STRATEGIC ALLIANCE AND PROJECT VENTURE AGREEMENT

 

 

                                                                    Page 1 of 11

 

                STRATEGIC ALLIANCE AND PROJECT VENTURE AGREEMENT

 

This STRATEGIC   ALLIANCE AND PROJECT VENTURE   AGREEMENT (the   "Agreement") is by

and between MR3 Systems, Inc., a Delaware corporation with its corporate address

at 435 Brannan Street, Suite 200, San Francisco, California, 94107, (hereinafter

referred to as "MR3"),   and   Purolite   Company,   a Delaware   corporation   with a

corporate   address at 150 Monument   Road,   Bala Cynwyd,   PA 19004,   (hereinafter

referred to as "PUROLITE").

 

                                    RECITALS

 

WHEREAS, MR3, is a publicly traded company,   whose proprietary   technologies and

intellectual property associated with the extraction,   separation, recovery, and

purification of precious and base metals are applied in commercial operations in

vertical   markets   involving,   but not limited to, ore   deposits,   ore tailings,

hazardous waste, oil and geothermal   fluids,   groundwater and soil   contaminated

with metals; and

 

WHEREAS,   PUROLITE is a leading global   manufacturer   of resins for   separation,

ion-exchange, and industrial remediation applications; and

 

WHEREAS,   MR3 provides unique   technologies for the extraction and separation of

metals applied to remediation and mining; and

 

WHEREAS,   PUROLITE   and MR3 are   positioned   to develop next   generation   unique

solutions   for   remediation   and   mining   markets,   tailored   for the   selective

separation, capture, and recovery of metals; and

 

WHEREAS,   PUROLITE and MR3 are positioned to market   globally the application of

newly developed resins and turn-key systems for selective metal extraction; and

 

WHEREAS,   MR3 and PUROLITE,   (collectively   the "Parties")   herein desire to set

forth   in   writing   the   terms   and   conditions   of   their    understandings   and

agreements.

 

NOW   THEREFORE,   in   consideration   of the   foregoing,   of the   mutual   promises

contained herein and for other good and valuable consideration,   the receipt and

sufficiency   of which are   hereby   acknowledged,   the   Parties   hereby   agree as

follows:

 

1.     DEFINITIONS.

 

Capitalized   terms used in this   Agreement,   including   those in   Recitals,   are

defined throughout the Agreement. Terms not defined therein shall be given their

plain English meaning; provided, however, that those terms, acronyms and phrases

known in the international trade and business   development   industry,   which are

not defined,   shall be interpreted in accordance with their   generally   accepted

industry meaning.

 

<PAGE>

 

                                                                    Page 2 of 11

 

2.     INTENT AND PURPOSE OF STRATEGIC ALLIANCE AND PROJECT VENTURE

 

      2.1.   INTENT AND PURPOSE.   This   Agreement   signifies   the formation of an

             exclusive venture between MR3 and PUROLITE to develop new and unique

            products and processing   solutions for the extraction and separation

            of selenium and perchlorate. The research, development,   bench-scale

            testing, pilot-scale validation, and commercialization of the unique

            products and processing solutions are to be performed jointly,   with

            ownership   of   the   resulting   intellectual   property   to be   shared

            equally by PUROLITE and MR3. The   commercialization   strategy is two

            fold: (i) to market,   sell, and distribute   large   quantities of the

            unique products   (resins)   developed under the venture,   and (ii) to

            apply the unique products   through the turn-key   systems in projects

            already established and penetrated. Pursuant to the foregoing, it is

            the current   intent of the   Parties to   undertake   projects   for the

            development   and   integration   of the first products as specified in

            Section 3 below, as well as any subsequent products agreed to by the

            Parties (the "Projects") and added as an addendum to this agreement.

 

      2.2.   PROJECT PLANS. It is further understood and agreed that each Project

            undertaken   pursuant   to   this   Agreement   will   be   subject   to the

            execution and delivery by the Parties of a separate project plan for

            each Project   undertaken   (each, a "Project   Plan").   When executed,

             each Project Plan will be attached to and   incorporated by reference

            into this   Agreement,   and the terms and   conditions   of the Project

            Plan shall control to the extent consistent with the terms contained

            herein.   The Parties   agree that each   Project   Plan will set forth,

            among   other   things as the   Parties   shall   deem   appropriate,   the

            following:

 

                2.2.1.   A detailed description of the project;

 

                2.2.2.   Any   design   documents   or   specifications   (unless   the

                        project   contemplates   creation   or   development   of the

                        same);

 

                2.2.3.   Project   deliverables,   if   any,   that   either   or   both

                         Parties will be responsible for creating and developing;

 

                2.2.4.   Tasks,   responsibilities,   covenants   and   agreements of

                        each Party relating to the project;

 

                2.2.5.   Deadlines,    interim    milestones,    and   other   matters

                        relating to timing and delivery or performance under the

                        project;

 

                2.2.6.   Intellectual   property   rights or licenses to the extent

                         different from the terms of this Agreement;

 

                2.2.7.   Termination   rights   of   the   Parties   relating   to   the

                        project;

 

                2.2.8.   Obligations   of the Parties to market and   implement the

                         project; and

 

                2.2.9.   Any other terms or   conditions   that vary from the terms

                        and conditions set forth in this Agreement.

 

<PAGE>

 

                                                                     Page 3 of 11

 

3.     THE PRODUCTS AND GRANT OF EXCLUSIVE OWNERSHIP RIGHTS

 

Each Party hereby grants to the other Party joint,   world-wide   ownership rights

in and to the Products set forth in this Section 3. The Parties   agree that they

have the joint exclusive ownership rights to the products developed hereunder.

 

      3.1.   THE   PRODUCTS.   The Parties   agree to initially   develop two (2) new

            products   described in Sections   3.1.1 and 3.1.2 (the   "Products" or

            each a "Product" hereunder) as follows:

 

                3.1.1.   SELENIUM   RESIN. A new product and processing   system to

                        be applied   for the   removal of   selenium to be based on

                        PUROLITE's   current arsenic removal resin.   The modified

                        resin and/or the   processing   system will have reductive

                        functionality   for    transformation   of   selenates   into

                        selenites with the resulting   increase in total selenium

                         removal capacity.

 

                3.1.2.   PERCHLORATE   RESIN. A new product and processing   system

                        described as a boron based resin to be applied to reduce

                        the   perchlorate   in the influent to chloride,   which in

                        turn   can   be   removed   with   conventional   ion-exchange

                        resins (such as PUROLITE's A100 or A500).

 

      3.2.   DEVELOPMENT   AND   COMMERCIALIZATION   PLAN.   The   Parties   agree to a

             development and commercialization plan with respect to each Product,

            as follows:

 

                3.2.1.   MR3 will   implement   bench-scale,   prototype   and   pilot

                        studies and develop   commercial   Products and processing

                        systems in collaboration with PUROLITE.

 

                3.2.2.   The testing   results will be provided to PUROLITE   along

                        with MR3's specifications and recommendations   regarding

                         resin   improvements   and   modification,   and new Product

                        synthesis.   PUROLITE will   synthesize the Products based

                        on MR3's   specifications   and data and will   incorporate

                        all possible   improvements   based on the Parties'   joint

                        development recommendations.

 

                3.2.3.   Each    developed    Product   will   be   marketed   under   a

                        trademark to be jointly owned by PUROLITE and MR3.

 

                3.2.4.   PUROLITE will provide reasonable samples of its existing

                        resins or its   modifications to MR3 free of charge on an

                        "As Needed" basis.

 

                3.2.5.   PUROLITE   and   MR3   will   jointly   patent   the   new   and

                        modified   Products   based on MR3's   tests   and   piloting

                        work,   and the Parties will have joint   ownership of all

                        intellectual property in the Products.

 

                3.2.6.   The Product   resins will be   marketed   under   PUROLITE's

                        marketing   program   and   applied   by MR3   in its   metals

                        removal markets. The pricing of all Products will be set

                         by PUROLITE,   whether sold directly by PUROLITE, by MR3,

                        or by third   parties.   The   pricing of all MR3   turn-key

                        systems shall be set by MR3.

 

<PAGE>

 

                                                                     Page 4 of 11

 

                3.2.7.   PUROLITE   agrees   to pay MR3 a   percentage   of its gross

                        receipts   from   the   sale of any and all   Products   to a

                        third   party,   payable   monthly   (within   30 days   after

                        PUROLITE has been paid by a third party). The percentage

                        is   determined by the selling price and margin as agreed

                        by the Parties after   determining   the standard cost and

                        selling price.

 

                3.2.8.   MR3 will be   granted   the right to   purchase   any of the

                        Products   from   PUROLITE at an agreed upon price   level.

                        All costs will have to be determined in consideration of

                        the price.

 

                3.2.9.   PUROLITE agrees to refer to MR3 all contacts,   requests,

                        leads,   and   the   like,   received   by   PUROLITE   for the

                         purchase   or   application   of   turn-key    extraction   or

                        remediation systems which appear to benefit from the use

                        of the Products.

 

                3.2.10. Exclusive Manufacturing Rights: MR3 agrees that PUROLITE

                        will have exclusive manufacturing rights to the Products

                        for the lifetime of the Products.   If PUROLITE is unable

                        to supply the Products, PUROLITE will advise MR3 and MR3

                        will have the right to seek an additional   supplier.   If

                        the   contract is   terminated   for reasons   specified   in

                        section 7.4, this clause is null and void.

 

4.     ADDITIONAL AGREEMENTS OF THE PARTIES

 

      4.1.   PUBLICITY;   PRESS RELEASES.   The Parties may by mutual consent agree

            to issue a joint press release   describing the   collaboration of the

            Parties. In addition,   each of PUROLITE and MR3 may, at such Party's

            discretion:   (a)   identify   the other as a   strategic   partner;   (b)

            hyperlink from an appropriate area within its website to the other's

            home page;   and (c)   display the other   Party's   logo on the its web

             site (in accordance with such Party's guidelines for the use of such

            mark).   The Parties shall also consult   regularly during the term of

            the Agreement and issue, as and when appropriate, such further press

            releases and/or other publicity materials as may be appropriate. The

            contents   of the   press   releases   issued   by the   parties   shall be

            subject to the approval of each Party,   which   approval shall not be

            unreasonably withheld or delayed.

 

      4.2.   USE OF NAME IN PROMOTIONAL   MATERIALS.   Each Party shall, with prior

            approval of the other Party (which will not be unreasonably withheld

            or delayed), be permitted to identify the other Party as a strategic

            partner,   to use the other Party's name in connection with proposals

            to prospective   customers,   and to refer to the other Party in print

            or   electronic   form for marketing or reference   purposes,   provided

            however that such   proposals and   marketing and reference   materials

            are for   projects   that both   Parties   have   agreed to   pursue.   The

            content of the Promotional Materials shall be approved by each Party

            in advance of the printing.

 

<PAGE>

 

                                                                    Page 5 of 11

 

      4.3.   MARKETING, DISTRIBUTION AND SUPPORT EFFORTS; PROMOTIONAL ACTIVITIES.

            To the extent agreed upon by the Parties   pursuant to the applicable

            Project   Plan or   otherwise,   each of   PUROLITE   and   MR3   agree   to

            undertake an active   marketing and promotion   effort for each of the

            projects pursuant to this Agreement. Each Party agrees to serve as a

             reference in the other Party's   proposals for a reasonable number of

            contacts by   prospective   customers   of the other   Party.   Under the

            direction   of the   Project   Managers,   the   Parties   may   by   mutual

            agreement or plan undertake joint-marketing or co-marketing programs

            or activities as appropriate to fu