Exhibit 10.1

 

ASSIGNMENT OF LICENSE AGREEMENT

 

THIS ASSIGNMENT OF LICENSE AGREEMENT (“Assignment”) is entered into March 8th,
2005 (“Effective Date”) by and between Verdisys, Inc., a California corporation
(“Verdisys”) and Maxim TEP, Inc., a Texas Corporation (“Maxim”).

 

WHEREAS on April 23, 2003, Verdisys and Carl Landers, an individual residing in
Madisonville, Kentucky (“Landers”) entered into a license agreement and this
license agreement was amended on September 4, 2003 and February 25, 2004
(collectively referred to as the “Verdisys License”) which is attached as
Exhibit A;

 

WHEREAS Maxim wishes to acquire the Verdisys License and Landers consents to the
acquisition per Exhibit C;

 

THEREFORE, in view of the good and valuable consideration stated below, Verdisys
and Maxim agree as follows:

 

1. Assignment of Verdisys License.

 

1.1 Verdisys hereby assigns all right, title, and interest it owns in the
Verdisys License to Maxim as well as all current and future negotiations for
assignments, sub-licenses or territorial royalty pertaining to the Verdisys
License.

 

2. Consideration.

 

2.1 In consideration of this Assignment, Maxim shall pay to Verdisys the total
sum of One Million Three Hundred Thousand and no/100 Dollars ($1,300,000.00
USD), payable in installments as follows:

 

2.1.1 Maxim shall make a first cash payment to Verdisys of Three Hundred
Thousand and no/100 Dollars ($300,000.00 USD) on or before March 9, 2005;

 

2.1.2 Maxim shall make a second cash payment to Verdisys of One Hundred Thousand
and no/100 Dollars ($100,000.00 USD) Dollars on or before March 18, 2005;

 

2.1.3 Maxim shall make a third cash payment to Verdisys of Five Hundred Thousand
and no/100 Dollars ($500,000.00 USD) Dollars on or before June 3th, 2005, and

 

2.1.4 Maxim shall make a fourth and final cash payment of Four Hundred Thousand
and no1/100 Dollars ($400,000.00 USD) on or before September 2th, 2005.

 

2.2 In further consideration of this Assignment, Maxim forgives and releases
Verdisys from a Two Hundred Seventy Thousand Dollar ($270,000.00 USD) supplier
credit obligation owed by Verdisys to Maxim.

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2.3 In further consideration of this Assignment, Maxim grants to Verdisys the
sublicense referenced in Section 6 below.

 

2.4 Any delay of payment beyond a ten (10) day period of the contracted payment
date shall cause a default of this contract resulting in a 45 day “Grace
Period”. Default shall be cured by payment of 110% of the payment missed within
the 45 day grace period. In the event the default is not cured, then the
transaction will be terminated, the Verdisys License returned to Verdisys and
any initial payments shall be forfeited. However, the ownership of any equipment
delivered to Maxim under Section 3 as of the time of default shall remain with
Maxim as said rigs were tendered against a stated credit owed to Maxim.

 

3. Delivery of Equipment.

 

3.1. Upon Maxim’s first $300,000.00 cash payment described above, Verdisys shall
execute the Bill of Sale attached as Exhibit B and deliver to Maxim one complete
Landers lateral drilling rig in good working order, including, but not limited
to: top-hole and down-hole drilling apparatus; drilling “Horse Head” and bracket
tree; 300 foot drilling hose with Landers drilling nozzle; deflection shoes;
flex shaft; mud motor; drilling bits and all spare parts culminating in a
completely outfitted rig ready to apply the Landers lateral drilling process.

 

3.2 Upon completion and testing of Verdisys’ second generation lateral drilling
rig currently under development, but in no event later than June 30, 2005,
Verdisys will deliver the second Landers rig in partial working order to Maxim.
The equipment described in Sub-paragraphs 3.1 and 3.2 will be delivered to Maxim
for no additional consideration other than that stated in Paragraph 2.2.

 

4. Resolutions.

 

4.1 Within seven days from the Effective Date, Verdisys shall provide Maxim with
(a) a resolution from the Verdisys Board of Directors authorizing Verdisys
officers to sell the Verdisys License under the terms stated in this Assignment,
and (b) copies and summaries of any offers made to Verdisys for sublicenses of
the Verdisys License including, but not limited to, copies of any Letters of
Intent (“LOI”), Memorandums Of Understanding (“MOU”) or other contractual
agreements executed by Verdisys with regards to Edge Capital
Group/Fraziers/Sossen; CTC, a Canadian group currently participating in a pilot
drilling program in hopes of receiving license to drill within the Canadian
border; and any other group that has a similar association with Verdisys.

 

4.2 Within seven days from the Effective Date, Maxim shall provide Verdisys with
a resolution from the Maxim Board of Directors authorizing Maxim officers to buy
the Verdisys License under the terms stated in this Assignment.

 

5. Reversion of License Agreement.

 

5.1 Should Verdisys fulfill all of its obligations under Paragraph 3 and should
Maxim fail to fulfill all of its obligations under Paragraph 2, the Verdisys
License and all rights therein shall revert back to Verdisys.

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6. Grant Back of Sub-License.

 

6.1 Maxim hereby grants Verdisys a non-exclusive sub-license to use the Landers
Horizontal Technology as defined in the Verdisys License beginning on the
Effective Date. Such sub-license to be used in association with new technologies
to be employed by Verdisys, provided all royalties are paid in full on every
well upon which the Landers Horizontal Technology is utilized.

 

6.2 The sub-license granted in Sub-paragraph 6.1 is conditioned upon Verdisys
timely making all royalty payments in full on every well upon which the Landers
Horizontal Technology is utilized directly to Maxim, which Maxim shall forward
to Landers.

 

7. Representations & Warranties.

 

7.1 Maxim warrants it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and has all necessary
corporate power and authority to carry on its business as it is currently being
conducted. Maxim has all necessary corporate power and authority to enter into
this Assignment, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby.

 

7.2 Maxim warrants that the execution, delivery and performance of this
Assignment and the consummation of the transactions contemplated hereby do not
and will not conflict with or violate any agreement previously entered into by
Maxim or any law or governmental order applicable to Maxim.

 

7.3 Verdisys warrants it is a corporation duly organized, validly existing and
in good standing under the laws of the State of California and has all necessary
corporate power and authority to carry on its business as it is currently being
conducted. Verdisys has all necessary corporate power and authority to enter
into this Assignment, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby.

 

7.4 Verdisys warrants that the execution, delivery and performance of this
Assignment and the consummation of the transactions contemplated hereby do not
and will not conflict with or violate any agreement previously entered into by
Verdisys or any law or governmental order applicable to Verdisys.

 

7.6 Verdisys warrants that there are no liens, liabilities, or other
encumbrances against the Verdisys License.

 

7.7 Verdisys warrants that it has no knowledge of any liens, liabilities, or
other encumbrances against U.S. Patents Nos. 5,413,184; 5,853,056 or 6,125,949
or any other aspect of the Landers Horizontal Technology. Patent No 6,125,949 is
not included in the Verdisys License with Landers, therefore is excluded in this
paragraph.

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7.8 Verdisys warrants that it has no knowledge of any claim or assertion
alleging that the Landers Horizontal Technology infringes the property rights of
a third person.

 

7.9 Verdisys warrants that other than the litigation captioned, Carl Landers et
al. v. Sideways LLC, No. 04-1510, 04-1538, pending before the Court of Appeals
for the Federal Circuit, it has no knowledge of any claim or assertion alleging
that U.S. Patents Nos. 5,413,184, 5,853,056 or 6,125,949 are invalid.

 

7.10 Verdisys warrants that it has no knowledge of any claims made or threatened
against Verdisys, greater than $50,000 (fifty-thousand) based upon or arising
out of its use of the Landers Horizontal Technology.

 

7.11 Verdisys warrants that all monies and other consideration owed to Landers
under the Verdisys License prior to the Effective Date have been paid to
Landers.

 

7.12 Verdisys represents that several negotiations are underway that may affect
the exclusivity of the Master License. Maxim is aware of these proceedings and
their impact on exclusivity as described below:

 

(a) Maxim hereby agrees to sublicense the Landers technology to Verdisys on a
mutually agreeable basis under Section 6.1 for the purpose of providing energy
services for Verdisys only, within the License Area. Verdisys hereby agrees to
accept the rights and obligations as specified in the Verdisys License.

 

(b) A Landers sublicense is currently being negotiated by Verdisys with Edge
Capital Group/Frazier/Sossen, which involves the receipt by Verdisys of revenue
sharing from five percent of the additional cash generated from oil & gas
production and the provision of certain improvements. Verdisys agrees to assist
in the transition with Edge and will retain all benefits of such sublicense.
Maxim agrees to “carve-out” this sublicense, and agrees to allow Verdisys to
retain all rights and benefits and obligations under the terms of the
Edge/Verdisys sub-licensure for Verdisys. This sublicense will be restricted to
joint ventures only and will not allow Edge/Frazier/Sossen the right to
sublicense.

 

(c) A pilot test is being negotiated by Verdisys with CTC in Canada, which
involves the sale of hardware for the limited testing of wells in Alberta.
Verdisys agrees to assist in the transition and retain the rights, benefits and
obligations under the pilot test. However, any benefits accruing from the sale
of a full sublicense will be shared on the basis of Maxim 65% and Verdisys 35%.

 

(d) A sub license is also being negotiated by Verdisys with a third party in
Texas to provide service work for the License area. Verdisys agrees to assist in
the transition and to name the party after the Effective Date. With Maxim’s

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assistance, contractual input and approval, Maxim will continue to negotiate
with this third party for sub-licensure. However, any benefits accruing from a
full sublicense will be shared on the basis of Maxim 65% and Verdisys 35%.

 

8. Indemnity.

 

8.1 Maxim shall indemnify, defend and hold harmless Verdisys and its
representatives from and against all claims, losses, settlements, liabilities,
damages, costs or expenses (including reasonable attorney’s fees and
disbursements) (collectively, “Losses”) made against or incurred by Verdisys or
its representatives of any nature whatsoever based upon, arising out of, in
connection with, or relating to (i) any breach of any representation or warranty
made by Maxim herein, and (ii) the substantial nonfulfillment of any covenant or
undertaking of Maxim contained herein.

 

8.2 Maxim shall indemnify, defend and hold harmless Verdisys 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 Verdisys or its representatives of
any nature whatsoever based upon, arising out of, in connection with, any use by
Maxim of the Landers Horizontal Technology.

 

8.3 Verdisys shall indemnify, defend and hold harmless Maxim and its
representatives from and against all claims, losses, settlements, liabilities,
damages, costs or expenses (including reasonable attorney’s fees and
disbursements) (collectively, “Losses”) made against or incurred by Maxim or its
representatives of any nature whatsoever based upon, arising out of, in
connection with, or relating to (i) any breach of any representation or warranty
made by Verdisys herein, and (ii) the substantial nonfulfillment of any covenant
or undertaking of Verdisys contained herein.

 

8.4 Verdisys shall indemnify, defend and hold harmless Maxim 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 Maxim or its representatives of any
nature whatsoever based upon, arising out of, in connection with, any use by
Verdisys of the Landers Horizontal Technology.

 

9. Taxes.

 

9.1 Neither Verdisys nor Maxim 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 Assignment.

 

10. Former Agreements.

 

10.1 Except as stated herein, all prior or contemporaneous written or oral
statement, arrangements, or agreements regarding this Assignment are merged into
and superseded by this Assignment.

 

10.2 In no event does Verdisys transfer any rights, title or obligations under
this agreement beyond those given to Verdisys under the Verdisys License.

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11. Prevailing Law and Jurisdiction.

 

11.1 This Assignment shall be construed and interpreted in accordance with the
laws of Texas. Jurisdiction for any dispute arising out of any term or matter
related to this Assignment shall be settled by binding arbitration according to
the rules and procedures of the American Arbitration Association in Houston,
Texas.

 

12. Arms-Length Transaction

 

12.1 This Assignment is entered into as an arms-length transaction and the
parties are independent contractors with respect to each other, and nothing in
this Assignment shall create or constitute a joint venture, partnership, agency
or any similar relationship between the parties.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

MAXIM TEP, INC.     

/s/ Robert Sepos

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March 8, 2005

        Date

Robert Sepos    Executive VP/Chief Financial Officer      VERDISYS, INC.     

/s/ David Adams

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March 8, 2005

        Date

David Adams,    President & Co-CEO     

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EXHIBIT C

CONSENT OF CARL LANDERS TO LICENSE ASSIGNMENT

 

WHEREAS on April 23, 2003, Verdisys and Carl Landers, an individual residing in
Madisonville, Kentucky (“Landers”) entered into a license agreement with
Verdisys, Inc., a California corporation (“Verdisys”) and this license agreement
was amended on September 4, 2003 and February 25, 2004 (collectively referred to
as the “Verdisys License”);

 

WHEREAS Maxim TEP, Inc., a Texas Corporation (“Maxim”), wishes to acquire the
Verdisys License and Landers desires to facilitate the transfer of the Verdisys
License to Maxim;

 

THEREFORE, Landers hereby consents to the assignment of the Verdisys License and
all amendments thereto to Maxim.

 

/s/ Carl Landers

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   Dated: March 4, 2005 Carl Landers