ABRASIVE FLUID JET TECHNOLOGY PURCHASE AGREEMENT
Exhibit
10.1
ABRASIVE
FLUID JET TECHNOLOGY
THIS
AGREEMENT (herein the “Agreement”) is made and entered into as of this
25th
day of
August, 2005, by and between Alberta Energy Partners, a general partnership
organized in the State of Texas and consisting of Xxxx XxXxxx and Xxxx Xxxxx
as
its two partners, and having its principal office in Xxxxxxxxxx County, Texas
(herein “Alberta”), and Blast Energy Services, Inc., f/k/a Verdisys, Inc., a
corporation incorporated in the State of California and having its principal
office at 00000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 (herein
“Blast”) (collectively referred to as the “Parties” or individually as
“Party”).
WHEREAS,
Alberta owns the Abrasive Fluid Jet Technology (or “Technology” as more
particularly defined herein), and is willing to grant to Blast a one-half
interest therein as set forth in this Agreement; and
WHEREAS,
Blast desires to own a one-half interest in such Technology as a co-owner,
and
to use such Technology and to license the Technology to others; and
WHEREAS,
the Parties entered into a licensing agreement on or about October 27, 2004,
which they now desire to replace in its entirety by substituting in replacement
thereof this Agreement;
NOW,
THEREFORE, FOR AND IN CONSIDERATION of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the adequacy
and sufficiency of which is hereby acknowledged, the Parties agree as
follows:
DEFINITIONS
| 1. |
For
purposes of this Agreement, the terms “Confidential Technical Information”
and “Technology” shall mean any and all technical information of Alberta
relating to a process for a coherent abrasive jet cutting of steel,
rock,
and other formation materials in a well bore, and a formation access
tool,
abrasive nozzles, and conductor, for utilization of the process,
and shall
include, but not be limited to, the
following:
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| a. |
descriptions,
designs, drawings, and specifications of the Technology, all materials
utilized in the Technology, and including, but not by way of limitation
of
the extent of the definition of the Technology, applied reference
number
US 60/627,308;
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| b. |
methods,
know-how, specifications, and procedures employed or to be employed
in the
design, manufacture, fabrication, transportation, installation, storage,
usage, sales, marketing or licensing of the Technology, and including
all
techniques, methodologies, procedures, tolerances, and sales, marketing
and licensing information, related thereto;
and
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| c. |
all
information, acquired technology, developments, improvements, or
other
information which become available to Alberta relating to the Technology,
and all enhancements of the Technology by either Party, during the
term of
this Agreement.
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| 2. |
The
terms “Confidential Technical Information” and “Technology” shall not
mean:
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| a. |
information
which at the time of disclosure to Blast by Alberta is in the public
domain;
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| b. |
information
which Blast can show was in its possession at the time of disclosure
of
such information to it by Alberta and not acquired directly or indirectly
from Alberta; and
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| c. |
information
acquired by Blast from a third party, after the disclosure of information
to it by Alberta, and which the third party did not receive from
Alberta
or from any other party under an obligation of
confidence.
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| 3. |
The
term “Royalty Payment” shall be defined as a share of non-License Payment
revenues received from the use of the
Technology.
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| 4. |
The
term “Licensing Payments” shall include all up front or annual fees from
third party licensing activities plus any allocation of the ongoing
share
of revenues from licensing arrangements.
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| 5. |
The
term “Revenue” shall be defined as gross cash receipts or gross sales
before any deductions.
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OWNERSHIP
RIGHTS
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6.
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Alberta
hereby conveys, transfers and assigns to Blast (as a co-owner with
Alberta) a 50% undivided interest in all of Alberta’s rights, title and
interest in the Technology. Either party may hold or may sell,
convey or
assign their respective interests in the Technology, subject to
all
rights, terms, obligations and liabilities of this Agreement. Such
sale,
conveyance or assignment shall be subject to the approval of the
other
Party, which shall not be unreasonably withheld. This Agreement
shall be
assigned by either Party to any other Party owned or under the
effective
control of the assigning Party (or its shareholders) without the
approval
of the other Party.
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7.
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In
the event of a potential sale by one of the Parties of an ownership
interest in the Technology, such sale terms shall be offered by
the
selling Party to the other Party in writing, with a written copy
of the
offer and the non-selling Party will have a right of first refusal
to
match said offered terms within twenty one (21) calendar days of
written
notice by the selling Party. A failure to accept the terms and
conditions
in writing as offered to the third party, within twenty one (21)
calendar
days of first notice shall be an act of
declining.
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8.
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Should
Blast decide to sell or merge the company in its entirety with
or into a
third party, Alberta shall have no rights to participate in the
proceeds
from such sale (except as rights otherwise become available by
virtue of
its shareholdings in Blast arising from this Agreement or otherwise),
but
such third party shall agree in writing to all of the terms, obligations,
and responsibilities of this
Agreement.
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TERMS
AND CONSIDERATION
| 9. |
Alberta
hereby sells, grants and conveys to Blast a 50% co-ownership interest
in
the Technology, which includes the unrestricted right to use the
Technology as defined in paragraph 1, and to license such use to
others,
world-wide, consistent with the License Approval provisions in 15,
16 and
17 below, upon execution of this Agreement, in consideration for
which,
Blast promises to pay the consideration for such ownership, including
terms for sharing revenues as part payment of such consideration,
and
restrictions upon ownership pending payment of certain consideration
as
follows:
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| a. |
Upon
execution of this Agreement and as part of the purchase price
consideration, Blast will convey to Alberta three million (3,000,000)
restricted shares of its common stock. Blast will file a registration
pursuant to requirements of the Securities and Exchange Commission
within
ninety (90) days of execution and use its best efforts to obtain
effectiveness from the SEC, so that such stock may become unrestricted
and
trade publicly. Blast does not guaranty that the Securities and Exchange
Commission will approve such filing. Alberta’s shares of Blast’s common
stock shall be of the same class and type as other Blast common stock
without any variance in voting or other
rights.
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| b. |
Upon
execution of this Agreement and as part of the purchase price
consideration, Blast will issue to Alberta seven hundred fifty thousand
(750,000) warrants for the purchase of shares of common stock of
Blast,
exercisable at forty five cents ($ .45) per share, and exercisable
at such
time as a minimum of $225,000 revenue has been received by operation
of
Blast’s first rig using the Technology. Such warrants will expire three
(3) years from date of issuance. These warrants will be subject to
dilution (reset) adjustment, in whole or in part, at the time they
are
exercised. Said warrants therefore shall be increased to offset any
dilution that would occur by the issuance of additional shares of
common
stock by Blast from this date forward. (This issuance of warrants
is in
addition to the issuance of two hundred fifty thousand (250,000)
warrants
previously issued to Alberta’s affiliate, Xxxxxx Energy Holding, Inc.,
pursuant to a prior separate agreement.)
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| c. |
Following
the execution of this Agreement and as part of the purchase price
consideration, Blast shall pay to Alberta one-half of Blast’s 50% share of
the gross revenue from licensing the use of the Technology, (i.e.,
seventy-five percent (75%) of such gross revenue being paid to Alberta,
and twenty-five percent (25%) to Blast) in addition to its own one-half,
until Alberta has received two million dollars ($2,000,000) from
the extra
50% of Blast’s portion, in addition to Alberta’s own one-half interest in
such revenue. Following the payment of the two million dollars
($2,000,000), the Parties shall share all future licensing revenue
equally.
It
is not intended that any form of corporate guarantee or debt obligation
shall arise requiring disclosure within the published financial statements
of Blast as a result of the disproportionate license revenue sharing
provisions contained herein.
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d.
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As
part of the consideration to enter the agreement, Blast shall pay
to
Alberta a Royalty Payment of two thousand dollars ($2,000) per
well bore,
or two percent (2%) of the gross revenue received, whichever is
greater,
for each well bore in which Blast utilizes the Technology, with
payment
and an accounting at the close of each calendar month forty five
days (45)
after the close of said month. Services requested by Blast customers
from
third party vendors (e.g. pumping services) and invoiced by Blast
as a
pass through billing to the customer are not subject to Royalty
Payments.
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e.
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Alberta
shall have the option (but not the obligation) to build each drilling
rig
utilizing the Technology and in consideration Blast shall pay Alberta
all
of the actual invoice costs of the items used, plus fifty thousand
dollars
($50,000) for each drilling rig (with the exception of the initial
drilling rig now under construction, which is the subject of a
separate
agreement). The fifty thousand dollars ($50,000) shall be paid
half at the
time construction of the rig begins and the balance when the rig
is
completed. Drilling rig cost invoices will be paid by Blast based
upon
their due dates. Blast will notify Alberta, in writing, of its
intention
to build each new rig together with any special requirements,
specifications, and contractual provisions that Blast may require.
Within
fourteen (14) calendar days of receipt of the notice, Alberta shall
either
agree to commit or decline to build the rig(s), in writing. If
Alberta
commits to accept the engagement, it will also provide an estimated
completion time and cost.
Alberta’s failure to formally agree to accept the terms and conditions
of
the construction within the fourteen (14) calendar days of the
notice
shall be considered a rejection to exercising the option.
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f.
|
Alberta
shall provide use of any of its leases to Blast for the purpose
of testing
its abrasive jetting services, while the initial rig is being
commissioned. Any out of pocket costs incurred by Alberta in such
field
testing shall be borne by Blast.
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g.
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The
Parties shall memorialize the 50% transfer of ownership with executed
assignment documents and filings with the US Patent and Trademark
Office.
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INDEMNITY
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10.
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Alberta
shall indemnify, defend and hold harmless Blast and its representatives
from and against all claims, losses, settlements, liabilities,
damages,
costs or expenses (including reasonable attorney’s fees and disbursements)
made against or incurred by Blast or its representatives of any
nature
whatsoever based upon, arising out of, or in connection with, any
use by
Alberta of the Technology.
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11.
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Blast
shall indemnify, defend and hold harmless Alberta and its representatives
from and against all claims, losses, settlements, liabilities,
damages,
costs or expenses (including reasonable attorney’s fees and disbursements)
made against or incurred by Alberta or its representatives of any
nature
whatsoever based upon, arising out of, or in connection with, any
use by
Blast of the Technology.
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RIGHT
OF USE OF TECHNOLOGY BY ALBERTA
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12.
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Alberta
retains the right to use the Technology, or any adaptation of the
Technology, on oil, gas or mineral lease-holds where Alberta holds
a lease
interest. Alberta’s use of the Technology, in such a case, shall be
without obligation to pay Royalty Payments to
Blast.
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13.
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Alberta
shall not offer abrasive jetting services for oil, gas or mineral
applications for monetary or other valuable consideration paid
by third
parties, exclusive of section 12.
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14.
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In
the event the Parties shall intend to use the Technology in a new
business
application with a third party, that Party shall offer a right
of first
refusal to the other Party to enter into such operation on the
same terms
as those contemplated with the third party. In such circumstance,
the
offering Party shall fully disclose to the other Party the financial
and
other details of the proposed operation, and the other Party shall
have
twenty-one (21) calendar days in which to agree to participate
on the same
basis and conditions or to decline. A failure to formally agree
to accept
the terms and conditions of the third party within twenty-one (21)
days of
first notice shall be considered a rejection of the offer. The
offering
Party shall thereafter be free to proceed without obligation to
the
rejecting Party except that the offering Party shall pay to the
rejecting
Party, the same Royalty Payment terms described in 8. e herein
with
payment and an accounting pursuant to the accounting and payment
terms
described below.
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LICENSE
APPROVAL
AND JOINT MANAGEMENT
|
15.
|
The
Parties hereby agree to develop a joint strategy and business plan,
designed to maximize Licensing Payments and deployment of the Technology.
Blast shall be responsible for the License Contract activities
with
oversight by Alberta.
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16.
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Each
party’s approval is required for any license or grant of use of such
Technology to third parties, by either Party, which approval shall
not be
unreasonably withheld. Each Party shall have ten (10) calendar
days
following a request for approval to state its position and if no
response
is provided within the ten (10) day period, the non-responding
party shall
be deemed to have provided its approval. In the event either Party
reasonably disapproves of the license or grant of use of the Technology,
the license or grant of use shall not be undertaken.
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17.
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The
management of the Technology shall be jointly held between the
Parties and
in the event of a deadlock in a decision (other than the approval
process
in paragraph 16 above), then the Parties shall use their best efforts
to
reach consensus. In the absence of a consensus between the Parties
to
change the management of the Technology, no decisions shall be
made to
change the arrangements that previously existed.
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CONSULTING
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18.
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19.
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Alberta
agrees to continue the provision of consulting services to Blast
and Blast
agrees to continue to pay for such services at the rate of $10,000
per
month until such consulting term expires on December 31,
2005.
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PAYMENTS
AND REPORTS
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20.
|
The
Parties shall keep or cause to be kept, in accordance with good
accounting
practices, books, records, and accounts of operations, relating
to use and
licensing of the Technology, as may be necessary for determining
the
Royalty Payments and Licensing Payments that may become
due.
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21.
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An
accounting and all Royalty Payments shall be provided fifteen (15)
days
following the close of each month for cash received in the preceding
month. Payment shall be by check or wire transfer in US dollars
to the
bank account designated in writing by the Party receiving payment.
Licensing Payments from third parties shall be paid within seven
(7)
calendar days of receipt.
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22.
|
In
the event of any dispute with respect to accounting or payments
under this
Agreement, pursuant to the request of either Party, the Parties
shall
select an independent Certified Public Accountant to examine the
books and
records and to report the results of such examination to both parties
promptly. In the event such examination shows that payments to
either
Party have been understated by five percent (5%) or more, the other
Party
shall pay the cost of the examination; otherwise, the cost of the
examination shall be paid by the requesting
party.
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TERM
|
23.
|
The
Agreement shall remain in effect for the duration of the co-ownership
of
the Technology.
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BUY-OUT
RIGHTS
|
24.
|
In
the event either of the Parties decides to liquidate
its assets, including its ownership in the Technology; or if a
Party is
dissolved other than in a reorganization; then the other Party
shall have
the first right of refusal to purchase that Party’s ownership interest in
the Technology as set forth below.
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| 25. |
If
one of the Parties decides to make an offer for the other party’s 50%
interest, such offer should be made on the same or similar basis
that the
Party would be willing to sell its own 50% interest on the same terms
and
conditions offered. The Buy-Out Price shall be determined on the
basis of
arms length negotiations between the two Parties and shall be reached
by
consensus in a reasonable time frame. If a third party shall make
an offer
to purchase the Technology owner within six calendar months of a
sale of
the 50% interest between the Parties, then the buying party shall
offer
the selling party the right to participate in the third party sale
on the
same terms and conditions as if they were still a 50% owner. If the
third
party sale has not closed after six calendar months from the time
of sale
of the 50% share, such right to participate in the third party sale
shall
cease to exist.
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26.
|
Upon
payment of the purchase price, the Party making the purchase shall
become
the owner of one hundred percent (100%) of the Technology (including
the
patent and trademark rights related to such Technology) effective
with the
date of the event giving rise to the buy-out rights. Such buy-out
(whether
exercised or not) shall not affect the obligation of either Party
to the
other that may have accrued prior to such buy-out rights coming
into
existence. Upon payment of the purchase price, the selling party
shall
execute all documents necessary to transfer ownership to the buying
party.
The selling party hereby appoints the other party its attorney-in-fact
to
execute all such documents in the event the selling party fails,
refuses
or otherwise cannot execute such documents. Following the buy-out,
the
Party making the purchase shall assume all of the rights and obligations
of the selling Party with respect to any existing license or other
agreements or arrangements which grant rights to third parties
to use the
Technology.
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27.
|
Notwithstanding
the foregoing buy-out provisions, no buy-out rights shall arise
against
Blast as long as Blast pays to Alberta or otherwise causes Alberta
to
receive no less than twenty five thousand dollars ($25,000) during
each
calendar year following an event described in paragraph 24 above.
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CONFIDENTIALITY
|
The
Parties’ obligations to maintain Confidential Technical Information in
confidence shall continue throughout the commercial life of the
Technology.
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REPRESENTATIONS
AND WARRANTIES
|
31.
|
The
Parties agree that this Agreement constitutes a legal, valid and
binding
obligation for each Party, enforceable against such Party in accordance
with its terms (subject always to applicable bankruptcy, insolvency,
receivership and other similar laws relating to or affecting the
enforcement of creditor’s rights generally and to general principles of
equity).
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33.
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Alberta
makes the following representations and warranties, and acknowledges
that
such representations and warranties are material and that Blast
has relied
upon them in entering into this
Agreement:
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| a. |
Alberta
is the sole and absolute owner of the Technology and has an absolute
right
to enter into the transaction represented by this
Agreement;
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| b. |
Alberta
is under no legal restriction and is free to disclose the Technology
and
all other technical information related to the Technology to
Blast;
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| c. |
Alberta
is not aware of any prior art that would invalidate its patent
application;
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| d. |
Alberta
owns the Technology free and clear of any liens, licenses, or known
enforceable claims of others;
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FORCE
MAJEURE
|
34.
|
If
performance of this Agreement by either Party is prevented, restricted
or
interfered with by reason of war, revolution, civil commotion,
acts of
public enemies, blockage, embargo, strikes, or any law, order,
proclamation, regulation, ordinance, demand or requirement having
a legal
effect of any government or any judicial authority or representative
of
any such government, beyond the reasonable control of the Party
affected,
then such affected Party shall upon giving written notice to the
other
Party be excused from such performance to the extent of such prevention,
restriction or interference; but provided, however, that the affected
Party shall use its best efforts to avoid or remove such cause
or causes
of nonperformance and shall continue performance hereunder to the
utmost
of its ability whenever such causes are
removed.
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ARBITRATION
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35.
|
All
claims, disputes or controversies arising out of, in connection
with or in
relation to this Agreement shall be decided by arbitration in accordance
with the Commercial Rules of the American Arbitration Association
then in
force and, to the maximum extent applicable, the Texas Arbitration
Act
(Texas Civil Practice & Remedies Code, '172.031
et. seq.). For claims, disputes or controversies which either Party
may
have in excess of $1,000,000, exclusive of claims for interest,
attorneys
fees and costs, three (3) neutral arbitrators shall be used. Otherwise
a
single arbitrator shall be used. For purposes of determining the
number of
arbitrators, the Parties’ claims and counterclaims shall not be additive.
The arbitration shall be conducted in Xxxxxx County, Texas. The
decision
of the arbitrator(s) shall be final, binding and enforceable in
any court
of competent jurisdiction, and the Parties agree that there shall
be no
appeal from the arbitrator(s)’ decision except as provided by applicable
law. All statutes of limitation that would otherwise be applicable
shall
apply to any arbitration proceeding. The right to arbitrate shall
survive
the termination of this Agreement. The Parties acknowledge and
agree that
this Agreement includes activities in interstate commerce and that
the
Federal Arbitration Act shall control and apply to all arbitrations
conducted hereunder, notwithstanding any state law provisions to
the
contrary.
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36.
|
The
Parties irrevocably agree to be joined as parties in any arbitration
proceeding which involves claims, disputes or controversies which
either
Party may have with other parties not a Party this Agreement and
which
involve issues which are otherwise subject to arbitration under
this
Agreement.
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37.
|
The
Parties irrevocably waive any objection to the joinder of other
parties
who are not parties to this Agreement to any arbitration commenced
pursuant to this Agreement.
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MISCELLANEOUS
PROVISIONS
|
38.
|
This
Agreement was negotiated, consummated and entered into in Xxxxxx
County,
Texas. The Parties agree that the validity and interpretation of
this
Agreement shall be governed by the laws of the State of Texas,
and that
venue and jurisdiction of any disputes relating to this Agreement
shall
lie in Xxxxxx County, Texas.
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39.
|
This
Agreement contains the entire and only agreement of the Parties
relating
to the Technology, but does not supersede or interfere with an
agreement
of the Parties co-existent with this Agreement relating to construction
of
a drilling rig which utilizes the Technology. Any prior representation,
agreement, or promise, of either party, including the License Agreement
of
on or about October 27, 2004 (which is superseded and replaced
by this
Agreement), not incorporated in this Agreement, is null and void,
except
that that Parties acknowledge and agree that the License Agreement
was
intended to be executed between Blast and Alberta Energy Partners
and that
all warrants delivered or deliverable through that License Agreement
should be to Alberta Energy Partners. Any amendment of this Agreement
shall be in writing and executed by both
Parties.
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40.
|
If
any provision of this Agreement is found to be unenforceable under
applicable law, the unenforceable provision shall be amended to
conform to
that which is enforceable, and any lack of enforceability of any
provision
shall not affect the continued effect and enforceability of the
remainder
of the Agreement if continued compliance of the Parties with the
remainder
of the Agreement is commercially reasonable of attainment and consistent
with the over-all intent and purpose of the
Agreement.
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41.
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The
failure of either Party to exercise any of its rights under this
Agreement
shall neither constitute a waiver of those rights nor excuse the
other
Party of its obligations under this
Agreement.
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42.
|
Any
notice given or required to be given under this Agreement shall
be in
writing and addressed to the Party executing this Agreement at
the address
shown below. Any notice given by United States certified mail or
by
courier service shall be effective upon
receipt.
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43.
|
Neither
Blast nor Alberta shall be responsible for the other Party's federal,
state or other taxes arising out of monies or other consideration
provided
between the Parties under this
Agreement.
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44.
|
This
Agreement shall be executed in four sets of counterparts and any
duly
executed copy thereof shall be considered an original for these
purposes.
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45.
|
Nothing
shall be construed herein to suggest that the Parties are entering
into a
Joint Venture, Partnership, Agency, or other such form of relationship
between them. As co-owners of the Technology, the Parties do not
intend to
file a tax return as partners and will take the actions necessary
to elect
out of subchapter K of the Internal Revenue
Code.
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IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their
duly authorized representatives and effective as of the date first above
written.
ALBERTA
ENERGY PARTNERS
00
Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx,
Xxxxx 00000
By:
___s/Xxxx
McAfee__________
Xxxx
XxXxxx, General Partner
By:
__s/Xxxx
Alley_____________
Xxxx
Xxxxx, General Partner
BLAST
ENERGY SERVICES, INC. (f/k/a Verdisys, Inc.)
00000
Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
By:
s/Xxxxx
Xxxxx _
Xxxxx
X.
Xxxxx
President
& Co-Chief Executive Officer
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WITNESS
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WITNESS
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||||
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By:
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s/
Xxxx Xxxxx
|
By:
|
s/
Xxxx X’Xxxxx
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||
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Xxxx
Xxxxx
|
Xxxx
X’Xxxxx
|
||||
SCHEDULE
A
MODEL
CONFIDENTIALITY AGREEMENT
THIS
AGREEMENT, entered into this _____________, by and between Blast
Energy Services, Inc.
a
corporation organized and existing under the laws of the State of California.,
("Disclosing Party"), and_____________,
a
corporation organized and existing under the laws of the State of_____________
("Receiving Party"). Disclosing Party and Receiving Party are sometimes herein
individually called a “Party” and collectively called the
“Parties”.
1. Disclosure
of Confidential Information.
The
Disclosing Party is willing, in accordance with the terms and conditions
of this
Agreement, to disclose to the Receiving Party certain confidential information,
which is proprietary, relating to the abrasive fluid jetting technology
(“Technology”) which may be in tangible, intangible or electronic form, together
with any notes, memoranda, analyses, evaluations, charts, drawings or summaries
derived therefrom. The foregoing is herein referred to, individually or
collectively as the context may require, as the "Confidential
Information". The
obligation of Disclosing Party to disclose Confidential Information to Receiving
Party is subject to applicable provisions of agreements that Disclosing Party
has with third parties.
2. Confidentiality
Obligation and Non-Competition.
In
consideration of the disclosure of Confidential Information referred to in
Paragraph 1 hereof, the Receiving Party agrees that the Confidential Information
shall be kept strictly confidential and shall not be sold, traded, published
or
otherwise disclosed to anyone in any manner whatsoever, including by means
of
photocopy or reproduction, without the Disclosing Party's prior written consent,
except as provided in Paragraphs 3, 4 and 5 below.
3. Confidentiality
Exceptions.
The
Receiving Party may disclose the Confidential Information without the Disclosing
Party's prior written consent only to the extent such information:
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(A)
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is
already known to the Receiving Party as of the date of disclosure
hereunder;
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(B)
|
is
already in possession of the public or becomes available to the
public
other than through the act or omission of the Receiving
Party;
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(C)
|
is
required to be disclosed under applicable law or by a governmental
order,
decree, regulation or rule (provided that the Receiving Party shall
give
written notice to the Disclosing Party prior to such disclosure);
or
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(D)
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is
acquired independently from a third party that represents that
it has the
right to disclose such information at the time it is acquired by
the
Receiving Party.
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4. Disclosure
to Affiliated Companies.
The
Receiving Party may disclose the Confidential Information without the Disclosing
Party's prior written consent to an Affiliated Company (as hereinafter defined),
provided that the Receiving Party guarantees the adherence of such Affiliated
Company to the terms of this Agreement. "Affiliated
Company"
shall
mean any company or legal entity which (a) controls either directly or
indirectly a Party, or (b) which is controlled directly or indirectly by
such
Party, or (c) is directly or indirectly controlled by a company or entity
that
directly or indirectly controls such Party. "Control"
means
the right to exercise more than 50% or more of the voting rights of such
company.
5. Other
Permitted Disclosures.
The
Receiving Party shall be entitled to disclose the Confidential Information
without the Disclosing Party's prior written consent to such of the following
persons who have a clear need to know in order to evaluate the Area of
Operations:
(A) employees,
officers and directors of the Receiving Party;
(B) employees,
officers and directors of an Affiliated Company;
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(C)
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any
professional consultant or agent retained by the Receiving Party
for the
purpose of evaluating the Confidential Information;
or
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| (D) |
any
bank, financial institution or person that finances the participation
by
Receiving Party or an Affiliate of Receiving Party of the Technology,
including any professional consultant retained by such entity for
the
purpose of evaluating the Confidential
Information.
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Prior
to
making any such disclosures to persons under subparagraphs (C) and (D) above,
however, the Receiving Party shall obtain from each such person an undertaking
of confidentiality, with substantially the same content as this
Agreement.
6. Use
of Confidential Information by Receiving Party.
The
Receiving Party and its Affiliated Companies, if any, shall use or permit
the
use of the Confidential Information disclosed under Paragraphs 4 or 5 above
to
evaluate the Area of Operations and determine whether to enter into a
transaction with Disclosing Party or one of its Affiliates for evaluation
of the
Technology.
7. Responsibility
to Ensure Confidentiality.
The
Receiving Party shall be responsible for ensuring that all persons to whom
the
Confidential Information is disclosed under this Agreement shall keep such
information confidential and shall not disclose or divulge the same to any
unauthorized person. Neither Party shall be liable in an action initiated
by one
against the other for special, indirect or consequential damages resulting
from
or arising out of this Agreement, including, without limitation, loss of
profit
or business interruptions, however it may be caused.
8. Ownership
of Confidential Information.
The
Confidential Information shall remain the property of the Disclosing Party,
and
the Disclosing Party may demand the return thereof at any time upon giving
written notice to the Receiving Party. Within 10 days of receipt of such
notice,
the Receiving Party shall return all of the original Confidential Information
and shall destroy all copies and reproductions (both written and electronic)
in
its possession and in the possession of persons to whom it was disclosed
pursuant to Paragraphs 4 and 5 hereof. .
9. Further
Agreements.
If the
Parties agree to participate in further agreements, which include
confidentiality provisions, then this Agreement shall terminate automatically
on
the date the Receiving Party enters into a further agreement with Disclosing
Party or one of its Affiliates that contains provisions covering the
confidentiality of data for the Technology. Unless earlier terminated under
the
preceding sentence, the confidentiality obligations set forth in this Agreement
shall terminate two (2) years after the date of this Agreement.
10. Right
to Disclose Confidential Information.
The
Disclosing Party hereby represents and warrants that it has the right and
authority to disclose the Confidential Information to the Receiving Party,
subject to the terms of agreements of Disclosing Party with third parties
relating to the Confidential Information. The Disclosing Party, however,
makes
no representations or warranties, express or implied, as to the quality,
accuracy and completeness of the Confidential Information disclosed hereunder,
and the Receiving Party expressly acknowledges the inherent risk of error
in the
acquisition, processing and interpretation of technical data. The Disclosing
Party, its Affiliated Companies, their officers, directors and employees
shall
have no liability whatsoever with respect to the use of or reliance upon
the
Confidential Information by the Receiving Party.
11 General
Provisions.
(A) Governing
Law.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of Texas, without regard to principles of conflicts of law that
would
refer the matter to the laws of another jurisdiction.
(B) Dispute
Resolution.
All
claims, disputes or controversies arising out of, in connection with or in
relation to this Agreement shall be decided by arbitration in accordance
with
the Commercial Rules of the American Arbitration Association then in force
and,
to the maximum extent applicable, the Texas Arbitration Act (Texas Civil
Practice & Remedies Code, '172.031
et. seq.). For claims, disputes or controversies which either Party may have
in
excess of $1,000,000, exclusive of claims for interest, attorneys fees and
costs, three (3) neutral arbitrators shall be used. Otherwise a single
arbitrator shall be used. For purposes of determining the number of arbitrators,
the Parties’ claims and counterclaims shall not be additive. The arbitration
shall be conducted in Xxxxxx County, Texas. The decision of the arbitrator(s)
shall be final, binding and enforceable in any court of competent jurisdiction,
and the Parties agree that there shall be no appeal from the arbitrator(s)’
decision except as provided by applicable law. All statutes of limitation
that
would otherwise be applicable shall apply to any arbitration proceeding.
The
right to arbitrate shall survive the termination of this Agreement. The Parties
acknowledge and agree that this Agreement includes activities in interstate
commerce and that the Federal Arbitration Act shall control and apply to
all
arbitrations conducted hereunder, notwithstanding any state law provisions
to
the contrary.
(C)
Approval
of Offers. Unless
otherwise expressly stated in writing, any prior or future proposals or offers
made in the course of the Parties’ discussions are implicitly subject to all
necessary management and government approvals and may be withdrawn by either
Party at any time. Nothing contained herein is intended to confer upon Receiving
Party any right whatsoever to Disclosing Party’s interests. Receiving Party
agrees with Disclosing Party that neither the review of Confidential Information
nor the granting of access thereto creates any obligation on Receiving Party
or
Disclosing Party to acquire or dispose of, respectively, any interest in
their
operations.
(D). Further
Agreements.
Unless
otherwise expressly stated in writing, any prior or future proposals or offers
made in the course of the Parties' discussions are implicitly subject to
all
necessary management and other approvals and may be withdrawn by either Party
at
any time. Nothing contained herein is intended to confer upon the Receiving
Party any right whatsoever to the Disclosing Party's interest in their
operations.
(E). Amendments
to Agreement.
No
amendments, changes or modifications to this Agreement shall be valid except
if
the same are in writing and signed by a duly authorized representative of
each
of the Parties hereto.
(F) Entire
Agreement.
This
Agreement comprises the full and complete agreement of the Parties hereto
with
respect to the disclosure of the Confidential Information and supersedes
and
cancels all prior communications, understandings and agreements between the
Parties hereto, whether written or oral, expressed or implied.
(G) Notices.
Any
notice given hereunder by either Party shall be given in writing and shall
be
delivered in person, or sent by facsimile, or mailed by first class or
registered mail, postage prepaid, and shall be considered to have been well
and
sufficiently given when received by the Party to whom it is addressed as
follows. Each Party shall have the right to change its address at any time
and/or designate that copies of all notices be directed to another person
at
another address, by giving written notice thereof to the other
Party.
IN
WITNESS WHEREOF,
the
duly authorized representatives of the Parties have caused this Agreement
to be
executed on the date first written above.
BLAST
ENERGY SERVICES, INC.
By:___________________________
RECEIVING
PARTY
By:__________________________
