Rossi was hawking a contract he wanted that is against all normal principles of inventor/VC practice
On balance, the agreement is favorable to IH. My guess is that IH probably did most of the hawking.
, because it front-loaded all the money based on the results of one test and that test was not one providing useful information.
If you had been offered hundreds of millions of dollars for transfer of ownership of all e-Cat technology by a U.S. government agency (read An Impossible Invention), and therefore knew the magnitude of interest surrounding your invention, would you settle with IH for a drawn-out royalty based on unit sales of something with a high-risk profile of ever reaching the marketplace? I think I would front load any agreement myself, had I been in Rossi's shoes. Nothing too extraordinary about that. Also, lump sum payments are quite common in licensing deals.
Thus proof of concept and COP could be got from a much shorter test, without a customer. Reliability could be got from a different type of test and would need to include operation without a person sitting in a container 24/7 during the test.
I'm pretty sure IH had the negotiating power to get this had they wanted it. Why they didn't is interesting to ponder. But Rossi should not be blamed for IH's lapse.
As Eric says, you can draw your own conclusions as to what this means, but what you cannot do is represent Rossi's tests as normal and logical based on standard practice.
What you define as "standard practice" for a commercially viable LENR test with significant money on the line the likes of which has never occurred in the history of the world? It would be nice to have the general handbook for these wistful adventures, but I'm pretty sure everyone involved is forging new territory. It certainly makes for some of the best entertainment available on the Internet today.