Product Development And Distribution Agreement

PRODUCT DEVELOPMENT AND DISTRIBUTION AGREEMENT


THIS PRODUCT DEVELOPMENT AND DISTRIBUTION AGREEMENT ("Agreement") is made and entered into as of the 1st day of June, 2000 ("Effective Date") by and between JG Engine Dynamics, Inc, a California corporation, Automotive Systems Group Inc., a California corporation (collectively the Licensor) and Edelbrock Corporation, a Delaware corporation ("Edelbrock").


RECITALS


A. Licensor owns Licensed Products (defined below) and related
Intellectual Property Rights.


B. Edelbrock is interested in obtaining an exclusive license to
manufacture, market, distribute and sell Licensed Products and
to use Licensor Technology (defined below) in order to create
jointly owned New Products (defined below) and to manufacture,
market, distribute and sell New Products.


C. The parties desire to collaborate on certain projects to develop
Joint Technology (defined below).


NOW, THEREFORE, in consideration of the premises and mutual covenants in this Agreement, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.


1. DEFINITIONS


1.1 "Confidential Information" means information not generally known to the
public that has independence economic value or which would constitute a
trade secret under the Uniform Trade Secrets Act, and which is used,
developed, owned or obtained by a party relating to that party's
business or this Agreement, including without limitation, technical
information, know-how, technology, prototypes, manuals, ideas,
inventions, improvements, data, files, customer lists, accounting
records, software programs and related documentation and all copies and
tangible embodiments thereof (in whatever form or medium). Confidential
Information does not include any information that: (i) has entered into
the public domain through no wrongful act or breach of any
confidentiality obligation on the part of the receiving party or any
third party; (ii) was in the lawful knowledge and possession of, or was
independently developed by, the receiving party prior to the time it was
disclosed to, or learned by, the receiving Licensors evidenced by
written records kept in the ordinary course of business by the receiving
party, or by written or other documentary proof of actual use by the
receiving party; (iii) was rightfully received from a third party not in
violation of any contractual, legal or fiduciary obligation by such
third party or (iv) was approved for release by the Licensor of such
information.


1 2 1.2 "Improvements" means any and all enhancements, improvements and/or
modifications of or to any technology.


1.3 "Intellectual Property Rights" means any and all rights in and to
trademarks, trade names, service marks, trade secrets, trade dress,
Patents, logos, brand features, Internet domain names and corporate
names, together with all goodwill associated therewith, and any
translations, adaptations, derivations or combinations of the foregoing,
rights of publicity, copyrights and copyrightable works, software
programming (including, without limitation, systems, documentation,
data, data formats and files, object code and source code), know-how,
"show-how," Patent registrations and applications, and renewals of any
of the foregoing, and any similar rights of any type under the laws of
any applicable government authority, issues or licensed to a party, and
any and all corresponding rights that, now or hereafter, may be secured
throughout the world. For the purposes of this Agreement this definition
applies to Licensed Products only.


1.4 "Joint Technology" means any technology developed as a result of the
parties' collaborative efforts, including, without limitation, all
inventions (whether or not patentable and whether or not reduced to
practice), Patents, and other proprietary information, data, technology,
know-how, methods, templates, software codes, documentation, tools,
interfaces, trade secrets, Improvements, algorithms, libraries, design
flows, processes, databases, mechanical and electronic hardware,
electronic components, computers and their parts, computer languages,
programs and their documentation, encoding techniques, articles,
writings, compositions, works of authorship and other proprietary
materials that are used, conceived or reduced to practice by the parties
in connection with this Agreement.


1.5 "Edelbrock Technology" means any technology owned by Edelbrock,
including, without limitation, all inventions (whether or not patentable
and whether or not reduced to practice), Patents, and other proprietary
information, data, technology, know-how, methods, templates, software
codes, documentation, tools, interfaces, trade secrets, Improvements,
algorithms, libraries, design flows, processes, databases, mechanical
and electronic hardware, electronic components, computers and their
parts, computer languages, programs and their documentation, encoding
techniques, articles, writings, compositions, works of authorship and
other proprietary materials that are used, conceived or reduced to
practice by Edelbrock.


1.6 "Licensor Technology" means any technology, included in the Licensed
Products, that is owned by Licensor, including, without limitation, all
inventions (whether or not patentable and whether or not reduced to
practice), Patents, and other proprietary information, data, technology,
know-how, methods, templates, software codes, documentation, tools,
interfaces, trade secrets, algorithms, Improvements, libraries, design
flows, processes,


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databases, mechanical and electronic hardware, electronic components,
computers and their parts, computer languages, programs and their
documentation, encoding techniques, articles, writings, compositions,
works of authorship and other proprietary materials that are used,
conceived or reduced to practice by Licensor.


1.7 "Licensed Products" means all non-U.S. automotive aftermarket products
(excluding Alfa Romeo) developed and owned by Licensor, including,
without limitation, cam shafts, intake manifolds, aluminum cylinder
heads, exhaust systems, including both headers and cat-back systems,
suspension, throttle bodies, miscellaneous chrome, parts and accessory
parts and all Improvements thereto. Licensed Products do not include
customized products made by Licensor for direct sales to Licensor
customers, customized means unique one of a kind product.


1.8 "Net Sales" means the gross invoice price of the Licensed Products and
New Products, less the following: (i) returns or product warranties or
alleged defects or refusals; and (ii) associated transaction-related
taxes including, without limitation, sales and duty taxes.


1.9 "New Products" means any new products or parts developed by Edelbrock
which are based upon the Licensed Products and may incorporate Edelbrock
created Improvements that are not based upon Licensed Products. If
Edelbrock develops new products or parts with the intent to utilize
Licensor's name on such new products or parts, Licensor will approve any
such name on a case-by-case basis. Edelbrock may not use Licensor's name
in connection with a new product or part without paying a five (5%)
percent royalty to Licensor for the life of the part/product and must
receive prior approval from Licensor to use Licensor's name on any new
part or product prior to Edelbrock's manufacture or production. As long
as this Agreement is in full force and effect either party agrees not to
develop products that compete with Licensed Products.


1.10 "Patents" means any and all patents, patent applications, patent
disclosures or foreign equivalents and all extensions, reissues,
divisions, continuations and continuations-in-part related thereto, as
well as any foreign patent applications that may be filed thereon and
all patents or legal equivalents in a foreign country that may be
issued.


1.11 "Royalty Report" means a written report setting forth each pertinent
monthly period and the type and quantity of Licensed Products and New
Products sold pursuant to this Agreement.


1.12 "Territory" means the entire world.


2. LICENSE


2.1 Licensed Products. Subject to the terms and conditions of this
Agreement, Licensor grants to Edelbrock an exclusive, royalty-bearing,
worldwide, perpetual, right and license (with a


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right to sublicense) under Licensor's Intellectual Property Rights to
manufacture, market, distribute, package, label and sell Licensed
Products in the Territory.


2.2 New Products. Subject to the terms and conditions of this Agreement,
Licensor grants to Edelbrock an exclusive, royalty-bearing, worldwide,
perpetual, right and license (with a right to sublicense) under
Licensor's Intellectual Property Rights to develop, manufacture, market,
distribute, package, label and sell New Products in the Territory.
Licensor shall immediately cease all manufacture of current new like
products upon development of like new products by Edelbrock.


2.3 Licensor Technology. Subject to the terms and conditions of this
Agreement, Licensor grants to Edelbrock an exclusive, worldwide,
perpetual, right and license, under Licensor's Intellectual Property
Rights, to use Licensor Technology in connection with: (i) the
development of Improvements; and (ii) the development of New Products.
Edelbrock has the right to grant sublicenses in and to the Licensor
Technology in connection with its rights under this Agreement.


2.4 Sublicense. Upon mutual consent of the parties hereto, Edelbrock has the
right to grant sublicenses to any or all the licensed rights set forth
in this Section 2 to third parties. Any such sublicense entered into by
Edelbrock is to be in a writing consistent with the terms of this
Agreement.


3. PAYMENTS


Edelbrock shall pay to Licensor royalties on sales of Licensed Products
and New Products in accordance with the terms set forth in Exhibit B,
attached hereto.


4. ACCOUNTING


4.1 Royalty. All payments made pursuant to this Agreement shall be in U.S.
dollars at the official rate of exchange prevailing in the U.S. on the
date of remittance.


4.2 Set Off. Edelbrock shall have a right of set off against amounts owed to
Licensor hereunder for any claims Edelbrock may have against Licensor
consistent with all applicable laws now or hereafter in effect.


5. RECORDS


5.1 Record Keeping. Edelbrock shall keep correct and complete records and
books of account covering all transactions relating to this Agreement.
Edelbrock agrees to permit, no more than once a year, at Licensor's
expense and reasonable request, an independent certified public
accountant selected by Licensor to have access during ordinary business
hours to such records and books of account and all other documents and
materials in the possession


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and under the control of Edelbrock relating to the subject matter of
this Agreement. Such accountant shall agree in writing to keep
confidential all information disclosed to it by Edelbrock provided,
however, that such accountant may disclose to Licensor only that
information which relates to solely the accuracy or preparation of, or
which should properly have been contained in, the royalty report
required hereunder. Such information is deemed the Confidential
Information of the Edelbrock.


5.2 Period of Record Retention. Edelbrock shall keep all such records and
books of account for a minimum of three (3) years as it retains such
documents in the ordinary course of its business.


5.3 Deficiency of Royalty Due. If any audit or examination reveals any
inconsistencies or mistakes, then: (i) in the case of an underpayment,
Edelbrock shall make the appropriate payment to Licensor promptly; or
(ii) in the case of an overpayment, Edelbrock will deduct such amount
from the next royalty payment.


6. COLLABORATION


6.1 Efforts. From time to time, the parties agree to collaborate with each
other on projects to develop Joint Technology.


6.2 Licensor Technology. Licensor grants to Licensee, a limited,
non-exclusive right and license, under Licensor's Intellectual Property
Rights, to use Licensor Technology to develop Joint Technology and in
connection with the manufacture, distribution and sale of products that
include Joint Technology.


6.3 Licensee Technology. Licensee grants to Licensor, a limited,
non-exclusive right and license, under Licensor's Intellectual Property
Rights, to use Licensee Technology solely to develop Joint Technology
and in connection with the manufacture, distribution and sale of
products that include Joint Technology.


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6 7. OWNERSHIP, PROTECTION AND ENFORCEMENT OF TECHNOLOGY


7.l Ownership.


7.1.1 Licensor Technology. Licensor exclusively owns all right, title and interest in and to all Licensor Technology.


7.1.2 Edelbrock Technology. Edelbrock exclusively owns all right, title and interest in and to all Edelbrock Technology.


7.1.3 Joint Technology ...