Exhibit 10.3


 


Agreement
in Principle


 


MAGNEGAS
CORPORATION (“MNGA”)


 


-AND-


 


FUTURENERGY
PTY LTD (“FE”)


 





	Initials FE	 	 	MNGA	 





 




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Date: 19th March
2014


 


BETWEEN:


 


MAGNEGAS CORPORATION (“MNGA”)


 


AND


 


FUTURENERGY PTY LTD (“FE”)


 


RECITALS


 


		A	WHEREAS,MNGA
                                         is a corporation organized and existing under the laws of the State of Delaware with
                                         its principal place of business in the State of Florida.



 


		B	WHEREAS,
                                         FE is a company organized and existing under the laws of Australia with its principal
                                         place of business in the State of Queensland.



 


		C	MNGA
                                         is in the business of generating gaseous fuel from liquid waste with recyclers manufactured
                                         with its patented Plasma Arc Flow technology.



 


		D	WHEREAS,
                                         FE has developed processes for multi-fuel combustion and is also working on further inventions
                                         in this field.



 


WHEREAS,
the parties desire to enter into this Memorandum of Understanding (“AGREEMENT”) in connection with the development
and commercialization of the technology utilizing the relevant Intellectual Property rights set out in this AGREEMENT. NOW,
THEREFORE the parties hereby agree as follows:


 


AGREEMENT TERMS


 


		1.	Definitions



 


Intellectual
Property (“IP”) means all patents, designs, drawings, plans, trade marks, copyrights, and trade secrets
(registered or unregistered), and all other industrial and intellectual property or rights, exclusively subsisting in, exclusively
used in or exclusively relating to the Technology, the Prototype, or improvements thereto. This will include patent continuations,
CIPs, extensions, renewals and foreign equivalents.


 


MNGA
Gasification & Gas IP – means all IP relating to the gas, process and apparatus for production of MagneGas thereof,
further defined as the production of gaseous fuel utilizing an electric arc under liquid.


 


FE
Multi-Fuel IP- means all IP relating to the processes for the combustion of MagneGas with other fuels (referred
to herein as the multi-fuel combustion program) as described in the Schedule “A” of this AGREEMENT.


 


MNGA
Hy-Fuels IP – means all IP relating to the processes for the production of MagneGas mixed with other fuels, owned by
MNGA such as Hyfuels, and its uses in Incineration and Soil Remediation referred to in Provisional (referred to herein as MNGA
Hy-Fuels IP).


 


	Initials
    FE	 	 	MNGA	 


 




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MagneGas
– means gaseous fuel produced via the use of an electric arc under liquid.


 


Channel
Partners – means other entities within specific territories that will bring the IP to market.


 


		2.	Purpose



 


The
purpose of this AGREEMENT is to set forth the basis upon which the parties intend to move forward with the development and commercialization
of the technology and share in the revenue from sales in the market and territories defined below. Accordingly, this agreement
deals with only the principal issues and is not intended to be exhaustive. It is intended that a further more detailed definitive
agreement will subsequently be executed.


 


		3.	Term



 


The
term of this AGREEMENT is for two years from the date of execution. It is the intention of both parties that a definitive agreement
will be executed during that time period and that this agreement will not materially differ from the terms outlined in this AGREEMENT.


 


		4.	Joint
                                         Venture



A
50:50 joint venture is to be formed between MNGA and FE for development and commercialization of the technology world-wide for
the Combustion of MagneGas utilizing the relevant rights from the FE Multi-Fuel IP and the production of MNGA Hy-Fuels
IP.. To this end, the parties agree to set up a joint venture company (“MF JV Co”) in a neutral zone with
50% preference shares owned by MNGA and by FE respectively with equal voting rights. The Board of Management shall be comprised
of 4 directors. MNGA and FE shall each be entitled to appoint two directors to the board of MF JV Co. The parties shall decide
on a jurisdiction and appoint an independent counsel and accountant for the new entity. Set up costs for the new entity are to
be borne equally between the parties.


 


Except
for certain specified decisions outlined below which require unanimous vote, decisions are to be determined by majority vote.


The
following actions require unanimous vote by the Board of Directors:


		a)	Action
                                         by one party that dilutes the other party’s interest;



		b)	Distribution
                                         of profits at a different percentage than share ownership;



		c)	Change/reduction
                                         or expansion of Board seats;



		d)	Issuance,
                                         transference or sale of percentage of MF JV Co;



		e)	Sale
                                         of MF JV Co or any of its assets;



		f)	Transfer
                                         or sale of FE interest or MNGA interest in the MF JV Co;



		g)	Creation
                                         of a new class of membership interest of MF JV Co;



		h)	Approval
                                         of debt in excess of $100,000.



		i)	Assignment
                                         of sub licenses from MF JV Co to third parties



 


Where
there is a block and the tie cannot be resolved, or unanimous vote cannot be obtained, the decision shall be referred to arbitration.
A clause setting out the procedure for resolution of such matters will be included in the definitive agreement


 


		5.	New
                                         Partners



 


It
is envisaged that it will be necessary to bring in new partners to work with MF JV Co at various stages in order to exploit relevant
markets. These may be Channel Partners with industry specific skills and local knowledge as well as investment funds) and/or investors.



 


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It
is envisaged that this shall be way of a separate joint venture or partnership for a particular region or territory. This may involve
dilution of shares or profits for that region/ territory. Any dilution of shares or sharing of profits with a channel partner and/or
investor shall be proportional to the shares held at that time.


 


All
negotiations and dealings between the parties and any potential new parties shall be subject to obligations of confidentiality,
particularly any dealings relating to disclosure and use of IP which is not in the public domain. Details of any IP disclosed must
not be used without prior consent in writing.


 


Agreements
with Channel Partners shall be subject to approval of the Board of Management. Approval of any new channel partner or investor
(or renewal) shall be by way of unanimous vote of the directors.


 


For
the avoidance of doubt, the agreement with each respective channel partner and/or distributor shall include at least the following:
confidentiality obligations (prior, during and continuing obligations thereafter), scope of permitted activities, threshold criteria
(eg securing relevant certification), key roles, performance criteria and requirements (such as timing of rollout) and grounds
for termination/removal or dilution are to be specified. New partners can then be brought in where required.


 


		6.	IP
                                         and Distribution Rights



FE
shall permanently and irrevocably license to the MF JV Co the use of the FE Mutli-Fuel IP as defined above. MNGA shall permanently
and irrevocably license to the MF JV Co the use of the MNGA Multi-Fuel IP as defined above.. MNGA will permanently and irrevocably
grant distribution rights to MF JV Co for purposes of selling MagneGas Gasification units into markets set forth in this AGREEMENT.
All licenses and distribution rights are non-exclusive.


 


MF
JV Co shall enter into various sub-licences with Channel partners for a region/territory to the extent necessary to give
effect to the contractual rights for the respective region/territory. Each party shall continue to own its respective IP and
no transfer shall be construed as a consequence of this agreement.


 



Both FE and
MNGA have the right to engage individually with other partners with IP that is not specifically included in this agreement without
limitation. For the avoidance of doubt, should FE wish to pursue Combustion markets utilizing other fuels not covered by MNGA Gasification
& Gas IP or MNGA Multi-Fuel IP as defined above, they are free to do so. Conversely should MNGA wish to pursue Combustion markets
utilizing other Combustion apparatus not covered by FE Multi-Fuel IP as defined above they are free to do so The exception to this
is XXXX, namely neither MNGA corporation nor FE can deal directly with XXXX or SES. All dealings with XXXX will be through the
MF JV.



 


In
the event of bankruptcy, dissolution or insolvency of the MF JV Co, all rights granted by FE and MNGA shall automatically revert
back to original inventors/owners and the original inventors / owners shall reform a partnership under new entity unless otherwise
divided by unanimous vote of the former MF JV board members.


 


Should
FE or MNGA sell their IP in whole or in part, this agreement survives any such sale. This
AGREEMENT does not grant the MF JV Co the right to manufacture any process or apparatus without expressed written consent of the
IP inventor/owner.


 


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Any
IP improvements identified by MF JV Co or partners will revert back to and be owned by FE or MNGA, depending on which existing
IP the new IP improved upon, such that no IP is owned by MF JV Co.


 


		7.	Confidentiality



Confidential
Information disclosed shall be kept confidential. The parties will agree to customary confidentiality provisions to protect each
Party’s proprietary information as well as provisions relating to other material information in compliance with the requirements
of the United States Securities and Exchange Commission as apply to MNGA and shall keep such information confidential unless disclosure
is required by law.


 


		8.	Business
                                         Plans & Budgets



The
parties shall work together to develop a strategic business plancovering the following areas: customer segments, value propositions,
customer relationships, revenue streams, channels, key activities, key partners, key resources and cost structures.


 


The
above plan is to be developed in the first 3 months of operation. Budgets and expenditure are to be signed off by the Board of
Management.


 


		9.	Certification
                                         & Construction of Pilot Plant



Channel
partners are to be responsible for certification for the respective region/territory for the certification and for the construction
of any pilot plant, and all costs associated therewith.


 


		10.	Commercialization



 The
commercialization costs and responsibility therefor shall be part of the strategic Planning and budgets which shall subject
to approval and signed off by the parties to the MF JV Co. It is envisaged that partners will be brought in, as
required.


 


		11.	Effect



This
AGREEMENT supersedes all previous agreements between the parties. No amendment, modification, termination or waiver of any of the
terms, provisions or conditions of this AGREEMENT shall be effective unless it is in writing and signed off by all of the parties
hereto. The prior confidentiality agreements signed between FE and MNGA remain in full force and effect.


 


		12.	Severability



Any
clause or part thereof which is found invalid or unenforceable shall be severed to the extent of any invalidity.


 


		13.	Territory



It
is intended that this joint venture shall be effective world-wide.


 


		14.	Governing
Law



This
AGREEMENT shall be governed by the State of Florida and Federal laws in the U.S.A. . Any dispute shall be resolved via WIPO Arbitration
and Mediation Centre.


 


		15.	Counterparts



This
AGREEMENT may be executed in any number of counterparts, each of which shall be deemed an original but all of which shall together
constitute one and the same instrument.


 


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		16.	Prior
                                         Agreements



It
is the intention of both parties to integrate prior agreements related to the combustion of MagneGas into the MF JV Co. These
include the SES LLC agreement of the U.S.A, and ENEA agreement of Italy.



 


As part of the
signature of this agreement, MF JV Co is authorizing the sub-license of the rights granted under this agreement to the Supplemental
Energy Solutions, LLC Combustion partnership formed for the use of Coal Combustion with MagneGas in the United States and Canada.
Under the terms of the existing agreement, FE and MNGA acknowledges that there is 50% of the SES partnership available, which will
be equally shared between MNGA and FE. It is the intention of both parties to propose that the original partner of SES, XXXX accepts
a 1/3 ownership, providing MF JV a 2/3 ownership in exchange for expanded fuel usage, namely co-combustion in electricity production
industry for US and Canada only, and technical assistance from FE.



 


While
this agreement supersedes the AGREEMENT between MNGA and FE from 14/9/2013 the $200,000 in shares previously granted to FE / MNGA
Australia will be granted for a 12 month consulting engagement with two weeks at MNGA facilities to assist with MagneGas
Gasification IP. Any IP developed as part of this consulting arrangement will remain property of MNGA.


 


IN
WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed as of the date indicated above.


 


	Dated:	19/3/2014	 MAGNEGAS
    CORPORATION	/s/ Ermanno Santilli	 
	 	 	 	Ermanno Santilli, CEO



	 
	 	 	 	 	 
	Dated:	19/3/2014	      FUTURENERGY
    PTY LTD	 	 


 


	Initials FE	 	 	MNGA	 


 




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SCHEDULE
A


 


MagneGas
Multi-fuel combustion program


 


The
following definitions are for bonding or processing MagneGas with fossil fuels in a process called multi-fuel combustion. This
process covers all processes used with MagneGas bonding with fossil fuels including:


 


		1.	Post
Combustion



		2.	Pre
Combustion,



		3.	Dual
fuels,



		4.	Highly refined
fracking process,



		5.	The apparatus
used and developed for the processes mentioned above.



 


MagneGas
is required to be combined with all fossil fuels in a way the combustion results in increase heat, reduce emissions, increase oxygen
or reduce contaminants either emissions or particulates in any shape of form either in a singular or combined effect.


 


Futurenergy
has developed a process for combusting fossil fuels with MagneGas.


 


The
apparatus used are developed by Futurenergy. The apparatus used, bonds MagneGas to the fossil fuel or emissions.


 


Post Combustion


 


Post combustion is whereby
the flue gas emissions of a boiler combustion process is then re combusted in an apparatus.


 


This
process works with fossil fuels and derivatives of fossil fuel products covering:


 


		·	Coal,



		·	Liquid
Petroleum Gas,



		·	Natural
gas,



		·	Propane,



		·	Rubber,



		·	Bitumen,



		·	Plastic,
etc.



 


The
apparatus is a chamber eg post combustion chamber.


 


The
methodology covers cooling of flue gases before combustion, fans, combustion controls, etc.


 




    	 



    	 



    

  


Highly Refined Fracking
Process.


 


The
process developed for bonding and removal contaminants in the new fuel. The new fuel is stable and pollution contaminants are removed.


 


The
highly refined fracking process produces hydrogen bonded enriched fuel for combustion. It captures contaminants from the refining
process and reprocesses these into usable gases. The gases are filtered and used again. The process can be completed either on
site or off site.


 


The
following fuels can be processed with this equipment:


 


		1.	Diesel,



		2.	Light
oils,



		3.	Av
Gas,



		4.	Aviation
fuels, for civil use or military use,



		5.	Kerosene,
and



		6.	Heavy
oils.



 


Pre Combustion


 


Futurenergy
has developed a process that covers infusing MagneGas with fossil fuels and carbon.


 


The
process cleans the base fuel or fossil fuel and removes contaminants. It then reforms the fuel into pellets using MagneGas and
a catalyst for improved combustion.


 


The
fuel increases its calorific value.


The
pellets are manufactured on site or off site.


 


A
Patent apparatus is used to produce pellets. Third parties own the apparatus.


 


Fossil
fuels include:


 


		·	Coal
and



		·	Biomass.



 


Dual fuels


 


This covers
LPG and MagneGas running in a gas fired boiler.


Dual
fuels require two gases running and burning in a co-combustion process whereby MagneGas is added to the existing fossil fuel. The
burning apparatus is modified to accept the duel fuels.


 


The
process has a combustion management system and a metered control system to optimize combustion efficiency.


Fuels
used are:


 


		·	LPG



		·	Natural
Gas



		·	Diesel



		·	Petrol



 


This
usually occurs in combustion environments covering boilers but not limited to boilers.