LICENSE AGREEMENT
This Agreement made this 24th day of April, 2003 between Verdisys, Inc., a
California Corporation ("Licensee"), and Xxxx Xxxxxxx of 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxx 00000, (herein referred to as "Xxxxxxx").
RECITALS
WHEREAS, Xxxxxxx has the rights to license the proprietary well enhancement
techniques and device developed by Xxxx X. Xxxxxxx of Madisonville, Kentucky,
known as the Xxxxxxx Horizontal Drill (the technology embodying the patented
method and apparatus); which technology is designed principally for the purpose
of stimulating and enhancing oil and gas well production by opening lateral
channels extending radially from the wellbore; and
WHEREAS, Xxxxxxx has also developed proprietary techniques and methods for
the utilization of the Technology (hereinafter "Trade Secrets"); and
WHEREAS, Licensee is in the oil and gas business and desires to obtain the
right to market and to use the Technology and Trade Secrets within the United
States of America and Canada; and
WHEREAS, Xxxxxxx desires to confer upon Licensee such right to market and
to use the Technology and Trade Secrets pursuant to Xxxxxxx' receipt of the
consideration described below and subject to the terms and conditions described
herein; and
WHEREAS, Licensee agrees and acknowledges that the Technology consists of
Downhole Equipment, which is more fully described in attached Exhibit "A" and
made a part of this Agreement by incorporation; and
WHEREAS, Licensee agrees and acknowledges that it will obtain and supply
its own surface equipment and will purchase downhole equipment exclusively from
Xxxxxxx; and
WHEREAS, Licensee agrees and acknowledges that the Xxxxxxx Horizontal Drill
Downhole Technology consisting of the following equipment: the riser, nozzle(s),
downhole motor(s) with wing, drill bit(s), flex shaft(s), 4" elbow(s), 5"
elbow(s), 7" elbow(s), one way valve(s), filter(s), hose(s), (as listed in
Exhibit "A") and any Downhole Equipment now in research and development or
developed by any person, including Licensee, in the future for use with the
Technology or in or on the Downhole Equipment, shall always remain the sole and
exclusive property of Xxxx Xxxxxxx, regardless of who designs, develops or pays
to have it built manufactured, or fabricated; and
WHEREAS, Licensee agrees and acknowledges that the annual license fee
covers use only of the Downhole Equipment and not ownership of it; and
WHEREAS, Licensee agrees and acknowledges that neither it, nor any
affiliated entity or person shall ever obtain any ownership interest or right in
the Xxxxxxx Horizontal Technology or trade secrets by virtue of the payment of
any fee; and
WHEREAS, upon termination of this Agreement, Licensee will cease from
further use of the Downhole Equipment and return all Downhole Equipment to
Xxxxxxx; and
NOW, THEREFORE, in consideration of the forgoing "Recitals", which are a
material part of this Agreement, and the rights, obligations and interests
included under this Agreement, both parties agree as follows:
1. Grant of License. Xxxxxxx hereby grants to Licensee and Licensee hereby
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accepts from Xxxxxxx a license to use the Downhole Equipment, Technology,
products patented method and apparatus, and Trade Secrets, hereinafter referred
to collectively as the "Xxxxxxx Horizontal Technology", during the term hereof
for the purposes and within the geographical area set forth herein, and subject
to the terms and conditions hereof (referred to herein as either the "License"
or the "Agreement"). "Licensee" shall include Licensee, its employees, officers
agents, affiliated entities, and/or any sub-licensee. Xxxxxxx shall retain all
rights for self-use and joint venture projects within the Licensed Area. For
purposes of this Agreement, the term "joint venture" shall mean any business
relationship with any third party with the sole intention of such business the
extraction, injection, and/or exploitation of oil, natural gas reserves, or
other fluids or substances. Xxxxxxx shall not Joint Venture with any "Fortune
1000" or "Global 2000" company or any existing Verdisys, Inc., customers within
the Licensee's Area. Nothing in this Agreement shall limit Xxxxxxx from
demonstrating the efficacy of the Technology within the Licensee's Area for a
fee from a joint venturer.
2. Area. Subject to the terms and conditions hereof, the License shall entitle
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Licensee to use the Xxxxxxx Horizontal Technology, during the term hereof only
within the United States of America and Canada, ("Area"). The Area of Licensee
is exclusive to Licensee except for the CRDC license, the contested Sideways,
LLC license, and self use and joint venture rights set out in pragraph #1.
3. License Fee. License fee shall be $2,750,000.00 plus 10% of the gross
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revenue paid to Licensee as a Service Company and 10% of any revenue derived
from any sub-licensee of Licensee or in any way affiliated with Licensee.
A. The License fee shall be paid as follows: $25,000.00 xxxxxxx money
paid upon signing of the Letter Agreement. $75,000.00 upon signing of the
License Agreement. The balance of $2,650,000.00 plus 8% interest will be paid
according to the payment schedule listed in Exhibit "B" and made a part of this
Agreement by incorporation. Additionally Licensee will pay to Xxxxxxx as its
License/Royalty Fees, 10% of the gross revenues derived from any and all
agreements, sub-license(s), and work (either service or self use) in which the
Xxxxxxx Horizontal Technology is utilized in any form, in total or in part, in
the Licensee's Area.
B. Any Attempt to transfer or alienate any rights to utilize or promote
the Xxxxxxx Horizontal Technology in any way by any entity or person so as to
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defeat, diminish, extinguish, bankrupt, or in any way adversely affect the fees
to be paid to Xxxxxxx shall cause this Agreement/License to immediately
terminate, and all rights to the development, promotion, or utilization of the
Xxxxxxx Horizontal Technology shall be immediately terminated and shall return
and be vested without limitation to Xxxxxxx with no further rights or interests
in or to Licensee.
C. The License Fees are to be paid by the 10th of each month following
Licensee's receipt of payment for services rendered to customer on xxxxx in
which Licensee has no interest.
D. Licensee shall compute and pay fees paid for xxxxx in which it has an
interest at the actual rate charged or at its highest for service rate, which
ever is the greater.
E. Failure to make monthly payments when such are due for one month shall
constitute cause to terminate this License. Provided however, Licensee shall
have an additional 30 (thirty) day grace period to make Royalty Payments after
the date such payments are due in which to cure the failure to make the payment
on a timely basis, and further provided however, any Royalty payment made after
the date due shall incur additional interest at the rate of 21% (twenty one
percent) per annum. The aforementioned grace period does not extend to the
initial License Fees listed on Exhibit "B".
F. Licensee, at its option, may select a Certified Public Accountant (not
affiliated with or in the employ of Licensee) to conduct an annual audit of the
records of Licensee for the purpose of ascertaining that payments are being made
in the proper amount and on a timely basis. All costs and expenses of the audit
shall be paid by Licensee, not to be more than $15,000.00 per year.
G. Penalty: If the audit or any other review of the books and accounts of
Licensee discloses that material discrepancies or deficiencies exist in the book
and records of Licensee or that Licensee has failed to pay as much as twenty
five percent (25%) of revenues when due, such shall constitute cause to
terminate this License Agreement by Xxxxxxx
4. Training of Licensee Personnel:
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A. Licensee shall have at least one (1) of its personnel trained by
Xxxxxxx.
X. Xxxxxxx will provide training for Licensee personnel for a fee of
$5,000.00 per well.
C. Initial training of Licensee Personnel will be within the United
States.
5. Equipment, Maintenance and Replacement Parts.
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A. Licensee is solely responsible for the building of the surface
equipment necessary for the utilization of the Xxxxxxx Horizontal Drill
Technology.
i. The costs and expenses associated with the building of the
surface equipment will be borne solely by Licensee or by its
sub-licensee.
ii. Licensee will purchase all downhole equipment necessary from
Xxxxxxx. The cost for the downhole equipment shall be in addition
to all other license fees, costs and expenses.
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iii. The above mentioned costs for surface equipment and downhole
equipment are in addition to any Licensee Fees to be paid by
Licensee.
X. Xxxxxxx will provide to Licensee information necessary for the
building of the surface equipment.
C. Licensee is solely responsible for the cost and expenses of
maintenance, repair, and replacement parts for all Surface Equipment and all
Downhole Equipment.
6. Term. This Agreement shall become effective upon execution by both parties.
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It shall continue in duration and until termination as expressly provided
herein.
7. Termination.
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A. This Agreement may be terminated by mutual consent of both parties.
B. Either party may terminate this Agreement for cause upon sixty (60)
days written notice. After receipt of such notice, the party at fault shall have
sixty (60) days to rectify or cure the failure(s). If the party's failure to
cure is for a reason beyond such party's control, then such period shall be
extended so long as such party is in good faith attempting to cure such failure.
Termination for cause is defined as Xxxxxxx or Licensee's failure or continuing
failure to meet the material terms of this Agreement or Licensee's failure to
pay License Fees in a timely manner or for discrepancies discovered in an audit
in excess of 25% of the fees due.
X. Xxxxxxx may also immediately terminate this Agreement, by written
notice of termination if:
i. Licensee ceases doing business or discontinues Licensee's Service
Company, or discontinues Licensee's Licensing Company .
ii. Licensee attempts to assign or sub-license the right to use the
Xxxxxxx Horizontal Technology except as set forth in this
agreement. Licensee has the right to sub-license the use of the
Xxxxxxx Horizontal Technology within the Licensee's Area.
iii. Licensee assigns this Agreement for the benefit of creditors.
iv. Licensee admits insolvency, or Licensee becomes unable to pay its
obligations as they become due;
v. Any voluntary or involuntary proceedings are instituted by or
against Licensee under bankruptcy or insolvency laws or for
corporate reorganization, or for a receivership, or for the
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dissolution of Licensee and such involuntary proceedings are not
resolved within the earlier of six (6) months or the end of the
effective term;
vi. Licensee commits any material act of fraud or dishonesty, such
act to be adjudicated by final judgment of a court of competent
jurisdiction.
D. Good faith termination under this Agreement shall not impose any
liability on Xxxxxxx or Licensee under the provisions of this Agreement. It is
further agreed by Licensee that Licensee will immediately advise Xxxxxxx in
writing of the occurrences of any event specified in this section.
E. Upon termination of this Agreement, Licensee shall immediately cease
to represent itself as an Xxxxxxx licensee, cease to use the Xxxxxxx corporate
name and or any Xxxxxxx trademark, or any near resemblance of such name or
trademark, as in the reasonable opinion of Xxxxxxx bears such near resemblance
to any name and/or trademark of Xxxxxxx as might deceive customers or create
confusion. In addition, Licensee shall immediately return to Xxxxxxx all
licensed Equipment, including Downhole Equipment now in research and development
or developed in the future, for use in, on, or with the Xxxxxxx Horizontal
Technology, whether developed by Xxxxxxx, licensee or any other person or entity
regardless of where located.
F. Licensee agrees that all License Fees are nonrefundable upon
termination of this Agreement.
8. Performance. Licensee shall use reasonable efforts to promote the use of
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the Xxxxxxx Horizontal Technology by the Service Company in all portions of the
Area in which Licensee is authorized to use the Xxxxxxx Horizontal Technology.
A. The Licensee will make available to any and all sub-licensee a model
of the "Work Order Contract - Pre Treatment Data" form and "General Terms and
Conditions" form as provided to Licensee by Xxxxxxx.
B. Licensee shall maintain accurate and complete well data information
with respect to its use of the Xxxxxxx Horizontal Technology. Such records shall
be kept in such form as is customary in the industry. Licensee shall make the
originals of such records available to Xxxxxxx, Xxxxxxx' employees, agents or
representatives during regular business hours and shall send to Xxxxxxx, at
Licensee's expense, copies of any such records as Xxxxxxx may from time to time
reasonably request.
9. Intellectual Property.
----------------------
A. This Agreement shall not be construed to give Licensee any inchoate,
vested or future right, title, or interest in any of the patents, licenses,
trademarks, or copyrighted material that Xxxxxxx now has or may acquire with
respect to the Xxxxxxx Horizontal Technology, or any improvement, modification,
or change in the method, apparatus, equipment, or process regardless of by whom
it is made, except to the extent and in the manner, time, and places that
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Licensee is authorized and permitted to use the Xxxxxxx Horizontal technology as
provided by the provisions of this Agreement. Licensee agrees that neither it
nor any other entity or persons associated or affiliated with it shall acquire
any pantentable, proprietary or property rights or interest in any of the
Xxxxxxx Horizontal Technology as it previously existed, as it presently exists,
or as it may be modified, developed, refined, changed in the future, regardless
of by whom, all of which shall always remain the sole and exclusive property of
Xxxxxxx
B. Grantback. Licensee agrees that any changes, improvements, or
modifications in the method, apparatus, equipment, and/or process which Licensee
makes or has made shall belong exclusively to Xxxxxxx, and that Xxxxxxx has full
rights to patent, incorporate and utilize such changes or improvements into the
Xxxxxxx Horizontal Technology.
10. LIMITATION AND DISCLAIMER OF DAMAGES AND EXCLUSION OF WARRANTIES.
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X. XXXXXXX SHALL NOT BE LIABLE TO LICENSEE FOR ANY INCIDENTAL, INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST OR
ANTICIPATED PROFITS, OF ANY NATURE WHATSOEVER. IN NO EVENT SHALL XXXXXXX BE
LIABLE TO LICENSEE FOR ANY CLAIM OF ANY KIND RESULTING FROM ANY PERFORMANCE,
NON-PERFORMANCE, OR BREACH OF THIS AGREEMENT OR OF THE XXXXXXX HORIZONTAL
TECHNOLOGY. XXXXXXX SPECIFICALLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESSED OR
IMPLIED BY LAW, OR BY AFFIRMATION, PROMISE, DESCRIPTION OR SAMPLE, INCLUDING BUT
NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, USAGE OR TRADE, OR FITNESS FOR A
PARTICULAR PURPOSE.
11. WARNING OF INHERENT RISKS
-------------------------
A. IT IS EXPRESSLY RECOGNIZED AND ACKNOWLEDGED THAT THE XXXXXXX
HORIZONTAL TECHNOLOGY IS OPERATED UNDER VERY HIGH PRESSURES AND THAT THERE ARE
INHERENTLY AND EXTREMELY DANGEROUS RISKS INVOLVED IN OPERATING THE TECHNOLOGY OR
ANY EQUIPMENT UTILIZING HIGH PRESSURES. THE PRESSURES GENERATED BY THE
TECHNOLOGY ARE CAPABLE OF CUTTING THROUGH AND PENETRATING ROCK, METAL, CLOTHING,
SKIN, BONE, AND PROTECTIVE CLOTHING AND GLASSES OR GOGGLES, AND THAT SUCH MAY
CAUSE SERIOUS INJURY OR DEATH. ALSO, THE DRILLING AND BLASTING OF OIL AND GAS
XXXXX AND CHANNELS CAN CAUSE OR CREATE PUNCTURES OR LEAKS IN THE EQUIPMENT,
WHICH CAN ALLOW FLUID UNDER EXTREMELY HIGH PRESSURES TO ESCAPE, WHICH CAN CAUSE
SERIOUS INJURY OR DEATH. LICENSEE SHALL HOLD XXXXXXX HARMLESS FROM ANY DEATH OR
INJURY TO PERSONS OR PROPERTY ARISING OUT OF OR RESULTING FROM THE USE OF THE
TECHNOLOGY, OR FROM THE NEGLIGENCE OR WILLFUL MISCONDUCT OF LICENSEE OR
LICENSEE'S PERSONNEL.
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12. No Agency Created.
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A. For the protection of both Xxxxxxx and Licensee, the relationship
created by this Agreement between Xxxxxxx and Licensee is not that of principal
and agent, and under no circumstances shall either party be considered an agent
of the other.
B. Licensee is and shall remain an independent contractor and Licensee
alone shall be answerable for any loss or damage caused by it or its employees
or agents. Licensee may indicate in its advertising and on its stationery that
it is an authorized Xxxxxxx licensee, provided that Licensee clearly understands
and states that it is separately owned and operated.
X. Xxxxxxx does not authorize Licensee to represent itself as Xxxxxxx, or
does Xxxxxxx authorize Licensee to pledge the credit of Xxxxxxx or enter into
any contract for Xxxxxxx, nor does Xxxxxxx convey to Licensee any property
interest in Xxxxxxx name, trademarks, or patents.
13. Assignment.
-----------
A. This Agreement may not be assigned by Licensee except as provided in
Section 7 Subsection - C- ii.
B. This Agreement may be assigned by Xxxxxxx to any party, provided that
Xxxxxxx provides ten (10) days written notice to Licensee of such assignment and
requires the assignee to assume all Xxxxxxx' responsibilities arising under this
Agreement.
14. Former Agreement. Except as stated herein, all prior or contemporaneous
------------------
written or oral statement, arrangements, or agreements regarding the License are
merged into and superseded by this Agreement.
15. Severability. If any provision of this Agreement is held to be invalid or
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unenforceable or is not enforced, this Agreement shall be considered divisible
as to such provisions and the remainder of the Agreement valid and binding as
though such provision were not included in this Agreement.
16. Change of Design.
-----------------
X. Xxxxxxx reserves the right to change the design of its products at any
time it is deemed necessary. Xxxxxxx is not to be held responsible for making
such design changes on the Xxxxxxx Horizontal Technology or Downhole Equipment
constructed and/or shipped by Xxxxxxx prior to the incorporation of such design
changes. Licensee will be notified of design enhancements to the Xxxxxxx
Horizontal Technology within ninety (90) days of completion of development and
the design enhancements be made available to Licensee. The rights to these
design enhancements will be subject to the covenants of this agreement.
B. In the same manner Licensee shall make all design changes made by any
person or entity affiliated with or associated with Licensee, or with any
sub-licensee that Licensee is affiliated with, available to Xxxxxxx, and it
shall be the sole property of Xxxxxxx.
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17. Prevailing Law and Jurisdiction. This Agreement shall be construed and
----------------------------------
interpreted in accordance with the laws of the Commonwealth of Kentucky.
Jurisdiction for any dispute arising out of any term or matter related to this
License and any sub-licenses shall be the courts of Kentucky.
18. Force Majeure. Neither party shall be liable for failure to perform its
---------------
part of this Agreement when the failure is due to fire, floods, strikes, or
other industrial, disturbances, inevitable accident, war, riot, insurrection,
act of terrorism or other causes beyond the control of the party claiming force
majeure. The party most affected shall act diligently to remove the force
majeure condition at the earliest practicable time. In no event shall financial
inability to pay be considered force majeure; nor shall force majeure excuse any
party's obligation to pay pursuant to this Agreement, any sums for which such
party became obligated prior to the occurrence of the force majeure event.
19. Compliance with Law.
--------------------
A. Licensee agrees that it will not violate any applicable law or
regulation of any country, state, or political subdivision thereof in performing
or purporting to perform any act arising out of or in connection with this
Agreement.
B. Pursuant to the above-stated obligation, Licensee agrees to maintain
such records as required by applicable laws and regulations and to provide all
written assurances required by Xxxxxxx in connection with such laws and
regulations.
20. Environmental and Occupational Regulations. It is Licensee's obligation to
-------------------------------------------
insure that all environmental and work place regulations applicable to Licensee,
either Federal, State or local, are adhered to and that any conditions set by
environmental or occupational regulatory agencies such as EPA or OSHA are met by
Licensee.
21. Indemnification.
----------------
A. Licensee agrees to hold Xxxxxxx harmless and to indemnify and defend
Xxxxxxx for all claims, loses and liabilities ("Losses") that may occur as the
result of Licensee's acts or omissions under this Agreement or otherwise, or
arising out of or resulting from the use proper or improper, of the Xxxxxxx
Horizontal Technology, or from the negligence or willful misconduct of Licensee
or Licensee's personnel, or of its sub-licensee or assignee.
B. ATTORNEY FEES. THE SUCCESSFUL PARTY IN ANY LITIGATION SHALL RECOVER
ITS ATTORNEY FEES AND RELATED LITIGATION EXPENSES, INCLUDING TIME AND TRAVEL. IN
THE EVENT OF THIRD PARTY LITIGATION INVOLVING THIS AGREEMENT, OR THE USE OF THIS
TECHNOLOGY, IF IT IS ADJUDICATED THAT ONE OF THE PARTIES OF THIS AGREEMENT IS AT
8
FAULT, THE OTHER PARTY SHALL BE INDEMNIFIED BY THE THIRD PARTY AT FAULT FOR ITS
REASONABLE ATTORNEY FEES, COSTS, AND LITIGATION RELATED EXPENSES, INCLUDING TIME
AND TRAVEL EXPENSES.
22. No Liability on Termination. The right to termination of this Agreement
-----------------------------
pursuant to the provisions of this Agreement is absolute and Xxxxxxx shall not
incur any liability by reason of such termination. Licensee shall release
Xxxxxxx from damages and from any claim of any nature (including but not limited
to damages sustained on account of loss of prospective commission or profits, or
on investments, contracts, leases, or other commitments) resulting from or
arising out of such termination, provided, however, that nothing in this section
shall be construed as a release of any obligation that shall have accrued prior
to the effective date of such termination and that is preserved pursuant to this
Agreement.
23. Notices. Any notice provided for or concerning this agreement shall be in
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writing and shall be deemed sufficiently given when either personally delivered
or mailed by certified or registered mail to the address of each party as
provided below. The address of either party may be changed by giving written
notice of such change to the other party. Notices may also be given by such
other means as are acceptable to and agreed upon by the parties to this
Agreement.
A. Notices sent to Xxxxxxx shall be addressed as follows:
Xx. Xxxx X. Xxxxxxx
000 X. Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
B. Notices sent to Licensee shall be addressed as follows:
Verdisys Inc.
00000 X-00 Xxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX
24. Confidentiality. Information furnished by Xxxxxxx to Licensee with respect
----------------
to the Downhole Equipment and its application, installation, operation and
repair that is designated by Xxxxxxx as confidential and proprietary and shall
be held by Licensee in confidence during the term of this Agreement and for ten
(10) years thereafter. Upon the effectiveness of termination of this License,
all such confidential and proprietary information, including all copies of such
information, and any other information not specifically designated by Xxxxxxx
for release to the public that may come into the possession of the Licensee
during the term of this Agreement, including all copies of such information,
shall be delivered by Licensee to Xxxxxxx when requested to do so by Xxxxxxx
without making or retaining copies or excerpts of such information.
25. Disclaimer. IN NO EVENT SHALL XXXXXXX or LICENSEE BE LIABLE TO EACH OTHER
-----------
FOR INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR LOSS OF ANTICIPATED
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PROFITS ON ANY CLAIM OF ANY KIND RESULTING FROM ANY PERFORMANCE,
NON-PERFORMANCE, OR BREACH OF THIS AGREEMENT OR OF THE XXXXXXX HORIZONTAL
TECHNOLOGY.
26. NO WARRANTY. NO WARRANTY IS GIVEN THAT THE TECHNOLOGY WILL INCREASE
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PRODUCTION ON ANY GIVEN WELL.
27. Xxxxxxx Warranty. Xxxxxxx will warrant the following: That he is the owner
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of and has the rights to License the Horizontal Drilling Technology embodied in
United States Patent #5413184 and #5853056.
28. Venue. The venue for any action arising out of any dispute between the
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parties to this Agreement shall be Kentucky.
29. Entire Agreement. This Agreement shall constitute the entire License
------------------
Agreement between Xxxxxxx and Licensee regarding the license of the Xxxxxxx
Horizontal Technology by Xxxxxxx to Licensee, and any prior understanding or
representation of any kind preceding the date of this Agreement and regarding
the license of the Xxxxxxx Horizontal Technology shall not be binding upon
either party except to the extent incorporated in this Agreement.
30. Modification of Agreement. Any modification of this Agreement or additional
--------------------------
obligations assumed by either party in connection with this Agreement shall be
binding only if placed in writing and signed by each party or an authorized
representative of each party.
31. No Waiver. The failure of either party to this Agreement to insist upon the
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performance of any of the terms and conditions of this Agreement or the waiver
of any breach of any of the terms and conditions of this Agreement shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain if full force and effect as if no such forbearance or
waiver had occurred.
32. Tax. All prices are exclusive of any Federal, State or Special Taxes
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imposed on the sale or use of the Xxxxxxx Horizontal Technology, merchandise and
services listed, which taxes, where applicable to Licensee, will solely be
Licensee's responsibility and borne by Licensee.
33. Authority. Each individual signing this Agreement on behalf of the
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corporation or partnership represents that she or he has the necessary authority
to execute this Agreement on behalf of such entity, and that in the case of a
corporation, all necessary corporate action has been taken approving the
execution of this Agreement.
34. No Guarantee on Performance. All parties agree success of this technology
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is not guaranteed on every well or in every formation or strata. Drilling for
oil and gas is a risky endeavor. It has been found that performance of this
technology is improved when utilized in appropriate formations or stratum with
appropriate downhole pressures and conditions at appropriate depths. The depth
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of xxxxx should not exceed 5800' (five thousand eight hundred feet). Performance
of the Technology is improved with appropriate well preparation, e.g. scraping
of the tubing and casing, concerning which detailed instructions have been given
to Licensee. The success of this Technology is greatly diminished on deviated
xxxxx. It is further understood that Xxxxxxx has strongly recommended that after
the Technology is utilized on a well that clean up of the well formation/strata
is necessary for optimal production. Xxxxxxx has not represented the Technology
under any circumstances beyond these limitations. The use of abrasives or acids
is not approved with this equipment.
IN WITNESS WHEREOF, the parties have subscribed their names and signatures
effective upon the date first written above.
XXXXXXX.
--------------------------------
Xxxx X. Xxxxxxx
------------------------------- ----------------------------------
Verdisys, Inc Xxx Xxxxxxxx, CEO
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EXHIBIT "A"
XXXXXXX HORIZONTAL TECHNOLOGY DOWNHOLE EQUIPMENT consists of:
1. Downhole Motors w/wing
2. Flex Shafts
3. Casing Cutting Implements
4. High Pressure Nozzles
5. 4" Elbows Complete
6. 5" Elbows Complete
7. 7" Elbows Complete
8. High Pressure Downhole Filter
9. Riser
Licensee agrees and acknowledges that the Downhole Equipment is to be
licensed and that the Downhole Equipment is referred to as the Xxxxxxx
Horizontal Technology.
Licensee agrees and acknowledges that all Downhole Equipment consisting of:
the riser, nozzle(s), downhole motor(s) with wing, drill bit(s), flex shaft(s),
4" elbow(s), 5" elbow(s), 7" elbow(s), one way valve(s), filter(s), hose(s), and
any Downhole Equipment now in research and development or developed in the
future for use in or on the Device, listed as or used as Downhole Equipment,
shall always remain the property of Xxxxxxx regardless of who designs, develops
or pays to have it built, manufactured, or fabricated.
Licensee agrees and acknowledges that the license/royalty fee covers use
only of the Downhole Equipment and not ownership of it and upon termination of
this agreement according to its terms, Licensee will cease from further use of
the Downhole Equipment and return all the Downhole Equipment to Xxxxxxx.
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EXHIBIT "B"
Verdisys Payment Terms to Xxxxxxx
1. 3/21/03 - $25,000.00 xxxxxxx for contract negotiations
2. 4/30/03 or before - $75,000.00 down payment
3. 5/31/03 - $75,000.00
4. 6/30/03 - $75,000.00
5. 7/31/03 - $100,000.00
6. 8/31/03 - $125,000.00
7. 9/30/03 - $125,000.00
8. 10/31/03 - $175,000.00
9. 11/30/03 - $250,000.00
10. 12/31/03 - $500,000.00
Total received by Xxxxxxx in 2003 $1,525,000.00
11. 1/31/04 - $500,000.00
12. 2/28/04 - $500,000.00
13. 3/31/04 - $445,000.00; total for this month includes $222,000.00 (8%)
simple interest
Total paid to Xxxxxxx $2,970,000.00 (12 month payout).
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