of this Agreement or breach any of its material provisions, AET, at AET’s option, may terminate this Agreement by giving ten (10) days written notice to the Second Contractor to cure such material breach, and if such breach is not
cured within ten (10) days of AET giving such notice, then this Agreement is deemed terminated. 
  
 SECTION 5.08  Termination by First and Second Contractor for Default of AET.    Should AET default in the performance of this Agreement or breach any of its material provisions, the
First and Second Contractors, at their option, may terminate this 

 
 20 

  
 Agreement by giving ten (10) days written notice to AET to cure such material breach, and if such breach
is not cured within ten (10) days of AET giving such notice then this Agreement is deemed terminated. 
  
 SECTION 5.09  Termination Should AET Cease to Develop the OX2 Engine.    Should AET at any time give written notice to First Contractor that AET intends to forthwith cease to
develop or otherwise pursue a commercial application of the OX2 Engine, then this Agreement shall terminate within ten (10) days thereafter as to all three (3) parties to this Agreement, provided that AET in fact ceases to pursue such development or
commercial application. 

 
 21 

  
 Engine, then this Agreement shall terminate within ten (10) days thereafter as to
all three (3) parties to this Agreement, provided that AET in fact ceases to pursue such development or commercial application. 
  
 IN WITNESS the parties hereto have duly executed this Agreement on the date first above written. 
  
 
	 SIGNED SEALED AND DELIVERED
 	  	 )
 	  	  	 	  
	 BY SAID STEVEN CHARLES MANTHEY
 	  	 )
 	  	  	 	  
	 IN THE PRESENCE OF:
 	  	 )
 	  	  	 	 /s/    STEVEN CHARLES MANTHEY
 
	 	 	 	 	 	
	

	  	  	  	  	  	 	  
	 /s/    MICHAEL JOHNSTON, ESQ.
 
	  	  	  	  	 	  
	 WITNESS
 	  	  	  	  	 	  
	  	  	  	  	  	 	  
	 OX2 ENGINE DEVELOPMENT EXECUTED
 	  	 )
 	  	  	 	  
	 BY ITS DULY AUTHORIZED OFFICER
 	  	 )
 	  	  	 	  
	 IN ACCORDANCE WITH THE CORPORATIONS
 	  	 )
 	  	  	 	  
	 LAW IN THE PRESENCE OF
 	  	 )
 	  	  	 	 /s/    STEVEN CHARLES MANTHEY
 
	 	 	 	 	 	
	

	  	  	  	  	  	 	  
	 /s/    MICHAEL JOHNSTON, ESQ.
 
	  	  	  	  	 	  
	 WITNESS
 	  	  	  	  	 	  
	  	  	  	  	  	 	  
	 The COMMON SEAL OF ADVANCED
 	  	 )
 	  	  	 	  
	 ENGINE TECHNOLOGIES, INC. was
 	  	 )
 	  	  	 	  
	 Duly affixed in accordance with its articles of
 	  	 )
 	  	  	 	  
	 Association in the presence of:
 	  	 )
 	  	  	 	 /s/    JOHN LUFT
 
	 	 	 	 	 	
	

	  	  	  	  	  	 	  
	 /s/    M. NEIL CUMMINGS, ESQ.
 
	  	  	  	  	 	  
	 COMPANY SECRETARY/TREASURE
 	  	  	  	  	 	  

 

 
 22

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