Document:

Unassociated Document

    
      Exhibit
        10.6

      Form
        of
        Genset Distribution Agreement

      

GENSET
      DISTRIBUTION AGREEMENT

    

    This
      Genset Distribution Agreement (the “Agreement”) is made as of _______________,
      by and between Hydrogen Engine Center Inc., an Iowa corporation (“HEC”), which
      has an office at 602 East Fair Street, Algona, Iowa 50511, and
      _____________________________________ a ___________________ (“Distributor”),
      which has an office at ___________________________. HEC and the Distributor
      are
      referred to in this Agreement from time to time individually as a “Party” and
      together as the “Parties.”

    

    Background

    

    A. HEC
      is in
      the business of designing, developing, manufacturing, distributing and selling
      electrical power generation systems using internal combustion engines fueled
      by
      either gaseous or liquid fuels.

    

    B. HEC
      wishes to appoint the Distributor as one of its distributors of the Systems,
      and
      the Distributor wishes to be HEC’s distributor of the Systems (as defined in
      Section 1.1).

    

    C. HEC
      wishes to have the Distributor market, distribute, and sell the Systems using
      the Licensed Trademarks.

    

    D. HEC
      is
      the owner of the Licensed Trademarks and has agreed to license the use of the
      Licensed Trademarks to the Distributor in accordance with the terms and
      conditions of this Agreement.

    

    E. Capitalized
      terms used in this Agreement and not defined in the body of this Agreement
      are
      defined in Exhibit A to this Agreement.

    

    NOW,
      THEREFORE, THE PARTIES AGREE AS FOLLOWS:

    

    Article
      I

    Appointment

    

    1.1   Appointment.
      Effective as of ____________________ (the “Effective Date”), HEC appoints the
      Distributor as a distributor of HEC’s Oxx PowerTM
      brand
      electrical power generation systems using internal combustion engines fueled
      by
      either gaseous or liquid fuels (the “Systems”). This appointment is valid only
      for the assigned territory or market segment defined on Exhibit D the
“Territory” and the Distributor hereby accepts such appointment. The Distributor
      acknowledges that it may sell, deliver or otherwise distribute Systems only
      in
      the Territory, except as provided for in Section 2.5.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Article
      II

    Obligations
      of the Distributor

    

    2.1   Organization
      of the Distributor.

    

    (a) The
      Distributor will use its best efforts to solicit sales of the Systems, to
      service customers for the Systems, and to promote the goodwill, Trademarks
      and
      interest of HEC.

    

    (b) The
      Distributor will establish and maintain a level of representation for the
      Systems reasonably satisfactory to HEC, by:

    

    (i) employing
      such reasonable numbers of individuals who have been adequately trained in
      the
      marketing and sales of the Systems as well as adequate numbers of service
      technicians who have successfully completed HEC training in the installation,
      startup, repair, field service and maintenance of the Systems;

    

    (ii) maintaining
      such premises, facilities and equipment for sales, stocking and servicing of
      the
      Systems as are, in HEC’s reasonable opinion, adequate for the Distributor’s
      sales targets, sales plans and marketing strategies as set forth in Section
      2.4.
      The Distributor will ensure that full service support is provided to the
      customers purchasing Systems from it, regardless of the location of the
      customer. This full service support will include System start-up at the customer
      location(s), warranty registration, warranty repairs, and normal repairs and
      maintenance, including field service. This full service support will be provided
      by the Distributor directly, by its Dealers (as defined in Section 2.13) (if
      any), or through another HEC distributor, subject to the prior approval of
      both
      the customer and the other distributor.

    

    (c) The
      Distributor will establish and maintain adequate financial and credit resources
      needed to perform its obligations under this Agreement.

    

    2.2   Promotion.
      The
      Distributor will (a) promote in every reasonable manner and at its expense,
      to
      the satisfaction of HEC, the sale of the Systems and (b) immediately pass to
      HEC
      details of any complaints received from customers or others relating to the
      System.

    

    2.3   Competing
      Products.
      If the
      Distributor markets or sells Competing Products, the Distributor will
      demonstrate, to HEC’s satisfaction, its ability and strategy to market both
      brands successfully and without detrimental effect to the HEC brand(s). The
      Distributor will provide HEC’s with fourteen days written notice in advance of
      any agreement to market and/or distribute additional brands of Competing
      Products. If the Distributor does not satisfy HEC’s concerns regarding Competing
      Products, then HEC shall have the right to terminate this
      Agreement.

    

    2.4   Sales
      Targets. Each
      year, HEC, after consulting with the Distributor, will set sales targets for
      the
      Distributor and the Distributor will develop and present marketing strategies
      and sales plans to achieve the sales targets. The Distributor will comply with
      HEC’s policies concerning sales and service policies, procedures and systems,
      marketing programs, advertising and sales promotion, and such other requirements
      as HEC may, from time to time, establish. HEC shall provide reasonable notice
      to
      the Distributor of such policies and any changes to such policies.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    2.5   Sales
      Out Of Territory/Market.
      The
      Distributor agrees to the following provisions for out-of-territory sales,
      both
      for instances when the Distributor is making the sale to a customer outside
      the
      Distributor’s Territory and for instances where other HEC distributors are
      making sales to customers within the Distributor’s Territory.

    

    (a) A
      distributor will not, directly or indirectly, solicit orders for the Systems,
      advertise the Systems, maintain any branch for the marketing of the Systems,
      or
      keep any inventory of the Systems, outside of the distributor’s Territory.
      However, if a potential customer outside the Territory contacts the distributor,
      then the distributor will notify HEC and choose to either:

    

    (i) let
      HEC
      refer that customer to the distributor assigned to the customer’s Territory, if
      such a distributor exists.

    

    (ii) make
      the
      sale and manage the customer account and interaction related to the sale. If
      this option is chosen, HEC will provide the distributor responsible for the
      customer’s Territory, if any, with an “out of territory” fee equal to either 5%
      of list price and that distributor will handle installation, startup and
      warranty/repair service of the System. The distributor making the sale will
      reimburse HEC for the “out of territory” fee.

    

    (iii)
       if
      there
      is no distributor responsible for that Territory, make the sale, manage the
      customer account and provide the customer with full service support under the
      terms of this Agreement.

    

    (b) In
      situations where the customer or customer business unit has multiple locations
      that involve two or more distributor’s assigned Territories, then the customer
      account and sales will be handled by the distributor responsible for the
      Principal Location of the customer or customer business unit (if that is the
      level making the purchasing decisions). The “Principal Location” of a customer
      is defined as having two or more of the following functions (the requisitioning
      activity issuing the purchase order, the engineering activity qualifying the
      System for use by the customer, and using location where the System(s) will
      be
      installed). In instances where affected distributors cannot agree on the
      customer’s Principal Location, HEC will decide.

    

    Where
      the
      multiple-location or multiple-market customers result in one distributor making
      the sale and some of the Systems then being shipped to and installed in other
      distributors’ Territories, the distributor making the sale will be responsible
      for managing the customer account and for handling the System installation
      and
      startup at the customer’s using locations (including responsibility for sending
      the completed warranty registration card to HEC) and may subcontract the
      installation and startup tasks to the distributor responsible for the customer’s
      using location by negotiating mutually-acceptable terms. HEC will provide the
      distributor responsible for the customer’s using location with an “out of
      territory” fee equal to 2% of list price for the Systems involved and that
      distributor will be responsible for the System’s ongoing product warranty
      service, routine service and maintenance.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.6   The
      Distributor to Act as Principal.
      The
      Distributor will:

    

    (a) in
      all
      correspondence and other dealings relating directly or indirectly to the sale
      or
      disposition of the Systems indicate that it is acting as principal and not
      as an
      agent of HEC, and

    

    (b) not
      incur
      any liability on behalf of HEC or in any way pledge or purport to pledge HEC’s
      credit or accept any order or make any contract binding upon HEC or give or
      make
      or purport to give or make any warranty or representation on behalf of
      HEC.

    

    2.7   Inspections
      and Reports.

    

    (a) The
      Distributor will provide HEC with such statements, forms, reports, estimates
      and
      other information regarding its financial condition, inventory, sales, future
      requirements, and other matters as HEC may reasonably request from time to
      time.
      Such reports will include, but not necessarily be limited to, the Distributor’s
      quarterly financial statements, annual audited financial statements, warranty
      registrations for new product installations, warranty repair reporting and
      tracking, and marketing and sales plans and results.

    

    (b) The
      Distributor will permit and enable HEC’s authorized representatives to have
      access to the premises of the Distributor for the purpose of inspecting the
      equipment and facilities and the work carried out there in connection with
      the
      sale and servicing of Systems and inspecting and checking inventory of the
      Systems and the inventory records applicable thereto.

    

    (c) The
      Distributor will report immediately to HEC in writing of any actual or
      anticipated Change of Control.

    

    2.8   Applications
      Engineering.
      The
      Distributor will have a number of qualified engineers on staff or under contract
      sufficient to provide applications engineering services for customers, including
      customizing the System by adding accessories without modifying the content,
      configuration or performance of the System as it is provided by
      HEC.

    

    2.9   Standards
      of Performance.
      The
      Distributor will

    

    (a) maintain
      standards of performance for the Systems (including regarding warehousing and
      stocking capabilities, engineering, delivery, customer training and information,
      warranty, and repair services) as are reasonably acceptable to HEC;
      and

    

    (b) comply
      with all procedures and policies set by HEC regarding standards

    of
      performance.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.l0   Sales
      and Service Performance.

    

    (a) If
      the
      Distributor is not, as determined in good faith by HEC, at any time providing
      sales or service coverage for the Systems (including at its own facility(ies)
      or
      at customer locations) in a responsive and highly professional manner (including
      with respect to regular maintenance and repairs, warranty service,
      factory-authorized startup procedures, maintaining service parts inventories,
      liaison with HEC’s suppliers, and, if applicable, oversight of sub-distributors,
      agents or dealers), then HEC will have the right

    notwithstanding
      anything to the contrary in this Agreement and without prejudice to any other
      of
      its rights under this Agreement, to serve notice on the Distributor requiring
      the Distributor at its sole expense to remedy the defects or omissions in the
      sales or service coverage, as applicable, specified in the notice within sixty
      (60) days of the date of the notice.

    

    (b) If
      the
      Distributor fails to remedy all or any of the specified defects or omissions
      within the sixty (60) day period, then HEC will have the option, in its sole
      discretion, to (i) terminate this Agreement, or (ii) exclude from this Agreement
      such one or more of the Systems and/or geographic regions and/or market segments
      in respect of which the specified defects or omissions have not been remedied
      by
      the Distributor within such sixty day period. HEC will also have the option,
      in
      its sole discretion; to extend such sixty (60) day period if the Distributor
      has
      defined a corrective action plan which is satisfactory to HEC and is making
      satisfactory progress in implementing that plan.

    

    2.11   Indemnification.
      The
      Distributor will indemnify and save harmless HEC from and against any and all
      actions, suits, investigations, proceedings or claims of every kind and any
      and
      all expenses, losses, damages or liabilities (collectively, the “Liabilities”)
      as and when incurred, insofar as such claims or Liabilities arise out of or
      are
      based, directly or indirectly, upon: (i) any action or inaction of the
      Distributor, its permitted assigns, and their respective directors, officers,
      employees, and agents, with respect to the Systems or their use; (ii) claims,
      excluding claims arising from the breach by HEC of the provisions of this
      Agreement, by third parties arising out of or relating to the Distributor’s use
      of the Systems or the operation of its business; or (iii) any breach by the
      Distributor of the provisions of this Agreement.

    

    2.12   Insurance.

    

    (a) The
      Distributor shall maintain in force at all times during the term of this
      Agreement commercial general liability insurance, including coverage for
      contractual liability, products liability and completed operations, with a
      minimum combined single limit for bodily injury and property damage of at least
      $2,000,000 per occurrence and in the aggregate. Such policy shall provide
      coverage for the negligent or other wrongful acts of the Distributor as well
      as
      any Dealers.

    

    (b) The
      Distributor shall provide to HEC a certificate of insurance reasonably
      acceptable to HEC showing (i) the amount of coverage, policy number and date
      of
      expiration of the policy, (ii) that the policy names “Hydrogen Engine Center,
      Inc., its subsidiaries and assigns, agents, officers, and directors” as
“additional insureds” for the coverage and as a “loss payee” with respect to all
      property coverage, and (iii) that thirty days prior written notice must be
      given
      to HEC before any modification, lapse or cancellation of the policy. The
      Distributor, on behalf of itself and its insurers, hereby waives any right
      of
      subrogation against HEC for any liability, costs or expenses imposed on the
      Distributor or its insurers.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    2.13   Compliance
      with Laws; USA Export Controls. 

    

    (a) Distributor
      shall comply with all applicable laws, including but not limited to export
      control laws, anti boycott laws, and the Foreign Corrupt Practices Act, which
      prohibits certain payments to third parties, in connection with its marketing,
      distribution, and sale of the Systems, including obtaining (at its own expense)
      any and all governmental approvals and authorizations that may be required.
      Further, Distributor shall, at its own expense, take any measure required within
      the Territory to declare, record, file, notify, authenticate, or otherwise
      render valid this Agreement.

    

    (b) Without
      limiting the foregoing, Distributor agrees not to export, re-export, or permit
      the re-exportation of the Systems to any country now or hereafter included
      in
      the U.S. Department of Commerce’s list of countries to which exportation of the
      Systems is or may be restricted or prohibited, unless that exportation or
      re-exportation is specifically authorized by a special license issued by the
      U.S. Office of Export Administration. This provision shall not in any way be
      interpreted to expand the definition of “Territory” set forth in Section 1.1 of
      this Agreement.

    

    2.14   Miscellaneous
      Covenants.

    

    (a) The
      Distributor will not alter, secure, remove, conceal or otherwise interfere
      with
      any markings or nameplates or other indication of the source of origin of the
      Systems.

    

    (b)
       HEC
      recognizes that the Distributor may use agents, dealers or sub-distributors
      (together, the “Dealers”) to assist it with its sales of the Distributors’s
      products containing Systems. However, unless HEC consents in writing to such
      arrangements and unless any such Dealer signs such acknowledgments or agreements
      as HEC requires, the HEC obligations, warranties, trademark licenses and other
      responsibilities contained in this Agreement shall remain solely with the
      Distributor and the Dealer shall have no rights with respect to
      HEC.

    

    If
      HEC
      consents to such arrangements and the Dealer signs such acknowledgments or
      agreements as HEC requires, the Distributor will not be released from any of
      its
      obligations under this Agreement. The Distributor shall be responsible for
      monitoring and ensuring that the Dealers comply with all of the terms and
      conditions of this Agreement which apply to the Distributor.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Article
      III

    Obligations
      of HEC

    

    3.1   HEC’s
      Assistance.
      HEC will
      assist the Distributor in the marketing of the Systems by:

    

    (a) ensuring
      that sales brochures, catalogues, service manuals, and other literature relative
      to the Systems are made available at reasonable cost to the Distributor
      according to the types and quantities of the Systems purchased by the
      Distributor from HEC;

    

    (b) providing
      a recommended stocking level and mix of Systems for the Distributor’s initial
      stocking (“Recommended Initial Stocking Package”), as well as the recommended
      stocking level for new System or Systems products subsequently introduced by
      HEC
      (“Recommended New Product Stocking Package”), which recommendations the
      Distributor will be free to accept or reject;

    

    (c) acquainting
      the Distributor with such new methods of selling and new applications for the
      Systems as may be recommended by HEC;

    

    (d) providing
      factory training for service technicians at no cost for the first six months
      after the Effective Date; and

    

    (e) making
      available, at a reasonable cost to the Distributor, factory training for the
      Distributor’ s staff in the marketing and servicing of Systems in accordance
      with the programs and subject to the conditions established from time to time
      by
      HEC.

    

    3.2   Warranty.

    

    (a) HEC
      warrants that, subject to the limitations in Section 3.3 below, at the time
      of
      delivery by HEC to the Distributor, the Systems will be in conformance with
      HEC’s specifications and will be substantially free of defects resulting from
      defective materials or workmanship (the “Warranty”). The Warranty will be
      effective for the period (the “Warranty Period”) as defined on Exhibit B and
      will be subject to the other provisions set forth in Exhibit B, which exhibit
      may be revised by HEC from time to time with advanced written notice to the
      Distributor. Subject to Section 3.3, if the Distributor or its customer
      discovers any such defect within the Warranty Period, then HEC shall reimburse
      the Distributor for the cost of repairs in accordance with Exhibit
      B.

    

    (b) The
      Warranty shall only apply if the System is operated and maintained in accordance
      with HEC specifications, operating instructions, and maintenance schedule.
      In
      addition, it will only apply if all maintenance and repairs are performed by
      qualified service technicians using HEC authorized parts and
      materials.

    

    3.3   Warranty
      Exclusion and Limitations

    

    (a) THE
      WARRANTY IS THE SOLE WARRANTY MADE BY HEC WITH RESPECT TO THE SYSTEMS, IS
      EXCLUSIVE, AND IS GIVEN AND ACCEPTED IN LIEU OF (I) ANY AND ALL OTHER
      WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
      MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND (II) ANY OBLIGATION,
      LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT OR TORT, WHETHER OR NOT ARISING
      FROM THE NEGLIGENCE, ACTUAL OR IMPUTED OF HEC.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (b) The
      Warranty shall not apply to any Systems if a System or any part of
      a

    System:

    

    (i) is
      damaged by misuse, accident, negligence or failure to maintain the Systems
      as
      specified by HEC;

    

    (ii)
       has
      been
      altered, modified or in any way changed after delivery of the System by HEC,
      unless such alterations, modification, or change has been authorized in writing
      by HEC;

    

    (iii)
       is
      installed, modified, operated or disassembled contrary to the procedures
      specified by HEC; or

    

    iv)
       is
      used
      in combination with items, articles or materials not authorized by
      HEC.

    

    (c) In
      addition, the Warranty is subject to the following limitations:

    

    (i)
       HEC’s
      responsibility, and the Distributor’s exclusive remedy, under the Warranty is
      limited to the repair or replacement of defects in materials and workmanship
      as
      set forth below. 

    

    (ii) THE
      WARRANTY IS THE ONLY WARRANTY APPLICABLE TO THE SYSTEMS. THE WARRANTY EXCLUDES
      ALL OTHER EXPRESS ORAL OR WRITTEN WARRANTIES AND ALL WARRANTIES IMPLIED BY
      LAW
      WITH RESPECT TO THE SYSTEMS, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR
      FITNESS FOR A PARTICULAR PURPOSE.

    

    (iii)
       The
      Warranty is for the benefit of, and shall be enforceable by or on behalf of,
      the
      Distributor only, and not by any other person or entity.

    

    (iv)
       Every
      claim under the Warranty for a particular System shall be deemed waived by
      the
      Distributor unless such claim is made in writing to HEC within sixty days after
      the expiration of the Warranty Period.

    

    (d) HEC
      is
      not responsible for any indirect, incidental or consequential damages resulting
      from the breach of this or any other express or implied warranty with respect
      to
      the Systems.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    3.4   Indemnification.
      Within
      the limitations of the Warranty, HEC will indemnify and save harmless the
      Distributor from and against any and all actions, suits, investigations,
      proceedings or claims of every kind and any and all Liabilities as and when
      incurred, insofar as such claims or Liabilities arise out of or are based,
      directly or indirectly, upon any breach by HEC of the provisions of this
      Agreement or caused by defects in the HEC products as supplied by HEC to the
      Distributor; provided, however, that under no circumstances shall HEC have
      any
      indemnification obligations to the Distributor if any System is altered,
      modified, or improved in any way after delivery by HEC.

    

    3.5   Modification
      of Warranty.
      No
      agreement varying or extending the Warranty or the remedies set forth in this
      article will be binding upon HEC unless in writing and signed by a duly
      authorized officer of HEC.

    

    Article
      IV

    Terms
      and Conditions of Ordering and Purchase

    

    4.1   Notice
      of Requirements.
      The
      Distributor will give to HEC at least [90] days notice of its requirements
      for
      Systems in every month of this Agreement.

    

    4.2   Orders.
      All
      orders for Systems required by the Distributor must be dispatched by the
      Distributor to HEC in writing or by electronic data transmission.

    

    4.3   Acceptance/Rejection
      of Orders.
      Each
      order may be accepted or rejected by HEC. No order placed will be deemed
      accepted until a formal acceptance has been dispatched to the Distributor by
      HEC
      in writing or by electronic data transmission. HEC is under no obligation to
      accept all or any orders tendered by the Distributor.

    

    4.4   Conditions
      of Sale. Each
      order placed by the Distributor for the purchase of a System and accepted by
      HEC
      will (whether or not expressly stated in the order or acceptance) be deemed
      to
      have been so accepted upon and subject to the terms and conditions of this
      Agreement, including HEC’s standard terms and conditions of sale (including
      warranty) current at the time of acceptance of such order. The Distributor
      shall
      take delivery of the Systems at HEC’s facility, title to the Systems shall pass
      upon delivery, and the Distributor will be responsible for all transportation
      costs and expenses from HEC’s facility.

    

    4.5   Price.
      Unless
      otherwise agreed between the Parties, the purchase price the Distributor will
      pay HEC for the Systems will be those specified in HEC’s Systems price list
      current at the date of delivery by HEC to the Distributor, less any discount
      mutually agreed upon in writing by the Parties and less any financial incentives
      specified by HEC for purchases by the Distributor that exceed the then-current
      sales targets. HEC may suggest the price levels for the Distributor to charge
      its customers, but the Distributor will make the final decision regarding the
      prices and discounts that it will provide to its customers and any
      Dealers.

    

    4.6 Payment.
      All
      payments, including charges for the purchase price, taxes, shipping, and other
      costs that are payable by Distributor shall be (i) prepaid, or (ii) paid by
      letter of credit at a bank in the United States acceptable to HEC, or (iii)
      upon
      such other payment terms as may be agreed to in writing by HEC.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.7   Returns.

    

    (a) For
      the
      first twelve months after purchasing and receiving Systems from HEC as part
      of
      either a Recommended Initial Stocking Package or a Recommended New Product
      Stocking Package, the Distributor shall have the right to exchange any such
      unused, undamaged Systems for a different System and shall be responsible only
      for paying the costs of transportation, and any price difference.

    

    (b) For
      all
      other Systems purchased from HEC, the Distributor shall have the right to
      exchange any unused and undamaged Systems for a different System and shall
      be
      responsible for paying the costs of transportation and for paying to HEC a
      reasonable restocking fee set by HEC; provided, however, that HEC shall not
      be
      required to accept the exchange of a System from the Distributor after the
      first
      anniversary of the delivery of the System to the Distributor

    

    4.8   Warranty
      By The Distributor.
      The
      Distributor will, in supplying the Systems, give for the benefit of the first
      user of the Systems a warranty no less favorable to the first user than the
      warranty given to the Distributor by HEC.

    

    4.9   Modifications
      By HEC.
      HEC may
      make modifications to the design of, or fitments to, any of the Systems or
      make
      improvements to them at any time, but shall be under no obligation to apply
      the
      same to any System previously purchased by the Distributor.

    

    4.10   No
      Modifications By The Distributor.
      The
      Distributor will not make any modifications to, or in any way vary, the HEC
      specifications of any System.

    

    4.11   Right
      to Discontinue.
      HEC
      reserves for itself the right to discontinue the manufacture of any System
      without incurring any obligation or liability to the Distributor.

    

    4.12   Taxes.

    

    (a) Distributor
      will pay, or reimburse HEC for, any taxes, duties, and tariffs, however
      designated, arising from or based upon HEC’s sale of the System to Distributor,
      this Agreement, the licenses granted pursuant to this Agreement, or
      Distributor’s use or sale of the Systems, but not including any income or
      corporate excise tax assessed against, or levied on, HEC.

    

    (b) If
      applicable, Distributor shall furnish HEC with whatever certificates or other
      instruments may be necessary or appropriate to evidence that HEC’s sales of the
      Systems to Distributor are not subject to tax under applicable law.

    

    Article
      V

    Licensed
      Trademarks

    

    5.1   License
      Grant.
      Effective on the Effective Date and ending on the date of the

    termination
      or expiration of this Agreement, HEC grants to the Distributor a
      non-transferable, non-exclusive license (the “License”) to use the Licensed
      Trademarks solely in the Territory for promoting the sale of Systems and for
      no
      other purpose whatsoever.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    5.2   License
      Terms.
      The
      remaining terms governing the grant of the License are as follows.

    

    (a) The
      Distributor shall only use the Licensed Trademarks in accordance with the
      instructions, standards of quality and specifications set by and approved by
      HEC
      from time to time.

    

    (b) The
      Distributor acknowledges and agrees that HEC is the sole and lawful owner of
      the
      Licensed Trademarks and the Distributor has no right, title or interest in
      or to
      the Licensed Trademark, or any part thereof; except the right to use the same
      as
      set out in this article and that nothing in this Agreement will be construed
      as
      an assignment or grant to the Distributor of any right, title or interest in
      or
      to the Licensed Trademarks other than by way of the License granted in this
      Agreement.

    

    (c) The
      Distributor will not challenge, directly or indirectly, HEC’s right, title or
      interest in the Licensed Trademarks or any one or more of them during or after
      the term of this Agreement or adopt or use any trademark, symbol, name, word
      or
      other mark which includes, or is confusingly similar to, any of the Licensed
      Trademarks or any part of the Licensed Trademark.

    

    (d) Upon
      termination of this Agreement, the Distributor will immediately cease to use
      the
      Licensed Trademarks and will remove and discontinue the use of all signs,
      stationery, advertising and other material that would make it appear to the
      public that the Distributor is still in any way associated with HEC or the
      rights granted under this Agreement.

    

    (e) Without
      restricting any of the other rights or remedies of HEC under this Agreement,
      upon termination of the rights granted under the License and regardless of
      the
      reason for termination, all rights whatsoever granted or accruing to the
      Distributor pursuant to this article will automatically revert to
      HEC.

    

    (f)
       During
      the term of this Agreement, all packaging and marketing materials used by the
      Distributor for the Systems shall use the Licensed Trademarks.

    

    5.3   Goodwill;
      Assignment of Rights.
      Any
      goodwill arising from Distributor’s use of the Licensed Trademarks under this
      Agreement shall inure to the sole benefit of HEC and any enhancement in the
      value of Licensed Trademarks that results from the efforts of Distributor shall
      be effected to the sole benefit of HEC and shall not give rise to any
      compensation to Distributor in the event of the expiration or termination of
      this Agreement, with or without cause, or otherwise.

    

    Article
      VI

    Term
      and Termination

    

    6.1   Term.
      This
      Agreement shall remain in force for an initial period expiring on the third
      anniversary of the Effective Date (the “Initial Term”). This Agreement may be
      extended for additional one-year terms, expiring on the next anniversary of
      the
      Effective Date, unless written notice of termination is delivered by either
      Party no less than 30 days prior to the expiration of the term.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    6.2   Termination.
      Notwithstanding Section 6.1, this Agreement may be terminated as
      follows:

    

    (a) if
      an
      Event of Default has occurred and is not cured within thirty days of receiving
      written notice of such event by the non-defaulting Party to the other Party;
      provided, however, that such cure period shall not apply to (i) any Event of
      Default described in (d), (e), (f) or (g) of the definition of Event of Default,
      or (ii) any breach of Article VII;

    

    b) by
      HEC
      pursuant to Section 2.10;

    

    (c) by
      HEC,
      if the Distributor fails to discontinue (within thirty (30) days of HEC’s
      written request) any line of products which, in the reasonable opinion of HEC,
      might interfere with the proper distribution of the Systems;

    

    (d) immediately
      by HEC if, any change occurs in the constitution, management, or the financial
      or other circumstances of the Distributor, including a Change of Control,
      including if any interest in the Distributor is, directly or indirectly,
      acquired by any Company engaged in any business which, in the opinion of HEC,
      competes with the business of HEC or any Affiliate of HEC; or

    

    (e) by
      either
      Party in accordance with Section 6.3.

    

    6.3   Force
      Majeure.

    

    (a) Upon
      giving written notice to the other Party, a Party affected by an event of Force
      Majeure (as defined in Section 6.3(c)) shall be released without any liability
      on its part from the performance of its obligations under this Agreement, except
      for the obligation to pay any amounts due and owing under this Agreement, but
      only to the extent and only for the period that its performance of such
      obligations is prevented by the event of Force Majeure. Such notice shall
      include a description of the nature of the event of Force Majeure, and its
      cause
      and possible consequences. The Party claiming Force Majeure shall promptly
      notify the other Party of the termination of such event. The Party invoking
      Force Majeure shall also provide to the other Party confirmation of the
      circumstances constituting Force Majeure. Such evidence may consist of a
      statement of an appropriate governmental department or agency where available,
      or a statement describing in detail the facts claimed to constitute Force
      Majeure.

    

    (b) If
      the
      conditions of Force Majeure continue for a period longer than three (3)
      consecutive months which prevents the other Party from fulfilling one or more
      of
      its material obligations under this Agreement, then either Party may terminate
      this Agreement by giving thirty days notice in writing to the other
      Party.

    

    (c) “Force
      Majeure” shall mean any event or combination of events which (i) did not exist
      on the date of this Agreement, (ii) was not reasonably foreseeable on the date
      of this Agreement, (Hi) is the direct or substantial cause of preventing or
      delaying the fulfillment by either Party of one or more of its material
      obligations under this Agreement, and (iv) is beyond the reasonable control
      of
      such Party and could not have been avoided by the exercise of due care. Such
      events shall include fire, floods, typhoons or hurricanes, earthquakes and
      other
      natural disasters, war or terrorist incident, and riots.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    6.4   Results
      of Termination.
      Upon the
      termination of this Agreement, the following shall apply.

    

    (a) All
      unfulfilled orders for Systems from the Distributor to HEC will

    automatically
      be cancelled except those which HEC agrees to fulfill.

    

    (b) All
      rights granted by HEC to the Distributor under this Agreement will immediately
      be relinquished by the Distributor with no further action required by either
      Party.

    

    (c) The
      Distributor will:

    

    (i) immediately
      discontinue all use of the Licensed Trademarks or any other trade marks, trade
      names, designations, and slogans owned or used by HEC, including on signs and
      in
      stationery and advertising as well as in websites and other electronic formats;
      and

    

    (ii) take
      no
      action that would make it appear to the public that the Distributor is still
      servicing or supplying the Systems.

    

    (d) Any
      indebtedness of the Distributor to HEC will become due and payable on the date
      of termination of this Agreement.

    

    (e) HEC
      will
      have the option to repurchase from the Distributor, free from all liens and
      encumbrances, any new and unused Systems which are unsold and in the
      Distributor’s possession upon refund of the purchase price actually paid by the
      Distributor to HEC for such Systems, less costs of reconditioning assessed
      by
      HEC at its sole discretion. If HEC exercises that option, then HEC shall take
      delivery of the Systems at the Distributor’s facility, title to the Systems
      shall pass upon delivery, and HEC will be responsible for all transportation
      costs and expenses from the Distributor’s facility. Such option will extend for
      a period of ninety days from the date of termination and the Distributor will
      ensure that delivery of each such repurchased System is in accordance with
      HEC’s
      directions; provided, however, that nothing in this subsection will be construed
      so as to oblige HEC to purchase all or any part of the Distributor’s inventory
      of Systems.

    

    (f)
       The
      Distributor will deliver to HEC all price lists, bulletins, manuals, catalogues
      and other literature and publications relating to sales and product information,
      servicing and repair parts, together with a copy of all sales and service record
      cards pertaining to the Systems. For this purpose, the Distributor will give
      HEC
      or its nominee access at all reasonable times to all customer and service
      records of the Distributor relating to the Systems and permit copies to be
      taken
      of such records.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (g) The
      Distributor will, at its expense, promptly, and in any event within ten days
      after the termination of this Agreement, at HEC’s option:

    

    (i) destroy
      all the HEC Confidential Information (in whatever form) and all reproductions
      of
      such information and all samples of materials provided by HEC to the Distributor
      in its possession or control and confirm such destruction to HEC in writing,
      or

    

    (ii) deliver
      to HEC all the HEC Confidential Information, including all such information
      that
      is electronically stored, all reproductions thereof and all samples of materials
      provided by HEC to the Distributor in its possession or control.

    

    6.5   Surviving
      Covenants.
      Upon the
      termination of this Agreement, subject as

    otherwise
      provided in this Agreement and to any rights or obligations which may have
      accrued before such termination, no Party will have any further obligations
      to
      the other Party under this Agreement.

    Article
      VII

    Confidentiality

    

    7.1   Confidentiality
      Obligations.
      The
      Distributor:

    

    (a) will,
      and
      will ensure that each of its directors, officers, employees, agents, Affiliates,
      and any Dealers (collectively, the “Distributor Agents”) will, hold in
      confidence and keep confidential the HEC Confidential Information;

    

    (b) will
      only
      disclose the HEC Confidential Information to the Distributor

    Agents:

    

    (i) with
      a
      definable need to know the HEC Confidential Information in connection with
      this
      Agreement, and

    

    (ii) who
      are
      informed of, and agree to comply with, the confidential nature of the HEC
      Confidential Information;

    

    (c) will
      not,
      and will ensure that none of the Distributor Agents will, directly or
      indirectly, use or disclose any HEC Confidential Information except to the
      extent that it is strictly necessary for the purposes of this
      Agreement;

    

    (d) will
      not,
      and will ensure that none of the Distributor Agents will, except to the extent
      necessary for the purposes of this Agreement, make copies of or otherwise
      reproduce the HEC Confidential Information, and

    

    (e) will,
      and
      will ensure that each of the Distributor Agents will, maintain all the HEC
      Confidential Information in a manner so as to protect the same against wrongful
      disclosure, misuse, espionage and theft.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    7.2   Exceptions
      for Confidentiality.
“HEC
      Confidential Information” shall not include any information:

    

    (a) which
      is
      or becomes generally available to the public through no breach of the terms
      of
      this Agreement or any other obligation of the Distributor or the Distributor
      Agents to HEC;

    

    (b) of
      which
      the Distributor or the Distributor Agents had knowledge before the Effective
      Date unless the same was disclosed to the Distributor or the Distributor Agents
      by HEC as demonstrated by independent evidence;

    

    (c) of
      which
      the Distributor or the Distributor Agents obtained knowledge from a third party,
      unless such third party obtained the HEC Confidential Information in violation
      of any duty of confidence owed to HEC; or

    

    (d) which
      is
      required to be disclosed pursuant to law or a rule, regulation, policy or order
      of a governmental authority having jurisdiction or pursuant to a final order
      or
      judgment of a court of competent jurisdiction, and in such case the Parties
      will
      cooperate with one another to obtain an appropriate protective order or other
      reliable assurance that confidential treatment will be afforded to the HEC
      Confidential Information.

    

    7.3   Reasonable
      Restriction.
      The
      Distributor agrees that the restrictions contained in this article are
      reasonable for the protection of the legitimate business interests of
      HEC.

    

    7.4   Injunctive
      Relief.
      The
      Distributor acknowledges that a breach by it of any covenant contained in this
      article could result in damages to HEC which may not adequately be compensated
      for by monetary award alone. Accordingly, if any such breach by the Distributor
      occurs (either directly or through the actions of the Distributor Agents),
      then,
      in addition to all other remedies available to HEC at law or in equity, HEC
      will
      be entitled as a matter of right to apply to a court of competent jurisdiction
      for relief by way of restraining order, injunction, decree or otherwise, as
      may
      be appropriate, to ensure compliance with the provisions of this
      article.

    

    7.5   Survival
      of Covenants.
      The
      provisions of this article are separate and distinct covenants and agreements
      and will be enforceable after the termination of this Agreement regardless
      of
      the reasons for the termination.

    

    Article
      VIII

    Dispute
      Resolution

    

    8.1   Arbitration.
      Except
      as otherwise provided for in this Agreement, any dispute arising
      under this Agreement shall be settled by arbitration in metropolitan Des Moines,
      Iowa in accordance with the Commercial Arbitration Rules of the American
      Arbitration Association (the “AAA”). It is the intention of the Parties that the
      arbitration award shall be final and binding, shall not be appealable, and
      that
      a judgment of any court having jurisdiction thereof may be rendered upon the
      award, and enforcement may be had according to its terms. This agreement to
      arbitrate shall be specifically enforceable against each Party.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    8.2   Arbitrators.
      Arbitration shall be conducted by one arbitrator mutually agreed upon by the
      Parties, or, if the Parties cannot agree on an arbitrator within thirty days
      of
      submission, then the single arbitrator shall be selected in accordance with
      the
      provisions of the AAA rules governing selection of an arbitrator. At no time,
      however, may an arbitrator be selected by the AAA.

    

    8.3   Enforcement.
      The
      Parties agree that an action to compel arbitration pursuant to this Agreement
      may be brought in any court of competent jurisdiction in the United States.
      Application may also be made to any such court for confirmation of any decision
      or award of the arbitrators, for an order of enforcement and for other remedies
      that may be necessary to effectuate such decision or award. The Parties consent
      to the jurisdiction of the arbitrators and of such court and waive any objection
      to the jurisdiction of such arbitrator and court.

    

    8.4   Costs
      and Expenses.
      Each
      Party shall pay its or their own costs and expenses incurred as a result of
      arbitration under this article and each Party shall pay one-half of the costs
      and expenses of the arbitrator.

    

    Article
      IX

    General
      Provisions

    

    9.1   Interpretation.

    

    (a) The
      headings in this Agreement are inserted for convenience only and do not form
      a
      part of this Agreement and are not intended to interpret, define or limit the
      scope, extent or intent of this Agreement or any provision of this
      Agreement.

    

    (b) The
      word
“including” means “including, but not limited to.”

    

    (c) Except
      where otherwise specified, all references to currency mean currency of the
      United States of America.

    

    (d) A
      reference to a statute includes all regulations made under such statute, all
      amendments to the statute or regulations in force from time to time, and any
      statute or regulation that supplements or supersedes such statute or
      regulations.

    

    (e) Unless
      otherwise specified, all references to Articles and Sections shall mean Articles
      and Sections of this Agreement.

    

    9.2   Entire
      Agreement. This
      Agreement constitutes the entire agreement among the parties and supersedes
      any
      prior or contemporaneous agreement, communication, expectation, negotiation,
      representation or understanding, whether oral or written, express or implied,
      statutory or otherwise, among the Parties with respect to the subject matter
      of
      this Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    9.3   Severability.
      If any
      provision of this Agreement is at any time unenforceable or invalid for any
      reason it will be severable from the remainder of this Agreement and, in its
      application at that time, then this Agreement will be construed as though such
      provision was not contained in this Agreement and the remainder will continue
      in
      full force and effect and be construed as if this Agreement had been executed
      without the invalid or unenforceable provision.

    

    9.4   Waiver
      and Consent.
      No
      consent or waiver, express or implied, by any Party to or of any breach or
      default by any other Party of any or all of its obligations under this Agreement
      will:

    

    (a) be
      valid
      unless it is in writing and stated to be a consent or waiver pursuant to this
      section;

    

    (b) be
      relied
      upon as a consent to or waiver of any other breach or default of the same or
      any
      other obligation;

    

    (c) constitute
      a general waiver under this Agreement; or

    

    (d) eliminate
      or modify the need for a specific consent or waiver pursuant to this section
      in
      any other or subsequent instance.

    

    9.5   Independent
      Contractors.
      No
      agency, employment or partnership is created between HEC and the Distributor
      and
      the Parties acknowledge that the business operated by the Distributor is
      separate and apart from any that may be operated by HEC. No representation
      will
      be made by either Party which could create obligations or debts which may be
      binding on the other Party. The only relationship between the Parties is that
      of
      independent contractors.

    

    9.6   Amendments.
      This
      Agreement may not be amended except in writing signed by each
      Party.

    

    9.7   Assignment.
      The
      Distributor may not assign or delegate this Agreement or its rights or
      obligations under this Agreement without the prior written consent of HEC (which
      consent HEC may withhold in its sole discretion), and any purported assignment
      without such consent will be null and void. HEC will be entitled, without
      restriction, to assign or delegate its rights or obligations under this
      Agreement.

    

    9.8   Governing
      Law.
      This
      Agreement for all purposes will be governed exclusively by and construed and
      enforced in accordance with the laws of the State of Iowa, without regard to
      the
      conflicts or choice of law principles of that jurisdiction.

    

    9.9   Notice.

    

    (a) Every
      notice, request, demand or direction (each, a “Notice”) to be given pursuant to
      this Agreement must be in writing and must be delivered by certified mail,
      return receipt requested, by an internationally recognized overnight delivery
      service upon subsequent written confirmation of receipt, or by facsimile
      transmission or other similar form of written transmission by electronic means,
      in each case addressed as follows:

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    If
      to
      HEC, to:

    Hydrogen
      Engine Center Inc.

    602
      East
      Fair Street

    Algona,
      Iowa USA 50511

    Attention: V.P.
      Operations

    Facsimile: 515-295-2453

    

    If
      to the
      Distributor, to:

    _____________________________________

    _____________________________________

    _____________________________________

    _____________________________________

    

    Each
      Party shall give the other Party prompt written notice of any change of the
      Party’s address.

    

    (b) Any
      Notice delivered or sent by facsimile transmission or other similar form of
      electronic transmission will be deemed conclusively to have been effectively
      given on the day the Notice was delivered or sent in such fashion if it was
      delivered or sent on a business day at the place of the intended recipient
      or on
      the next day that is a business day at such place if it was delivered or sent
      on
      a day that was not a business day at such place.

    

    9.10   Further
      Assurances.
      Each
      Party will execute and deliver such further agreements and other documents
      and
      do such further acts and things as the other Party reasonably requests to
      evidence, carry out or give full force and effect to the intent of this
      Agreement.

    

    9.11   Time
      of Essence.
      Time is
      of the essence in the performance of each Party’s obligations under this
      Agreement.

    

    9.12   Binding
      Effect.
      This
      Agreement will inure to the benefit of and be binding upon the respective
      successors and permitted assigns of the Parties.

    

    9.13   Survival.
      All
      rights and obligations of the Parties occurring before the effective date of
      the
      termination of this Agreement and all rights and obligations expressly stated
      to
      continue after, or accrue as a result of, the termination of this Agreement,
      are
      separate and distinct rights and obligations binding on the Parties, will
      survive its termination and will continue in full force and effect and nothing
      in this Agreement will affect the enforceability of such
      provisions.

    

    9.14   No
      Partnership.
      Nothing
      in this Agreement will or will be deemed to create any partnership or joint
      venture between the Parties or to give any Party any right or authority to
      act
      as the agent of or to pledge the credit of any other Party. In fulfilling its
      obligations under this Agreement, each Party shall be acting as an independent
      contractor.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    9.15   Publicity.
      Except
      as required by applicable securities laws, a Governmental Authority or
      regulatory requirements, Distributor shall not issue a press release, grant
      an
      interview to the press, or otherwise make a general public announcement,
      regarding the existence or subject matter of this Agreement without the prior
      written consent of HEC, with such consent not to be unreasonably withheld or
      delayed.

    

    9.16   Language.
      The
      official language of this Agreement is English. In the event of any difference
      in the meaning between English and translated text, the English text shall
      govern. It shall be the obligation of Distributor to comply with any laws in
      the
      Territory requiring System literature to be presented in a language other than
      English. If any translations of the Agreement are required for import of Systems
      into the Territory, the Distributor will furnish a qualified interpreter to
      make
      such translations at Distributor’s expense.

    

    The
      Parties executed this Distribution Agreement as of the date first-above
      written.

    

    Hydrogen
      Engine Center Inc.

    

    

    By:
      _____________________

    

    Name:
      ___________________

    

    Title:
      ____________________

    

    

    By:
      ______________________

    

    Name:
      ____________________

     

    Title:
      _____________________

    

    

    (DISTRIBUTOR)

    

    By:
      ______________________

    

    Name:
      ____________________

     

    Title:
      _____________________

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    Exhibit
      A

    

    Definitions
      And Interpretations

    

    “Affiliate”
      means any direct or indirect subsidiary or parent company of a Party, or
      any

    other
      Company which is 20% or more owned, directly or indirectly, by a Party or by
      the
      majority owner of a Party.

    

    “HEC
      Confidential Information” means information known or used by HEC in

    connection
      with its business and technology, including HEC’s Intellectual Property,
      customer information, financial information, marketing information, and
      information as to business opportunities and research and
      development.

    

    “Change
      of Control” of a Party shall have occurred if (a) the Party sells all
      or

    substantially
      all of its assets, (b) merges with another Company after which the majority
      owner of the Party before the merger, or largest shareholder if there is no
      majority owner, is not the majority or largest owner of the surviving company
      after the merger, and (c) the majority owner of the Party, or largest
      shareholder if there is no majority owner, as of the date of this Agreement
      is
      no longer the majority or largest owner of the Party.

    

    “Company”
      means an individual, corporation, limited liability company (LLC), partnership,
      unincorporated organization or other entity.

    

    “Competing
      Products” means products manufactured by Companies other than HEC or its
      Affiliates which compete with the Systems.

    

    “Event
      of
      Default” means the occurrence of one or more of the following
      circumstances:

    

    (a) a
      Party
      provides materially inaccurate information to the other Party;

    

    (b) the
      Distributor breaches a legal or ethical duty owed to HEC, or takes any action
      that would bring disrepute to, or harm the commercial goodwill of, HEC, the
      Systems or the Licensed Trademarks;

    

    (c) a
      Party
      is in material breach of any of its obligations under this
      Agreement;

    

    (d) a
      Party
      takes any action to liquidate, dissolve or wind-up its business;

    

    (e) a
      Party
      applies to be put in bankruptcy, takes any action that would permit its
      creditors to make an application to put such Party in bankruptcy, is adjudged
      or
      declared bankrupt or makes an assignment for the benefit of creditors, consents
      to a proposal or similar action under any bankruptcy or insolvency legislation
      applicable to it, or commences any other proceedings relating to it under any
      bankruptcy, reorganization or dissolution law or statute of any jurisdiction,
      or
      consents to any such proceeding;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

     (f)
       a
      custodian, liquidator, receiver, receiver and manager, receiver-manager, trustee
      or any other person with similar powers is appointed for such Party or in
      respect of any material property or assets or material part of the property
      or
      assets of such Party; or

    

    (g) a
      final,
      non-appealable, decision of any judicial, administrative, governmental or other
      authority or arbitrator is made which enjoins or restrains, or renders illegal
      or unenforceable, the performance or observance by a Party of any material
      term
      of this Agreement.

    

    “Governmental
      Authority” means any United States or other federal, state, or local
      government.

    

    “Intellectual
      Property” means all rights held by a Party (by ownership or under license) in
      and to various inventions and trade secrets, including any patent, patent
      application (whether now existing or pending or whether obtained or applied
      for
      after the date of this Agreement), industrial design, invention, design, trade
      secret, idea, work, methodology, technology, innovation, creation, concept,
      moral right, development drawing, research, analysis, know-how, experiment,
      copyright, data, formula, method, procedure, process, system or technique and
      the goodwill associated with the foregoing, but does not include trademarks
      or
      tradenames.

    

    “Internal
      combustion engine” means an engine using the combustion of any liquid or gaseous
      fuel to create energy and motion.

    

    “Licensed
      Trademarks” means the trademarks, tradenames or logos listed on Exhibit C, as
      revised by HEC from time to time in its sole discretion.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Exhibit
      B

    

    HEC
      Limited Warranty Terms and Conditions 

    for
      Oxx PowerTM
      Systems

    

    

    These
      warranty terms apply to Systems, as defined in the Distribution Agreement by
      and
between
      HEC and the Distributor. These terms may be revised by HEC from time to time
      with advanced written notice to the Company.

    

    

    Warranty
      Period

    

    The
      warranty terms will apply for the following period of time (“the Warranty
      Period”):

    

    • For
      Systems designed to be fueled by natural gas or liquid propane, this warranty
      expires on the earlier of (a) the third anniversary of the shipment of the
      Systems by HEC to the Company or (b) 1,000 hours of operation of the System
      at
      the using customer’s location.

    

    • For
      Systems designed to be fueled by hydrogen, the warranty for all of the
      components in the Systems except for the internal combustion engines will expire
      on the earlier of (a) the third anniversary of the shipment of the Systems
      by
      HEC to the Company or (b) 1,000 hours of operation of the System at the using
      customer’s location. The warranty duration and terms for the hydrogen-fueled
      internal combustion engine are still to be determined by HEC.

    

    Remedies

    

    The
      Distributor may return defective Systems to HEC after HEC has had a
      reasonable

    opportunity
      to inspect such Systems. HEC, at its option, will either replace or repair
      defective Systems and will deliver the replacement System or repaired System
      to
      the Distributor without additional charge to the Distributor.

    

    If
      the
      Distributor is required to make repairs for defects covered by this warranty
      to
      any System delivered by the Distributor to its customer, then the Distributor
      must seek advanced authorization from HEC for such repairs as
      follows:

    

    •     The
      Distributor’s repair technicians, after assessing the customer’s complaint and
      before traveling to the customer location, must call HEC’s customer service
      center at (515) 295-3178 and provide (a) the System’s serial number, (b) its
      current location, (c) the elapsed number of hours of operation of the System,
      (d) the name of the repair technician and the name of the Distributor, and
      (e) a
      description of the System’s problem and a detailed summary of the prior
      maintenance, including dates of maintenance activities (including regularly
      scheduled maintenance activities) and by whom such activities were
      performed.

    

    •     In
      response, HEC Customer Service will take one of the following
      actions:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (i) Authorize
      the warranty repair by the Distributor’s technician and provide a warranty
      repair authorization number to use in subsequent requests for reimbursement
      by
      the Distributor. If, in the process of making the authorized warranty repairs,
      the technician determines that additional warranty repairs are necessary, he/she
      must repeat the process of obtaining authorization from HEC for these additional
      repairs.

    

    (ii) Authorize
      the technician to visit the customer location for on-site diagnosis and
      assessment of the needed repairs, providing a repair diagnosis authorization
      number for use in subsequent requests for reimbursement. If HEC elects this
      option, then the repair technician must call the HEC Customer Service Center
      from the System’s location with the results of the assessment and request
      warranty repair authorization before proceeding with warranty
      repairs.

    

    (iii)
      Reject the repair as being outside of warranty coverage.

    

    •     If
      the
      Distributor would like to use a Dealer or other organization to perform warranty
      repairs and receive reimbursement directly from HEC, it must first receive
      written authorization from HEC Customer Service.

    

    •     For
      all
      authorized warranty repairs, the repair technician will take possession of
      the
      defective parts removed from the System and make them available to HEC for
      subsequent inspection and assessment.

    

    Warranty
      Reimbursement

    

    HEC’s
      reimbursement of warranty repairs will cover:

    

    •     the
      cost
      of HEC authorized repair parts (at HEC list prices at the time of the repair)
      plus actual shipping charges; and

    

    •     the
      cost of
      repair labor, as well as the repair technician’s travel time and expenses going
      to and from the System’s location. The reimbursable amounts for these items will
      be based on the then-current HEC Warranty and Policy Procedures Manual, which
      HEC will publish and update periodically.

    

    HEC
      will
      not be responsible for any direct, indirect or consequential damages incurred
      by
      the System user or the Distributor due to the malfunction of the System or
      to
      the loss of operation of the System while awaiting repairs. HEC will also not
      be
      responsible for excess travel and labor charges resulting from technician travel
      to System locations that are greater than 300 miles from the Distributor’s
      location.

    

    The
      Distributor agrees that if HEC disputes a warranty claim made by the
      Distributor, then, in connection with such dispute, the Distributor making
      the
      warranty claim shall not reduce or withhold any payments owed by the Distributor
      to HEC before such dispute is resolved.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Warranty
      and Policy Procedures Manual

    

    All
      other
      terms of the HEC Warranty and Policy Manual shall apply.

    

    Distribution
      Agreement

    

    HEC
      gives
      this warranty in connection with the Distribution Agreement between the
      Distributor and HEC and, except as specifically provided for in this warranty,
      all terms and conditions set forth in such agreement shall apply to this
      warranty, including all dispute resolution provisions.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
      C

    

    Licensed
      Trademarks

    

    

    [list
      to
      be provided by HEC]Unassociated Document

    
      Exhibit
        10.13

    

    EXECUTIVE
      EMPLOYMENT AGREEMENT

    

    

    

    This
      Executive Employment Agreement ("Agreement")
      is
      entered into effective this _____ day of January, 2007
      by and
      between Hydrogen Engine Center,
      Inc.,
      an Iowa corporation,
      ("Company")
      and
      Donald C. Vanderbrook ("Executive").

    

    WHEREAS,
      the
      Executive has been employed by the Company as its Vice
      President and General Manager
      and
      possesses certain, skills, knowledge and abilities; and

    

    WHEREAS,
      the
Company
      has
      determined that it is to the advantage and interest of the Company to
employ
      the Executive as the Vice
      President and General Manager of
      the
      Company; and

    

    WHEREAS,
      the
      Executive desires to accept
      employment with
      the
      Company in the capacity of Vice
      President and General Manager.

    

    NOW
      THEREFORE,
      in
      consideration thereof the parties hereby agree as follows:

    

    1. EMPLOYMENT
      AND TERM.
      The
      Company will employ the Executive to serve as the Vice
      President and General Manager of
      the
      Company and the Executive agrees to perform such services under the terms and
      conditions of this Agreement. The initial term of Executive’s
      employment under this
      Agreement shall begin on the date first written above (the "Effective
      Date")
      and
      shall continue for a period of three (3) years
      (the
“Term”).
      Notwithstanding the foregoing, Executive’s
      employment under this
      Agreement may be terminated prior to the expiration of the Term as provided
      in
      this Agreement.

    

    2. DUTIES.
      Executive shall be responsible for and perform those duties outlined in Exhibit
      A, incorporated by reference herein. The Executive will also render such
      appropriate and reasonable services as are directed by the President or the
      Board. Executive’s duties as the Company’s Vice President and General Manager
      shall require Executive’s full productive time and effort and as such, Executive
      shall perform his duties on a full-time basis.
      Without
      the prior written consent of the Company, Executive shall undertake no
      activities for compensation from any entity other than the Company.

    

    3. COMPENSATION.

    

    (a) Salary.
      Executive’s annualized base salary shall be $105,000.00, subject to withholding
      for federal and state income and other applicable taxes or
      deductions.
      Executive shall be entitled to receive the following bonus payments, subject
      to
      withholding for federal and state income and other applicable taxes or
      deductions:

     

    
      	·  	
              $5,000
                upon the later of (i) the date when the Company shall have sold and
                shipped a total of 100 open power units or the date when the Company
                shall
                have sold and shipped a total of 50 gensets (ii) the date when the
                Executive has finalized his move to Algona, Iowa
                and

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    The
      Company agrees to adopt on or before January 1, 2008, a bonus plan which will
      include Executive as a participant. The Company
      has the
      discretion to increase Executive’s base salary based on performance goals and
      expectations as may
      be
      adopted
      by the Company and
      revised
      from time to time typically on an annual basis based on performance and company
      profitability.

    

    (b) Benefits.
      Executive will receive all medical, dental, pension, life, disability and any
      other employee benefits offered by Company subject to the eligibility terms
      of
      each individual plan. 

    

    (c) Expenses.
      The
      Company will reimburse the Executive for all reasonable direct out-of-pocket
      expenses incurred in connection with the performance of his duties and
      responsibilities. Such requests for reimbursement will be made by the Executive
      in a timely manner and in conformance with all policies of the Company.
      Executive will receive up
      to
      $15,000
      as
reimbursement
      for relocation expenses,
      $5,000
      of which may be paid in advance upon the request of Executive. Payment of
      relocation expenses is subject to presentation of receipts evidencing expenses
      that constitute qualified moving expenses under the US Internal Revenue Code
      or
      expenses otherwise approved by the Company.

    

    (d) Vacation.
      During
      the term of his employment, the Executive will receive fifteen days vacation
      in
      the first year of this agreement and fifteen days plus one additional day of
      vacation every year thereafter. The Executive may carryover to the next year
      no
      more than one-half of the vacation available in any given year. One-half of
      any
      vacation not used in excess of this amount will be forfeited. Vacation maybe
      taken at anytime during the vacation year so long as it, as determined by the
      Company
      acting
      reasonably, does not materially interfere with the Executive’s duties. The
      Executive may not use vacation in lieu of any notice required by this agreement.
      In the event this agreement lapses or is terminated, the Executive will be
      paid
      all vacation available to him at the time of the lapse or termination except
      as
      otherwise provided for herein. 

    

    (e) Stock
      Options.
      The
      Executive will receive options to purchase 85,000
      shares
      of
      common stock of the Company at under the Company’s 2005 Incentive Compensation
      Plan, subject to the milestones and benchmarks identified on Exhibit B. The
      vesting date, exercise price and other terms will be determined in accordance
      with the terms of a separate Stock Option Agreement to be executed by the
      Company and Executive. 

    

    4. TERMINATION.

    

    (a) Termination
      Without Cause.
      This
Executive’s
      employment under this Agreement
      may be terminated, without cause, by either party by giving written notice
      to
      the other party ninety (90) days prior to the effective date of termination.
      

    

    (i) Termination
      by Executive. The
      Executive may not use vacation in lieu of the notice period. If Executive fails
      to provide appropriate notice and fully cooperate in any transitional
      arrangements, he will forfeit all vacation or PTO benefits available to him
      under the terms of the Contract. Executive shall receive no severance pay or
      benefit continuation if he terminates the agreement.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (ii) Termination
      by Company.  The
      Executive shall receive the prorated portion of any incentive compensation
      which
      would otherwise have been payable to him under the existing plan in the year
      of
      the termination of employment.

    

    (b) Termination
      for Cause.
      Executive’s
      employment under this Agreement
      shall
      terminate immediately for cause under the following circumstances:

    

    (i) In
      the
      event of the death or permanent disability of the Executive. For the purposes
      of
      this agreement, permanent disability means any physical, mental or emotional
      illness, disease or condition which in the opinion of a physician chosen by
      the
      Company renders the Executive incapable of adequately performing his usual
      duties for a period exceeding ninety (90) days.

    

    (ii) The
      Executive commits embezzlement, fraud, dishonesty or other acts of misconduct,
      or is guilty of conduct in material violation of established ethics,
      regulations, law or policy.

    

    (iii) The
      Executive is charged with any crime.

    

    (iv) The
      Executive is adjudicated as incompetent.

    

    (v) Company
      determines, based on action or threatened action, of any federal or state
      government agency or in the opinion of Company’s legal counsel that continuance
      of the agreement would violate the provisions of any federal or state law or
      regulation.

    

    (vi) There
      is
      a material breach by Executive of this agreement or of one or more obligations
      imposed upon him under the agreement.

    

    (vii) Executive
      shall have committed any act of gross negligence in the performance of his
      duties or obligations hereunder or, without proper cause, shall have willfully
      refused or habitually neglected to perform his employment duties or obligations
      under this Agreement;

    

    (viii)
       Executive
      shall have committed any act that constitutes a willful breach of the Company’s
      employment policies;

    

    (ix)
       Executive
      shall have committed any material act of willful misconduct, dishonesty, or
      breach of trust against Company;

    

    (c) Mutual
      Agreement.
      This
      Agreement may be terminated by the mutual written agreement of the
      parties.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    5. SEVERANCE
      PAYMENTS.
      In the
      event Company terminates
      Executive’s employment under
      this
      Agreement prior to the expiration of the Term, Executive shall receive his
      then
      current salary (not including any bonus earned after the date of termination
      of
      Executive's employment, or calculated for any period of time after such date
      of
      termination) for a period of time following the effective date of termination
      equal to: (i) six months if such termination occurs on or before January 1,
      2008, or (ii) one year if such termination occurs at any time subsequent to
      January 1, 2008; provided, however, that eligibility for any such severance
      payments shall not be paid if Executive is terminated for cause in accordance
      with this Agreement. Severance payments shall be made in accordance with the
      Company’s regular payroll intervals, and such payments shall be due Executive
      regardless of whether he secures other employment during the severance period,
      except in the event Executive competes with Company or breaches any other
      contract, duty or agreement with Company. Company shall make all required
      withholdings from Executive’s pay. If
      Executive’s employment is terminated as a result of a “Change in Control” while
      Executive is employed under this Agreement, Executive shall be entitled to
      severance payments in accordance with this Section unless such termination
      was
      for cause as defined in Section 4(b). Change of Control shall mean the sale
      or
      disposition of all or substantially all the Company's assets; the merger,
      consolidation, or reorganization of the Company with or involving any other
      entity; or the liquidation of the Company. In no event shall a Change-in-Control
      be deemed to have occurred if Mr. Hollinger is part of a purchasing group which
      consummates the Change-in-Control transaction. 

    

    6. SEVERANCE
      BENEFITS.
      Executive shall continue to participate during the applicable severance period,
      at the Company’s expense, in any group health, dental, life or disability
      insurance plan that he was otherwise entitled to on the date of his termination.
      However, such insurance benefits may be waived by Executive prior to the end
      of
      the severance period if he becomes eligible to receive comparable benefits
      through subsequent employment. No vacation or paid leave or any other benefits
      not specified herein shall accrue following the last day of Executive’s active
      employment. The parties agree that termination of Executive’s employment shall
      be the “qualifying event” which commences Executive’s right to continuation of
      applicable group health insurance under the provisions of the Consolidated
      Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and that once the severance
      period is over, Executive will be responsible for paying the premium himself
      for
      the remainder of the COBRA period. Executive shall be entitled to any accrued
      paid time off which is not used prior to the effective date of termination
      pursuant to the existing policies of the Company. Executive shall not receive
      paid benefits in the event he is terminated for cause.

    

    7. CONFIDENTIALITY.

    

    (a) Confidential
      Information. 

    

    (i) Executive
      acknowledges that in the course of his employment he will have access to
      proprietary information, trade secrets, and other Confidential Information,
      that
      such information is a valuable asset of Company
      and that
      its disclosure or unauthorized use will cause Company
      substantial harm. As used in this Agreement, the term “Confidential
      Information”
means:
      (1) proprietary information of Company,
      and (2)
      information described in this Agreement as confidential or designated by
Company
      as
      confidential or which Executive knows or should know is confidential.
      Confidential Information includes software programs, whether in source form
      or
      object form, scientific, technical, trade, or business information possessed,
      obtained by, developed for, or given to Company
      that is
      treated by Company
      as
      confidential or proprietary including, without limitation, intellectual
      property, research materials and Developments (defined below), formulations,
      techniques, methodologies, formulae, procedures, tests, equipment, data,
      reports, know-how, sources of supply, patent positioning, relationships with
      consultants and employees, business plans and business developments, information
      concerning the existence, scope of activities of any research, development,
      manufacturing, marketing, or other projects of Company
      , and
      any other confidential information about or belonging to Company
      or its
      suppliers, licensors, licensees, partners, affiliates, customers, potential
      customers, or others. Confidential Information does not include information
      that
      (i) was known to Executive at the time it was disclosed, other than by previous
      disclosure by Company,
      as
      evidenced by Executive’s written records at the time of disclosure; (ii) is at
      the time of disclosure or later becomes publicly known under circumstances
      involving no breach of this Agreement, or (iii) is lawfully and in good faith
      made available to Executive by a third party who did not derive it, directly
      or
      indirectly, from Company.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    (ii) “Developments”
shall
      include, without limitation, ideas, concepts, discoveries, inventions,
      developments, know-how, trade secrets, techniques, methodologies, modifications,
      innovations, improvements, writings, documentation, data, research materials,
      and rights (whether or not protectable under state, federal, or foreign patent,
      trademark, copyright, license or similar laws) that are conceived, discovered,
      invented, developed, created, made, or reduced to practice or tangible medium
      by
      Executive or under his or her direction (solely or with others) and that relate
      directly or indirectly to the development,
      sale, marketing, manufacture and support of internal combustion engines capable
      of being fueled by alternative fuels such as hydrogen (the “Field”)
      or
      result from the actual or anticipated business, work, research or investigations
      of the
      Company
      or which
      result to any extent from the use of the
      Company’s
      premises or property. 

    

    (b) Ownership.
      Executive acknowledges that all Confidential Information is and shall continue
      to be the exclusive property of the
      Company,
      whether
      or not prepared in whole or in part by Executive and whether or not disclosed
      to
      Executive or entrusted to his custody in connection with his employment by
      the
      Company.
      Executive hereby assigns to the
      Company
      all
      right, title and interest he or she may have or acquire in all Developments
      and
      agrees that all Developments shall be the sole property of the
      Company
      and its
      assigns, and the
      Company
      and its
      assigns shall be the sole owner of all patents, copyrights, licenses and other
      rights in connection therewith. Executive further agrees to assist the
      Company
      in every
      proper way (but at the
      Company’s
      expense) to obtain and from time to time enforce patents, copyrights, licenses
      or other rights on said Developments in any and all countries, and to that
      end
      Executive will execute all documents necessary:

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (i) to
      apply
      for, obtain and vest in the name of the
      Company
      alone
      (unless the
      Company
      otherwise directs) letters patent, copyrights, licenses or other analogous
      protection in any country throughout the world and when so obtained or vested
      to
      renew and restore the same; and

    

    (ii) to
      defend
      any opposition proceedings in respect of such applications and any opposition
      proceedings or petitions or applications for revocation of such letters patent,
      copyright, license or other analogous protection.

    

    8. NONDISCLOSURE
      AND NONUSE.
      

    

    (a) During
      the Term, and thereafter, Executive shall not directly or indirectly publish,
      disseminate, or otherwise disclose, deliver, or make available to any third
      party any Confidential Information, other than with the prior written consent
      of
the
      Company.
      Executive may disclose the Confidential Information to a governmental authority
      or by order of a court of competent jurisdiction, provided that such disclosure
      is subject to all applicable governmental or judicial protection available
      for
      like material and reasonable advance notice is given to the
      Company.
      Executive agrees to use the Confidential Information only as directed by
the
      Company.
      In
      addition, Executive agrees to use his best efforts to prevent accidental or
      negligent loss or release by others to any unauthorized person of the
      Confidential Information. 

    

    (b) Executive
      shall not publish any manuscript or other document, solely or in co-authorship
      with others, pertaining to the Confidential Information without the prior
      written consent of the
      Company.
      Executive agrees to submit to the
      Company
      a copy
      of any proposed manuscript or other materials to be published or otherwise
      publicly disclosed that contains Confidential Information, or which contains
      any
      discussion relating to the
      Company,
      in
      sufficient time to enable the
      Company
      to
      determine if patentable Developments or any Confidential Information of
the
      Company
      would be
      disclosed. Executive shall cooperate with the
      Company
      in this
      respect and shall delete from the manuscript or other disclosure any
      Confidential Information if requested by the
      Company
      and
      shall assist the
      Company
      in
      filing for patent protection for any patentable Developments prior to
      publication or other disclosure.

    

    9. DEVELOPMENTS.
      Developments are works made for hire and are and shall remain the exclusive
      property of the
      Company. The Company
      may use
      or pursue them without restriction or additional compensation. Executive agrees
      to promptly disclose to the
      Company,
      all
      Developments. Executive hereby assigns to the
      Company
      any and
      all right, title and interest he or she may have or acquire in all Developments
      and agrees that all Developments shall be the sole property of the
      Company
      and its
      assigns, and the
      Company
      and its
      assigns shall be the sole owner of all patents, copyrights, licenses and other
      rights in connection therewith. 

    

    10. INTELLECTUAL
      PROPERTY RIGHTS.
      Executive agrees that the
      Company
      shall be
      the sole owner of all domestic and foreign patent or other rights pertaining
      thereto and further agrees to execute all documents which the
      Company
      reasonably determines to be necessary or convenient for use in applying for,
      perfecting or enforcing patents -or other intellectual property rights.
      Executive further agrees to assist the
      Company
      in every
      proper way (but at the
      Company’s
      expense) to obtain and from time to time enforce patents, copyrights, licenses
      or other rights on said Developments in any and all countries, and to that
      end
      Executive will execute all documents necessary:

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    (a) to
      apply
      for, obtain and vest in the name of the
      Company
      alone
      (unless the
      Company
      otherwise directs) letters patent, copyrights, licenses or other analogous
      protection in any country throughout the world and when so obtained or vested
      to
      renew and restore the same; and

    

    (b) to
      defend
      any opposition proceedings in respect of such applications and any opposition
      proceedings or petitions or applications for revocation of such letters patent,
      copyright, license or other analogous protection.

    

    11. TRADE
      SECRETS OF OTHERS.
      Executive warrants that his employment by the
      Company
      does not
      violate any agreement with any prior employer or other person or firm, that
      he
      is not subject to any existing confidentiality agreement or obligation, except
      as has been fully disclosed in writing to the
      Company,
      and
      that Executive will not use or disclose in connection with his employment by
      the
      Company
      any
      trade secrets belonging to any other person or firm. 

    

    12. OTHER
      OBLIGATIONS. Executive
      acknowledges that the
      Company
      from
      time to time may have agreements with other persons or with various governmental
      agencies that impose obligations or restrictions on the
      Company
      regarding inventions or creative works made during the course of work thereunder
      or regarding the confidential nature of such work. Executive agrees to be bound
      by all such obligations and restrictions of which he is informed by the
      Company
      and to
      take all action necessary to discharge the obligations of the
      Company
      thereunder.

    

    13. RETURN
      OF CONFIDENTIAL INFORMATION.
      Executive shall deliver to the
      Company
      all
      Confidential Information provided by the
      Company
      upon the
      termination of
      Executive’s employment under this Agreement or
      expiration of the Term for any reason. During his employment for the
      Company,
      Executive will deliver immediately to the
      Company
      upon its
      request all Confidential Information. Executive will retain no excerpts, notes,
      photographs, reproductions or copies of any Confidential
      Information.

    

    14. NON-COMPETITION
      AND NON-SOLICITATION.

    

    (a) Executive
      covenants that during the Term and for one
      year
      commencing upon expiration of the period for which Executive should be entitled
      to receive severance payments under Section 5 above,
      and
      within the geographic area in which the
      Company
      does
      business, Executive shall not in any capacity whether in the capacity as an
      employee, officer, director, partner, manager, consultant, agent or owner (other
      than a minority shareholder or other equity interest of not more than 1% of
      a
company
      whose
      equity interests are publicly traded on a nationally recognized stock exchange
      or over-the-counter):

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    (i) directly
      or indirectly advise, manage, render or perform any services to or for any
      other
      person; association or entity which is engaged in, or preparing to engage in,
      the Field; or 

    

    (ii) call
      upon
      on behalf of a competing entity any person or entity that is or becomes within
      the two year period prior to the termination of
      Executive’s employment under this Agreement or
      expiration of the Term, a customer of the
      Company
      for the
      purpose of soliciting or selling products or services similar to those offered
      by the
      Company.;

    

    (b) For
      a 12
      month period following the termination of
      Executive’s employment under this Agreement or
      expiration of the Term for any reason, Executive will not solicit, or assist
      another person to solicit, any employee, supplier or independent contractor
      of
the
      Company
      to
      terminate such employee's employment or terminate or curtail such supplier's
      or
      independent contractor's business relationship with the
      Company

    

    (c) Executive
      acknowledges and agrees that the time, scope, geographic area, and other
      provisions of this Section 14
      have
      been specifically negotiated by sophisticated parties and specifically hereby
      agrees that such time, scope, geographic area, and other provisions are
      reasonable under the circumstances. Executive further agrees that if, at any
      time, despite the express agreement of the parties hereto, a court of competent
      jurisdiction holds that any portion of this Section 14
      is
      unenforceable for any reason, the maximum restrictions of time, scope, or
      geographic area reasonable under the circumstances, as determined by such court,
      will be substituted for any such restrictions held unenforceable

    

    (d) The
      right
      to the severance payments described in Sections 5 and 6 of this Agreement shall
      be forfeited in the event of violation of the terms of this Section
      14.

     

    15. GOVERNING
      LAW AND RESOLUTION OF DISPUTES:
      

     

    (a) All
      questions concerning the construction, interpretation and validity of this
      Agreement, and all matters relating hereto, shall be governed by and construed
      and enforced in accordance with the laws of the State of Iowa, without giving
      effect to any choice or conflict of law provision or rule (whether in the State
      of Iowa or any other jurisdiction) that would cause the application of the
      laws
      of any jurisdiction other than the State of Iowa.

    

    (b) Each
      of
      the parties hereto hereby irrevocably and unconditionally submits, for itself
      and its property, to the exclusive jurisdiction of any Iowa state court or
      federal court of the United States of America sitting in the State of Iowa,
      and
      any appellate court from any thereof, in any action or proceeding arising out
      of
      or relating to this Agreement or for recognition or enforcement of any judgment,
      and each of the parties hereto hereby irrevocably and unconditionally agrees
      that all claims in respect of any such action or proceeding may be heard and
      determined in any such Iowa state court or, to the extent permitted by law,
      in
      such federal court. Each of the parties hereto agrees that a final judgment
      in
      any such action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by
      law.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    16. LEGAL
      ADVICE:
      The
      parties agree and acknowledge that they are each responsible for obtaining
      their
      own tax and legal advice concerning this agreement. Neither party has assumed
      nor will assume any responsibility in advising the other party as to the legal
      or tax consequences of the agreement.

    

    17. TENDERING
      RESIGNATIONS.
      The
      Executive agrees that after termination of his employment, he will tender his
      resignation from any position he may hold as an officer or director of the
      Company or its subsidiaries. Doing so will not reduce the obligations of the
      Company described herein.

    

    18. DELIVERY
      OF RECORDS.
      Upon
      any termination of employment, the Executive shall, within five (5) business
      days, deliver or cause to be delivered to the Company all books, documents,
      effects, monies, securities, electronically stored information, or other
      property belonging to the Company or its subsidiaries or for which the Company
      or its subsidiaries are liable to others, which are in the possession, charge,
      control, or custody of the Executive.

    

    19. NOTICES.
      Any
      notice required to be given by this Agreement shall be in writing and sent
      by
      certified mail to the Company, at its principal office or to the Executive
      at
      the Executive's last known address on the books of the Company.

    

    20. ASSIGNMENT.
      The
      rights and obligations of the Company under this Agreement will inure to the
      benefit of and be binding upon the successors and assigns of the Company. This
      Agreement is not assignable by the Executive since the Executive's services
      under this Agreement are personal.

    

    21. INVALID
      PROVISION.
      The
      invalidity or unenforceability of any particular provision of this Agreement
      will not affect other provisions, and this Agreement shall be construed in
      all
      respects as though such in invalid or unenforceable provisions were
      omitted.

    

    22. MERGER.
      This
      Agreement, including Exhibits and Attachments, if any, represents the entire
      understanding between the parties with respect to the subject matter hereof.
      Any
      prior agreements between the parties as to the subject matter of this Agreement
      are hereby expressly terminated. 

    

    IN
      WITNESS WHEREOF,
      this
      Agreement has been executed on the day, month, and year written
      below.

    

    HYDROGEN
      ENGINE CENTER   

    

    
      	
              By:

            	
              /s/
                Theodore
                G. Hollinger

            	 	
              /s/
                Donald
                C. Vanderbrook

            
	
              Theodore
                G. Hollinger

            	 	
              Donald
                C. Vanderbrook

            
	 	 	 	 	 
	
              Its:
                

            	President	 	
              Date:

            	
              1-7-2007

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    SERVICES
      TO BE PROVIDED BY EXECUTIVE

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    MILESTONES/BENCHMARKS

    

    
      
        
        

      

      
        11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]