Exhibit 10.45

 

EXCLUSIVE MANUFACTURING, MARKETING, SALES
AND CONSULTING AGREEMENT

 

THIS EXCLUSIVE MANUFACTURING, MARKETING, SALES AND CONSULTING AGREEMENT (the
“Agreement”) is made and entered into as of January 9, 2015 (the “Effective
Date”), by and among Extreme Technologies, LLC, a Utah limited liability company
(“Extreme”), Hard Rock Solutions, LLC, a Utah limited liability company (“Hard
Rock”), Tenax Energy Solutions LLC, an Oklahoma limited liability company
(“Tenax”) and Kevin Jones, an individual (“Jones”). Tenax and Jones may be
referred to herein collectively as the “Tenax Parties” and singularly as a
“Tenax Party”). Hard Rock and Extreme may be referred to herein collectively as
the “Hard Rock Parties” and singularly as a “Hard Rock Party”). The Hard Rock
Parties and the Tenax Parties may hereinafter be referred to singularly as a
“Party” or collectively as the “Parties”.

 

WITNESSETH:

 

WHEREAS, Jones is the inventor of and has filed a certain United States patent
application and non-provisional applications on technology that is used on a
certain subsurface drilling tool (the “Orbit IP”) as more fully described on
Schedule A (the “Orbit U.S. Patent Application”);

 

WHEREAS, Jones is the inventor of and has filed certain worldwide patent
applications on Orbit IP as more fully described on Schedule B (the “Orbit
Global Patent Applications” and together with the Orbit U.S. Patent Application,
hereinafter referred to collectively as the “Orbit Patent Applications”);

 

WHEREAS, Jones is the majority owner of Tenax;

 

WHEREAS, Jones and Tenax are parties to that certain perpetual Exclusive
Manufacturing, Marketing, Sales and Consulting Agreement evidencing Tenax's
exclusive rights to manufacture, market, sell and rent the Orbit IP product line
(the “Tenax Agreement”), a copy of which has been furnished to the Hard Rock
Parties;

 

WHEREAS, pursuant to that certain Bill of Sale, executed as of even date
herewith, Hard Rock has purchased from Tenax and Tenax has sold and delivered to
Hard Rock all inventory associated with the Orbit IP product line, free and
clear of all liens and encumbrances (the “Orbit Inventory Purchase Price”) as
more fully described therein (“Bill of Sale”); and

 

WHEREAS, the Parties desire to enter into an agreement whereby Hard Rock has the
exclusive right on a perpetual basis to manufacture, market, sell and rent the
products that utilize the Orbit IP (the “Orbit Products”), as hereinafter more
fully described and as subject to the terms and condition hereof;

 

WHEREAS, the Parties desire to set forth various rights, duties and obligations
with respect to Jones removing certain liens on the Orbit IP and granting an
option to purchase same;

 

NOW THEREFORE, for and in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, the Parties hereby agree as follows:

 

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ARTICLE I

 

Grant of Exclusive License

 

Tenax hereby grants to Hard Rock the perpetual and exclusive right and license
to manufacture, market, sell and rent the Orbit Products utilizing the Orbit IP
(the “License”) according to the following terms:

 

(a)          The Orbit IP and any goodwill associated therewith are and shall at
all times remain the property of Jones unless and until Extreme exercises its
Purchase Option according to Section 4.2 and as defined therein.

 

(b)          Hard Rock shall use the Orbit IP at all times in connection with
promoting the worldwide manufacture, market, sale or rental of the Orbit
Products (collectively, the “Operations”).

 

(c)          The Parties understand and agree that Hard Rock's license to use
the Orbit IP and perform the Operations is exclusive and perpetual subject to
the terms and conditions contained herein.

 

(d)          If at any time Jones determines that it is appropriate to change,
substitute or add modifications to the Orbit IP, then the definition of “Orbit
IP” hereunder shall automatically, and without further action of the Parties
hereto, be amended to reflect any such change, substitution or addition.
Notwithstanding the foregoing, Jones agrees to give at least thirty (30) days
prior written notice to Extreme and not implement any such proposed change,
substitution, addition or discontinuance of all or part of the Orbit IP without
the prior written consent of Extreme which shall not be unreasonably withheld.

 

ARTICLE II

 

Orbit Products; Operations

 

All decisions concerning pricing, marketing tools, taxes, record keeping,
marketing efforts, quality control, shipment, return policies, warranties, etc.
shall be solely at the discretion of Hard Rock or its “Affiliates”, as
hereinafter defined, with respect to the manufacture, marketing, sale and/or
rental of the Orbit Products pursuant to this Agreement. The defined term,
“Affiliate” or “Affiliates” shall have the meaning set forth in Rule I 2b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.

 

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ARTICLE III

 

Term; Term Payments

 

3.1           The term of the License shall begin on the Effective Date and
continue unless sooner terminated pursuant to this Agreement (the “Term”). Hard
Rock shall commence payment of the amount of $83,334.00 per month (the “Term
Payments”) on February 1, 2015 and shall continue such monthly payments through
January 1, 2017, subject to Sections 3.2, 3.3 and 3.4 and unless sooner
terminated pursuant to this Agreement. Alternatively, Hard Rock shall have the
right to prepay any of said amounts including making quarterly payments of
$250,000.00 for each quarterly time period subject to Sections 3.2, 3.3 and 3.4.
Notwithstanding the foregoing, in the event Extreme exercises its Purchase
Option pursuant to Section 4.2, from that time forward, all of the Term Payments
shall cease and the Royalty Payments, as hereinafter defined, shall be
implemented. In the event the Orbit Patents, as hereinafter defined, are not
granted, then the License shall remain in full force and effect including the
obligation of Hard Rock to make the Tenn Payments; provided that, after the last
Term Payment on January 1, 2017, such that an aggregate amount of $2,000,000.00
or such lesser amount as determined pursuant to Sections 3.2, 3.3 and 3.4, has
been paid to Tenax, this exclusive license shall remain in full force and effect
so long as the Term Payments continue as contemplated herein, or the exclusive
license shall terminate if the Term Payments are discontinued except as
specifically permitted herein.

 

Calculation of Term Payments; Option to Terminate the Term Payments

 

3.2           Notwithstanding anything to the contrary contained herein, in the
event that the revenue generated from the sales or rentals of the Orbit Products
by Hard Rock compared to the direct and indirect labor, material and marketing
costs incurred by Hard Rock is not producing an adequate profit to Hard Rock,
the Parties shall meet in good faith to discuss and implement an appropriate
reduction in the amount of Term Payments to a reasonable level so that an
adequate profit can be achieved by Hard Rock.

 

3.3           Furthermore, notwithstanding anything to the contrary contained
herein, the calculation of the Term Payments shall be equal to the lesser of (i)
$83,334.00 per month, or (ii) the amount of actual gross revenues (whether
collected or not) from sales or rentals of the Orbit Products for such month.
There shall be a true-up on the first (16`) of each month commencing on February
1, 2015. For the avoidance of doubt the following is an example of such true-up:
if the amount of revenues from sales or rental of the Orbit Products during the
month of January 2015 shall be determined to be greater than $83,334, the amount
of the Term Payment shall equal $83,334; if the amount of revenues from sales or
rental of the Orbit Products during the month of January 2015 shall be
determined to be less than $83,334, the amount of the Term Payment shall equal
the actual amount of revenues (whether collected or not) for such month.
Notwithstanding anything to the contrary contained herein, under no
circumstances shall the aggregate amount of Term Payments be required to be
greater than $2,000,000.00 or such lesser amount to the extent, if any, that the
Term Payments are reduced pursuant to Section 3.2. 3.3 or 3.4 (the “Aggregate
Term Payments Amount”).

 

3.4           In the event bona fide, material litigation is filed against
Jones, Tenax and/or Hard Rock asserting or alleging patent infringement and/or
theft or misuse of confidential information pertaining to the Orbit IP or Orbit
Products, Hard Rock may terminate its obligation to make the Term Payments as
set forth in Section 3.1 hereof, but shall continue the exclusive rights granted
herein with respect to the Orbit IP. In the event the Tenax Parties favorably
resolve the suit, subject to Section 3.6, any remaining unpaid Term Payments
shall commence until the Aggregate Term Payments Amount is paid.

 

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New IP

 

3.5           The Tenax Parties and their Affiliates agree that for and in
consideration of the Term Payments being made by Hard Rock, to not show to any
third party any new or additional intellectual property created or developed by
Jones, Tenax or both in any field or industry (the “New IP”), without first
showing any such New IP to Extreme and its Affiliates. Extreme and its
Affiliates shall have a period of thirty (30) days (the “Early Option Period”)
thereafter to make a proposal to the Tenax Parties with respect thereto should
it desire to do so. The Tenax Parties shall have the right, in their sole
discretion, to reject such proposal from Extreme and offer the New IP to any
third party but only on higher purchase price terms and conditions and further
provided that the Tenax Parties cannot consummate a transaction concerning the
New IP with a third party unless it is on higher purchase price terms and
conditions to the Tenax Parties than the highest purchase price terms and
conditions offered by Extreme and such transaction with such third party is
consummated with one hundred eighty (180) days from the date the last offer from
Extreme is rejected by the Tenax Parties.

 

Right of First Refusal and Buyout Options

 

3.6           

 

(a)          If the Tenax Parties or their Affiliates receive a bona fide third
party offer to purchase all or part, or otherwise acquire any interest in the
New IP which the Tenax Parties desire to accept (a “New IP Offer”) and doing so
is not otherwise in violation of this Agreement, prior to making such sale, the
Tenax Parties shall deliver a written offering notice to the Hard Rock Parties
containing details of the New IP Offer and affording the Hard Rock Parties a
right of first refusal to match such New IP Offer on or prior to thirty (30)
days of the date of receipt of such written notice. The Hard Rock Parties shall
deliver a reply notice to the Tenax Parties setting forth whether it desires to
match such New IP Offer. Should the Hard Rock Parties match the New IP Offer
within thirty (30) days of its receipt of written notice of the Offer, such
reply notice shall constitute an agreement binding on the Hard Rock Parties to
purchase and the Tenax Parties to sell all or part of the New IP proposed to be
purchased in the New IP Offer at the price offered by the proposed purchaser.

 

(b)          If within the thirty (30) day period, the Hard Rock Parties shall
fail to deliver a written reply notice either agreeing to match the New IP Offer
as provided in subsection (a) or desiring to participate in the New IP Offer as
provided in this subsection (b), then the Hard Rock Parties shall be deemed to
have rejected such New IP Offer and shall have no further rights with respect
thereto. In such event, the Tenax Parties shall be permitted to consummate the
New IP Offer on the same or better conditions to the Tenax Parties; provided,
that it is done so within one hundred eighty (180) days of the expiration of the
thirty (30) day time period.

 

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ARTICLE IV

 

Orbit Patents: Purchase Option: Consulting Services: Royalty Payments:
Non-Competition

 

4.1           Throughout the Term, Jones shall utilize commercially reasonable
best efforts to procure the Orbit Patents, including but not limited to paying
all attorneys' fees, filing and maintenance fees, and all other costs and
expenses reasonably contemplated in procuring the Orbit Patents both in the
United States and elsewhere in the world where applications are already pending
or reserved to be implemented.

 

4.2           Commencing on January 1, 2016, Extreme shall have the option at
any time that this Agreement is in effect to purchase from Jones all of the
Orbit Patent Applications and/or the Orbit Patents in accordance with the terms
and conditions set forth herein below. In addition, in the event the Orbit U.S.
Patent Application is granted (the “Orbit U.S. Patent”), Jones shall send
written notice thereof to Extreme, and for one hundred eighty (180) days after
receipt of such written notice, or one hundred eighty (180) days after the time
when Jones is able to transfer good and marketable title to the Orbit U.S.
Patent and all Orbit Global Patent Applications and Global Orbit Patents, if
any, Extreme shall have the option to purchase from Jones all of the foregoing
being hereinafter referred to as the “Purchase Option”, all right, title and
interest held by Jones in and to the Orbit Patents, as hereinafter defined, free
and clear of all liens and encumbrances, for a payment of One Million and no/00
Dollars ($1,000,000.00) (the “Orbit IP Purchase Price”); provided however, that,
should Hard Rock have made Term Payments or other payments other than the Orbit
Inventory Purchase Price (the “Total Payments”) to the Tenax Parties in excess
of the Aggregate Term Payments Amount, then the Orbit IP Purchase Price shall be
reduced by the amount that the Total Payments exceed the Orbit IP Purchase
Price. Should neither Extreme nor any of its Affiliates elect to exercise the
Purchase Option within the time period provided herein, then the Term shall
immediately terminate and Hard Rock and/or its Affiliates shall retain the right
to continue to market, sell or rent the Orbit Products manufactured during the
Term on a non-exclusive basis without the obligation to make any further
payments to the Tenax Parties including but not limited to the Term Payments,
and Extreme shall no longer retain a purchase option. The license granted to
Hard Rock in Article I shall otherwise terminate upon failure to exercise the
Purchase Option.

 

4.3           In the event the purchase of the Orbit Patents is consummated by
Extreme (the “Orbit Patents Purchase”), good and marketable title to the Orbit
Patent, as well as all Orbit Global Patent Applications or if patents have been
granted thereon, the actual patents themselves shall be conveyed by Jones to
Extreme, free and clear of all liens and encumbrances. The term “Orbit Patents”
shall include the Orbit U.S. Patent, the Orbit Global Patent Applications and if
same has been granted, all existing international patents on the Orbit IP.
Notwithstanding the foregoing, in the event that Jones cannot convey good and
marketable title to the Orbit Patents free and clear of all liens and
encumbrances including but not limited to termination of the IRS Tax Lien, then
in such event and until Jones is able to procure same and provide good and
marketable title free and clear or all liens and encumbrances, the Purchase
Option shall not be consummated. During any such time, Hard Rock shall retain
the exclusive right to manufacture, market, sell and/or rent the Orbit Products
using the Orbit IP and all Term Payments shall terminate. Notwithstanding the
foregoing, Extreme may, at its own option and upon ten (10) days prior written
notice to the Tenax Parties, pay a portion of the Orbit IP Purchase Price to
such bona fide lienholders including but not limited to liquidation of the IRS
Tax Lien necessary to procure said good and marketable title as provided in
Section 5.3(b).

 

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4.4           Consulting Services. For a time period of two (2) years from the
Effective Date and for and in consideration of entering into this Agreement and
without further compensation, Jones hereby agrees to provide consulting services
to Extreme as may be requested by Extreme from time to time not to exceed the
amount of forty (40) hours per month in connection with enhancing the design of
the Orbit Products, the manufacture and marketing thereof, and other matters
reasonably requested by Extreme. In connection therewith, Jones shall be
reimbursed for all reasonable third party out-of-pocket costs and expenses, if
any, that are previously authorized and approved by the Hard Rock Parties, that
he incurs in performing such consulting services.

 

4.5           Royalty Payments. Upon consummation of the Orbit Patents Purchase,
Extreme shall commence paying Jones quarterly royalty payments within thirty
(30) days after the end of each quarter, of twenty percent (20%) of its
collected “Net Revenues,” as hereinafter defined, from the sale or rental of the
Orbit Products (the “Royalty Payments”), up to an aggregate ceiling of
$10,000,000, less any amounts previously received by Tenax or Jones from the
Hard Rock Partners or their Affiliates in the form of the payment of the Orbit
IP Purchase Price, Term Payments or otherwise, not including the Orbit Inventory
Purchase Price. For purposes hereof, the term “Net Revenues” shall mean the
total collected gross revenue less direct and/or indirect labor, material and
marketing costs incurred with respect to the manufacture, marketing, sale and/or
rental of the Orbit Products. Notwithstanding the foregoing, in the event that
after being granted by the United States Patent and Trademark Office, the Orbit
U.S. Patent is revoked, terminated or expires, and not as a result of the
conduct of Extreme not paying maintenance fees to keep the Orbit Patents viable,
then all obligations of Extreme to pay Royalty Payments shall thereafter
discontinue.

 

4.6           Noncompetition Obligation. For a time period of the greater of:
(1) five (5) years from the Effective Date, or (ii) three (3) years after the
termination of this Agreement, (the “Non-Compete Term”) neither the Tenax
Parties or their Affiliates shall directly or indirectly compete with the Hard
Rock Parties or their Affiliates with respect to the manufacture, marketing,
sale and/or rental of the Orbit Products (the “Business”) anywhere within the
Territory, as hereinafter defined. The term “Territory” shall mean the United
States, any European country and any other country where as of the Effective
Date or any time thereafter, any of the Tenax Parties file a national stage
patent application concerning the Orbit IP. Furthermore, during the Non-Compete
Term, the Tenax Parties and their Affiliates shall not directly or indirectly
solicit any of the customers or potential customers of any of the Hard Rock
Parties or their Affiliates or otherwise encourage any of such customers or
potential customers to discontinue or not do business with the Hard Rock Parties
of its Affiliates with respect to the Business anywhere within the Territory.
Notwithstanding the foregoing, the Non-Compete Term as described herein shall
immediately terminate and all noncompetition obligations shall immediately cease
if the Purchase Option is not exercised by Extreme or one of its Affiliates
within the time period provided in Section 4.2 herein.

 

4.7           Audit Rights. Upon seven (7) days prior written notice, the Tenax
Parties shall be permitted to inspect the books of Hard Rock and/or Extreme and
their Affiliates for the purpose of verifying the amount of Net Revenues,
Royalty Payments, deductions from the Total Payments, and any allegations of
inadequate profits made pursuant to Section 3.2 hereof. In connection therewith,
the Tenax Parties shall have executed together with the Hard Rock Parties a
mutually agreed upon form of Mutual Confidentiality Agreement.

 

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ARTICLE V

 

Representations- Covenants

 

5.1          Representations and Warranties of the Tenax Parties. The Tenax
Parties severally represent and warrant, which shall survive the execution
hereof, as follows:

 

(a)          Except as set forth in Schedule C, there are no actions, suits, or
proceedings pending or threatened against or affecting the Orbit U.S. Patent
Application, or the consummation of the transactions contemplated hereby, at law
or in equity or before or by any governmental authority or instrumentality or
before any arbitrator of any kind, and there is no valid basis for any such
action, proceeding, or investigation;

 

(b)          No consent, approval, or authorization of, or declaration, filing,
or registration with any governmental or regulatory authority, or any other
person or entity, is required to be made or obtained by the Tenax Parties in
connection with the execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby;

 

(c)          Jones has the full power and authority to execute this Agreement on
behalf of himself.

 

(d)          Tenax is a limited liability company duly organized, validly
existing, and in good standing with the laws of the State of Oklahoma. Tenax is
duly qualified to transact business and is in good standing as a foreign in each
jurisdiction where the nature of its business and properties requires due
qualification and good standing. Tenax has all right, power and authority to
enter into the transactions contemplated by this Agreement. Tenax has taken all
necessary action to consummate the transactions contemplated herein, and this
Agreement constitutes the valid and binding obligation of each of the Tenax
Parties enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally.

 

(e)          This Agreement does not violate or infringe on any patents or any
proprietary or personal right of any other person, finn, or corporation; and the
Tenax Parties have not infringed on any patent or other right belonging to any
other person, firm, or corporation;

 

(f)          Except as disclosed on Schedule C attached hereto (the “Orbit Tax
Liens”), Jones is the sole and exclusive owner of the Orbit U.S. Patent
Application and Orbit IP, in their entirety, as they exist on the date hereof,
free and clear of all liens, claims, encumbrances, taxes, maintenance fees or
other actions; and

 

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(g)          The Tenax Parties have not brought any infringement actions or
other judicial, arbitration, or other adversary proceedings concerning the Orbit
IP or the Orbit U.S. Patent Application against any third party, nor do the
Tenax Parties have any knowledge of any facts or circumstances which would or
might reasonably be expected to constitute an infringement by any third party of
any of the Orbit IP or the Orbit U.S. Patent Application.

 

(h)          The Tenax Parties have not granted any options to purchase, acquire
license to any third party or otherwise have any rights in and to the Orbit IP
or the Orbit Patent Applications except to the extent specifically provided in
that certain Tenax Agreement.

 

5.2          Representations and Warranties of the Hard Rock Parties. The Hard
Rock Parties jointly and severally represent and warrant, which shall survive
the execution hereof, as follows:

 

(a)          No consent, approval, or authorization of, or declaration, filing,
or registration with any governmental or regulatory authority, or any other
person or entity, is required to be made or obtained by the Hard Rock Parties in
connection with the execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby.

 

(b)          Each Hard Rock Party is a limited liability company duly organized,
validly existing, and in good standing with the laws of the State of Utah. Each
Hard Rock Party is duly qualified to transact business and is in good standing
as a foreign in each jurisdiction where the nature of its business and
properties require due qualification and good standing. Each Hard Rock Party has
all right, power and authority to enter into the transactions contemplated by
this Agreement. The Hard Rock Parties have taken all necessary action to
consummate the transactions contemplated herein, and this Agreement constitutes
the valid and binding obligation of each of the Hard Rock Parties enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally.

 

(c)          The Hard Rock Parties have had an opportunity to review the Orbit
IP with counsel of their choosing and to their knowledge have received all of
the due diligence materials they have requested that is needed for them to enter
into this Agreement. The Hard Rock Parties acknowledge Jones' IRS Tax Lien
issues and the potential attachment of an IRS lien to the Orbit IP. Nothing
contained in the foregoing statements shall negate any of the representations,
warranties, covenants or obligations of the Tenax Parties in their entirety as
contained herein.

 

5.3          Covenants of the Parties.

 

(a)          Notwithstanding anything to the contrary herein, the Hard Rock
Parties shall have the unilateral right at any time to prepay any amounts that
are or may in the future be due and owing under this Agreement.

 

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(b)          Jones shall resolve all existing or hereinafter created liens and
encumbrances on the Orbit IP including but not limited to the Internal Revenue
Service's (IRS) liens on the Orbit IP (the “Orbit Tax Liens”) on or before
December 31, 2015 and provide prompt written notice to the Hard Rock Parties,
together with satisfactory corroborating information from the IRS that all Orbit
Tax Liens have been discharged once same is accomplished. In the event all Orbit
Tax Liens have not been fully discharged by the IRS on or before December 31,
2015, then in such event, the Hard Rock Parties or one of their Affiliates shall
have the right to cause the discharge of such Orbit Tax Liens and to utilize and
offset any existing or future payments due and owing by either Hard Rock Party
to Tenax or Jones to accomplish same.

 

(c)          Other than the existing IRS Tax Liens and the security interest
granted to the Hard Rock Parties pursuant to Section 5.3(e) herein, Jones shall
not allow any additional liens or encumbrances to exist or to be created on the
Orbit IP, the Orbit Patent Applications or the Orbit Patents.

 

(d)          Furthermore, except as specifically provided herein, Jones shall
not sell, grant an option, or otherwise transfer any right, title or interest in
and to the Orbit Patent Applications, the Orbit Patents and/or the Orbit IP
unless and until the Orbit U.S. Patent has been granted and Extreme or its
Affiliates have not exercised the Purchase Option within the time period set
forth in Section 4.2 herein.

 

(e)          By his execution hereof, Jones hereby grants a security interest in
and to the Orbit U.S. Patent Application, the Orbit Global Patent Applications,
the Orbit 1P and any future Orbit Patents and all of the proceeds thereof in
order to permit the Hard Rock Parties to collateralize all of the obligations of
the Tenax Parties as contained herein and in the Bill of Sale. In connection
therewith, the Tenax Parties shall execute such UCC-1 financing statements and
security assignment documents in order for the Hard Rock Parties to secure their
position with the Secretary of State of Oklahoma, the United States Patent and
Trademark Office and such other jurisdictions as the Hard Rock Parties may
reasonably request

 

(f)          Jones shall guarantee all of the obligations of Tenax as contained
in all agreements entered into with any of the Hard Rock Parties or their
Affiliates including but not limited to this Agreement.

 

(g)          From the execution hereof and for so long as this Agreement remains
in effect, the Tenax Parties hereby agree on behalf of themselves and their
intellectual property counsel to fully cooperate with Extreme with respect to
providing copies of all communications and documents from and to the United
States Patent and Trademark Office and any other applicable countries' patent
office and providing comments and information about the status of granting the
Orbit Patents; provided, however, that Extreme shall be bound by the obligations
contained in the Mutual Confidentiality Agreement.

 

(h)          Confidentiality. Each Party hereby agrees, with respect to the
Orbit IP:

 

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(i)          to protect and keep such Orbit IP free from disclosure, except as
required in U.S. and foreign patent applications, with the same degree of
precautions and safeguards it uses to protect and keep its other trade secrets
and proprietary information, but in any case with no less than reasonable care,
except to the extent reasonably necessary for Hard Rock to manufacture, market,
sell and/or rent the Orbit Products;

 

(ii)         not to disclose or reveal such Orbit IP to any person other than
U.S. and foreign patent offices, employees, representatives or advisors employed
by it who have a need to know such Orbit IP and a contractual duty to maintain
information that they receive in the course and scope of their employment in
confidence;

 

(iii)        to make the conditions of this Agreement known to any person to
whom it discloses such Orbit IP and obtain from such person a commitment to be
bound hereby, except any U.S. or foreign patent office; and

 

(iv)        in the event any of the Parties believes that the Orbit JP has been
disclosed in any way not permitted by this Agreement (“Unauthorized
Disclosure”), or a Party has reason to believe an Unauthorized Disclosure has
occurred or may occur in the future, such Party agrees to immediately deliver to
all other Parties notice of such Unauthorized Disclosure and shall cooperate
fully with all Parties to minimize the damages resulting from such Unauthorized
Disclosure.

 

(i)          Mutual Nondisclosure. It is contemplated that the Parties in
performing their duties, obligations and covenants as contained herein will have
access to and be on the physical premises of the other Parties from time to
time. In connection therewith, it is likely that the Parties will be exposed to
and learn various trade secrets, know-how and other confidential information
(“Confidential Information”) of the other Parties that but for this Agreement
they would not have access to. For and in consideration of this Agreement, the
Parties hereto do hereby agree not to disclose, use, duplicate, copy or
otherwise transfer any right, title or interest in and to any of the
Confidential Information of any other Party without the prior written consent of
such Party, except as reasonably contemplated by this Agreement or except where
prior written authorization of the affected Party has been given. Each Party
agrees that it shall afford any other Parties' Confidential Information the same
type of protection that it would afford to its own Confidential Information and
shall ensure that all of its employees, independent contractors and professional
representatives adhere to the foregoing.

 

(j)          Action Under The Tenax Agreement. Notwithstanding anything
contained herein, Tenax shall not take any action or exercise any of its rights
arising out of or under the Tenax Agreement without the prior written consent of
the Hard Rock Parties. Tenax further agrees to immediately take any action and
exercise any rights available to it under the Tenax Agreement if so directed by
the Hard Rock Parties.

 

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ARTICLE VI
 

Termination

 

6.1        Events of Termination. This Agreement may be terminated at the option
of the non-breaching Patty automatically upon the occurrence of a “Material
Breach.” It shall be a Material Breach if any Party fails to cure a default
under this Agreement within fifteen (15) days following receipt of a written
notice of such default. For purposes of this Agreement, it shall be a default
if:

 

(a)          any Party conducts any portion of its business or uses any of the
Orbit IP in a manner that is reasonably believed to threaten the validity or
integrity of any of the Orbit IP, Orbit Products, granting of the Orbit Patents
or threatens the goodwill associated therewith;

 

(b)          any Party becomes insolvent by reason of an inability to pay debts
as they mature or makes an assignment for the benefit or creditors or any
admission of inability to pay obligations as they become due; or

 

(c)          any Party fails or refuses to comply with any other provision of
this Agreement, or otherwise breaches this Agreement.

 

6.2         Notwithstanding the termination of this Agreement, nothing shall
preclude the Hard Rock Parties from completing the manufacture, marketing, sale
and/or rental of any Orbit Products that are already in process as of the date
of termination and/or fulfilling any outstanding purchase orders or other
contractual obligations.

 

6.3         Survival. Notwithstanding termination of this Agreement by any
Party, the provisions contained in Sections 3.5, 3.6, 4.3, 4.5, 4.6, 5.3(1),
5.3(h), 5.3(i), 6.2, and Article VII and VIII shall survive any such
termination.

 

ARTICLE VII

Indemnification

 

7.1         Products Liability.

 

(a)          The Tenax Parties shall be indemnified and held harmless by the
Hard Rock Parties in the event that the Products that are manufactured,
marketed, sold or rented by the Hard Rock Parties are defective, unless such
defect is due in any material manner to the design of the Product, and such
Product is unmodified in any material manner by the Hard Rock Parties.

 

(b)          The Hard Rock Parties shall be indemnified and held harmless by the
Tenax Parties in the event that the Products that are manufactured, marketed,
sold or rented by the Hard Rock Parties are defective in any material manner as
a result of the design of the Product and the Product has not been modified in
any material manner by the Hard Rock Parties.

 

11

 

  

7.2         Suits and Technology Maintenance. Prior to the exercise of the Orbit
IP Patent Option, in the event any Party becomes aware of an infringement by any
third party of any of the Products, the Orbit IP or the Orbit Patents, then such
Party shall furnish written notice to the other Parties. For a period of thirty
(30) days after such notice, the Tenax Parties shall have the obligation, to
enforce the validity of the particular portion of the Orbit IP for which an
infringement has occurred or allegedly occurred, in which event the Tenax
Parties shall send written notice to the Hard Rock Parties. In such event, the
Tenax Parties shall bear all of the costs of prosecution of such suit, but
receive all the benefits thereto. If during such thirty (30) day period, the
Tenax Parties do not send written notice to the Hard Rock Parties that it
desires to enforce the validity of the Orbit IP against the alleged infringer,
then the Hard Rock Parties shall have the right, but not the obligation, to
enforce its validity by bearing all the expenses but receiving all the benefits,
if any, resulting from such suit.

 

7.3         Indemnification.

 

(a)          In addition to Section 7.1(a), the Tenax Parties shall indemnify,
save, and hold harmless Hard Rock Parties from and against any and all Claims,
incurred in connection with or arising out of or resulting from or incident to
any breach of any covenant or warranty, or the inaccuracy of any representation,
made by the Tenax Parties in or pursuant to this Agreement.

 

(b)          In addition to Section 7.1(b), the Hard Rock Parties shall
indemnify, save, and hold harmless the Tenax Parties from and against any and
all costs, losses, liabilities, damages, lawsuits, deficiencies, claims and
expenses, including without limitation, interest, penalties, attorneys' fees and
all amounts paid in investigation, defense or settlement of any of the foregoing
(collectively referred to herein as “Claims”), incurred in connection with any
breach of any covenant or warranty, or the inaccuracy of any representation,
made by the Hard Rock Parties in or pursuant to this Agreement.

 

(c)          If any lawsuit or enforcement action is filed against any Party
entitled to the benefit of indemnity hereunder, written notice thereof shall be
given to the indemnifying party as promptly as practicable (and in any event
within fifteen (15) days after the service of the citation or summons); provided
that the failure of any indemnified party to give timely notice shall not affect
rights to indemnification hereunder except to the extent that the indemnifying
party demonstrates actual damage caused by such failure. After such notice, if
the indemnifying Party acknowledges in writing to such indemnified Party that
such indemnifying Party shall be liable under its indemnity in connection with
such lawsuit or action, then the indemnifying party shall be entitled, if it so
elects, to take control of the defense and investigation of such lawsuit or
action and to employ and engage attorneys of its own choice to handle and defend
the same, at the indemnifying Party's cost, risk and expense, and such
indemnified party shall cooperate in all reasonable respects, at its cost, risk
and expense, with the indemnifying Party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom.

 

12

 

 

7.4         Patent Suits.

 

(a)          The Tenax Parties shall protect and maintain the Orbit Patent
Applications and the Orbit Patents and the Orbit IP and shall defend, at their
expense, any claims of infringement or unfair competition brought against the
Hard Rock Parties in connection with the Hard Rock Parties' proper use hereunder
of the Orbit IP. The Hard Rock Parties shall notify the Tenax Parties of the
existence of any such claims promptly after being advised hereof. The defense,
settlement and handling of such claims for infringement or unfair competition
shall be as determined by the Tenax Partes in its sole reasonable discretion.
All litigation, suits, actions or proceedings challenging the validity of the
Orbit Patents and the Orbit 1P, or claims of infringement of other patents
brought by any third party against the Tenax Parties or the Hard Rock Parties,
are hereinafter sometimes referred to collectively as “Infringement Suits” and
singularly as an “Infringement Suit”. In the event that the Tenax Parties fail
to undertake the defense of or fails to indemnify the Hard Rock Parties from an
Infringement Suit as provided for in this subsection (a), the Tenax Parties
shall have the option, but not the obligation, to defend itself in any such
Infringement Suit. Regardless of whether the Hard Rock Parties defend themselves
in connection with an Infringement Suit, the failure of the Tenax Parties to
defend the Hard Rock Parties or to provide indemnification shalt permit the Hard
Rock Parties to hold the Tenax Parties liable for all damages that it incurs, so
long as the alleged infringement is not due to a material modification or an
improper use of the Orbit IP by a Hard Rock Party.

 

(b)          The Hard Rock Parties shall undertake the defense of and shall
indemnify, defend and hold harmless the Tenax Parties from and against any
claims, suits or causes of action brought or threatened against the Tenax
Parties by any third party pertaining to the Products that do not constitute
Infringement Suits (“Non-Infringement Suit”). The Hard Rock Parties shall pay
(i) all costs and expenses (including attorneys' fees and expenses) paid or
incurred by the Tenax Parties in connection with any claim or any actual or
threatened suit, action or proceeding, including all costs and expenses of
investigating or defending against such claim, suit, action, or proceeding, (ii)
all damages and costs finally awarded against the infringing party as the result
of any suit, action or proceeding, and (iii) the amount of any settlement of any
claim, suit, action or proceeding. In the event Slazenger fails to defend any
such Non-Infringement Suit, the Tenax Parites shall have the option, but not the
obligation, to defend such Non-Infringement Suit against the Hard Rock Parties.
In such event, the Tenax Patties shall be entitled to be reimbursed by the Hard
Rock Parties to the extent of the Tenax Parties' out-of-pocket expenses. In the
event that the Hard Rock Parties fail to undertake the defense or fails
indemnify the Tenax Parties from any such Non-Infringement Suit as provided for
in this subsection (b), the Tenax Parties shall have the option, but not the
obligation, to defend itself in any such suit. Regardless of whether the Tenax
Parties defend themselves in connection with such suit, the failure of the Hard
Rock Parties to defend the Tenax Parties or to provide indemnification shall
permit the Tenax Parties to hold the Hard Rock Parties liable for all damages
that it incurs.

 

13

 

 

ARTICLE VIII

Miscellaneous

 

8.1           Independent Contractor. Nothing herein shall be construed or
deemed to create a joint venture, contract of employment or partnership. The
relationship between the Parties is that of independent contractors. Under no
circumstances will either Party act or attempt to act, or represent itself, as
an agent of the other Party without prior written authorization, or enter into
any contract on behalf of the other Party.

 

8.2           Notices. Any notice, request, consent or communication
(collectively a “Notice”) under this Agreement shall be effective only if it is
in writing and (a) personally delivered or, (b) sent by certified or registered
mail, return receipt requested, postage prepaid or, (c) sent by nationally
recognized overnight delivery service, with delivery confirmed, or (d) telefaxed
or telecopied, with receipt confirmed, addressed as follows:

 

If to Tenax: Tenax Energy Solutions LLC   Attn: Kevin Jones, President   10303
N. 2210 Road   Clinton, OK 73601-7707   Fax:  ________________     If to Jones:
Kevin Jones   10303 N. 2210 Road   Clinton, OK 73601-7707  
Fax:  ________________     If to Hard Rock: If to Extreme: Hard Rock Solutions,
LLC   Attn: Troy Meier, President and Chief Executive Officer   1583 S. 1700 E.
  Vernal, UT 84078   Fax:  (435) 789-0595     If to Extreme: Extreme
Technologies, LLC   Attn: Troy Meier, President and Chief Executive Officer  
1583 S. 1700 E.   Vernal, UT 84078   Fax: (435) 789-0595

 

or to such other address or addresses as shall be furnished in writing by any
Party to the other Party. A Notice shall be deemed to have been given as of the
date when (i) personally delivered, (ii) three days after when delivered during
business hours to said overnight delivery service, properly addressed and prior
to such delivery service's cut off time for next day delivery, or (iii) when
receipt of the telex or telecopy is confirmed, as the case may be, unless the
sending Party has actual knowledge that a Notice was not received by the
intended recipient.

 

14

 

  

8.3           Headings. Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

8.4           Entire Agreement. This Agreement contains the complete expression
of the agreement between the Parties with respect to the matters addressed
herein and there are no promises, representations, or inducements except in
writing signed by both Parties hereto. All terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the Parties hereto.

 

8.5           Amendments and Waiver. This Agreement may be amended, modified, or
superseded only by written instrument executed by all Parties hereto. Any waiver
by either Party to be enforceable must be in writing and no waiver by either
Party shall constitute a continuing waiver.

 

8.6           No Waiver. Failure by either Party hereto to enforce at any time
or for any period of time any provision or right hereunder shall not constitute
a waiver of such provision or of the right of such Patty thereafter to enforce
each and every such provision.

 

8.7           Governing Law; Venue. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas. All
disputes concerning this Agreement shall be tried in the federal or state courts
located in Houston, Harris County, Texas.

 

8.8           Multiple Counterparts. This Agreement may be executed in any
number of counterparts (including by electronic delivery of signed signature
pages) and by different Parties in separate counterparts, each of which
counterparts, when so executed and delivered, will be deemed to be an original
and all of which counterparts, taken together, will constitute but one and the
same agreement.

 

8.9           Severability. If any provision of this Agreement shall for any
reason be held to violate applicable law, and so much of said Agreement is held
unenforceable, then the invalidity of such specific provision herein shall not
be held to invalidate any other provision herein, which shall remain in full
force and effect.

 

8.10         Force Majeure. Either Party will be excused for delays in
performance under this Agreement if their inability to perform punctually is
caused by Force Majeure. “Force Majeure” as used herein shall mean, cover and
include the following: acts of God, strikes, lockouts, industrial disturbances,
acts of the public enemy, wars, blockades, insurrections, riots, epidemics,
landslides, lightning, earthquakes, fires, storms, floods, wash-outs, tornadoes,
hurricanes, windstorms, arrest and restraint of rulers and people, civil
disturbances, boycotts, explosions, breakage or accident to machinery or
equipment, and any other causes similar to those above, which are not within the
reasonable control of the Patty claiming force majeure, and which by the
exercise of due diligence such Party is unable to overcome, it being understood
and agreed by and between the Parties hereto, that upon any event of force
majeure that lasts for a consecutive period of three (3) months, either Party
hereto shall be entitled to unilaterally terminate this Agreement with immediate
effect, by written notice to the other Party.

 

15

 

 

8.11         Rights of Parties. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the Parties and their respective successors
and assigns, nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third persons to any Party to this Agreement,
nor shall any provision give any third person any right of subrogation or action
over or against any Party to this Agreement.

 

8.12         Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the Parties and their respective successors and assigns,
but this provision shall in no way alter the restrictions set forth herein
relating to assignment by the Parties.

 

8.13         Assignment. This Agreement may not be assigned by any Party hereto
without the prior written consent of all other Parties hereto, except that the
Hard Rock Parties may assign this Agreement or any right or interest it has
under this Agreement to an Affiliate or in connection with the sale of all or
substantially all the equity or assets of either of the Hard Rock Parties,
without the prior written consent of the Tenax Parties.

 

8.14         Drafting. Both Parties hereto acknowledge that each Party was
actively involved in the negotiation and drafting of this Agreement and that no
law or rule of construction shall be raised or used in which the provisions of
this Agreement shall be construed in favor or against either Party hereto
because one is deemed to be the author thereof.

 

8.15         Injunctive Relief. In recognition of the fact that a breach of any
of the provisions of Sections 3.5, 3.6, 4.2, 4.6, 5.3(c), 5.3(d), 5.3(e), 5.3(h)
and 5.3(i) as well as the provisions of this Agreement will or is likely to
cause irreparable damage for which monetary damages alone will not constitute an
adequate remedy, the Parties shall be entitled as a matter of right (without
being required to prove damages or furnish any bond or other security) to obtain
a restraining order, an injunction, an order of specific performance, or other
equitable or extraordinary relief from any court of competent jurisdiction
restraining any further violation of such provisions by breaching Party or
requiring it to perform its obligations hereunder. Such right to equitable or
extraordinary relief shall not be exclusive but shall be in addition to all
other rights and remedies to which the nonbreaching Party may be entitled at law
or in equity, including without limitation the right to recover monetary damages
for the breach by the breaching Party of any of the provisions of this
Agreement.

 

8.16         Prevailing Party. The prevailing Party in any litigation concerning
a breach of this Agreement shall be entitled to reimbursement of its reasonable
costs, including legal and accounting fees, incurred in connection with any such
matter.

 

8.17         Counsel. EACH PARTY ACKNOWLEDGES THAT IT IS EXECUTING A LEGAL
DOCUMENT THAT CONTAINS CERTAIN DUTIES, OBLIGATIONS AND RESTRICTIONS AS SPECIFIED
HEREIN. EACH PARTY FURTHERMORE ACKNOWLEDGES THAT IT HAS BEEN ADVISED OF ITS
RIGHT TO RETAIN LEGAL COUNSEL, AND THAT IT HAS EITHER BEEN REPRESENTED BY LEGAL
COUNSEL PRIOR TO ITS EXECUTION HEREOF OR HAS KNOWINGLY ELECTED NOT TO BE SO
REPRESENTED.

 

Signature Page Follows:

 

16

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the date as first above written.

 

  Extreme Technologies, LLC         By:       Troy Meier, President and    
Chief Executive Officer         Hard Rock Solutions, LLC         By:       Troy
Meier, President and     Chief Executive Officer         Tanax Energy Solutions
LLC         By:       Kevin Jones, President             KEVIN JONES,
individually

 

Signature Page to Exclusive Manufacturing Marketing Sales

and Consulting Agreement

 

 

 

 

SCHEDULE A

 

Orbit U.S. Patent Application

 

U.S. Provisional Patent Application Serial No. 61/879,131 filed by Kevin Jones,
Inventor, on a certain subsurface drilling tool on September, 2013, and
non-provisional applications filed on 5/29/14, U.S. Serial No. 14/290,597 and on
8/22/2014, U.S. Serial no. 14/465,907

 

Schedule A

 

 

SCHEDULE B

 

Orbit Global Patent Applications

 

Schedule B

 

 

Agent Ref. No. P11107WO01

 

TITLE:SUBSURFACE DRILLING TOOL

 

CROSS-REFERENCE TO RELATED APPLICATION

 

This PCT is based on U.S. Serial No. 14/465,907 filed August 22, 2014, which is
a Continuation Application of U. S. Serial No. 14/290,597 filed May 29, 2014,
which application claims the benefit of U.S. Provisional Patent Application
Serial No. 61/879,131 filed September 13, 2013, all of which are incorporated
herein by reference in their entirety.

 

FIELD OF THE INVENTION

 

The present invention relates in general to subsurface drilling tools and
cutting elements for drill bits or other tools incorporating the same. More
specifically, embodiments disclosed herein relate generally to rotatable cutting
elements for rotary drill bits for deep well drilling.

 

BACKGROUND OF THE INVENTION

 

Drill bits used to drill wellbores through earth formations generally are made
within one of two broad categories of bit structures. Depending on the
application/formation to be drilled, the appropriate type of drill bit may be
selected based on the cutting action type for the bit and its appropriateness
for use in the particular formation. Drill bits in the category generally known
as “roller cone” bits, include a bit body having one or more roller cones
rotatably mounted to the bit body. The bit body is typically formed from steel
or another high strength material. The roller cones are also typically formed
from steel or other high strength material and include a plurality of cutting
elements disposed at selected positions about the cones. The cutting elements
may be formed from the same base material as is the cone. These bits are
typically referred to as “milled tooth” bits. Other roller cone bits include
“insert” cutting elements that are press (interference) fit into holes formed
and/or machined into the roller cones. The inserts may be formed from, for
example, tungsten carbide, natural or synthetic diamond, boron nitride, or any
one or combination of hard or superhard materials.

 

Schedule B - 1

 

 

Agent Ref. No. P11107WO01

 

Drill bits of the category typically referred to as “fixed cutter” or “drag”
bits, include bits that have cutting elements attached to the bit body. Drag
bits may generally be defined as bits that have no moving parts. However, there
are different types and methods of forming drag bits that are known in the art.
For example, drag bits having abrasive material, such as diamond, impregnated
into the surface of the material which forms the bit body are commonly referred
to as “impreg” bits. Drag bits having cuffing elements made of an ultra-hard
cutting surface layer or “table” (typically made of polycrystalline diamond
material or polycrystalline boron nitride material) deposited onto or otherwise
bonded to a substrate are known in the art as polycrystalline diamond compact
(“PDC”) bits. PDC bits drill soft formations easily, but they are frequently
used to drill moderately hard or abrasive formations. They cut rock formations
with a shearing action using small cutters that do not penetrate deeply into the
formation. Because the penetration depth is shallow, high rates of penetration
are achieved through relatively high bit rotational velocities. PDC cutters have
been used in industrial applications including rock drilling and metal machining
for many years. In PDC bits, PDC cutters are received within cutter pockets,
which are formed within blades extending from a bit body, and are typically
bonded to the blades by brazing to the inner surfaces of the cutter pockets. The
PDC cutters are positioned along the leading edges of the bit body blades so
that as the bit body is rotated, the PDC cutters engage and drill the earth
formation. In use, high forces may be exerted on the PDC cutters, particularly
in the forward-to-rear direction. Additionally, the bit and the PDC cutters may
be subjected to substantial abrasive forces. In some instances, impact,
vibration and erosive forces have caused drill bit failure due to loss of one or
more cutters, or due to breakage of the blades.

 

In a typical PDC cutter, a compact of polycrystalline diamond (“PCD”) (or other
superhard material, such as polycrystalline cubic boron nitride) is bonded to a
substrate material, which is typically a sintered metal-carbide to form a
cutting structure. PCD comprises a polycrystalline mass of diamond grains or
crystals that are bonded together to form an integral, tough, high-strength mass
or lattice. The resulting PCD structure produces enhanced properties of wear
resistance and hardness, making PCD materials extremely useful in aggressive
wear and cutting applications where high levels of wear resistance and hardness
are desired.

 

Schedule B - 2

 

  

Agent Ref. No. P11107WO01

 

A significant factor in determining the longevity of PDC cutters is the exposure
of the cutter to heat. Conventional polycrystalline diamond is stable at
temperatures of up to 700-750° Celsius in air, above which observed increases in
temperature may result in permanent damage to and structural failure of
polycrystalline diamond. This deterioration in polycrystalline diamond is due to
the significant difference in the coefficient of thermal expansion of the binder
material, cobalt, as compared to diamond. Upon hearing of polycrystalline
diamond, the cobalt and the diamond lattice will expand at different rates,
which may cause cracks to form in the diamond lattice structure and result in
deterioration of the polycrystalline diamond. Damage may also be due to graphite
formation at diamond-diamond necks leading to loss of microstructural integrity
and strength loss, at extremely high temperatures.

 

Exposure to heat (through brazing or through frictional heat generated from the
contact of the cutter with the formation) can cause thermal damage to the
diamond table and eventually result in the formation of cracks (due to
differences in thermal expansion coefficients) which can lead to smiling of the
polycrystalline diamond layer, delamination between the polycrystalline diamond
and substrate, and conversion of the diamond back into graphite causing rapid
abrasive wear. As a cutting element contacts the formation, a wear flat develops
and frictional heat is induced. As the cutting element is continued to be used,
the wear flat will increase in size and further induce frictional heat. The heat
may build-up that may cause failure of the cutting element due to thermal
miss-match between diamond and catalyst discussed above. This is particularly
true for cutters that are immovably attached to the drill bit, as conventional
in the art.

 

Accordingly, there exists a continuing need to develop ways to extend the life
of a cutting element and improve the drilling process.

 

BRIEF SUMMARY OF THE INVENTION

 

Therefore, it is a principal object, feature, and/or advantage of the present
invention. to overcome the aforementioned deficiencies in the art and provide a
new and improved subsurface drilling tool that will efficiently drill hard rock
formations.

 

Another object, feature, and/or advantage of the present invention is to provide
a subsurface drilling bit with new and improved alternating rotating cones
having hard inserts embedded therein and protruding therefrom to crush hard rock
formation.

 

A further object, feature, and/or advantage of the present invention is to
provide a subsurface drilling bit that eliminates or minimizes sticky clay or
shale drill cuttings from preferentially adhering to and “balling-up” a drill
bit cutting face while drilling in a bore hole.

 

Schedule B - 3

 

 

Agent Ref. No. P11107WO01

  

Another object, feature, and/or advantage of the present invention is to provide
a subsurface drilling bit that has replaceable hard inserts embedded therein for
easy access and increased efficiency.

 

These and/or other objects, features, and/or advantages of the present invention
will be apparent to those skilled in the art. The present invention is not to be
limited to or by these objects, features, and advantages. No single aspect need
provide each and every object, feature, or advantage.

 

According to one aspect of the present invention, a subsurface drilling tool,
particularly a drill bit, is provided. The drill bit includes a bit body or
shank, wherein the shank comprises a pin end and an opposite cutting end. The
pin end is open and comprises a fluid course extending longitudinally from the
open pin end, through the shank, and through the cutting end for drilling fluid
to transfer through the shank. The pin end includes a pin, screw, threads, or
other means standard in the industry for attaching a drill bit to a drill stem.
The cutting end comprises a plurality of ear portions configured to form the
shape of a socket, wherein a ball shaped cutting tool fits inside the socket and
is rotatably attached to the plurality of ear portions via an axle. The ball
shaped cutting tool comprises a plurality of cones, preferably two, shaped like
half-domes and placed adjacent to one another to form the ball shape. The
plurality of cones further comprise weights configured to cause the plurality of
cones to rotate in opposite directions around the axle while the drill bit is
drilling or cutting through the ground, rock, or other material. The drilling or
cutting is caused by a plurality of blade inserts, preferably metal-carbide,
that fit inside and protrude therefrom a plurality of holes covering the
exterior of the ball shaped cutting tool, wherein each blade insert comprises a
cutting face and a trailing face. The plurality of cones and, consequently, the
ball shaped cutting tool may be locked in place via a locking pin through the
axle. The drill bit of the present invention further includes a series of
milling courses extending longitudinally along the outside length of the shank
for milling and particles of formation to flow to the surface through the bore
hole. According to another aspect of the present invention, a method of
subsurface drilling using a drill bit includes providing a drill and a drill
bit. The drill bit includes a bit body or shank, wherein the shank comprises a
pin end and an opposite cutting end. The pin end is open and comprises a fluid
course extending longitudinally from the open pin end, through the shank, and
through the cutting end for drilling fluid to transfer through the shank. The
pin end includes a pin, screw, threads, or other means standard in the industry
for attaching a drill bit to a drill. The cutting end comprises a plurality of
ear portions configured to form the shape of a socket, wherein a ball shaped
cutting tool fits inside the socket and is rotatably attached to the plurality
of ear portions via an axle. The ball shaped cutting tool comprises a plurality
of cones, preferably two, shaped like half-domes and placed adjacent to one
another to form the ball shape. The plurality of cones further comprise weights
configured to cause the plurality of cones to rotate in opposite directions
around the axle while the drill bit is drilling or cutting through the ground,
rock, or other material. The drilling or cutting is caused by a plurality of
blade inserts, preferably metal- carbide, that fit inside and protrude therefrom
a plurality of holes covering the exterior of the ball shaped cutting tool,
wherein each blade insert comprises a cutting face and a trailing face. The
plurality of cones and, consequently, the ball shaped cutting tool may be locked
in place via a locking pin through the axle. The drill bit of the present
invention further includes a series of milling courses extending longitudinally
along the outside length of the shank for milling and particles of formation to
flow to the surface through the bore hole. The method subsequently involves
attaching the drill bit to the drill, inserting the drill bit into the ground,
and starting to drill.

 

Schedule B - 4

 

  

Agent Ref. No. P11107WO01

 

Different aspects may meet different objects of the invention. Other objectives
and advantages of this invention will be more apparent in the following detailed
description taken in conjunction with the figures. The present invention is not
to be limited by or to these objects or aspects.

 

DESCRIPTION OF FIGURES

 

Figures 1-3 represent examples of subsurface drilling tools of the present
invention, and a method of subsurface drilling utilizing the present invention.

 

FIG. 1 is a side elevation of the subsurface drilling tool of the present
invention.

 

FIG. 2 is a schematic view of the subsurface drilling tool of FIG. 1.

 

FIG. 3 is a bottom view of the subsurface drilling tool of FIG. 1.

 

Schedule B - 5

 

 

Agent Ref. No. P11107WO01

  

DETAILED DESCRIPTION OF THE INVENTION

 

FIG. 1 illustrates a side elevation view of the subsurface drilling tool,
particularly a drill bit, of the present invention. A rolling cutter, such as
the one herein described, is a cutting element having at least one surface that
may rotate within a cutter pocket as the cutting element contacts the drilling
formation. As the cutting element contacts the formation, shearing may allow a
portion of the cutting element to rotate around a cutting element axis extending
through a central plane of the cutting element. The drill bit of the present
invention includes a bit body or shank (1 0), wherein the shank (10) comprises a
pin end (12) and an opposite cutting end (14). The shank (10) may be formed of
material including, for example, metal, carbides, such as tungsten carbide,
tantalum carbide, or titanium carbide, nitrides, ceramics and diamond, such as
polycrystalline diamond, or a combination thereof. Also illustrated in FIG. 1,
the pin end (12) has the usual threaded portion by which it may be connected to
a typical drill stem (not shown), although other means standard in the industry
such as pins, screws, or other means for attaching a drill bit to a drill stem
may be utilized. The construction of the shank (10) may be of a conventional
type well known and heretofore extensively used in rolling cutters in a
conventional cross roller cutter bit.

 

The cutting end (14) comprises a plurality of ear portions (16), preferably two,
located opposite one another on both sides of the shank (10). Moreover, the ear
portions (16) extend beyond the shank (10) to assist in forming the cutting end
(14) of the shank (10). For instance, the ear portions (16) are configured to
form the shape of a socket (18), wherein a ball shaped cutting tool (20) fits
inside the socket (18) and is rotatably attached to the plurality of ear
portions (16) via an axle (24). Comprising the ball shaped cutting tool (20) is
a plurality of cones (22), preferably two, shaped like half-domes and located
adjacent to one another to form the ball shape as illustrated in FIG. 1. The
ball shaped cutting tool (20) is thus snugly engaged and held in place by the
socket (I8). The drill bit of the present invention further includes a locking
pin (38) to lock the axle (24) in place, thus, effectively locking the plurality
of cones (22) into a set.position.

 

As further illustrated in FIGS. I and 2, when the drill bit is rotated by the
drill stem (not shown) in a bore hole, the plurality of cones (22) rotate on the
axle (24) and, as a very great pressure is applied by the weight of the drill
stem, the plurality of cones (22) will crush the hard formation on which the
drill bit is rotated. The pin end (12) of the present invention is open and
comprises a fluid course (40) extending longitudinally from the open pin end
(12), through the shank (10), and through the cutting end (14) for drilling
fluid to transfer through the shank (10). The milling or particles of formation
crushed by the plurality of cones (22) will be removed by the drilling fluid
which is pumped in the usual manner through the open pin end (12), down through
the fluid course (40) and continuing through and around the cutting end (14).
The milling or particles of formation will subsequently return to the surface of
the earth through the series of milling courses (36) and walls of the bore hole.
Thus, this process eliminates or significantly reduces “bit- balling” at this
critical area of the drill bit's cutting end (14).

 

Schedule B - 6

 

 

Agent Ref. No. P11107WO01

  

The arrangement of the plurality of cones (22) is such that the cones will crush
substantially the entire area of the bottom of the bore hole. Moreover, the
plurality of cones (22) is of such composition and so manufactured as to have an
extremely high compressive strength, and to be extremely resistant to transverse
rupture and to abrasion. For example the plurality of cones (22) may be made of
a composition of tungsten, cobalt, iron and carbon processed to produce the
desired properties just referred to. The plurality of cones (22) forming the
ball shaped cutting tool (20) will take the extreme loads required in drilling
hard rock. No bending moment is imposed upon the hard metal of which the
plurality of cones (22) is made. The plurality of cones (22) will take loads
imposed upon them from any direction under operating conditions. The plurality
of cones (22) forming the ball shaped cutting tool (20) eliminates sharp corners
in the shank (10) from which cracks might start, thus, effectively increasing
the life of the drill bit. Also, it has been found that the use of the plurality
of cones (22) in forming the ball shaped cutting tool (20) not only simplifies
and reduces the cost of manufacture, but also facilitates final assembly and
repair of the drill bit of the present invention.

 

Illustrated in FIG. 3, the plurality of cones (22) further comprise weights (26)
configured to cause the plurality of cones (22) to rotate in opposite directions
around the axle (24) while the drill bit is drilling or cutting through the
ground, rock, or other material. The drilling or cutting is accomplished by a
plurality of blade inserts (30) that fit inside a plurality of holes (28)
covering the exterior of the ball shaped cutting tool (20). One blade insert of
the plurality of blade inserts (30) is snugly fitted into one hole of the
plurality of holes (28) and attached by means known in the industry, such as via
brazing, interference fitting, welding, or threaded screws, so that the blade
insert (30) does not rotate within the hole (28). Alternatively, in other
embodiments, blade inserts (30) may rotate within their respective holes (28).
The plurality of blade inserts (30) may have a cutting face (32) and a trailing
face (34), wherein the cutting face (32) faces in the direction of blade
rotation.

 

Schedule B - 7

 

Agent Ref. No. P11107WO01

  

The plurality of blade inserts (30) according to embodiments of the present
disclosure may be formed of material including, for example, metal, carbides,
such as tungsten carbide, tantalum carbide, or titanium carbide, nitrides,
ceramics and diamond, such as polycrystalline diamond, or a combination of
substrates thereof. For instance, a carbide substrate utilized in the present
invention may include metal carbide grains, such as tungsten carbide, supported
by a matrix of a metal binder. Various binding metals may be present in the
substrate, such as cobalt, nickel, iron, alloys thereof, or mixtures, thereof In
a particular embodiment, the substrate may be formed of a sintered tungsten
carbide composite structure of tungsten carbide and cobalt. However, it is known
that various metal carbide compositions and binders may be used in addition to
tungsten carbide and cobalt. Thus, references to the use of tungsten carbide and
cobalt are for illustrative purposes only, and no limitation on the type of
carbide or binder use is intended. Further, diamond composites, such as
diamond/silicon or diamond/carbide composites, may be used to form the plurality
of blade inserts (30).

 

According to a further aspect of the present invention a method of subsurface
drilling using a drilling tool, particularly a drill bit, is provided.
Illustrated in FIGS. 1-3, the method includes providing a drill and the
aforementioned drill bit. For instance, the drill bit includes a bit body or
shank (10), wherein the shank (10) comprises a pin end (12) and an opposite
cutting end (14). The pin end (12) is open and comprises a fluid course (40)
extending longitudinally from the open pin end (12), through the shank (10), and
through the cutting end (14) for drilling fluid to transfer through the shank
(10). The pin end (12) includes means standard in the industry for attaching the
drill bit to a drill stem. The cutting end (14) comprises a plurality of ear
portions (16) configured to form the shape of a socket (18), wherein a ball
shaped cutting tool (20) fits inside the socket (18) and is rotatably attached
to the plurality of ear portions (16) via an axle (24). The ball shaped cutting
tool (20) comprises a plurality of cones (22), preferably two, shaped like half-
domes and placed adjacent to one another to form the ball shape. The plurality
of cones (22) further comprise weights (26) configured to cause the plurality of
cones (22) to rotate in opposite directions around the axle (24) while the drill
bit is drilling or cutting through the ground, rock, or other material. The
drilling or cutting is caused by a plurality of blade inserts (30), preferably
metal-carbide, that fit inside and protrude therefrom a plurality of holes (28)
covering the exterior of the ball shaped cutting tool (20), wherein each blade
insert (30) comprises a cutting face (32) and a trailing face (34). The
plurality of cones (22) and, consequently, the ball shaped cutting tool (20) may
be locked in place via a locking pin (38) through the axle (24). The drill bit
further includes a series of milling courses (36) extending longitudinally along
the outside length of the shank (10) for milling and particles of formation to
flow to the surface through the bore hole. The method subsequently involves
attaching the drill bit to the drill, inserting the drill bit into the ground,
and starting to drill.

 

Schedule B - 8

 

 

Agent Ref. No. P11107WO01

  

The subsurface drilling tool of the present invention and method of drilling
using the subsurface drilling tool are universally applicable to drilling
apparatuses of all shapes and sizes, makes, models, and manufacturers.
Furthermore, while intended for large subsurface drilling operations, the
drilling tool of the present invention may be used for drilling in all manner of
uses, large and small. Although the invention has been described and illustrated
with respect to preferred aspects thereof, it is not to be so limited since
changes and modifications may be made therein which are within the full intended
scope of the invention.

 

Schedule B - 9

 

 

Agent Ref. No. P11107WO01

  

What is claimed is:

 

1.          A drill bit for use in a drilling operation comprising: a body
comprising an axle; a wheel comprising a plurality of sections configured to
rotate independently about the axle while drilling; and wherein the diameter of
the wheel is greatest at its center.

 

2.          The drill bit of claim 1 further comprising a plurality of holes
covering the exterior of the wheel.

 

3.          The drill bit of claim 2 further comprising a plurality of blade
inserts that fit inside the plurality of holes, wherein each blade insert
comprises a cutting face and a trailing face.

 

4.          The drill bit of claim 1 wherein the plurality of sections are
configured such that they tear at an object upon rotation of the sections in
opposite directions while engaged with the object.

 

5.          The drill bit of claim 4 wherein the wheel is configured to impact
into the object.

 

6.          The drill bit of claim 4 wherein the wheel is configured to mill the
object by scraping the plurality of sections against the object.

 

7.          The drill bit of claim 4 wherein the object is a frac plug.

 

8.          The drill bit of claim 4 wherein the object is a sliding sleeve.

 

9.          The drill bit of claim I wherein the body further comprises a
plurality of cutters affixed to an outer cirmunference of the body.

 

10.        The drill bit of claim 9 wherein the plurality of cutters reduce
friction between the body and a hole created by the bit.

 

Schedule B - 10

 

 

Agent Ref. No. P11107WO01

 

11.         The drill bit of claim 9 wherein the body is configured to pulverize
an object contained within a hole created by the bit as the body rotates and the
plurality of cutters engage with the object.

 

12.         The drill bit of claim 1 wherein the body and wheel are configured
such that they automatically center themselves on an object being drilled within
a hole.

 

13.         The drill bit of claim 1 wherein torque built up between an object
contained within a hole created by the bit and the body is released by rotating
the plurality of sections in opposite directions while engaged with the object.

 

14.         The drill bit of claim I wherein friction built up between an object
contained within a hole created by the bit and the body is reduced by rotating
the plurality of sections in opposite directions while engaged with the object

 

15.         The drill bit of claim 1 wherein vibration between an object
contained within a hole created by the bit and the body is minimized by rotating
the plurality of sections in opposite directions while engaged with the object

 

16.         The drill bit of claim 1 wherein the body further comprises a fluid
course to supply fluid to the wheel.

 

17.         The drill bit of claim 16 wherein the fluid course supplies fluid to
the wheel such that the fluid flows around the wheel and washes debris away from
the plurality of sections as they rotate.

 

18.         The drill bit of claim 17 wherein the flow of fluid around the wheel
is such that hydraulic pressure does not prevent contact between the wheel and
an object being drilled.

 

19.         The drill bit of claim 1 wherein the body further comprises a first
end configured for attachment to a drill.

 

20.         The drill bit of claim 19 wherein the drill supplies lubricating
fluid for lubrication of the axle.

 

Schedule B - 11

 

 

Agent Ref. No. P11107WO01

  

21.         The drill bit of claim 20 wherein the plurality of sections filter
the lubricating fluid by grinding up particles contained within the lubricating
fluid.

 

22.         The drill bit of claim 19 wherein the body further comprises a
plurality of ports formed proximate the first end of the body.

 

23.         The drill bit of claim I wherein the wheel comprises more than two
sections.

 

24.         The drill bit of claim 1 wherein the plurality of sections are of
equal size.

 

25.         The drill bit of claim I wherein the plurality of sections are
different sizes.

 

26.         The drill bit of claim 1 wherein the wheel, axle, and body do not
comprise rubber elements.

 

27.         The drill bit of claim 1 wherein the wheel, axle, and body do not
comprise seals.

 

28.         The drill bit of claim 1 wherein the wheel, axle, and body do not
comprise grease sealed within the wheel, axle, or body.

 

29.         The drill bit of claim 1 further comprising bearings.

 

30.         The drill bit of claim 1 wherein the axle is cantilevered.

 

Schedule B - 12

 

 

Agent Ref. No. P11107WO01

  

ABSTRACT

 

The present invention relates in general to subsurface drilling tools, and more
specifically, to a drill bit comprising a ball shaped cutting tool. The drill
bit is configured so that a plurality of cones, forming the ball shaped cutting
tool, rotate in opposite directions around an axle while the drill bit is
drilling or cutting through the ground, rock, or other material. The drilling or
cutting is accomplished by a plurality of blade inserts that fit inside and
protrude therefrom a plurality of holes covering the exterior of the ball shaped
cutting tool. The purpose of the present invention is to provide a new and
improved subsurface drilling tool that will efficiently drill hard rock
formations.

 

Schedule B - 13

 

 

 

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