AGREEMENT AND MUTUAL RELEASE
Exhibit
10.1
MUTUAL
RELEASE
This
Agreement and Mutual Release (this “Agreement” or “Mutual Release”) entered into
on August 22, 2007, (“Effective Date”) is by and between Blast Energy Services,
Inc., a California corporation, and Eagle Domestic Drilling Operations, LLC,
a
Texas limited liability company wholly owned by Blast (collectively referred
to
herein as “Blast”) and Xxxxxxxx Business Security Trust, a Nevada Trust, (the
“Trust”), collectively referred to as the “Parties.”
1. Facts.
1.1
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As
of the Effective Date, the Trust is the owner and holder of 16,477,500
shares of Blast Common Stock (the “Trust Common Stock”). The Trust Common
Stock has not been registered by Blast, as previously agreed at the
time
of purchase, and is not freely tradable at this
time.
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1.2
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The
trustee of the Trust has decided to offer to sell to Blast all shares
of
the Trust Common Stock.
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1.3
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Sale
of the Trust Common Stock to Blast would result in a complete redemption
of the Trust Common Stock.
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1.4
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Subject
to the approval of the United States Bankruptcy Court for the Southern
District of Texas (the “Bankruptcy Court”) having jurisdiction over
Blast’s current Chapter 11 reorganization case, Blast has determined it
is
in the best interest of Blast, its creditors and its Chapter 11 estate
to
complete the repurchase of the Trust Common Stock on the Effective
Date
and enter into this Mutual Release on the terms and conditions set
forth
herein.
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2. Settlement.
2.1
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The
Trust agrees
that in consideration for Blast agreeing to the terms and conditions
of
Section 3.2 below; the Trust agrees to the terms and conditions of
Section
3.1 below (the “Blast
Consideration”).
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2.2
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Blast
agrees that in consideration for the Trust agreeing to the terms
and
conditions of Section 3.1 below, Blast agrees to the terms and conditions
of Section 3.2_ below (the “Trust
Consideration”).
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2.3
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The
Trust agrees that it will receive full and valid consideration from
the
Blast Consideration.
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2.4
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Blast
agrees that it will receive full and valid consideration from the
Trust
Consideration.
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0.Xxxxxx
Release.
3.1
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In
consideration of the agreements and covenants set forth herein above
and
below, the sufficiency of which is hereby acknowledged and confessed,
the
Trust, for itself, its agents, servants, attorneys, employees, successors
and assigns, hereby covenant and agree as
follows:
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3.1.1
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That
the Trust hereby releases, acquits and forever discharges Blast,
its
current and former agents, officers, directors, servants, attorneys,
representatives, successors, employees and assigns (the “Blast Parties”)
from any and all rights, obligations, claims, demands and causes
of
action, whether in contract, tort, under state and/or federal law,
or
state and/or federal securities regulations, whether asserted or
unasserted, whether known or unknown, suspected or unsuspected, for
or by
reason of any matter, cause or thing whatsoever, including all obligations
arising therefrom, and omissions and/or conduct of Blast, and/or
Blast’s
agents, attorneys, servants, representatives, successors, employees,
directors, officers and assigns, relating directly or indirectly
thereto.
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3.1.3
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At
the time of payment of the Purchase Price which shall be made on
or before
August 22, 2007, the Trust shall deliver the Trust Common Stock
appropriately endorsed by the
trustee.
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3.1.4
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In
consideration of the terms of this Mutual Release, the Trust makes
the
following representations and warranties to Blast and the Bankruptcy
Court
in conjunction with Blast’s seeking approval to consummate this Agreement,
which warranties and representations and agreements shall survive
the
Bankruptcy Court’s approval of the
Agreement:
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a)
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The
Trust has access to and that it has carefully read the following
disclosures:
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(i)
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Blast’s
Form 10-KSB for the period ended December 31, 2006 (the “Form 10-KSB”);
and
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(ii)
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All
other documents filed by Blast with the SEC subsequent to the Blast’s Form
10-KSB and prior to the date of this Agreement, including without
limitation, the “Risk Factors” in the 10-KSB;
and
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(iii)
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There
are certain disclosures made in (i) and (ii) specifically with respect
to
the Trust, which the Trust does not agree with and which a Trust
representative has pointed out to Blast orally and in writing. At
this
time such differences have not yet been resolved.
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b)
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With
respect to trust tax and other economic considerations that may be
involved in connection with this Agreement, the Trust is not relying
on
Blast, other than through the opinion of Blast’s corporate counsel in
relation to exemption from securities registration, as set forth
below..
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c)
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The
Trust and/or the Trust’s advisor(s) has/have had a reasonable opportunity
to ask questions of and receive answers and to request additional
relevant
information from a person or persons acting on behalf of Blast concerning
this Agreement and the consequences of the sale of the Common Stock
provided for in this Agreement.
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d)
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The
Trust, its trustee and the Trust’s advisor(s) have such knowledge and
experience in financial, tax and business matters so as to enable
the
Trust to use the information made available to the Trust in connection
with this Agreement to evaluate the merits, consequences and risks
and to
make an informed decision with respect
thereto.
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e)
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The
trustee of the Trust has the sole and full legal right, title, interest
and power over the Trust Common Stock, and all authority and approval
required to sell, execute and deliver, or authorize execution and
delivery
of, this Agreement and the sale of the Trust Common Stock and all
other
instruments executed and delivered by or on behalf of the Trust in
connection with the sale of the Trust Common
Shares.
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f)
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The
signature of the trustee signing on behalf of the Trust is the sole
authority necessary to bind the
Trust.
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3.2
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In
consideration of the agreements and covenants set forth herein above
and
below, the sufficiency of which is hereby acknowledged and confessed,
Blast, for itself, its officers, its directors and its agents, servants,
representatives, successors, attorneys, employees and assigns , hereby
covenants and agrees as follows:
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3.2.1
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That
Blast hereby releases, acquits and forever discharges the Trust,
the
trustees of the Trust, the beneficiaries of the Trust, attorneys,
agents,
accountants, representatives, and employees from any and all rights,
obligations, claims, demands and causes of action, whether in contract,
tort, under state and/or federal law, or state and/or federal securities
regulations, whether asserted or unasserted, whether known or unknown,
suspected or unsuspected, and/or Blast in general, for or by reason
of any
matter, cause or thing whatsoever, including all obligations arising
therefrom, and omissions and/or conduct of the Trust and/or its trustees,
beneficiaries, agents, attorneys, servants, representatives, successors,
employees, and assigns, relating directly or indirectly
thereto;
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3.2.2
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Blast
shall pay the trustee of the Trust $16.48 in cash (“Purchase Price”) as
full and valid consideration for the Trust Common
Stock;
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3.2.3
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The
Purchase Price shall be paid on or before August 22, 2007 following
the
entry of an order by the Bankruptcy Court approving this Agreement
and
authorizing Blast to purchase the Trust Common Stock and without
any
change by the Bankruptcy Court in the
terms
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of
this
Agreement as set forth by this Agreement; or this Agreement shall terminate
immediately without further obligation hereto; and
3.2.4
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Blast
agrees to make an immediate and timely disclosure of the above facts
in
its filings with the United States Securities and Exchange Commission.
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4.
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Legal
Opinion Regarding the Sale of the Trust Common
Stock.
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Blast
agrees that following the receipt by Blast’s corporate counsel of any required
transfer documentation, this Agreement as Executed by the Trust, that Blast’s
corporate counsel will issue an opinion to trustee of the Trust for the
trustee’s reliance thereon, that the transfer of the Trust Common Stock as
contemplated hereby will be exempt from registration under the Securities Act
of
1933, as amended (the “Opinion”). The parties agree that the issuance of the
Opinion shall be a condition precedent to the consummation of the transactions
contemplated herein and such Opinion shall be completed in writing and delivered
to the trustee of the Trust on August 22, 2007 and may be faxed to counsel
for
the trustee.
5. Miscellaneous.
5.1
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Deliberately
Omitted.
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5.2
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No
Other Cause of Action.
The Parties are not aware of any claims not being released herein
against
them.
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5.3
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Capacity
and Authorization.
The Parties to this Mutual Release further represent that they have
read
it in full before its execution and that they fully understand the
meaning, operation and effect of its terms. Each individual signing
this
Mutual Release warrants and represents that he or she has the full
authority and is duly authorized and empowered to execute this Mutual
Release on behalf of the Party for which he or she
signs.
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5.4
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Assignments.
The Trust represents that it has not assigned, in whole or in part,
any
claims, demands and/or causes of action against Blast to any person
or
entity prior to their execution of this Mutual Release. Blast represents
that it is not aware of any assignment, in whole or in part, any
claim,
demand and/or causes of action against the Trust to any person or
entity
prior to its execution of this Mutual Release.
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5.5
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Binding
Effect.
This is an arms-length transaction and entry into a Mutual Release
shall
be binding on and inure to the benefit of the Parties and their trustees,
respective heirs, successors, assigns, directors, officers, agents,
employees and personal representatives.
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5.6
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Modification.
No
modification or amendment of this Mutual Release shall be effective
unless
such modification or amendment shall be in writing and signed by
all
Parties hereto.
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5.7
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No
Admission of Liability. Each
Party acknowledges and agrees that this Mutual Release is a compromise
of
disputed claims and neither this Mutual Release, nor any consideration
provided pursuant to this Mutual
Release,
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shall
be
taken or construed to be an admission or concession by either the Trust or
Blast
of any kind with respect to any fact, liability, or fault.
5.8
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Entire
Agreement.
This Mutual Release constitutes the entire agreement between the
Parties
pertaining to the subject matter hereof and supersedes all prior
and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties in connection with the subject
matter hereof.
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5.9.
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Interpretation.
The interpretation, construction and performance of this Mutual Release
shall be governed by the laws of the State of Nevada, as the Trust
is
governed by Nevada Law and only Nevada Law shall be used as to its
interpretation or construction. Whenever used herein, the singular
number
shall include the plural, the plural shall include the singular and
the
use of any gender shall be applicable to all genders. This Agreement
does
not represent and shall not in any manner be construed as an appearance
by
the Trust in the Bankruptcy Court or consent to or submission of
jurisdiction over the Trust of the Bankruptcy
Court.
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5.10.
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Faxed
Signatures.
For purposes of this Mutual Release a faxed signature shall constitute
an
original signature.
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5.11.
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Execution.
This Mutual Release may be executed in several counterparts, each
of which
shall be deemed an original, and such counterparts taken together
shall
constitute but one and the same Mutual Release. A photocopy of this
Mutual
Release shall be effective as an original for all purposes.
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6. Court
Approval.
Blast
seeks the approval of the Bankruptcy Court to enter into the terms and
conditions of this Agreement and Mutual Release. Before the Effective Date,
Blast will file an appropriate motion requesting such authorization by the
Bankruptcy Court to complete the purchase of the Trust Common Stock. The
Trust
is not seeking the approval of the Bankruptcy Court, as the Trust has not
entered an appearance nor does the Trust submit or agree to the jurisdiction
of
the Bankruptcy Court over the Trust.
[Remainder
of page left intentionally blank. Signature page follows.]
IN
WITNESS WHEREOF,
intending to be legally bound, the Parties hereto have executed this Mutual
Release as of the date first written above.
Blast
Energy Services,
Inc.
By:___/s/
Xxxx O’Keefe____________
Xxxx
X’
Xxxxx
Chief
Executive Officer
Xxxxxxxx
Business Security Trust
By:__
/s/Xxxxxxx Brown___________
Xxxxxxx
Xxxxx, Trustee