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EXHIBIT 10(i)
AGREEMENT WITH (n,p) ENERGY, INC.
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BASIC AGREEMENT
1. This is an agreement between (n,p) Energy, Inc. (NPE) of Albuquerque,
New Mexico, and Innova Pure Water, Inc. (IPW) of Clearwater, Florida,
for development of products and to safeguard proprietary information
which has been and will be transferred in the future between the two
parties. NPE and IPW will be responsible for the control and further
dissemination of the technology into their respective companies and to
such third parties as jointly agreed upon.
1.1. Unless otherwise provided by written consent, no information
will be transferred to a third party which has not entered
into a confidentiality agreement containing, as a minimum the
same terms in the attached Nondisclosure Agreement.
1.2. It is further agreed that the principals and/or officers who
signed the attached Nondisclosure Agreement may disseminate
the information within their companies on a need-to-know basis
following receipt of a signed copy of the attached
Nondisclosure Agreement by the second party to this agreement
from each individual receiving the information.
1.3. Unless otherwise agreed to, the information transmitted to
third parties will be in the form of application data and such
peripheral knowledge as may be required to generate confidence
in the product and/or technology to provide incentive to the
third party to fund development of marketable products
containing such technology, or to obtain financing as well as
to obtain the necessary agency or government approvals to
market products embracing the transferred technology.
2. Both parties agree that this document supersedes previous agreements
entered into between NPE and IPW.
3. IPW represents that it:
3.1. Has current patents, or patents pending, for technology
developed for water treatment for the purpose of human
consumption; and,
3.2. Will not, for the period during which collective effort is
being put forth, or products employing the transferred polymer
technology are in development and for a period of five years
thereafter, enter into any contractual relationship --
3.2.1. With the Los Alamos National Laboratory (LANL); or,
3.2.2. With any company with which NPE is currently
discussing a strategic alliance, option or agreement;
and,
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3.3. Will not directly contact, deal or communicate with an
individual or third party which has been introduced by NPE
(e.g., other strategic partners) or by associate companies of
NPE without written authorization from the President or
Chairman of the Board of NPE; and,
3.4. Shall make no attempt to circumvent the technology transferred
or to utilize the product or market knowledge brought to IPW
as a result of this agreement; and,
3.5. Will report immediately any attempts at circumvention, or
subversion of which IPW shall become aware, as well as any
license infringements to the transferred technology that may
take place.
4. NPE represents that it:
4.1. Has received, or will seek, the exclusive license for Polymer
FiltrationTM technology developed by LANL suitable for
treatment of water for human consumption at the in-feed, and
beyond, of industrial facilities, offices, municipal
buildings, and households as well as products for use by the
individual for the purpose of the removal of heavy metals
(e.g., lead, arsenic) and radioactive metals, which would
subsequently be sub-licensed to IPW under terms herein set
forth, and,
4.2. Will not for the period during which collective effort is
being put forth, or products employing the transferred
technology are in development, and for a period of five years
thereafter, enter into any contractual relationship with a
company:
4.2.1. In direct competition with IPW products in the area
of treatment of water for human consumption at the
in-feed, and beyond, of industrial facilities,
offices, municipal buildings, and households as well
as products for use by the individual for the purpose
of the removal of heavy metals (e.g., lead, arsenic)
and radioactive metals; or,
4.2.2. With whom IPW has a strategic alliance in the area of
treatment of water for human consumption at the
in-feed, and beyond, of industrial facilities,
offices, municipal buildings, and households as well
as products for use by the individual for the purpose
of the removal of heavy metals (e.g., lead, arsenic)
and radioactive metals; and,
4.3. Will not directly contact, deal or communicate with an
individual or third party which has been introduced by IPW
(e.g., IPW's other strategic partners); without written
authorization from the President or Chairman of the Board of
IPW; and,
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BASIC AGREEMENT
4.4. Shall make no attempt to circumvent the technology transferred
or to utilize the product or market knowledge brought to NPE
as a result of this agreement; and,
4.5. Will report immediately any attempts at circumvention, or
subversion of which NPE shall become aware, as well as any
patent infringements to the transferred technology that may
take place.
5. Both parties acknowledge that they will diligently pursue the testing,
development, production, and commercialization of products employing
the NPE/IPW technologies. As a minimum, agreements for product
development and commercialization will include:
5.1. NPE will issue a sub-license granting IPW rights to use
Polymer FiltrationTM technology specific to the following
field-of-use (FOU):
5.1.1. Treatment of water for human consumption at the
in-feed, and beyond, of industrial facilities,
offices, municipal buildings, and households as well
as products for use by the individual for the purpose
of the removal of heavy metals (e.g., lead, arsenic)
and radioactive metals.
5.1.2. The sub-license would be applicable to the following
countries:
5.1.2.1. United States,
5.1.2.2. Canada,
5.1.2.3. Elected countries within the European
Patent Organization (EPO), and,
5.1.2.4. Japan.
5.2. NPE will issue a license granting IPW rights to NPE know-how
for polymer technology specific to the FOU and applicable to
all countries other than the United States, Canada, EPO,
Japan, Mexico and Southeast Asia.
5.3. The products employing the subject technology may be used
within the defined FOU, either as initially conceived by the
patents licensed, with NPE know-how, or with a new patented
technology developed though the combining of technology
between NPE and IPW. If shared technology results in a new
patented technology, NPE and IPW both own rights to the
invention and both share in the revenues as delineated in
paragraph 11.1.
5.4. NPE will work in good faith with the University of California
(UC) to modify its current license to cover cost recover if
there is independent
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BASIC AGREEMENT
litigation in which UC does not participate in the prosecution
or defense of patent infringement against Polymer FiltrationTM
technology patents. The license between NPE and IPW will need
to incorporate any approved modifications. This includes:
5.4.1. Right to chose own attorney;
5.4.2. Profit sharing less reasonable costs for prosecuting
patent infringement
5.5. Based on results of discussions with UC on patent right
litigation, 50% of the reasonable costs of defense or
litigation for defending or prosecuting patent infringements
against Polymer FiltrationTM technology patents will be
credited from profit sharing due during the period of
litigation. In addition, 50 % of recovered damages will be
considered part of the total revenue stream for purposes of
profit sharing.
5.6. Should the patent for US Patent Application number 08/453,406
and US Patent Application number 08/454,451 be overturned, the
profit sharing payment will be re-negotiated.
5.7. Both NPE and IPW --
5.7.1. Retain their current protected positions for patents,
developments, applications and know-how developed in
conjunction with their respective current
technologies;
5.7.2. will have joint ownership of patentable new
inventions combining the NPE's patented polymer
technology and IPW's patented water filtration
technology; and,
5.7.3. will equally share patent costs for new patentable
inventions derived from combining NPE/IPW know-how
and technology. Either party may exercise the option
to not participate in the patent process and forego
their ownership rights for the specific invention.
5.8. NPE will make best efforts to provide IPW with polymer
information and performance information. IPW will make best
efforts to provide NPE with water treatment information and
performance information for its patented technology. Neither
party will provide indemnification to the other party for
losses resulting from any claims. Both parties agree to carry
product liability insurance.
5.9. Termination will automatically occur with the expiration of
the last relevant patent.
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BASIC AGREEMENT
5.10. Should the NPE license with UC be in jeopardy of termination for
through no fault of IPW, IPW may enter into direct negotiations with
UC to protect IPW's investment and interest.
5.11. NPE will notify UC of the sub-license agreement with IPW within 30
days after execution of the agreement.
5.12. As required, NPE will make the necessary disclosures to NSF and other
governmental agencies that may have a regulatory responsibility.
5.13. IPW will provide to NPE a business plan for the FOU which outlines:
5.13.1. Current strategic partners,
5.13.2. Authorized distribution including any geographic and/or
commercial exclusions,
5.13.3. Anticipated net sales: "net sales" defined as invoiced sales
or services less the following deductions where applicable:
a) sales returns; b) allowances; c) trade discounts; d)
sales and excise taxes; and, f) duties and tariffs from
integrated products for the first five years in the
following format:
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Year Low Estimate (SM) Best Estimate (SM) High Estimate (SM)
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2
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3
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4
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5
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6. IPW will devote reasonable efforts to support capitalization of NPE
through assistance with business plans and introduction to investment
groups or individuals.
7. NPE has assignability option to associated NPE companies with written
approval from 19W. IPW has assignability option to associated IPW
companies with written approval from NPE.
8. The anticipated plan for development is:
8.1. Existing State of Technology
8.2. Phase 1 (estimated cost $80K, NPE)
8.2.1. Proof of principle for exit filter for the removal of
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BASIC AGREEMENT
8.2.1.1. Lead, and
8.2.1.2. Radioactive metals
8.3. Phase 2 (estimated cost $400K, NPE)
8.3.1. Development of useable product for IPW exit filter
8.3.1.1. Doesn't wash off (i.e., permanently
bound)
8.3.1.2. Shows enhanced performance over current
methodology
8.3.1.3. Performance comparisons, covalent bonding
or grafting technology, basic production
methodology
8.3.1.4. Cost effective
8.3.2. Apply to product form
8.3.2.1. Take an existing product format and dose
it to remove Pb at least 90% over 50
gallons or water.
8.3.2.2. Should include tool-up costs for pilot
scale operation.
8.4. Phase 3 (estimated cost $30K, NPE)
8.4.1. Testing
8.4.1.1. Performance Testing,
8.4.1.2. Market evaluation, and
8.4.1.3. NSF certification.
8.5. Tooling and Production
8.6. Launch Product
9. IPW will work with its strategic alliance partners to find NPE during
application development and product testing.
9.1. Direct Costs
9.2. Burdened labor rates
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BASIC AGREEMENT
10. NPE will provide polymer
10.1. Direct costs plus a
10.2. 6.67% fee.
11. Profit sharing and fees:
11.1. Profit sharing is defined as:
11.1.1. For products in the IPW/NPE markets (e.g., removal of
radioactive impurities in the Ukraine), NPE and IPW
equally share the profits.
11.1.2. For products in the IPW /Strategic Alliance
partnership markets (e.g., Rubbermaid), NPE will
receive 1.5 % of net sales with NPE incorporated
polymers.
11.1.3. For products in the IPW markets (e.g., WaterWay), NPE
will receive 3 % of total revenue of net sales with
NPE incorporated polymers.
11.2. At delivery of proof of principal results outlined in Phase
IPW will pay a $5,000 portion of the sub-licensee fee to NPE
with a balance due of $20,000 upon commitment to proceed by a
strategic alliance partner or within six months after delivery
of proof-of-principle.
11.3. In calendar year 1999, IPW will guarantee a minimum profit
share of $150,000 payable on revenue received within 30 days
of the end of each quarter or give up the exclusive rights,
thereto.
11.4. In calendar year 2000 and thereafter, IPW will guarantee a
minimum profit share of $300,000, payable on revenue received
within 30 days of the end of each quarter, or give up the
exclusive rights thereto.
12. The costs and income of both parties may be inspected on the books of
another by an independent auditor acceptable to both parties relevant
to this agreement.
13. The sub-license will include mandatory pass-down clauses from the
NPE/UC license agreements.
14. This Letter of Intent constitutes and represents the full and complete
understanding between the parties.
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BASIC AGREEMENT
15. This agreement will be governed under the Laws of the State of Florida.
Attachment:
Nondisclosure Agreement
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▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chairman President
Innova Pure Water, Inc. (n,p) Energy, Inc.