INTELLECTUAL PROPERTY SECURITY AGREEMENT
Exhibit
10.7
THIS
INTELLECTUAL PROPERTY SECURITY AGREEMENT (this “Agreement”),
dated
as of August 25, 2006, is made by BLAST
ENERGY SERVICES, INC.,
a
California corporation (“Blast
Energy Services”),
and
EAGLE DOMESTIC DRILLING OPERATIONS LLC, a Texas limited liability company
(“Eagle”,
and
together with Blast Energy Services, each a “Grantor”
and
collectively, the “Grantors”),
in
favor of LAURUS MASTER FUND, LTD. (“Laurus”).
WHEREAS,
pursuant to that certain Securities Purchase Agreement dated as of the date
hereof by and between Blast Energy Services and Laurus (as from time to time
amended, restated, supplemented or otherwise modified, the “Purchase
Agreement”),
Laurus has agreed to provide certain financial accommodations to Blast Energy
Services;
WHEREAS,
pursuant to that certain Guaranty dated as of the date hereof made by Eagle
(the
“Guarantor”)
in
favor of Laurus (as from time to time amended, restated, supplemented or
otherwise modified, the “Guaranty”),
the
Guarantor guaranteed all of the obligations and liabilities of Blast Energy
Services under the Purchase Agreement and the Related Agreements (as defined
in
the Purchase Agreement).
WHEREAS,
Laurus is willing to enter into the Purchase Agreement, but only upon the
condition, among others, that Grantors shall have executed and delivered to
Laurus this Agreement;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
Section
1DEFINED
TERMS.
(a)When
used
herein the following terms shall have the following meanings:
“Copyright
Licenses”
means
all written agreements naming any Grantor as licensor or licensee, granting
any
right under any Copyright, including the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright, and whether
any Grantor is named as licensor, licensee or otherwise.
“Copyrights”
means
all copyrights arising under the laws of the United States, any other country
or
any political subdivision thereof, whether registered or unregistered and
whether published or unpublished, all registrations and recordings thereof,
and
all applications in connection therewith, including all registrations,
recordings and applications in the United States Copyright Office, and the
right
to obtain all renewals of any of the foregoing.
“General
Intangibles”
shall
have the meaning provided thereto in Section 9-102 of the UCC, as amended,
restated or otherwise modified from time to time.
“Intellectual
Property”
shall
mean all rights, title and interests in or relating to intellectual property
and
industrial property of each Grantor and all IP Ancillary Rights relating
thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names
and IP Licenses.
“Internet
Domain Names” means all rights, title and interests (and all related IP
Ancillary Rights) of each Grantor in or relating to internet domain
names.
“IP
Ancillary Rights”
shall
mean with respect to any Copyrights, Patents, Trademarks, Internet Domain Names
and IP Licenses, as applicable, all foreign counterparts to, and all
divisionals, reversions, continuations, continuations-in-part, reissues,
reexaminations, renewals and extensions of, such intellectual property and
all
income, royalties, proceeds and liabilities at any time due or payable or
asserted under or with respect to any of the foregoing or otherwise with respect
to such intellectual property, including all rights to xxx or recover at law
or
in equity for any past, present or future infringement, misappropriation,
dilution, violation or other impairment thereof, and, in each case, all rights
to obtain any other IP Ancillary Right.
“IP
Licenses”
shall
mean Copyright Licenses, Patent Licenses and Trademark Licenses.
“Master
Security Agreement”
shall
have the meaning provided thereto in Section 5 hereof.
“Obligations”
shall
have the meaning provided thereto in the Master Security Agreement.
“Patent
Licenses”
means
all agreements, whether written or oral, relating to any Patent, including
agreements providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by a Patent,
and whether any Grantor is named as licensor, licensee or
otherwise.
“Patents”
means
(a) all letters patent of the United States, any other country or any political
subdivision thereof, and all reissues and extensions of such letters patent,
(b)
all applications for letters patent of the United States or any other county
and
all divisions, continuations and continuations-in-part thereof, and (c) all
rights to obtain any reissues or extensions of the foregoing.
“Trademark
Licenses”
means,
collectively, each agreement, whether written or oral, relating to any
Trademark, including agreements providing for the grant by or to any Grantor
of
any right to use any Trademark, and whether any Grantor is named as licensor,
licensee or otherwise.
“Trademarks”
means
(a) all trademarks, trade names, corporate names, business names, fictitious
business names, trade styles, services marks, logos, and other source or
business identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or political subdivision thereof, or
otherwise, and all common-law rights thereto, and (b) the right to obtain all
renewals, reissues or extensions thereof.
“UCC”
shall
have the meaning provided thereto in the Master Security Agreement.
(b)All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Purchase Agreement.
Section
2GRANT
OF SECURITY INTEREST IN INTELLECTUAL PROPERTY COLLATERAL.
To
secure the complete and timely payment of all the Obligations of the Grantors
now or hereafter existing from time to time, each Grantor hereby grants to
Laurus a continuing first priority security interest in all of such Grantor’s
right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the “Collateral”):
(a) all
of
its Patents and Patent Licenses to which it is a party including those referred
to on Schedule
I
hereto;
(b) all
of
its Trademarks and Trademark Licenses to which it is a party including those
referred to on Schedule
II
hereto;
(c) all
of
its Copyrights and Copyright Licenses to which it is a party including those
referred to on Schedule
III
hereto;
(d) all
of
its Internet Domain Names including those referred to on Schedule
IV
hereto;
(e) all
IP
Ancillary Rights;
(f) all
goodwill of the business connected with the use of, and symbolized by, any
of
the Intellectual Property; and
(g) all
products and proceeds of the foregoing, including, without limitation, any
claim
by such Grantor against third parties for past, present or future (i)
infringement or dilution of any Intellectual Property or Intellectual Property
licensed under any IP License and (ii) injury to the goodwill associated with
any Intellectual Property or any Intellectual Property licensed under any IP
License.
Section
3REPRESENTATIONS
AND WARRANTIES.
Each
Grantor represents and warrants that:
(a) Such
Grantor does not have any interest in, or title to, (a) any Patents or Patent
Licenses except as set forth on Schedule I, (b) any Trademarks or Trademark
Licenses except as set forth on Schedule II, (c) any Copyrights or Copyright
Licenses except as set forth on Schedule III or (d) any Internet Domain Names
except as set forth on Schedule IV.
(b) Each
of
its Patents, Trademarks and Copyrights is valid and enforceable, and there
is no
claim that the use of any of them violates the rights of any third party.
(c) The
IP
Licenses are in full force and effect, and such Grantor is not in breach or
default under any of the IP Licenses.
(d) This
Agreement is effective to create a valid and continuing first priority lien
on
and perfected security interests in favor of Laurus in all of such Grantor’s
Patents, Trademarks, Copyrights, IP Licenses and Internet Domain Names and
such
perfected security interests are enforceable as such as against any and all
creditors of, and purchasers from, such Grantor.
(e) Upon
filing of this Agreement with the United States Patent and Trademark Office
and
the United States Copyright Office and the filing of appropriate financing
statements, all action necessary or desirable to protect and perfect Laurus’
Lien on each Grantor’s Patents, Trademarks, Copyrights and Internet Domain Names
shall have been duly taken.
Section
4COVENANTS.
Each
Grantor covenants and agrees with Laurus that from and after the date of this
Agreement:
(a) Such
Grantor shall notify Laurus immediately if it knows or has reason to know that
any application or registration relating to any Patent, Trademark or Copyright
(now or hereafter existing) may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent
and
Trademark Office, the United States Copyright Office or any court) regarding
such Grantor’s ownership of or right to use any Patent, Trademark or Copyright,
its right to register the same, or to keep and maintain the same.
(b) In
no
event shall such Grantor, either directly or through any agent, employee,
licensee or designee, file an application for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office,
the
United States Copyright Office or any similar office or agency without giving
Laurus prior written notice thereof, and, upon request of Laurus, such Grantor
shall execute and deliver a supplement hereto (in form and substance
satisfactory to Laurus) to evidence Laurus’ lien on such Patent, Trademark or
Copyright, and the General Intangibles of such Grantor relating thereto or
represented thereby.
(c) Such
Grantor shall take all actions necessary or requested by Laurus to maintain
and
pursue each application, to obtain the relevant registration and to maintain
the
registration of each of the Patents, Trademarks and Internet Domain Names (now
or hereafter existing), including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings.
(d) In
the
event that any of the Collateral is infringed upon, misappropriated or diluted
by a third party, such Grantor shall notify Laurus promptly after such Grantor
learns thereof. Such Grantor shall, unless it shall reasonably determine that
such Collateral is in no way material to the conduct of its business or
operations, promptly xxx
for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and shall take such other
actions as Laurus shall deem appropriate under the circumstances to protect
such
Collateral.
(e) Upon
the
request of Laurus, such Grantor shall execute and deliver to Laurus, in form
and
substance reasonably acceptable to Laurus and suitable for recording with the
appropriate internet domain name registrar, a duly executed form of assignment
for all Internet Domain Names of such Grantor (together with appropriate
supporting documentation as may be requested by Laurus).
Section
5MASTER
SECURITY AGREEMENT.
The
security interests granted pursuant to this Agreement are granted in conjunction
with the security interests granted to Laurus by each Grantor pursuant to the
Master Security Agreement, dated as of the date hereof, among the Grantors
and
Laurus (as amended, restated or otherwise modified from time to time, the
“Master
Security Agreement”).
Each
Grantor and Laurus hereby acknowledges and affirms that the rights and remedies
of Laurus with respect to the security interest in the Collateral made and
granted hereby are more fully set forth in the Master Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.
Section
6REINSTATEMENT.
This
Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against any Grantor for liquidation or
reorganization, should any Grantor become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant
to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or
returned by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
Section
7INDEMNIFICATION.
(a)
Each Grantor assumes all responsibility and liability arising from the use
of
the Patents, Trademarks and/or Copyrights and each Grantor hereby indemnifies
and holds Laurus harmless from and against any claim, suit, loss, damage or
expense (including reasonable attorneys’ fees) arising out of such Grantor’s
operations of its business from the use of the Patents, Trademarks and/or
Copyrights. (b) In any suit, proceeding or action brought by Laurus under any
IP
License for any sum owing thereunder, or to enforce any provisions of such
IP
License, Grantors will indemnify and keep Laurus harmless from and against
all
expense, loss or damage suffered by reason of any defense, set off,
counterclaim, recoupment or reduction or liability whatsoever of the obligee
thereunder, arising out of a breach by the applicable Grantor of any obligation
thereunder or arising out of any other agreement, indebtedness or liability
at
any time owing to or in favor of such obligee or its successors from such
Grantor, and all such obligations of such Grantor shall be and remain
enforceable against and only against such Grantor and shall not be enforceable
against Laurus.
Section
8NOTICES.
Whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect
to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given in
the
manner, and deemed received, as provided for in the Purchase Agreement with
respect to Blast Energy Services and the Guaranty with respect to the
Guarantor.
Section
9TERMINATION
OF THIS AGREEMENT.
Subject
to Section
6
hereof,
this Agreement shall terminate upon indefeasible payment in full in cash of
all
Obligations and irrevocable termination of the Purchase Agreement and the
Guaranty.
[Signature
Page to Follow]
IN
WITNESS WHEREOF, each Grantor has caused this Intellectual Property Security
Agreement to be executed and delivered by its duly authorized officer as of
the
date first set forth above.
|
By:
/s/
Xxxx X’Xxxxx
Name:
Xxxx X’Xxxxx
Title:
EVP, CFO, & Co-CEO
|
|
|
EAGLE
DOMESTIC DRILLING OPERATIONS LLC
By:
BLAST ENERGY SERVICES, INC., its sole
member
By:
/s/
Xxxxx X. Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
President & Co-CEO
|
|
|
ACCEPTED
AND ACKNOWLEDGED BY:
LAURUS
MASTER FUND, LTD.
By:
/s/
Laurus Master Fund, LTD.
Name:
Title:
|
STATE
OF
TEXAS )
) ss:
COUNTY
OF
XXXXXX )
On
the
24th day of August, 2006, before me personally came Xxxx X’Xxxxx to me known,
who being by me duly sworn, did depose and say he is the Executive Vice
President, Chief Financial Officer and Co-CEO of Blast Energy Services, Inc.,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the board of directors of said
corporation.
/s/
Xxxxxxx X. Xxxxxxx
Notary
Public
My
Commission Expires: March 04, 0000
XXXXX
XX
XXXXX )
) ss:
COUNTY
OF
XXXXXX )
On
the
24th day of August, 2006, before me personally came Xxxxx Xxxxx to me known,
who
being by me duly sworn, did depose and say he is the President and Co-CEO of
Blast Energy Services, Inc., the sole member of Eagle Domestic Drilling
Operations LLC, the limited liability company described in and which executed
the foregoing instrument; and that he signed his name thereto by order of the
board of directors of said corporation.
/s/
Xxxxxxx X. Xxxxxxx
Notary
Public
My
Commission Expires: March 04, 2009
SCHEDULE
I
TO
|
I. PATENT
REGISTRATIONS
|
|||
|
Grantor
|
Patent
|
Reg.
No.
|
Date
|
|
None.
|
|||
|
II. PATENT
APPLICATIONS
|
|||
|
Grantor
|
Patent
|
Application
No.
|
Filing
Date
|
|
Blast
Energy Services, Inc. (50% owner of the Patent)
|
Method
and Apparatus for Jet-Fluid Abrasive Cutting
|
60/527,308
|
November
12, 2004
|
|
III. PATENT
LICENSES
|
||||||
|
Grantor
|
Patent
|
Reg.
No.
|
Owner
|
Date
|
Exclusivity
|
Type
of License
|
|
Method
of an Apparatus for Horizontal Well Drilling
|
5,413,184
|
Xxxx
Xxxxxxx
|
5/9/95
|
Not
Exclusive
|
Sublicense
to Blast Energy Services under terms of license sale to Maxim
TEP
|
|
|
Method
of and Apparatus for Horizontal Well Drilling
|
5,853,056
|
Xxxx
Xxxxxxx
|
12/29/98
|
Not
Exclusive
|
Sublicense
to Blast Energy Services under terms of license sale to Maxim
TEP
|
|
SCHEDULE
II
TO
(m) TRADEMARK
REGISTRATIONS
|
GRANTOR
|
REG.
NO.
|
XXXX
|
COUNTRY
|
REG.
DATE
|
|
None.
|
||||
(n) TRADEMARK
APPLICATIONS
|
GRANTOR
|
SER.
NO.
|
XXXX
|
COUNTRY
|
FILING
DATE
|
|
None.
|
||||
(o) TRADEMARK
LICENSES
|
GRANTOR
|
REG.
NO.
|
XXXX
|
COUNTRY
|
REG.
DATE
|
EXCLUSIV-ITY
|
TYPE
OF LICENSE
|
|
None.
|
||||||
SCHEDULE
III
TO
|
(a) COPYRIGHT
REGISTRATIONS
|
|||||||
|
Grantor
|
Copyright
|
Reg.
No.
|
Date
|
||||
|
None.
|
|||||||
|
(b) COPYRIGHT
APPLICATIONS
|
|||||||
|
Grantor
|
Copyright
|
Date
|
|||||
|
None.
|
|||||||
|
(c) COPYRIGHT
LICENSES
|
|||||||
|
Grantor
|
Copyright
|
Reg.
No.
|
Date
|
Exclusivity
|
Type
of License
|
||
|
None.
|
|||||||
SCHEDULE
IV
TO
INTERNET
DOMAIN NAMES
xxxxxxxxxxxxxxxxxxx.xxx
xxxxx-xx.xxx
xxxxxxxx.xxx
