Exhibit 10.3
 
 
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO RULE 24B-2 AND
ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THIS
EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE
MARKED WITH A […].

OEM LICENSE AGREEMENT

This OEM License Agreement (this “Agreement”) is made and effective this 16th
day of October 2012 (the “Effective Date”), by and between Origin Oil, Inc., a
corporation duly organized and existing under the laws of the State of Nevada
with its principal place of business at 5645 W. Adams Boulevard, Los Angeles,
California 90016 (hereinafter, “OOIL”) and PEARL H20, LLC, a limited liability
company duly organized and existing under the laws of the State of California
with its principal place of business at 17520 Newhope Street, Suite 200,
Fountain Valley , CA 92780 (hereinafter, “PEARL”).

RECITALS

1.
OOIL engages in the business of developing, manufacturing and marketing products
and services in biofuels, algae, industrial wastewater treatment and water
remediation for the oil and gas industries to multiple companies and through
significant investment of time and resources has built up a significant amount
of expertise, contacts, suppliers and customers in manufacturing, marketing,
shipping, fulfillment, and other related areas;

2.
PEARL is a company which specializes in the design, manufacture and distribution
of water treatment systems and products and PEARL wishes to purchase Equipment
related to the Technology and license the technology from OOIL for use in
products designed, manufactured and/or distributed by PEARL and/or its
Subsidiary Companies; and

3.
OOIL hereby grants PEARL non-exclusive license for the designated “Technology”
to be used in PEARL Products in the specified “Markets” listed herein below
within the defined “Territory” and PEARL accepts and agrees to the terms and
conditions of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the covenants, promises, and obligations set
forth herein, and for other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, OOIL and PEARL agree as follows:

ARTICLE 1
DEFINITIONS

1.1
“Agreement” shall mean this document, Articles 1 through 16, inclusive, and all
Appendices or Exhibit(s) attached hereto and/or specified herein to be so
attached.  

1.2
“Confidential Information” means information relating to the business or
anticipated business of either party to this Agreement including, but not
limited to, trade secrets, know-how, inventions (whether patented or not),
ideas, improvements, works of authorship, derivative works, modifications,
product development plans, forecasts, strategies, names and expertise of
employees and consultants, techniques, processes, algorithms, software programs,
schematics, designs, contracts, customer lists, financial information, sales and
marketing plans and all other business and technical information.

 
 
 
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1.3
“Equipment” shall mean any mechanical or electrical components or control
systems and algorithms provided related to the Technology.

1.4
“Technology” shall be defined as certain mechanical and electrical designs,
control algorithms and the integration of these components to remove
contaminants for water treatment applications. These components may comprise,
but are not limited to, anode/cathode materials and assemblies, separation
devices, power supplies, software, PLCs SCADA systems, associated components,
and other support documentation beneficial to integrate the Technology into
PEARL Products.

1.5
“Markets” shall mean companies, contractors, customers and consumers in the
frack flowback and produced water treatment and recycling markets.

1.6
“Territory” shall mean any location in the world.

1.7
“Order” or “Orders” shall mean an order from PEARL for a definite amount of
Equipment related to the Technology with a delivery schedule of less than one
(1) year. The term “Order” shall not include letters of intent, memoranda of
intent or understanding, volume purchase agreements, blanket purchase agreements
or purchase orders with a delivery schedule of greater than one (1) year from
the date of issuance.

1.8
“Subsidiary Companies” means any entity now existing or hereinafter acquired
which is owned or controlled directly or indirectly by a party hereto as to
fifty percent (50%) or more of the issued shares and/or voting rights entitled
to vote for the election of directors or other governing authority or otherwise
having power to control such entity’s general activities, but only for so long
as such ownership or control shall continue.

1.9
“Effective Date” shall mean the date and time first written above.

1.10
“PEARL Product” or “PEARL Products” shall be defined as those water treatment
products designed, manufactured, distributed or marketed by PEARL, in whole or
in part, utilizing Technology licensed or Equipment related to the Technology
supplied by OOIL under the terms of this Agreement.

 
ARTICLE 2
GRANT OF LICENSE

2.1
Grant of License.  Conditioned upon PEARL’s continued satisfaction of the terms
and conditions of this Agreement, OOIL hereby grants PEARL a worldwide,
non-exclusive license to use the Technology and related Equipment in the
manufacture, distribution, and sale of PEARL Products in the designated Markets
and within the defined Territory.  PEARL hereby accepts said license, and PEARL
agrees that it shall not use the Technology or Equipment in the manufacture,
distribution, and sale of PEARL Products except as expressly set forth in this
Agreement.

PEARL acknowledges that the grant of this license may limit OOIL’s ability to
commercialize the Technology to major international or national accounts.  PEARL
therefore acknowledges that its license may be subordinated to any exclusive
license granted by OOIL for the territory of that exclusive
license.  Subordination shall mean that PACE’s license would become a sublicense
of the exclusive license. Said Subordination shall be under the identical terms
of this agreement with no interruptions, modifications, or changes to PEARL’s
use of this license in any manner what so ever.

 
All rights granted under this Agreement shall be construed narrowly, and any
rights to the Technology granted herein shall be limited only to the products
designed, built and marketed for the subject Market.  Under no circumstances
shall PEARL have any rights under this Agreement to use the Technology or
Equipment to manufacture, distribute, or sell any type of product that is
designed to for products in other Markets.  Further, any sale by PEARL of OOIL
Technology or related Equipment which is not integrated into PEARL products is
strictly prohibited without express written consent of OOIL in each
instance.  In this context, PEARL products shall mean products incorporating
PEARL technology and shall not include standard pumps, filters or other off the
shelf products.

 
PEARL acknowledges OOIL rights to sell or license OOIL’s Technology to others in
the subject Market or other markets.

 

 
 
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2.2
 

2.3
Channels of Distribution.
PEARL may contract with distribution channels (producers, oil service companies,
water treatment companies, system integrators and engineering companies) of
their choice to act on behalf of PEARL. PEARL shall provide OOIL a quarterly
summary of pending opportunities and plans. PEARL and OOIL shall coordinate
their individual distribution plans to eliminate potential conflicts. Any
compensation to such channels shall be solely the responsibility of PEARL; and
provided further that PEARL shall cause any distribution channels contracted by
PEARL hereunder to also be bound by all restrictive covenants which bind PEARL
under this Agreement.  Any agreement with such distribution channel with respect
to the Technology shall be coterminous with this Agreement.  No prior written
approval is required from OOIL for the appointment of any PACE Subsidiary
Companies as a distribution channel of the licensed Technology.

2.4
No Right to Sublicense.  PEARL may not sublicense the Technology license granted
hereunder unless that right is specifically granted as an amendment to this
agreement.

2.5
Independent Contractor Status.  The relationship of OOIL and PEARL established
by this Agreement is that of independent contractors, and neither party is an
employee, agent, partner or joint venture of the other. PEARL shall not be
considered an agent or legal representative of OOIL for any purpose, and neither
PEARL nor any director, officer, agent, or employee of PEARL shall be, or be
considered, an agent or employee of OOIL. PEARL is not granted and shall not
exercise the right or authority to assume or create any obligation or
responsibility on behalf of or in the name of OOIL. All sales and other
agreements between PEARL and its customers are PEARL’s sole responsibility and
will have no effect on OOIL’s obligations under this Agreement.

2.6
Operations and Expenses. The detailed operations of PEARL under this Agreement
are subject to the sole control and management of PEARL. PEARL shall be
responsible for all of its own expenses and employees. PEARL shall provide, at
its own expense, such office space and facilities, and hire and train such
personnel, as may be required to carry out its obligations under this Agreement.
PEARL agrees that it shall incur no expense chargeable to OOIL, except as may be
specifically authorized in advance and in writing by OOIL.

2.7
No Other Rights. Except as expressly provided in this Agreement, no right, title
or interest is granted by OOIL to PEARL. No right, title or interest is granted
by OOIL to PEARL relating to products other than the Technology defined in
paragraph 1.4.

 
2.8
Improvements and Developments.

 
2.8.1  The Parties acknowledge that significant intellectual property, unique
processes and trade secrets (“Intellectual Property”) are embodied in the
Equipment and Technology, and the systems and activities thereof, and in the
PEARL Products and the systems and activities thereof.  Each of the parties
hereto further acknowledges and agrees that neither party has an interest in the
Intellectual Property of the other party and that no transfer of such
Intellectual Property is implied or will occur in connection with this Agreement
or any project hereunder or for any specific Intellectual Property use license
agreement that may need to be executed as part of a project. Each of the parties
shall ensure that its research partners such as public or private laboratories
involved in joint research, development or R&D projects shall be bound not to
infringe any of OOIL’s or PEARL’s rights in its Intellectual Property.

 
 
         2.8.2
In the event that either party conceives, reduces to practice or develops (in
whole or in part, either alone or jointly with others) any additional inventions
or discoveries relating to any Intellectual Property (“Developments”), then the
following rights and obligations shall apply:

 
a. If the Development relates to OOIL’s Intellectual Property, including but not
limited to the Technology or Equipment, then all right, title and interest in
such Development shall be the property of OOIL and PEARL does hereby assign,
including any divisions, continuations, and continuations-in-part thereof, and
in and to any and all Letters Patent of the United States, and countries foreign
thereto, which may be granted or have granted for said invention, and in and to
any and all reissues and reexaminations thereof, and in and to any and all
priority rights, convention rights, and other benefits accruing or to accrue to
OOIL with respect to the filing of applications for patents or securing of
patents in the United States and countries foreign thereto, unto OOIL and shall
ensure that PEARL assigns to OOIL such Development and all rights thereto,
including Intellectual Property.  If any such Development or rights therein
assigned hereunder are based on, incorporate, are improvements or derivatives
of, or cannot reasonably be made, used, reproduced and distributed without using
or violating, technology or intellectual property or other rights owned or
licensed by OOIL and not assigned hereunder, PEARL hereby grants OOIL a
perpetual, worldwide, royalty-free, non-exclusive, sublicensable right and
license to exploit and exercise all such technology and rights in support of
OOIL’s exercise or exploitation of any assigned Development or rights related
thereto (including any modifications, improvements and derivatives thereof).
PEARL further agrees to sign and execute all necessary and lawful future
documents, including applications for foreign patents, for filing divisions,
continuations, and continuations-in-part of said application for patent, for
obtaining any reissue or reissues of any Letters Patent which may be granted for
the aforesaid invention, as OOIL or its designee(s) may from time to time
require and prepare at its own expense.
 
 
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b. If the Development relates to PEARL’s Intellectual Property, then all right,
title and interest in such Development shall be the property of PEARL and OOIL
shall assign and does hereby assign, or shall ensure that OOIL assigns, to PEARL
such Development and all rights thereto.  If any such Development or rights
therein assigned hereunder are based on, incorporate, are improvements or
derivatives of, or cannot reasonably be made, used, reproduced and distributed
without using or violating, technology or intellectual property or other rights
owned or licensed by PEARL and not assigned hereunder, OOIL hereby grants PEARL
a perpetual, worldwide, royalty-free, non-exclusive, sublicensable right and
license to exploit and exercise all such technology and rights in support of
PEARL’s exercise or exploitation of any assigned Development or rights related
thereto (including any modifications, improvements and derivatives thereof).
 
c. If the Development does not relate to the Intellectual Property of either
OOIL or PEARL and was developed jointly by the parties, then all right, title
and interest, including Intellectual Property, in such Development shall be the
joint property of OOIL and PEARL; provided, however, that in commercializing
such Developments, each of the parties hereby covenants not to compete during
the term of this Agreement and for a period of 2 (two) years, directly or
indirectly, in or with the other party’s then-current business.  The parties
shall negotiate in good faith the responsibilities for (i) filing and
prosecuting any patent applications for such Development, and (ii) enforcing any
rights derived from such patent applications.
 
d. If the Development does not relate to OOIL’s Intellectual Property and was
developed by PEARL without the assistance of OOIL, then all right, title and
interest, including Intellectual Property, in such Development shall be the
property of PEARL.
 
e. If the Development does not relate to PEARL’s Intellectual Property and was
developed by OOIL without the assistance of PEARL, then all right, title and
interest, including Intellectual Property, in such Development shall be the
property of OOIL.

ARTICLE 3
OBLIGATIONS OF LICENSEE

3.1
Diligence. PEARL shall use its best efforts to manufacture, distribute, and sell
PEARL Products that utilize the Technology and/or related Equipment.  If PEARL
determines that OOIL Technology is no longer the best technology for the Market,
PEARL may utilize the technology of its choice and this License is terminated
under paragraph 14.2.9.

3.2
Consideration. PEARL and OOIL agree in principle that PEARL will be responsible
for the purchase, construction and installation of all OOIL Technology and
related equipment, with the exception of certain control software.  Further that
consideration for the license shall be in the form of royalties from revenue
sharing with PEARL.  The parties further agree in principle that revenue sharing
will be based on, without limitation, revenues generated from the sale or lease
of PEARL Products and license or royalties received by PEARL for the use of
PEARL Products.  OOIL share of revenue shall not be reduced by discounts or
special offerings to PEARL customers. Current fees and royalties are delineated
in Appendix B and as these fees and royalties are changed or developed, Appendix
B will be amended.

 
However in the initial phases of this Agreement, equipment costs and project
economics either are not known or will vary from project to project.  Therefore,
during this phase PEARL and OOIL shall negotiate in good faith to determine a
upfront licensing fee for the related Equipment provided by OOIL to PEARL and
for an on-going royalty fee that will be based on percentage of PEARL revenue
from a given project.  Both PEARL and OOIL recognize that in the early stage of
this commercialization of this technology, sales of these products will involve
projects with varying degrees of cost savings.  Each of the projects will
therefore involve unique economics and benefits to PEARL and OOIL. Specific
payments shall be remitted in accordance with Article 6 and paragraph 4.1.

3.3
Costs and Expenses. Except as expressly set forth herein, PEARL shall be solely
responsible for all costs and expenses related to developing saleable PEARL
Products for the identified markets and territories and the advertising,
marketing, promotion, and distribution of the PEARL Products and for performing
its obligations hereunder.

3.4
Sales Activity Reports.  Within thirty (30) days after the end of each calendar
quarter, PEARL shall send to OOIL a “Sales Activities Report” including the
names and quantities of PEARL Products sold, project names, terms of the sale
and licensing, volumes processed and the dollar amounts received by PEARL for
the sale and licensing of PEARL Products. “Net Sales” means, as applicable, the
total sales amount received by PEARL from its Customer for the PEARL Products
less sales tax and freight costs.

3.5
Inspection of Records.  At any time during normal business hours, upon written
notice and as often as OOIL may deem necessary, OOIL shall have the right, at
its expense, to audit and examine all relevant PEARL support documents to the
Sales Activity Report for the purpose of validating the completeness and
accuracy of the quarterly Sales Activity Reports.  The audit or examination may
be performed by OOIL or by an independent third party designated by OOIL. It is
understood and agreed that the documents provided by PEARL for the purpose of
audit and examination shall remain the property of PEARL and shall constitute
“Confidential Information” of PEARL.  The failure to produce documentation in
support of the Sales Activity Report shall constitute a material breach of this
Agreement.

3.6
Indemnification. PEARL agrees to indemnify and hold OOIL, its officers,
directors, employees, successors, and assigns harmless from and against any and
all losses, damages or expenses of whatever form or nature, including attorneys’
fees and other costs of legal defense, whether direct or indirect, that they, or
any of them, may sustain or incur as a result of any acts or omissions of PEARL
or any of its directors, officers, employees, or agents, including but not
limited to (i) breach of any of the provisions of this Agreement, (ii)
negligence or other tortuous conduct, (iii) representations or statements not
specifically authorized by OOIL herein or otherwise in writing, or (iv)
violation by PEARL of any applicable law, regulation, or order in or of the
Territory or the United States.

 
 
 
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3.7
Joint Venture.  The parties acknowledge and agree that in the future they may
desire to alter their relationship whereby OOIL and PEARL’s relationship would
be that of joint venture partners or other equity holders.  Accordingly, OOIL
reserves the right to waive its rights to any payments to which it would be
entitled under this Agreement and convert such payments into equity
contributions in connection with a potential revised relationship structure with
PEARL.  Any waiver of rights by OOIL under this paragraph 3.7 shall not affect
its other rights hereunder or its right to require payments be made as described
in this Agreement.

 
 

ARTICLE 4
PRODUCTS & PRICES

4.1
Equipment Price.  As stated in Consideration, paragraph 3.2, PEARL and OOIL
agree in principle that PEARL will be responsible for the purchase, construction
and installation of all OOIL Technology and related equipment, with the
exception of certain control software.  However, in the initial phase or
projects, it may be expeditious for OOIL to provide certain equipment. The
parties agree to work together in good faith to establish prices and discounts
for the Equipment.

4.2
Technology Implementation and Changes.  OOIL offers and requires OOIL
involvement in the design, implementation or integration of OOIL Technology in
PEARL products.  Further, any changes in the design related to OOIL Technology
require OOIL involvement in the design and their express written
approval.   OOIL reserves the right, from time to time in its sole discretion,
to discontinue certain Equipment or make changes to the Technology which do not
adversely affect the utility of the Technology to PEARL, to add new and
additional features to the Technology; and upon reasonable notice to PEARL, to
change its sales and distribution policies, not inconsistent with the terms of
this Agreement.

4.3
PEARL Product Pricing. PEARL shall provide OOIL with PEARL Product pricing
information for OOIL’s consideration and comment.  Not less than thirty (30)
days prior to the launch of each new PEARL Product, PEARL shall advise OOIL of
the anticipated market price of the new PEARL Product(s).  The foregoing
notwithstanding, the pricing of PEARL Products shall be the exclusive
responsibility of PEARL.

4.4
Quality Control.  PEARL shall cooperate with OOIL, in a commercially reasonable
manner, to permit OOIL to ascertain that the PEARL Products meet OOIL’s quality
standards.

4.5
Inspection.  PEARL shall not make any use of, sell or distribute any OOIL
Technology or related equipment prior to OOIL granting final written approval of
the quality of the product, as to the use, implementation, design and
construction of the Equipment and/or Technology with and into the PEARL
Products.  PEARL shall not have any rights against OOIL for damages or other
remedies by reason of OOIL’s failure or refusal to grant any approval.

 
ARTICLE 5
PURCHASE ORDERS

5.1
Purchase Orders.  If certain equipment is to be provided by OOIL to PEARL, PEARL
shall issue a written purchase order listing the specific equipment, price and
terms of sale.

 
 

 
OOIL hereby covenants and agrees to sell PEARL all of the specified Equipment
related to the Technology required by PEARL as confirmed by written orders
tendered by PEARL to OOIL.  All orders for Equipment by PEARL shall be confirmed
by a written purchase order in form acceptable to OOIL; provided, however, that
an order may initially be placed orally, by fax or email if a written Purchase
Order is received by OOIL within seven (7) days of said oral, fax or email
order.

5.2
Agreement Governs. Purchase Orders shall be governed by the terms of this
Agreement. Nothing contained in any Purchase Order shall in any way modify or
delete the terms and conditions contained herein or add any additional or
different terms or conditions to the terms and conditions of this Agreement.

5.3
Order Changes. Purchase Orders may be canceled only with OOIL’s prior written
approval.  Cancellation of a Purchase Order is subject to a restocking charge
equal to ten percent (10%) of the aggregate value of such Purchase Order.

 
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ARTICLE 6
ROYALTY PAYMENTS

6.1.1  
Within […] days after the end of each calendar quarter, PEARL shall remit to
OOIL royalty payments due to OOIL as specified in the Sales Activity Report
described in paragraph 3.4 herein.  Payment will only be made to OOIL with funds
that have been actually received by PEARL from its customers. Receipt of payment
by PEARL from its customers is a condition of any Royalty payment to OOIL.

6.1.2  
OOIL and PEARL are each responsible for there own taxes on any Royalty payment
transactions.

ARTICLE 7
PAYMENT AND TAXES

7.1
Payment Terms. Payment of any and all amounts due under this Agreement shall be
in U.S. Dollars.  PEARL shall pay for the Equipment purchases pursuant to
Article 5 within […] by wire transfer or check to OOIL’s designated account.

7.2
Offsets. Any credits, allowances, or other amounts payable to or creditable by
PEARL shall be subject to offset for any claims or other amounts owed by PEARL
to OOIL pursuant to the provisions of this Agreement.

7.3
Taxes.  Prices do not include and are net of any foreign or domestic
governmental taxes or charges of any kind that may be applicable to the sale,
licensing, marketing or distribution of the Equipment or Technology, including
without limitation excise, sales, use, or value-added taxes; customs or other
import duties; or other taxes, tariffs or duties.  PEARL shall be responsible
for and shall pay all such taxes and charges levied against OOIL in a timely
manner. When OOIL has the legal obligation to pay or collect such taxes,
excluding taxes on the income of OOIL, the appropriate amount shall be invoiced
to PEARL and paid by PEARL within thirty (30) days of the date of invoice unless
PEARL provides OOIL with a valid tax exemption certificate authorized by the
appropriate taxing authority.

ARTICLE 8
DELIVERY, REJECTION AND RETURN OF TECHNOLOGY

8.1
Shipment and Delivery. Equipment related to the Technology delivered pursuant to
the terms of this Agreement shall be suitably packed for shipment in OOIL’s
standard shipping cartons, marked for shipment to the destination specified in
PEARL’s Purchase Order, and delivered to the carrier agent […], California,
United States, at which time risk of loss shall pass to PEARL. Unless otherwise
specified in writing by PEARL in PEARL’s purchase order, OOIL shall select the
carrier. All freight, insurance, and other shipping expenses, as well as
expenses for any special packing requested by PEARL and provided by OOIL, shall
be paid by PEARL. All shipment and freight charges shall be deemed correct
unless OOIL receives from PEARL, no later than […] after the date of shipment, a
written notice specifying the shipment, the purchase order number, and the exact
nature of the discrepancy between the order and the shipment in number or type
of Technology shipped, or freight or other charges, as the case may be.

8.2
Title. OOIL shall retain all right, title and interest in and to Equipment
related to the Technology delivered to PEARL until OOIL has received all
applicable payments therefore.

8.3
Inspection and Rejection.  PEARL shall inspect all equipment related to the
Technology promptly upon receipt thereof and may reject any defective equipment
related to the Technology, provided that PEARL shall (i) within the earlier of
[…] days after receipt of such alleged defective equipment related to the
Technology or […] days after discovery of such alleged defect, notify OOIL of
its rejection and request a Return Material Authorization (“RMA”) number and
(ii) within […] days of receipt of the RMA number from OOIL return such rejected
Technology to OOIL, freight prepaid and properly insured. Equipment related to
the Technology not rejected within the foregoing time periods shall be deemed
accepted by PEARL. In the event that OOIL determines that the returned
Technology is defective and properly rejected by PEARL, OOIL shall at its
option, repair or replace such defective equipment related to the Technology, or
accept return for credit of such defective Technology. OOIL shall return to
PEARL, freight prepaid, all repaired or replaced Technology properly rejected by
PEARL. In the event that any rejected product is determined by OOIL to not be
defective or to have been modified or subjected to unusual electrical or
physical stress, misuse, abuse or unauthorized repair, PEARL shall reimburse
OOIL for all costs and expenses related to the inspection, repair, if any, and
return of such equipment related to the Technology to PEARL.  Once accepted,
PEARL shall have title to the equipment and the responsibility for the function
and support of the equipment.

8.4           Returned Product. PEARL shall only return equipment related to the
Technology to OOIL with OOIL’s prior written approval. Any Technology returned
to OOIL by PEARL as authorized under this Agreement shall be shipped, […] OOIL’s
address first set forth above or such other location as OOIL may instruct PEARL,
and shall be packed in its original packing material where practicable. OOIL may
refuse to accept any equipment related to the Technology not packed and shipped
as herein provided.

ARTICLE 9
TECHNICAL SUPPORT

9.1
Support by OOIL.  OOIL shall be responsible for supporting all Technology
distributed hereunder. OOIL technical support (Level 3) shall be limited to
direct and  reasonable technical support to PEARL, including without limitation
(i) maintaining trained and competent technical and engineering support
personnel for the Technology who are sufficiently knowledgeable with respect to
the Technology to answer PEARL’s questions regarding the use and operation of
the Technology, (ii) designating a technical liaison to coordinate technical
support to PEARL, (iii) responding promptly to requests for technical support
from PEARL, and (iv) providing technical support services to address and resolve
PEARL’s support requests with respect to the Technology. PEARL shall ensure that
PEARL’s technical and engineering support personnel attend any training required
by OOIL with respect to the Technology.  OOIL technical support is specifically
exclusive of any direct technical support to PEARL customers or resellers.

 
 
 
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9.2
Support by PEARL. PEARL is responsible for all direct technical support for its
customers (Level 1) and resellers (Level 2) either delivered by PEARL or its
nominee.  PEARL shall ensure that all customer questions regarding the use or
operation of PEARL Products are initially addressed to and answered by PEARL.
Unless otherwise agreed in writing by OOIL, PEARL shall not represent to any
third party that OOIL is available to answer questions from any customer
directly.

9.3
Conformance with OOIL Policy. PEARL will provide prompt and effective service
and repair of Technology in the Territory in accordance with OOIL’s standard
support policies then in effect.

9.4
Additional Responsibilities.  Without limiting the foregoing and in addition to
any other obligations set forth in OOIL’s then current support terms and
conditions, PEARL also shall be responsible for (i) providing sufficient
information to OOIL for OOIL to duplicate any reported error in the Technology;
(ii) incorporating updates into the Technology promptly upon receipt thereof
from OOIL; (iii) reporting errors promptly in writing in accordance with OOIL’s
standard support procedures; and (iv) providing reasonable cooperation and full
information to OOIL in the furnishing of support for the Technology.

ARTICLE 10
DISCLAIMER OF WARRANTY

10.1
OOIL makes no warranties or conditions, express, statutory, implied or
otherwise, and OOIL specifically disclaims the implied warranties and conditions
of merchantability, fitness for a particular purpose, and all other implied
warranties or conditions arising from course of dealing, usage of trade or
custom. Notwithstanding the foregoing, OOIL does not exclude liability to the
extent that such liability may not be excluded or limited by law.

ARTICLE 11
CONFIDENTIALITY AND PROPRIETARY RIGHTS
11.1
Confidentiality. The parties acknowledge that by reason of the relationship
created herein both OOIL and PEARL will have access to certain information and
materials concerning one another’s business, plans, customers, technology, and
products that are confidential and of substantial value, which value would be
impaired if such information were disclosed to third parties (“Confidential
Information”). OOIL and PEARL agrees that it will not use in any way for its own
account or the account of any third party, nor disclose to any third party, any
Confidential Information revealed to it pursuant to the terms of this Agreement.
PEARL and OOIL shall communicate to specifically identify any particular
information or materials as confidential.  In the event of termination of this
Agreement, there shall be no use or disclosure by either party of any
Confidential Information and each party agrees not to reproduce, manufacture,
have reproduced or have manufactured any computer software programs, devices,
components or assemblies utilizing any of the confidential information.

11.2
Proprietary Rights. PEARL agrees that OOIL retains all of its right, title and
interest in and to all patents, trademarks, trade names, inventions, copyrights,
know-how and trade secrets relating to the Technology, and the design,
manufacture, operation or service of the Technology including any improvements
relating to the Technology developed by OOIL during the course of this
Agreement. The use by PEARL of any of these property rights is authorized only
for the purposes herein set forth and upon termination of this Agreement for any
reason such authorization will cease. PEARL shall not (and shall require that
its customers do not) remove, alter, cover or obfuscate any patent, trademark,
copyright or other proprietary rights notices placed or embedded by OOIL on or
in the Technology. PEARL shall not make use of any OOIL trademarks without prior
approval by OOIL of such usage.

ARTICLE 12
INTELLECTUAL PROPERTY INDEMNIFICATION

12.1
Limited Indemnity. PEARL agrees that OOIL has the right to defend, or at its
option to settle, and OOIL agrees, at its own expense, to defend or at its
option to settle, any third party claim, suit or proceeding (collectively,
“Action”) brought against PEARL alleging that the Technology infringes any
patent, copyright or trademark in existence as of the Effective Date, subject to
the limitations hereinafter set forth. OOIL shall have sole control of any such
Action or settlement negotiations, and OOIL agrees to pay, subject to the
limitations hereinafter set forth, any final judgment entered against PEARL on
such issue in any such Action defended by OOIL. PEARL agrees that OOIL will be
relieved of the foregoing obligations unless PEARL notifies OOIL in writing of
such Action within thirty (30) days after becoming aware of such action, gives
OOIL authority to proceed as contemplated herein, and gives OOIL proper and full
information and assistance to settle and/or defend any such Action. If it is
determined by a court of competent jurisdiction, or if OOIL believes, that the
Technology, or any part thereof, infringes any patent, copyright or trademark,
or if the sale or use of the Technology, or any part thereof, is, as a result,
enjoined, then OOIL may, at its election, option, and expense: (i) procure for
PEARL the right under such patent, copyright or trademark to sell or use, as
appropriate, the Technology or such part thereof; (ii) replace the Technology,
or part thereof, with other noninfringing suitable products or parts; (iii)
suitably modify the Technology or part thereof; or (iv) remove the Technology,
or part thereof, terminate distribution or sale thereof and refund the payments
paid by PEARL for such Technology.

12.2
Limitations. Notwithstanding the provisions of Section 12.1 above, OOIL assumes
no liability for infringement claims arising from (i) combination of the
Technology or portions thereof with other intellectual property not provided by
OOIL if such infringement would not have occurred but for such combination, or
(ii) the modification of the Technology or portions thereof unless such
modification was made or authorized by OOIL, when such infringement would not
have occurred but for such modification.

ARTICLE 13
LIMITATION OF LIABILITY

13.1
In no event shall either party be liable for lost profits, cost of procurement
of substitute goods, or any other special, reliance, incidental, or
consequential damages, however caused and under any theory of liability whether
based in contract, tort (including negligence), products liability, or
otherwise. The foregoing limitations shall apply regardless of whether such
party has been advised of the possibility of such damages and notwithstanding
the failure of essential purpose of any limited remedy stated herein.

 
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ARTICLE 14
TERM AND TERMINATION

14.1
Term.  Unless earlier terminated pursuant to Section 14.2 below or by mutual
written consent, this Agreement shall commence upon the Effective Date and
continue in full force and effect for an initial term expiring on [__3
years________]. The parties may renew this Agreement for additional terms upon
mutual written consent.

14.2
Termination. This Agreement may be terminated prior to the expiration of the
initial term by prior written notice to the other party as follows:

 
14.2.1
By either party upon written notice of termination if the other party breaches
any material term or condition of this Agreement and fails to cure that breach
within thirty (30) days after receiving written notice stating the nature of the
breach and the non-breaching party’s intent to terminate; or

 
14.2.2
By either party, effective immediately, if the other party should become the
subject of any voluntary or involuntary bankruptcy, receivership, or other
insolvency proceedings or make an assignment or other arrangement for the
benefit of its creditors, or if such other party should be nationalized or have
any of its material assets expropriated; or

 
14.2.3
By either party, effective immediately, if there should occur any material
change in the management, ownership, control, sales personnel, sales and
marketing capability, or financial condition of the other party that prevents
the other party from fulfilling its obligations hereunder; or

 
14.2.4
By OOIL, effective immediately, if any law or regulation should become adopted
or in effect in the Territory that would restrict OOIL’s termination rights or
otherwise invalidate any provisions hereof; or

 
14.2.5
By OOIL, effective immediately, if PEARL should violate the terms of paragraph
15.1, below; or

 
14.2.6
By OOIL, effective immediately, if PEARL knowingly makes any false or untrue
statements or representations to OOIL herein; or

 
14.2.7
By OOIL, effective immediately, if PACE is more than 30 business days late in
making the payment required under Section 3.2, or is late by more than 90
business days for any other payment to be made to OOIL as required under this
Agreement.

 
14.2.8
By either party, upon 60 days written notice to the other party, for lack of
performance (including projects) or for business convenience.

 
14.2.9 By OOIL, effective immediately, if PEARL is not longer utilizing OOIL
Technology in PEARL products.

14.3
Purchase Orders; No Waiver.  Notwithstanding the foregoing, PEARL shall be
obligated to accept deliveries of equipment related to the Technology for which
orders were accepted by OOIL prior to the effective date of termination. After
any notice of termination has been delivered by either party hereunder,
deliveries of equipment related to the Technology from OOIL to PEARL, unless
otherwise agreed by OOIL in its sole discretion, shall require prepayment by
wire transfer by PEARL to OOIL. The acceptance of any order for the sale of any
equipment related to the Technology to PEARL after the termination or expiration
of this Agreement shall not be construed as a renewal or extension of this
Agreement nor as a waiver of termination of this Agreement.

14.4
Rights of Parties Upon Termination or Expiration. The following provisions shall
apply on the termination or expiration of this Agreement.

 
14.4.1
Cessation of Sales Activities. PEARL shall cease all sales and other activities
on behalf of OOIL and shall return to OOIL and immediately cease all use of
Confidential Information previously furnished by OOIL and then in PEARL’s
possession;

 
14.4.2
Acceleration of Amounts Owed. All indebtedness of PEARL to OOIL shall become
immediately due and payable without further notice or demand, which is hereby
expressly waived;

 
14.4.3
No Obligation to Repurchase. OOIL shall have no obligation to repurchase or to
credit PEARL for its inventory of equipment related to the Technology at the
time of termination of this Agreement. OOIL may, at its sole option, repurchase
from PEARL at the prices paid by PEARL less a 20% restocking fee, any or all
inventory of Technology originally purchased by PEARL from OOIL and remaining
unsold by PEARL.

14.5
No Liability for Termination. Except as expressly required by law, in the event
of termination of this Agreement by either party in accordance with any of the
provisions of this Agreement, neither party shall be liable to the other,
because of such termination, for compensation, reimbursement or damages on
account of the loss of prospective profits or anticipated sales or on account of
expenditures, inventory, investments, leases or commitments in connection with
the business or goodwill of OOIL or PEARL. Termination shall not, however,
relieve either party of obligations incurred prior to the
termination.  Termination of this Agreement by OOIL, pursuant to 14.2.1, shall
not alter the obligation of PEARL to remit the minimum royalty payments
specified in paragraphs 3.5 and 6.1, of this Agreement.

14.6
Survival. Except for termination by OOIL pursuant to paragraph 14.2.1 above,
PEARL may sell Products existing in its inventory as of the effective date of
termination of this Agreement for a period of one hundred eighty (180) days
after the effective date of such termination (“Wind-Down Period”).  During the
Wind-Down Period, the provisions of paragraph 2.2, and Article 16 shall survive.

 

 
 
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ARTICLE 15
COMPLIANCE WITH LAWS

15.1
Export Control. Any and all obligations of OOIL to provide the Technology, as
well as any technical data, shall be subject in all respects to such United
States laws and regulations as will from time to time govern the license and
delivery of technology and products abroad by persons subject to the
jurisdiction of the United States, including the Export Administration Act of
1979, as amended, any successor legislation, and the Export Administration
Regulations issued by the U.S. Department of Commerce, Bureau of Export
Administration. PEARL represents and warrants that it will not export or
re-export the Technology or technical data related thereto except in conformity
with such laws and regulations.

15.2
Local Law. PEARL shall notify OOIL of the existence and content of any mandatory
provision of law in the Territory that conflicts with any provision of this
Agreement at the time of its execution or thereafter.

15.3
Liability of OOIL. The provisions of this Agreement under which the liability of
OOIL is excluded or limited shall not apply to the extent that such exclusions
or limitations are declared illegal or void under the laws applicable in the
countries in which Products are sold hereunder.

15.4
Questionable Payments. PEARL certifies that neither it, nor any of its
directors, officers, employees, or agents is an official, agent, or employee of
any government or governmental agency or political party or a candidate for any
political office on the date of this Agreement. PEARL shall promptly notify OOIL
of any event that would or may result in an exception to the foregoing
representation. PEARL shall not, directly or indirectly, in the name of, on
behalf of, or for the benefit of OOIL offer, promise to pay, or pay any
compensation, or give anything of value to, any official, agent, or employee of
any government or governmental agency, or to any political party or officer,
employee, or agent thereof. Any breach of the provisions of this paragraph 15.4,
shall entitle OOIL to terminate this Agreement effective immediately upon
written notice to PEARL pursuant to paragraph 14.2 above.

ARTICLE 16
MISCELLANEOUS PROVISIONS

16.1
Governing Law; Venue. This agreement has been negotiated and entered into in the
State of California, and shall be governed by, construed and enforced in
accordance with the internal laws of the State of California, applied to
contracts made in California to be wholly performed in California.  Except as
otherwise provided herein, the United States District Court for the Central
District of California shall have jurisdiction to enforce the terms of this
Agreement and any action for breach of the agreement or to enforce any of the
terms of this agreement shall be filed in the United States District Court for
the Central District of California.  In the event that the United States
District Court for the Central District of California lacks jurisdiction
pursuant to 28 U.S.C. § 1441(b) or otherwise refuses to exercise jurisdiction
over the parties or causes relating to this Agreement, then the general
jurisdiction Courts of the State of California, located in Los Angeles,
California shall have jurisdiction to enforce the terms of this Agreement and
adjudicate any action for breach of the Agreement.

16.2
Assignment. PEARL may not transfer or assign any of its obligations under this
Agreement without the prior written consent of OOIL. OOIL may freely transfer or
assign its rights under this Agreement without the prior written consent of
PACE. Subject to the foregoing, this Agreement will be binding upon and inure to
the benefit of the parties hereto, their successors and assigns.

16.3
No Implied Waivers. The failure of either party at any time to require
performance by the other of any provision hereof shall not affect the right of
such party to require performance at any time thereafter, nor shall the waiver
of either party of a breach of any provision hereof be taken or held to be a
waiver of a provision itself.

16.4
Severability. If any provision of this Agreement is held to be invalid by a
court of competent jurisdiction, then the remaining provisions will nevertheless
remain in full force and effect. The parties agree to renegotiate in good faith
those provisions held to be invalid to create valid, enforceable provisions
which provisions shall reflect as closely as possible the original intent of the
parties.

16.5
Force Majeure. Except for payment of monies, neither party shall be liable for
failure to fulfill its obligations under this Agreement or any purchase order
issued hereunder or for delays in delivery due to causes beyond its reasonable
control, including, but not limited to, acts of God, man-made or natural
disasters, earthquakes, fire, riots, flood, material shortages, strikes, delays
in transportation or inability to obtain labor or materials through its regular
sources. The time for performance of any such obligation shall be extended for
the time period lost by reason of the delay.

16.6
Conflicting Terms. The parties agree that the terms and conditions of this
Agreement shall prevail, notwithstanding contrary or additional terms, in any
purchase order, sales acknowledgment, confirmation or any other document issued
by either party effecting the purchase and/or sale of Technology.

16.7
Headings. Headings of paragraphs herein are inserted for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.

16.8
Notice. Any notice required or permitted to be given under this Agreement shall
be delivered (a) by hand, (b) by registered or certified mail, postage prepaid,
return receipt requested, to the address of the other party first set forth
above, or to such other address as a party may designate by written notice, (c)
by overnight courier, or (d) by fax with confirming letter mailed under the
conditions described in (b) above. Notice so given shall be deemed effective
when received, or if not received by reason of fault of addressee, when
delivered.

 
 
 
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16.9
Interpretation:  No provision of this agreement is to be interpreted for or
against either party because that party or that party’s representative drafted
such provision.

16.10
Indemnity:  In the event that any party violates the terms of this Agreement,
then the party violating this agreement shall indemnify and hold harmless the
non-breaching parties from any and all liability, costs, expenses and fees,
including attorneys’ fees (whether suit is actually filed and in connection with
all appeals), arising from said violation of this agreement or arising from an
action to enforce the terms of the agreement.

16.11
Arbitration Agreement.  Except as specified in paragraph 6.5 of this Agreement,
any unresolved controversy or claim arising out of or relating to this Agreement
shall be submitted to binding arbitration under the auspices of Judicial
Arbitration & Mediation Service (JAMS) in accordance with its rules then in
effect, and judgment upon any award rendered in such arbitration will be binding
and may be entered in any court having jurisdiction thereof.  Except as
otherwise provided herein, each party will bear its own costs in respect of any
disputes arising under this Agreement.

16.12
Waiver of Jury Trial.  Each party hereto hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Agreement or the
administration, performance, enforcement or termination hereof.

16.13
Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and supersedes all prior
agreements relating thereto, written or oral, between the parties. Amendments to
this Agreement must be in writing, signed by the duly authorized officers or
representatives of the parties.

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of the specified Effective Date.

ORIGIN OIL, INC.

_______________________________
By:  Riggs Eckelberry, CEO
Date:  October 16, 2012

PEARL H20, LLC.

_______________________________
By:  Cory M. Severson, President
Date:  October 16, 2012

 
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OEM LICENSE AGREEMENT

 
APPENDIX “A”
 

Pursuant to the terms of the Agreement, OOIL hereby grants PEARL the right to
manufacture, distribute, and sell PEARL Products incorporating OriginOil
Technology in the following specified Markets:

 
1.
Oil & Gas Frack Flowbach and Produced Water Treatment Market  -  This market
includes the sale of any frack flowback and produced water treatment equipment
utilizing OOIL Technology to producers, oil service companies, water treatment
companies, system integrators and engineering companies in the oil and gas
marketplace.

 
 
 
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OEM LICENSE AGREEMENT

 
APPENDIX “B”

ROYALTY

A. The Royalty Fee shall be equal to the following:

[…]

 
 
 
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