Exhibit
10.3   RESEARCH
AND DEVELOPMENT AGREEMENT
 (for the
preparation and utilisation of a work subject to copyright
protection)
 
 (hereinafter:
Agreement)
 Entered
into by and between
 SZEPESSY György (Place and
date of birth: Budapest, 3 December 1948, residing at: 1053 Budapest, Kecskeméti
u. 6., Mother’s name: SZENDREI Borbála, social security number: 014565722, tax
identification code: 8299212286)
 (hereinafter:
Contractor), on the one
hand;
 and
 VIDATECHTechnológiai
Kutató, Fejlesztő és SzolgáltatóKorlátolt
Felelősségű Társaság (head office: 1095 Budapest, Soroksári út 94-96.;
registered under No. 01-09-870107 by the [Budapest] Metropolitan Court, as Court
of Registration, represented by KUN Dániel Jr, Managing
Director; hereinafter: Customer), on the other
hand,
 (referred
to hereinafter separately as Party and collectively as Parties), at the date and
place stated hereinbelow, under the following terms and conditions.
 This day
the parties agreed according to the following conditions:
 
 1.
              Subject-matter
      of the agreement:
 1.1.
              By
      signing this agreement the Customer entrusts the Contractor with the
      research and development activity of the invention entitled “Development of equipment
      transforming the movement energy of running water into
      electricity”, quoted by inventors Salca János and Salca Viktor, but
      patented by the Customer under the name River – Power, furthermore, with
      the performance of a creation subject to copyright
    protection.
 
 1.2.
              The
      hydraulic test of 2 pieces of sample machines prepared and made available
      by the Customer was made in VITUKI Kht’s measurement wing gauging channel
      in the year 2007. The main units of the sample machines are constituted by
      4 pieces of blade wheels with perpendicular axle, being in mechanical
      connection with each other. The equipment named Machine “A” by the
      Customer proved to be a more favourable version. The goal of the research
      task set out in this agreement shall be the finalisation of the
      performance data of this equipment proved to be more favourable and the
      selection of a shape version exploiting better the energy of running
      water. All this shall be carried out within the framework of patent
      protection, i.e. safekeeping the principle of operation providing the
      essence of the equipment and the structural elements to be assigned
      thereto, i.e. the perpendicular axle and the wheel constituted by the
      tipper.
 
 The
testing activity is a process consisting of several steps, the number of the
versions to be tried in the laboratory at the level of experiment was 3. The
performance of the equipment is influenced both by fluid flow and mechanical
factors, thus both of them must be taken into consideration upon the compilation
of the measurement programme. In the course of the measurements the number of
the blade wheels being in a forced connection with each other was reduced, the
wheels became independent of each other and also the role of the hydraulic
conduction was examined. The detailed nature of the individual measurements
depended on the development of the received performance data. The number of the
operational graphs determined in the course of the test was minimum 14, we could
reckon with at least 6 measurement points per graph. The versions were evaluated
on the basis of the comparison of the results of measurement.
  1
  The
measurement of the most favourable shaping version was duly detailed, as a
result of the processing and evaluation of data even the re-calculation, at the
level of estimation, of the connection between model and reality became
possible. According to the presumption the tested equipment was at the same time
a model at a scale of 1:4.
 
 The
hydraulic model test of the version(s) was made in the measurement wing gauging
channel of VITUKI Kht. The equipment was put on a cart placed on the top of the
gauging channel, rolling on rails, movable with adjustable speed. The basis of
detailed gauging of the machine merged into water was constituted by the
determination of the torque and the rotary speed acting on the axle, belonging
to the speeds which were varied per step. On the basis thereof the mechanical
capacity of the equipment became already calculable.
  1.3.
                The
      Contractor agrees to meet the request and by this agreement it assigns to
      the Customer the right of utilisation of the work to be created through
      the research and development
activity.
 
 2.
              Deadlines:
 2.1.
                  
                  Evaluation
      of version 1
                  
                  end
      of week 42.2.
                  
                  Evaluation
      of version 2
                  
                  end
      of week 82.3.
                  
                  Evaluation
      of version 3
                  
                  end
      of week 122.4.
                  
                  Selection
      of the best version, preparation of a summarising report
                  
                  end
      of week 16
 
 The
agreed on commencement of the work shall be the date of the occurrence of the
first bank transfer under Clause 3. The planned completion shall be the end of
week 16 following the commencement of the planning of version 1 (payment of the
amount due upon the commencement of the work), and the end of such week 16 shall
be simultaneously the deadline of the preparation of the summarising
report.
 
 3.
              Basic
      entrepreneurial fee
 The
Contractor shall be entitled to HUF 3,000,000, say three million Forints, as
advance payment on entrepreneurial fee, upon the commencement of the work, and
then to further HUF 600,000, say six hundred thousand Forints per version
according to the deadlines specified in Clause 2. The total basic
entrepreneurial fee due for the preparations and the evaluation shall amount to
HUF 4,800,000, say four million eight hundred thousand Forints in the
aggregate.
 
 Entrepreneurial
success fee
 The
further part of the remuneration shall be proportionate to the success of the
test and to the improvement of the efficiency of the machine. The basic amount
of HUF 4,800,000, say four million eight hundred thousand Forints will be
increased by further HUF 60,000, say sixty thousand Forints on each 10% increase
of efficiency of the equipment serving as basis of the test, made available upon
the commencement of the work. The full increase will be calculated on the basis
of the result set out in the summarising report. The maximum performance of the
machine qualified originally, achieved at a speed of flow of 1 m/sec shall serve
as basis of comparison. The maximum value of the fee thus received will be
identical to the fixed fee, i.e. it may be HUF 4,800,000.
 
 2
  The
remuneration due to the agent for the preparation of an author’s work and for
the utilisation thereof, detailed above, shall be divided in the following
proportion:
 -
              author’s
      fee: 30%
 -
              royalty
      for the assignment of author’s property rights (right of utilisation):
      70%
 
 The
Contractor shall not be entitled to any reimbursement of cost in addition the
entrepreneurial fee.
 The
Contractor will only be entitled to entrepreneurial fee in the event of
successful research work.
 
 4.
              Settlement
      of financial accounts:
 4.1.
              The
      Customer shall perform payment on the basis of a performance certificate,
      within 5 business days of the issuance of the
  certificate.
 4.2.
              Performance:
      Certificate issued by the Customer on the basis of the quantitative and
      qualitative control of the activity carried out by the Contractor (there
      will be no payment without such
certificate).
 4.3.
              The
      Contractor requests to pay the remuneration through transfer to his bank
      account number 11773054 – 50375547 kept with OTP Bank
  Rt.
 The part,
remaining after the deductions, of HUF 3,000,000 due upon the commencement of
the work shall be transferred in one instalment, while the portion, remaining
after the deductions, of the further items amounting to HUF 600,000 each shall
be transferred according to the scheduling set out in Clause 2. The fee due on
the improvement of efficiency shall be transferred simultaneously with the
handover of the closing report. The parties shall state the magnitude of the fee
on the basis of the data included in the summarising report.
 
 5.
              Obligations
      of the Customer
 5.1.
              It
      shall provide the available information necessary for the
      Contractor.
 
 6.
              Obligations
      of the Contractor
 6.1.
              Fulfilment
      of the theoretic work required for the
  performance.
 6.2.
              The
      Contractor shall secure for himself the conditions required for his
      activity.
 6.3.
              He
      shall record the activity in the final
  documents.
 
 7.
              Method
      of co-operation
 The
contracting parties declare that  they shall meet their obligations of
co-operation related to the development activity in the manner as generally
expectable, they shall make available for each other the information required
for the faultless performance of the research, according to the earlier
practice.
 
 7.1.
              The
      parties appoint the following contact
persons:
 7.1.1.
              On
      behalf of the Customer:
 ZALA
Mihály
 
 
 7.1.2.
              On
      behalf of the Contractor:
 SZEPESSY
György
 
 3
  8.
              Clause
      of confidentiality:
 The
parties acknowledge approvingly that they may disclose any information qualified
as business secret, learned by them in the course of this agreement to any third
party only and exclusively in the event of the prior written consent of the
other contracting party.
 
 9.
              Copyrights
 The
results, intellectual products coming into existence in the framework of the
entrepreneurial agreement constitute in full the property of the Customer, the
Contractor may not sell or utilise them outside the framework of the agreement,
he may not claim any further legal interest therein.
 
 10.
              Liability
      for damages
 The
Contractor shall be liable for any damage caused through negligence to the
Customer in connection with this agreement up to no more than the full fee under
the agreement.
 
 11.
              Use
      of subcontractors
 The
Contractor may use any subcontractor with the prior consent of the
Customer.
 
 12. The author declares that
he will make a declaration constituting annex to the agreement, published by the
tax office, in respect of his income forming aggregated tax base in the tax year
and in respect of taking into consideration the itemised accounting for costs or
of the income contents of 90%, secured by law. The Utiliser will deduct the tax
advance, defined in the legal rule in force on personal income tax, from the fee
of agency taking this into account. The Utiliser is aware of the legal
consequences of erroneous declaration.
 
 13. The author declares that
he is
 -
                in
      employment
 -
              retired
 The
certificate on the performance of the payment obligation of HUF 65, as
healthcare contribution prescribed on the basis of Section 6 of Act LXVI of 1998
constitute annex to the agreement.
 
 The
Contractor agrees to report to the Customer any change in his employment
affecting the payment of healthcare contribution within eight days.
 
 14.
              Legal
      rules connected to the agreement:
 a.
              Sections
      412 to 414 of the Civil Code
 b.
              In
      the event of a legal dispute the parties shall first carry out
      reconciliation out of court. Should the reconciliation have no result,
      then the Central District Court of Pest or the [Budapest] Metropolitan
      Court will be entitled to decide the legal dispute, depending on the value
      limit
 
 4
  The
parties have read and understood the agreement above, and they signed it
approvingly, as a deed in full conformity with there will.
 
 Budapest,
20 November 2008
 
 
 L.S.KUN
      Dániel Jr
                  
                  SZEPESSY
      GyörgyManaging
      Director
                  
                  ContractorVidatech
      Kft.Customer




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