SERVICES AGREEMENT

THIS SERVICES AGREEMENT (the “Agreement”) is entered into this 7th day of July,
2011, between APPLIED POWER CONCEPTS, INC., a California corporation (“APC”),
and BluFlow Technologies, Inc., a Delaware Corporation (“the COMPANY”) (each a
“Party” and collectively, the “Parties”).

RECITALS

WHEREAS, COMPANY is engaged in the research, development, commercialization,
distribution and sale of commercial pollution remediation products and desires
to engage APC to provide certain additional services including, but not limited
to, process development, design and limited prototype manufacture of specific
products; and

WHEREAS, APC has the facilities and the expertise and desires to assist COMPANY
with the development of the process and production of the products for COMPANY.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Parties agree as follows:

1.        Definitions.

1.1           Affiliate shall mean any person, joint venture, partnership,
corporation, trust, unincorporated organization or other entity that, directly
or indirectly, controls, is controlled by, or is under common control with
another party.

1.2           Equipment Schedule shall mean the list of equipment related to the
process that COMPANY owns that may be deployed at APC.

1.3           Process shall mean that process for the development of the Product
[****]  as related to the COMPANY’s process as agreed between the parties.

1.4           Patents shall mean any patent or patent application, together with
any division, reissue, continuation, continuation-in-part and/or addition
thereof as well as improvements thereto, and any and all foreign counterparts
thereof, which cover or claim Technology or any Product, or any use thereof, or
the process, design or methodology for manufacturing any Product.

1.5           Product shall mean the following: [****]

1.6           Payment Schedule shall mean the schedule of payments attached as
Schedule A hereto and modified by agreement periodically.

1.7           Technology shall mean all know-how, chemical formulas,
formulations, drawings, sketches, configurations, models, prototypes, machines,
equipment, designs, concepts, schematics, layouts, inventions, processes,
methodology, works of authorship, software (including the source code thereof),
ideas and concepts and any other information disclosed to APC by COMPANY or
developed, improved or modified hereunder by APC and used in the design,
development, modification, improvement or manufacture of the Products.

2.        Product Processing or Process Development.

2.1           APC’s Obligations.  APC will use its best efforts to develop a
commercially viable Process and to produce the Products and to cooperate with
COMPANY in bringing the Products to a cost effective production Process.  APC
shall supply sufficient for the development of the Process or the production of
the Product according to the Process.  APC will provide technology advice to
improve the Process.

 
 

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2.2           COMPANY’s Obligations.  COMPANY will provide the original Process
for production of the Products.  When any of COMPANY’s employees are at APC they
shall follow all the safety procedures and other rules required for the safe and
secure operation of the APC facility as defined by APC.  COMPANY’s employees
will be covered by insurance of the COMPANY for any liability associated with
actions while at the APC facility.

2.3           Technical Support.  APC shall provide a level of technical support
reasonably necessary to enable COMPANY to bring the Products to commercial
production.  COMPANY shall pay all reasonable out-of-pocket expenses of APC in
performing the support.  COMPANY shall further pay APC the hourly rates for work
performed by APC personnel as agreed between APC and COMPANY from time to
time.  APC shall provide to COMPANY estimates, in advance, of expenses and will
not exceed such estimates without COMPANY’s written consent.

2.4           Competitive Development.  During the term of this Agreement, and
any mutually agreed upon extensions hereof, APC agrees that, except with the
consent of COMPANY, it shall not undertake, or contract with other parties to
perform development work which would result in the creation of a nanoparticle
product which competes with the Product.

2.5           Termination.  COMPANY may, at any time, terminate the production
of Products by APC and shall be liable for those payments that have accrued.  At
time of such termination, all rights, ownership and other items transferred to
APC by COMPANY shall revert to COMPANY. Any items purchased by COMPANY on behalf
of APC for production of Products shall be returned to the COMPANY at no cost to
APC. COMPANY shall reimburse APC for removal of all of its equipment at no cost
to APC and return the facility locations where the equipment was operated to the
original state.

3.        Payments and Other Consideration.

3.1           Periodic Payments.  COMPANY shall pay to APC for production of the
Products and improvements in the Process the amounts and at the times set forth
on the Payment Schedule.

3.2           Costs and Expenses.  All costs and expenses of APC incurred in
carrying out its obligations hereunder shall initially be borne by APC unless
mutually agreed otherwise, and the monetary liability of COMPANY with respect to
APC’s production of the Products shall be to make the payments set forth on the
Payment Schedule.  Such payments to APC shall be made within 15 days of the
invoice date.

4.        Ownership of Technology, Patent Rights.

APC hereby agree that COMPANY shall be the lawful owner, ab initio, of all
Technology developed hereunder and hereby assigns to COMPANY all of its right,
title and interest in such Technology when and as developed, including any such
Technology developed by APC in preparation for the work to be performed
hereunder.  To the extent any such Technology constitutes works of authorship,
APC hereby acknowledge that such works of authorship are “works made for hire”
as that term is defined in the United States Copyright Act.  Any invention,
development, modification or improvement conceived or made by APC that is
embodied in, or is desirable in, the Products shall immediately be disclosed by
APC to COMPANY and shall (without any further action by any party) become
Technology subject to this Agreement. APC hereby agrees that all employees,
consultants and agents of APC who conduct any work hereunder shall execute an
appropriate proprietary rights agreement assigning all right in Technology, and
any Patents relating thereto, to COMPANY.  Such agreements shall also provide
that such employees, consultants or agents shall execute appropriate documents
so that APC can carry out its obligations under paragraph 5.1 below and shall
further provide that such employees, consultants or agents shall maintain
information in confidence as set forth in paragraph 7 below.

5.        Patent Matters.

5.1           Patent Filings.  APC shall execute, and shall have all of its
employees, consultants and agents execute, all certificates, instruments and
other documents necessary to perfect COMPANY ownership interest in the
Technology and any Patents arising therefrom.  COMPANY may, in its sole
discretion, file an application for patent on each invention included in the
Technology, in the United States and any other country designated by COMPANY.

 
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5.2           Assistance.  In connection with any investigation or suit related
to the proprietary rights in the Technology, APC shall, if requested, cooperate
with COMPANY and provide reasonable assistance such as making available to
COMPANY laboratory notebooks, technical information, data, witnesses and the
like.

6.        Duration and Termination.

6.1           Term of Agreement.  This Agreement shall terminate based on
agreement between the parties or by COMPANY as in section 2.5.

6.2           Default Termination.  In the event that either party defaults or
is in breach of any of the provisions of this Agreement, the other party may
terminate this Agreement by giving the defaulting or breaching party sixty (60)
days’ advance written notice thereof; provided, however, that if the defaulting
or breaching party cures said default or breach within the sixty (60) day period
referred to, this Agreement shall continue in full force and effect as if such
default or breach had not occurred.

6.3           Insolvency Termination.  In the event either party shall go into
liquidation, or have a receiver or trustee appointed for its property or estate,
or shall make an assignment for the benefit of creditors, whether any of the
aforesaid events be the outcome of a voluntary act or otherwise, the other party
shall be entitled by notice to terminate this Agreement forthwith.

6.4           Continuing Obligations.  In the event of the termination of this
Agreement for any reason, COMPANY shall not be relieved of its duty and
obligation to pay any additional payments and to make any other payments that
may have accrued up to the effective date of such termination.  The obligations
of paragraph 7 shall survive the termination of this Agreement.

7.        Confidential Information.

APC, including all employees of APC and any and all contractors, sub-contractors
or third parties engaged by APC, and COMPANY agree to maintain in confidence and
not to use for any purposes other than those contemplated by this Agreement, any
confidential or proprietary information received from the other party, or
developed hereunder (“Confidential Information”).  Confidential Information
includes, but is not limited to, trade secrets, marketing plans, blueprints,
schematics, designs, techniques, processes, procedures and formulae related to
the Technology and/or Products.  APC and COMPANY will take reasonable measures
to maintain the secrecy of the Confidential Information, but not less than the
standard of care and measures which each party uses to protect its confidential
information of similar type.  However, this confidentiality obligation shall not
extend to information which: (i) was in possession of, or was known by the party
seeking to disclose it prior to its receipt from the other party or development
hereunder as shown by its records and files; (ii) is or becomes public knowledge
without the fault of the party seeking to disclose it; or (iii) is received from
a source other than the other party without the breach of any confidentiality
provisions.

8.        Miscellaneous.

8.1           Force Majeure.  Neither party shall be liable for failures or
delays in performance hereunder due to fire, explosion, breakdown of plant,
lockout, labor dispute, casualty or accident, lack or failure of source of
supply of labor, raw materials, power or supplies, acts of God or the public
enemy, interference by civil or military authority, compliance with laws of the
United States of America or of any other governmental authority, or any other
cause beyond the control of the party in question.

8.2           Paragraph Headings.  The paragraph headings used in this Agreement
are for purposes of convenience only.  They shall not be construed to limit or
extend the meaning of any part of this Agreement.

8.3           Notices.  Any notice, demand, approval, consent, or other
communication required or desired to be given under this Agreement shall be in
writing and shall be either personally served or mailed in the United States
mails, certified, return receipt requested, postage prepaid, addressed to the
party to be served with the copies indicated below, at the last address given by
that party to the other under the provisions of this section.  All such
communications shall be deemed delivered at the earlier of actual receipt or
three (3) business days following mailing as aforesaid.

 
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  COMPANY:
BluFlow Technologies, Inc.
 
430 Park Avenue
 
Suite 702
 
New York, NY 10022
 
Attn: Joseph Sierchio, Esq.
   
  APC:
411 E. Julianna Street
 
Anaheim, CA 92801
 
Attn:  President

8.4           Binding Effect.  APC and COMPANY hereby affirm that the
signatories to this Agreement have all requisite power and authority to execute
and deliver this Agreement and to perform their obligations hereunder and that
all the terms, covenants and conditions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors.

8.5           Entire Agreement.  This Agreement sets forth the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes and replaces any prior understanding, agreement or
statement, written or oral, with respect to the same.  No provision of the
Agreement shall be construed to confer any rights or remedies on any person
other than parties hereto

8.6           California Law.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California applicable to
agreements made and to be performed entirely within such state.

8.7           Time of the Essence.  Time is of the essence in the performance of
each and every provision of this Agreement.

8.8           Dispute Resolution, Arbitration.  In the event the parties are
unable to resolve a disagreement concerning any matter under this Agreement,
either party by written notice to the other may have the disagreement referred
to the Chief Executive Officers of COMPANY and APC for good faith
resolution.  In the event the Chief Executive Officers fail to resolve the
matter within thirty (30) days after the matter is referred to them for
resolution, either party may initiate arbitration proceedings to resolve the
matter pursuant to this paragraph 8.8.

Any controversy concerning the interpretation of this Agreement, or any breach
thereof, shall be settled by final and binding arbitration in accordance with
the then existing rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction over the party against which the award is entered.  The arbitration
shall be conducted in Orange County, California.  The parties hereto agree that
the service of any notice in the course of such arbitration at the respective
addresses as provided for in paragraph 8.3 shall be valid and binding.  Any such
arbitration proceeding shall be heard before a panel of three arbitrators, one
to be designated by each party, and a third to be agreed upon by the other two;
provided, however, that if the two party-appointed arbitrators are unable to
agree on a third arbitrator within thirty (30) days after the second arbitrator
is appointed, the third arbitrator shall be selected by the American Arbitration
Association.

8.9           Assignment.  This Agreement shall not be assignable by either
party without the consent of the other, which shall not be unreasonably
withheld, provided, however, that COMPANY may assign its rights and obligations
hereunder to any entity assuming the business of manufacturing and/or selling
Products, as well as in the event of any merger, sale of substantially all its
assets, sale of stock or other reorganization.

8.10         Parties in Interest.  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 to it 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 persons any right of
subrogation or action over or against any party to this Agreement.

 
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8.11         Modification.  This Agreement, and the Exhibits hereto, shall not
be modified except by a writing signed on behalf of each of the parties hereto.

8.12         Severability.  If any term, provision, covenant or condition of
this Agreement is found by a court of competent jurisdiction to be invalid, void
or unenforceable, then such term, provision, covenant or condition shall be
deemed to be stricken from this Agreement and the remainder of this Agreement
shall remain in full force and effect and shall in no way be effected, impaired
or invalidated thereby.

8.13         Independent Contractor Status, No Agency.  APC’s and COMPANY’s
activities hereunder shall be conducted as independent contractors and no agency
relationship shall exist between the parties.

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

 
APPLIED POWER CONCEPTS, INC.
       
By: 
     
          Tracy Palmer, President
       
COMPANY
       
By: 
                Meetesh Patel, President & CEO

 
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This is Schedule A to the Services Agreement Dated July 7, 2011
Entered Into Between APC and the Company

Payment Schedule
Work to be performed by APC will be suggested in protocols submitted to Company
at a not to exceed price with tasks and deliverable enumerated.  Each such
protocol, when approved in writing by the Company will be carried out by APC and
billed on a monthly basis.  The cost of each protocol will be determined by APC
by the application of the following schedule of hourly rates that include
overhead (insurances, utilities, permits, existing equipment, etc.).  Any
specific equipment or other out-of-pocket charges (disposable chemicals,
chromatography columns, etc.) will be listed separately.
 
Hourly Rates
Time for W.A. Farone
  $ [ ****]
Senior Chemists/Engineer
  $ [ ****]
Chemist/Engineer
  $ [ ****]
Technician/Pilot Plant
  $ [ ****]
Utility/Clerical
  $ [ ****]

Performance Bonus
In addition to the above hourly rates, subject to the execution and delivery of
the Services Agreement and a definitive Stock Option Agreement, which shall be
subject to the COMPANY’s 2011 Long-Term Incentive Plan, between APC and the
COMPANY, APC shall receive a total of [****] options (the “Options”) to purchase
up to an aggregate of [****] shares of the COMPANY’s common stock at a per share
price of $[****]. The Options are subject to and shall have such further
restrictions, vesting requirements and exercise provisions as are set forth in
the Stock Option Agreement. Subject to any required action by the shareholders
of the COMPANY, the number of option shares and the exercise price thereof shall
be proportionately adjusted for any increase or decrease in the number of issued
shares resulting from a subdivision or consolidation of shares or the payment of
a stock dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the COMPANY; provided however that
the conversion of any convertible securities of the COMPANY shall not be deemed
having been “effected without receipt of consideration by the COMPANY”. Subject
to the foregoing the Options shall vest as follows:

1. [****] Options shall vest when APC [****] if such work is completed within 90
days of entering into the Services Agreement.

2. [****] Options shall vest if APC delivers a working prototype within [****]
from entering into this Services Agreement.

3. [****] Options shall vest when APC demonstrates the ability to produce [****]
on a commercial basis at less than $[****].

4. [****] Options shall vest when APC demonstrates the ability to produce [****]
on a commercial basis at less than $[****].

5. [****] Options shall vest when APC introduces the COMPANY to one or more
customers who purchase products from the COMPANY totaling no [****].

6. [****] Options shall vest when APC arranges for demonstrations of the
COMPANY’s prototypes at [****].

 
 

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