Exhibit
10.3


 


Agreement NO: HBYT-CY-2008-JS-147


 


Technological Services Agreement


 


Title of Agreement: Nano MD Filming Oil
Displacement for Block WEN120


 


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Services Consignor (Party A): PetroChina Huabei Oil Field Company


 


Legal Address: Hui-Zhan-Dao Renqiu City,
Hebei Province, PRC


 


Legal Representative
(Responsible Person): SU Jun


 


Contact Person: CAO Lan-Zhu


 


 


	
  /s/

  	
   

  
	
   

  	
   

  
	
  (Name of Legal Representative)

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Song Zhizong

  	
   

  
	
   

  	
   

  
	
  (Name of Authorized Agent)

  	
   

  
	
   

  	
   

  
	
  Name: Song Zhizong

  	
   

  



 


 


Location of Agreement Signed: Renqiu City (County)
Hebei Province


 


Date of Agreement Signed: July 17, 2008


 


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Services Provider (Party B): Tianjin New Highland Science Development Co., Ltd.


 


Legal Address: Dagang Development Zone, Tianjin
City, PRC


 


Legal Representative (Responsible Person): XIN
Guo-Qiang


 


Contact Person: DONG Su-Lin


 


 


	
  /s/ Xin Guoqiang

  	
   

  
	
   

  	
   

  
	
  (Name of Legal Representative)

  	
   

  
	
   

  	
   

  
	
  Name: Xin Guoqiang

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/

  	
   

  
	
   

  	
   

  
	
  (Name of Authorized Agent)

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  



 


 


Location of Agreement Signed: Renqiu City (County)
Hebei Province


 


Date of Agreement Signed: July 17, 2008


 


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1 General Introduction


 


In accordance with the provisions of currently
effective laws and regulations, including but not limited to the Contract Law
of the People’s Republic of China, following the principles of equality,
volition, fairness, trust, and credibility, the two parties have through
friendly consultation signed this Agreement into effect with regard to the
provision of technological services for Nano MD Filming Oil Displacement for
Block WEN120 (“Services”).


 


2 Content and Approach of Services


 


2.1 Content of Services


 


2.1.1 Party B agrees to use Nano MD filming
technologies to develop oil-increasing plans that raise extraction efficiency
for the 49 oil wells and 15 water wells of Fault Block WEN120 (“WEN120”), and
to conduct construction work by strictly following its plans.


 


2.1.2 Party B shall be responsible for the
development of technological plans, technological measures of Nano MD filming
oil displacement, and onsite technological construction.


 


2.2 Approach of Services: Under the terms of this
Agreement, Party B shall only be responsible for covering the costs of
construction staff and MD filming agents; Party A shall cover all remaining
costs.


 


2.3 Technological Requirements and
Verification/Acceptance Standards for the Services Provided:


 


2.3.1 Services shall realize the designated volume
of raw oil production, at the quota of 75,000 tons of delivered raw oil during
the effective term of this Agreement.


 


2.3.2 Method of calculating raw oil production
volume: the production volume of raw oil shall be determined by the existing
production calculation methods of WEN120 with regard to liquid volume
calculation and water content testing.


 


2.3.3 Payments for Services shall be made on the
basis of the volume of raw oil actually produced from WEN120, at the rate of
330 RMB/ton (volume shall be disregarded when less than one ton).


 


3 Effective Term, Location, and Schedule of
Services


 


3.1 Effective term of Services: from the effective
date of Agreement through January 1, 2012.


 


3.2 Location of Services provision: onsite WEN120.


 


3.3 Schedule arrangement:


 


From the effective date of Agreement through January 1,
2009: the surface flow alteration phase for Party A and plan design phase for
Party B;


 


From January 1, 2009 through January 1,
2012: the provision of Services phase.


 


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4 Supplying Documents and Relevant Materials


 


4.1 Party A shall provide Party B with
technological documents, data, materials, and/or samples:


 


It shall punctually provide all such basic
documents and materials as required for the operation of the project.


 


4.2 Party B shall provide Party A with documents,
data, materials, and/or samples:


 


Including, but not limited to, production manuals
regarding MD filming, production verification reports, and reports on project
implementation and outcomes.


 


5 Costs and Payment


 


5.1 The payments for Services under the terms of
this Agreement are calculated by multiplying the actual volume of oil produced
in a given year by the rate of 300 RMB/ton. Party A shall be responsible for
making the payments for Services to Party B in accordance with this Agreement.


 


5.2 Payment method: Services shall be verified on a
monthly basis, billings shall be settled on a quarterly basis, and accounts
shall be closed on an annual basis.


 


6 Rights and Obligations


 


6.1 Apart from the rights and obligations mentioned
under other provisions of this Agreement, the parties’ rights and obligations
are set forth as follows:


 


6.1 Rights of Party A


 


6.1.1 Party A has the right to request Party B to
deliver results of Services in accordance with the terms of this Agreement.


 


6.1.2 Party A has the right to check and supervise,
at any point in time, the Services provided by Party B.


 


6.1.3 Party A has the right to request Party B to
correct errors and/or solve problems that arise during the process of providing
the Services.


 


6.1.4 Party A has the right to request Party B to
supply technological materials and/or necessary technological guidance.


 


6.1.5 Other Rights: N/A


 


6.2 Obligations of Party A


 


6.2.1 Party A shall provide Party B with the
technological documents, data, materials, and/or samples as mentioned in Section 4.1
of this Agreement within N/A days after the effective date of this Agreement.


 


6.2.2 Party A shall provide Party B with the
following work conditions: N/A, and the resultant costs shall be covered by N/A.


 


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6.2.3 Party A shall issue a response within N/A
days after receiving notifications from Party B requesting Party A to improve
or replace technological documents, data, materials, and/or samples that do not
conform to the terms under this Agreement.


 


6.2.4 Party A shall make payments to Party B in
accordance with the terms under this Agreement.


 


6.2.5 Party A shall conduct verifications of
project outcomes in accordance with the terms of this Agreement.


 


6.2.6 Others N/A.


 


6.3 Rights of Party B


 


6.3.1 Party B has the right to accept the
technological documents, data, materials, and/or samples provided by Party A.


 


6.3.2 Party B has the right to obtain payments
after delivering Services in accordance with the terms under this Agreement.


 


6.3.3 Party B has the right to notify Party A of
requests for improvement and/or replacement if Party B detects noncompliance in
the technological documents, data, materials, and/or samples provided by Party
A, and the notifications shall be issued within thirty (30) days after the
reception of the aforementioned materials or the date on which work was begun.
If Party B does not issue any notifications for improvement and/or replacement
within the aforementioned time limit, it shall automatically be designated that
the materials and work conditions provided by Party A satisfy the requirements
under the terms of this Agreement.


 


6.3.3 Other rights: Volume calculation shall be
completed by Party A and supervised by Party B, and the results shall be given
approval by both parties. Oil well sampling, lab testing, and production
reporting shall be completed by Party A and supervised by Party B, following
the existing operational procedures of Party A and entailing approval from both
parties.


 


6.4 Obligations of Party B


 


6.4.1 Party B shall securely store the
technological documents, samples and other items provided by Party A. During
the course of executing this Agreement, if continuation of its work under this
Agreement proves to pose a risk of damaging the materials, samples, and/or
equipment, Party B shall stop working and issue timely notifications to Party
A. Within one (1) month after the completion of the work under this
Agreement, Party B shall return all the aforementioned technological documents,
materials, and samples to Party A, and may not knowingly retain any duplicate
copies.


 


6.4.2 When accessing Party A’s plants, Party B
shall abide by the regulations and rules of Party A, and shall be held
accountable for any losses resulting from its violation of Party A’s
regulations and rules.


 


6.4.3 After the project is verified and accepted,
Party B shall transfer to Party A the technological know-how, technological
documents, and necessary technological guidance relevant to the project.


 


6.4.5 Others N/A.


 


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7 Health, Work Safety, and Environmental Protection


 


Both parties shall execute their respective rights,
obligations, and duties of health, work safety, and environmental protection
according to applicable regulations.


 


8 Ownership and Confidentiality of Technological
Outcomes


 


8.1 Party A shall possess the new technological
outcomes as the result of utilizing the Services provided by Party B.


 


8.2 The ownership and intellectual property rights
of the technological outcomes that arise during Party B’s provision of
services, including but not limited to new technologies, new craftsmanship, new
methods, new inventions, and new discoveries, shall be determined under the
terms specified in Section 8.2.1 as follows:


 


8.2.1 Party A possesses the ownership right and
intellectual property right, while Party B may make FREE (free or paid) use of
the rights. Without consent from Party A, Party B may not allow any third party
to use those rights. In the event that Party A transfers the ownership and/or
intellectual property right to any third party, Party B’s right of use shall
not be affected.


 


8.2.2 Party B possesses the ownership right and
intellectual property rights, while Party A may make N/A (free or paid) use of
the rights. Without consent from Party B, Party A may not allow any third party
to use them. In the event that Party B transfers the ownership and/or
intellectual property right to any third party, Party A’s right of use shall
not be affected.


 


8.2.3 Jointly owned by both parties, and the
profits shall be distributed through the method of N/A. Either party’s transfer
of the technologies to a third party shall be approved by the other party.


 


8.4 Confidentiality


 


8.4.1 During the course of executing this
Agreement, Party A rightfully possesses all the original documents that Party B
obtains as well as the existing work outcomes and relevant documents in
possession of Party A; Party B bears confidentiality obligations for all of the
aforementioned materials. Without prior written consent from Party A, Party B
may not disclose these materials by any means during or after the effective
term of this Agreement. Information of confidential nature, under this
Agreement, includes but is not limited to drawings, charts and tables, and
data. The following types of information, however, are not regarded as
confidential:


 


A That which is publicly available.


 


B That which is obtained from any third party who
does not bear any confidentiality obligations.


 


8.4.2 Party A bears confidentiality obligations for
the new technologies and new methods owned by Party B, and without prior
written consent from Party B, may not make any disclosures through any means.


 


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8.4.3 The confidentiality terms under the
provisions herein remain legally binding within N/A years after the expiration
of this Agreement.


 


9 No third party claim


 


Each party shall guarantee that the other party
shall not suffer any discrepancy or that no third party intellectual property
right shall be violated due to the use of equipment, materials, work procedures
and craftsmanship, software, and other matters protected by intellectual
property rights that the providing party allows the receiving party to use. If
any third party’s rights are violated, the providing party shall be held
accountable for the transaction with the third party and for the resultant
legal and financial liabilities. Any losses caused to the receiving party, due
to violations of third party rights, shall be compensated for under the terms
of this Agreement.


 


10 External Relations


 


Within the location where Party B provides the
Services, Party B shall be solely responsible for the external work relations
with other related services.


 


11 Force Majeure


 


11.1 Events of force majeure include, but are not
limited to, the following unavoidable and unpreventable cases: wars, riots,
earthquakes, tornadoes, and floods.


 


11.2 In the event that personnel from an involved
party is impacted by force majeure and not able to execute this Agreement, the
affected party shall notify the other party immediately, take proactive
measures to minimize the losses that might be caused by force majeure, and
provide the other party with proof of force majeure within THIRTY (30) days
after the occurrence of force majeure.


 


11.3 In the event that this Agreement cannot be
fulfilled punctually as contracted or cannot be executed at all, each party
shall be responsible for its own resulting losses. If losses are amplified due
to the fact that the party impacted by force majeure fails to notify the other
party of the occurrence of force majeure, as is its obligation, and/or if any
party fails to take proactive measures to minimize losses, the responsible
party shall compensate the increased sum of losses to the other party. When
events of force majeure cease or their impacts cease to exist, and if the
purposes of this Agreement are still realizable, the parties shall continue to
execute the terms of this Agreement, with the effective duration and/or
relevant implementing phases being extended accordingly.


 


12 Liability for Breach of Agreement


 


12.1 Party A’s Liability for Breach of Agreement


 


12.1.1  If
Party A fails to provide Party B with the relevant technological documents,
data, samples and work conditions, as in accordance with this Agreement, hence
preventing Party B 


 


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from delivering the Services in line with the
criteria under the terms of this Agreement, Party A shall be held liable for
breach of Agreement and compensate the corresponding financial losses.


 


12.1.2 If Party A makes payments for Services THIRTY
(30) days or more after the deadline, it shall pay Party B late fees,
calculated on a daily basis, in the amount equivalent to banking deposit
interests during the corresponding period.


 


12.1.3 If Party A violates the confidentiality
terms of Sections 8.4.2 & 8.4.3, it shall compensate for the direct
financial losses of Party B.


 


12.1.4 Other terms of agreement N/A.


 


12.2 Party B’s Liability for Breach of Agreement


 


12.2.1 If Party B fails to fulfill this Agreement,
it shall be held liable for breach of Agreement, and compensate the direct
losses of Party A, in which case Party A has the right to cancel this Agreement
unilaterally.


 


12.2.2 If Party B provides Services after the
designated deadline, it shall be held liable for breach of Agreement, and shall
pay Party A monetary compensation in the amount of 3% of a given year’s total
of Services payments due. If Party B fails to complete work beyond THIRTY (30)
days after the designated deadline, Party A shall have the right to cancel this
Agreement unilaterally and Party B shall refund all Services payments already
made.


 


12.2.3 If the Services provided by Party B do not
meet the standards under the terms of this Agreement, it shall be responsible
for making correction so that the Services comply with those standards. If,
during Party B’s efforts to make corrections, the effective term of this
Agreement expires, Party A shall, according to actual circumstances, allow
Party B a certain grace period in order to complete corrective work. If Party B
fails to provide Services that comply with the standards at the end of the
grace period, or if Party A refuses to give Party B a grace period, Party A has
the right to unilaterally cancel this Agreement at the end of grace period or
after the expiration date of this Agreement, and Party B shall refund all the
payments already made by Party A. If Party B successfully completes corrective
work, but at a time later than the deadline, Party B shall pay late fees
according to the terms set forth in Section 12.2.2.


 


12.2.4 If Party B realizes that the technological
documents, data, samples and/or work conditions provided by Party A do not
comply with the terms under this Agreement, but Party B fails to notify Party A
in written form of such a fact in accordance with Section 6.3.3, hence
causing Services to be suspended, delayed, or impossible to be fulfilled, Party
B shall be held liable for breach of Agreement, and compensate the
corresponding financial losses of Party A.


 


12.2.5 If Party B breaches the terms set forth
under Sections 8.4.1 & 8.4.3, it shall compensate the direct losses of
Party A.


 


12.2.6 Other terms NA.


 


13 Insurance


 


13.1 Party B shall purchase insurance for all its
equipment and staff. If equipment damages and/or human causalities occur
(except those due to the fault of Party A), Party B shall claim compensation
from the insurance companies, and Party A shall be exempt from any liabilities.


 


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13.2 If equipment damages and/or human losses of
Party B are caused by Party A, Party B shall claim compensation from the
insurance companies and Party A shall only be held accountable for the
compensation of losses beyond the scope of insurance compensation. Party A
shall not be held accountable for the losses that are not insured.


 


14 Effectiveness, Changes, and Termination of this
Agreement


 


14.1 This Agreement enters into effect through the
signing and seal-stamping of the parties’ legal representatives.


 


14.2 The parties may negotiate changes made to this
Agreement, and the changes shall be signed into contract in written form.


 


14.3 This Agreement terminates if one or more of
the following takes place:


 


14.3.1 This Agreement is fulfilled in accordance
with the terms and conditions herein.


 


14.3.2 The parties, through negotiation, agree to
terminate this Agreement.


 


14.3.3 One party terminates this Agreement
according to the conditions set forth in Section 14.4 below.


 


14.3.4 Other reasons: NA.


 


14.4 If one or more of the following happens to one
party, the other party has the right to terminate this Agreement in the form of
written notification, under the condition that other remedial or corrective
measures under this Agreement shall not be affected:


 


14.4.1 Bankruptcy and/or liquidation;


 


14.4.2 Events of force majeure persist for THIRTY
(30) days or more, making it impossible to materialize the purposes of this
Agreement;


 


14.4.3 Failure to execute the confidentiality
obligations under the terms of this Agreement;


 


14.4.4 Failure to execute the obligations under the
terms of this Agreement, and failure to complete corrective work within NA days
after breach of Agreement or by the end of the grace period agreed to by both
parties.


 


14.4.5 Other occurrences: NA.


 


15 Settlement of Disputes


 


If disputes arise during the course of executing
this Agreement, both parties shall negotiate solutions regarding dispute
settlement in a timely fashion.


 


If negotiation fails, the parties agree to adopt
the SECOND method as follows:


 


First, submit for arbitration to N/A (name of
arbitrating entity), following the entity’s arbitration principles.


 


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Second, appeal to the People’s Court of Law of Renqiu
City.


 


Third, if this Agreement is an affiliated
transaction contract, the parties shall first of all endeavor to settle
disputes through negotiation, and when negotiation fails, they shall settle
disputes by following the terms and conditions set forth in the master contract
and relevant subcontract(s) of the affiliated transaction.


 


16 Miscellaneous


 


16.1 With regard to matters not mentioned in this
Agreement, the parties shall sign supplementary agreements through negotiation
in accordance with national laws, rules, and other relevant regulations.


 


16.2 This Agreement is signed in FOUR (4) formal
exemplars, with each party holding TWO (2) originals and FOUR (4) duplicates,
with each party holding TWO (2) originals. The notifications, reports, and
correspondences, as required for the execution of this Agreement, shall be
delivered, effective in written form only, to the address designated by the
parties.


 


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