August 3, 1998

MEMORANDUM

To: Mr. Joe Pugliese
Re: Joseph W. Newman

Please be advised that I represent Joseph W. Newman, with whom you executed
a contract on 2 June 1998 and that I am sending you this memorandum at his
request.  (It is my understanding that he will hand deliver this to you.)

First, let me state that I have known Joe for many years and have found him
to be straightforward and honest.  He says what he means and he means what
he says.  He values honesty and abhors dishonesty.

While he believes that you and he can have a mutually-profitable
relationship, he is concerned that you are considering breaching your
agreement with him.  You should not do that.  The agreement is clear:  He
gets the first machine built, and you get the next.  Further, your right to
manufacture the machine is dependent upon your first producing TWO
prototypes as soon as possible.

It is my understanding that you have not been able to build the first
machine without Joe's help and that he has willingly given it to you.  He
stands ready to work with you on completing this machine and building the
second unit, but this must be done as soon as possible.  You are,
therefore, strongly urged to honor your agreement with Joe.

(If you have changed your mind and do not want to build the second unit,
then you must release the first unit to Joe, and he will release you from
the contract. Joe hopes, however, that you want to proceed with this
project, for the benefit of both of you.)

Sincerely,

[SIGNED]
Robert P. Shepard
 

_________________________________________
 

LAW OFFICES OF MURPHY AND SHEPARD
235 Ratliff Street
Lucedale, Mississippi 39452
 

August 7, 1998

Attn: Mr. Joe Pugliese
Re: Joseph W. Newman

Dear Mr. Pugliese,

As you know, I represent Mr. Joseph W. Newman

It is my understanding that you have decided not to honor your agreement
with Mr. Newman and have instead breached the agreement.

It is also my understanding that you have made threats to file criminal
charges against Mr. Newman.  While you and he may have a civil dispute,
this is not a criminal matter.  If you make the serious mistake of filing
criminal charges against him, he will sue you for defamation, false arrest,
malicious prosecution, and any other claim his lawyers can conceive.

You are further advised that you executed a Confidential Disclosure
Agreement on Mr. Newman's machine, which prohibits you from disclosing how
it was built or attempting to sell a copy of it.  If you refuse to honor
that agreement, you will be sued for bad faith breach of contract, and Mr.
Newman will seek actual and punitive damages from you personally and your
company.

Sincerely,

[SIGNED]
Robert P. Shepard

_________________________________________

NEWMAN ENERGY TECHNOLOGIES CORPORATION
2050 Vineyard Drive
Castle Rock, Colorado 80104
(303) 814-3403

August 11, 1998

Ms. Tamra Palmer
Attorney-at-Law
Denver, Colorado

Dear Ms. Palmer,

I have a potential business problem which may be immediate in nature, or
nonexistent for which I may need your services.

Please see Exhibit A (an outline of said potential problem) provided by my
long-time local attorney from my previous location of residence in
Mississippi.  This material was addressed to Joe Pugliese via his company.
See also Exhibits B, C, & D which prove that Joe Pugliese and his top
technical representative, Norm Biss, both signed Binding Trade Secret
Papers which include any employees of Pugliese's company.  Note that ALL
test results and manufacturing information they have gathered or anything
to do with my Confidential Disclosures to them should be immediately
returned to me.  Also note, ". . . or in the event that such breach appears
to be imminent possibility . . ." I can sue them.

The facts prove this to be the case:

See Exhibit E of Contract signed by Joe Pugliese on June 2, 1998 to make
two (2) Prototypes "AS SOON AS POSSIBLE."

Fact:   The company representatives were NOT proceeding very fast according
to the terms and spirit of the original Contract, so therefore I took
$6,000.00 worth of magnets (at my own expense), myself hired a worker, and
we went to work at Pugliese's company for close to five (5) weeks.

On Thursday, August 6, 1998 a Pugliese's company employee - Greg - gladly
and eagerly helped me load into my automobile my nearly-completed Prototype
which I and my hired worker had previously constructed over the last five
weeks.  More than 90% of the work was done by the two of us.  My
above-mentioned magnets and my Trade Secret Innovations were employed in
the unit's construction.

The First Prototype constructed is and was definitely mine.  For whatever
reason, Joe Pugliese had chosen to violate the original Agreement dated
June 2, 1998, and he did not build the second unit for himself.  However,
after I left the facility last Thursday (August 6, 1998) with my prototype
which was loaded into my automobile by an employee of Joe Pugliese, I
returned to my hotel to check out.  At that time, the same employee who
assisted me with loading my prototype appeared at the check out desk of my
hotel and told me that Joe Pugliese had told him to get me and said
Prototype back in his building or he was "out the door."  He added that Joe
Pugliese had said that the "PROTOTYPE WOULD STAY IN HIS BUILDING."

I angrily objected to these words and gave the employee a copy of the
Contract signed by Joe Pugliese and a copy of the letter from Bob Shepard,
my previous local attorney (in Mississippi).  I then left for Castle Rock,
Colorado to attend my son's Birthday this 10th day of August, 1998.

Several hours west of Pugliese's company, I stopped and contacted my wife
by telephone and learned that she was terribly upset.  She told me that:

Joe Pugliese had called her and has angrily and repeatedly shouted at her
about six times:

"YOU HAD BETTER GET YOUR HUSBAND TO BRING THAT PROTOTYPE BACK BY TOMORROW
MORNING OR I WILL HAVE YOUR HUSBAND ARRESTED IN FRONT OF YOU AND YOUR
CHILD."

And Joe Pugliese added in a very threatening tone of voice:

"I KNOW WHERE YOU LIVE."

These actions are clearly extortion and since there would be telephone
records of Mr. Pugliese's interstate telephone call from his state of
residence to Castle Rock, Colorado, I assume that his threatening actions
would constitute a violation of Federal Law.

The actions of Joe Pugliese are clearly in violation of the Contract which
we signed on June 2, 1998.

The facts tell me that Mr. Pugliese is doing something unscrupulous behind
my back and in total violation of all the Contracts which he signed with me
on June 1st and June 2nd, 1998.

I would appreciate it if you would notify Mr. Pugliese of these facts, that
ALL originals and copies of all test results and manufacturing information
they have gathered or anything to do with my Confidential Disclosures to
them should be immediately returned to me, and that if he even attempts to
so act as he personally threatened to my wife, then:

I will sue Mr. Pugliese for SLANDER, for EXTORTION, for DELIBERATE
INTERFERENCE WITH MY BUSINESS, for the VIOLATION OF OUR CONTRACTS, and for
the ATTEMPTED THEFT OF MY PROTOTYPE BUILT BY MY EFFORTS, SWEAT, AND IDEAS.

Please forward to me a copy of your letter to Mr. Pugliese.

Sincerely,

[SIGNED]
Joseph Westley Newman
 

____________________________________

POTENTIAL CONTRACT BETWEEN:

Joseph Newman and his Motor Company and Joe Pugliese and his Motor Company:

Joe Pugliese has the option to start production of the ENERGY MACHINE
INVENTION of Joseph Newman for a given area after:

First building two (2) Prototypes of Drawing, given to Norm Biss, as soon
as possible.  One (1) Prototype goes to Joseph Newman and one (1) to Joe
Pugliese.

No one can sell the Energy Invention other than Joseph Newman as people he
contracts to do so as Distributors, even if Joe Pugliese and/or his company
choose to produce it --- when and if the contract is consummated.

In that event, Joe Pugliese chooses the following area for Production for
which Joseph Newman and his assignees make sales of Energy Invention in
said area.

If Joe Pugliese cannot produce said Invention relative to the demand of
said area, then an additional manufacturer can be contracted with to meet
the demand.

If this Contract is consummated as stated above, then Joseph Newman or his
assignees receives 25% of the profit of Joe Pugliese's production of the
Joseph Newman Energy Invention.

[SIGNED]
Joe Pugliese

[SIGNED]
Joseph Newman

June 2, 1998

_______________________________________
 

NONDISCLOSURE AGREEMENT

This agreement is entered between Joseph Westley Newman (hereinafter
referred to as "Newman") and "Name of Joe Pugliese's Company" (hereinafter
referred to as "contractor") this 1 day of June, 1998.

Whereas, Newman is engaged in the development, manufacture and sale of
products which involve the development and utilization of information not
generally known in the industry or industries in which Newman is or may
become engaged; which information may, without limitation, include
information to research, development, inventions, manufacture, purchasing,
accounting, engineering, marketing, merchandising and selling (hereinafter
collectively referred to as "the secret information");

Whereas, in performing its functions for Newman, contractor will
necessarily be given access to secret information, which will be identified
by Newman as such;

Whereas, the use of the secret information by, or its disclosure to, any
person or organization other than Newman and Newman's employees or
contractors would be highly detrimental and damaging to Newman; and

Whereas, the contractor seeks to perform services or provide products or
materials to Newman which may be paid for by Newman;

Now, therefore, in consideration of the mutual promises, covenants and
conditions contained herein, the parties agree as follows:

Section 1. Nondisclosure of secret information.

a. Nondisclosure.  The contractor agrees that neither it nor any of its
subsidiaries, divisions, employers, employees, principals, agents,
independent contractors or other persons or organizations over which it has
control, will at any time during or after its relationship with Newman,
directly or indirectly use any secret information for any purposes not
associated with Newman's activities or disseminate or disclose any of the
secret information to any person or organization not connected with Newman,
without the express written consent of Newman.  Contractor also agrees that
it will undertake all necessary and appropriate steps to ensure that the
secrecy of the secret information in its possession will be maintained.

b. Return of documents.  Upon termination of its relationship with Newman,
the contractor agrees that all documents, records, notebooks and similar
repositories of or containing secret information, including copies thereof,
then in its possession, whether prepared by it or others, will be left with
Newman.

c. Noncompetition.  After termination of its relationship with Newman,
contractor agrees that neither it nor any of its subsidiaries, divisions,
employers, employees, principals, agents, independent contractors or other
persons or organizations over which it has control, will, directly or
indirectly, render services to any person or organization in, or about to
become engaged in, the research or development, production, marketing or
selling of a product, process or service of Newman, without the express
written consent of Newman; nor will contractor, its subsidiaries,
divisions, employers, employees, principals, agents, independent
contractors or other persons or organizations over which it has control,
directly or indirectly, become engaged in the research or development,
production, marketing or selling of a product, process or service which
resembles or competes with a product, process or service of Newman, without
the express written consent of Newman.

Section 2. Enforcement.

In the event that the contractor shall breach this nondisclosure agreement,
or in the event that such breach appears to be an imminent possibility,
Newman shall be entitled to all legal and equitable remedies afforded it by
law as a result thereof, and may, in addition to any and all other forms of
relief, recover from contractor all reasonable costs and attorneys' fees
encountered by it in seeking any such remedy.

Section 3. Binding effect.

This agreement shall be governed for all purposes by the laws of the State
of Mississippi.  If any provision of this agreement is declared void, or
otherwise unenforceable, such provision shall be deemed to have been
severed from this agreement, which shall otherwise remain in full force and
effect.

In witness whereof, the parties executed the foregoing agreement on the
date first shown above.

[SIGNED]
Joseph Westley Newman

[SIGNED]
Joseph Pugliese

_______________________________________

TO WHOM IT MAY CONCERN

We, the undersigned, on this day of June 1, 1998, are being shown and
having explained to us a new energy device which has energy output greater
than energy input (by use of Magnetic Energy) and which has U.S. and
foreign patents pending.

We are being shown this in strict confidence and we will not disclose this
information to anyone else.

We also agree that any improvements or inventions which we may develop from
or as a result of the disclosures we have been shown and had explained to
us will be the sole property of Joseph Westley Newman.

[SIGNED]
Norman M. Biss

[SIGNED]
Joseph Pugliese

Date:  June 1, 1998
 

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