ex10_6.htm


    
      

    

    EXHIBIT 10.6

    
 

     BLAST
ENERGY SERVICES, INC.

    $1,120,000 SECURED PROMISSORY
NOTE

    
 

    
      
        	
                $1,120,000

              	
                Houston,
      Texas

              	
                February
      27, 2008

              


      



    BLAST
ENERGY SERVICES, INC., a Texas corporation (hereinafter called the "Company,"
which term includes any successor entities), for value received, hereby promises
to pay to Berg McAfee Companies, LLC (hereinafter called "Holder"), or his
heirs, devisees, or assigns,  up to the principal sum of One Million
One Hundred and Twenty Thousand and No/100 dollars ($1,120,000), together with
interest on the amount of such principal sum from time to time outstanding,
payable in accordance with the terms set forth below.

    


    The
obligations of the Company contained in this Note are secured by a Security
Agreement between the Company and the Holder dated July 15, 2005, as may be
amended or modified (the "Security Agreement").

    


    ARTICLE
I

     

    DEFINITIONS

    


    1.1                      Definitions. For all purposes
of this Note, except as otherwise expressly provided or unless the context
otherwise requires: (a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted accounting principles as
promulgated from time to time by the Association of Independent Certified Public
Accountants; and (c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Note as a whole and not to any particular
Article, Section or other subdivision.

    


    “Base Amount” shall mean a
principal amount outstanding under the Note of $1,200,000.

    


    "Board of Directors" means
the board of directors of the Company as elected from time to time or any duly
authorized committee of the Board of Directors.

    


    "Business Day" means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which U.S.
banking institutions are authorized or obligated by law or executive order to be
closed.

    


    "Default" means any event
which is, or after notice or passage of time would be, an Event of
Default.

    


    "Event of Default" has the
meaning specified in Section 3.1.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    "Maturity Date", when used
with respect to this Note, means February 27, 2011 (or such earlier date upon
which this Note becomes due and payable under Section 3.2).

    


    "Note" means this $1,120,000
Promissory Note, as hereafter amended, modified, substituted or
replaced.

    


    "Person" means any
individual, corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, estate, other entity, unincorporated
organization or government or any agency or political subdivision
thereof.

    


    I.  ARTICLE
II

     

    PAYMENTS

    


    2.1           Interest.  From the
date of this Note through the Maturity Date, interest on the principal amounts
outstanding under the Note shall accrue at the rate equal to eight percent (8%)
per annum calculated on the basis of a 360-day year from the date of this Note
through the Maturity Date.

    


    2.2           Payment of Principal and
Interest.  The principal and all accrued interest under this
Note shall be due and payable in full on the Maturity Date.

    


    2.3           Prepayments.  The
Company may prepay this Note, in whole or in part, without penalty or discount,
upon five days' prior written notice given to Holder pursuant to Section
5.5.  All payments made under this Note shall be applied first to
accrued interest, and the balance, if any, to principal.

    


    2.4           Manner of
Payment.

    2.4.1                      Cash
payments of principal on this Note will be made by delivery of checks to Holder
or wire transfers pursuant to instructions from Holder. If the date upon which
the payment of principal is required to be made pursuant to this Note occurs
other than on a Business Day, then such payment of principal shall be made on
the next occurring Business Day following said payment date and shall include
interest through said next occurring Business Day.

    


    2.4.2                      Payment
of interest on this Note will be made in Reorganized Blast Common Stock at the
rate of $0.20 per share.

    


    2.5           Security.  This
Note is secured by the collateral defined in the Security
Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
III

     

    REMEDIES

    


    3.1           Events of Default. An "Event
of Default" occurs if:

    


    (a)           the
Company defaults in the payment or mandatory prepayment of the principal or
interest on this Note when such principal or interest becomes due and payable
and such default remains uncured for a period of ten (10) Business Days;
or

    


    (b)           the
Company defaults in the performance of any covenant made by the Company, and
such default remains uncured for a period of thirty (30) Business Days in this
Note (other than a default in the performance of a covenant specifically
addressed elsewhere in this Section 3.1) or the Security Agreement;
or

    


    (c)           any
representation or warranty made by the Company in the Security Agreement, or
this Note or in any certificate furnished by the Company in connection with the
consummation of the transaction contemplated thereby or hereby, is untrue in any
material respect as of the date of making thereof and such default remains
uncured for a period of ten (10) Business Days; or

    


    (d)           after
the date hereof, a court of competent jurisdiction enters (i) a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company under any
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or of any substantial part of the property of the Company or ordering
the winding up or liquidation of the affairs of the Company and any such decree
or order of relief or any such other decree or order remains unstayed for a
period of 30 days from its date of entry; or

    


    (e)           after
the date hereof, the Company commences a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the Company files a petition, answer or consent seeking
reorganization or relief under any applicable federal or state law, or the
Company makes an assignment for the benefit of creditors, or admits in writing
its inability to pay its debts generally as they become due; or

    


    (f)           the
Company (1) merges or consolidates with or into any other Person (unless the
Company is the surviving or acquiring party or if the merger or consolidation is
to effect a re-domicile of the Company); (2) dissolves or liquidates; or (3)
sells all or substantially all of its assets except where such action by the
Company would not have a material adverse effect on the financial condition or
business of the Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    3.2           Acceleration of Maturity.
This Note and all accrued interest shall automatically become immediately due
and payable if an Event of Default described in Sections 3.1(d), 3.1(e) or
3.1(f) occurs and, this Note shall, at the option of the Holder in its sole
discretion, become immediately due and payable if any other Event of Default
occurs, and in every such case the Holder of the Note may declare the principal
and interest on the Note to be due and payable immediately.

    


    ARTICLE
IV

     

    COVENANTS

    


    The
Company covenants and agrees that, so long as this Note is
outstanding:

    


    4.1           Payment of Principal and Accrued
Interest. The Company will duly and punctually pay or cause to be paid
the principal sum of this Note, together with interest accrued thereon from the
date hereof to the date of payment, in accordance with the terms
hereof.

    


    4.2            Existence. The Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate or Company existence, rights (charter and statutory)
and franchises.

    


    4.3           Taxes; Claims; etc. The
Company will promptly pay and discharge all lawful taxes, assessments, and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any of its properties, real, personal, or mixed, before the same shall
become in default, as well as all lawful claims for labor, materials, and
supplies or otherwise which, if unpaid, might become a lien or charge upon such
properties or any part thereof, and which lien or charge will have a material
adverse effect on the business of the Company; provided, however, that the
Company shall not be required to pay or cause to be paid any such tax,
assessment, charge, levy, or claim prior to institution of foreclosure
proceedings if the validity thereof shall concurrently be contested in good
faith by appropriate proceedings and if the Company shall have established
reserves deemed by the Company adequate with respect to such tax, assessment,
charge, levy, or claim.

    


    4.4           Maintenance of Existence and
Properties. The Company will keep its material properties in good repair,
working order, and condition, ordinary wear and tear excepted, so that the
business carried on may be properly conducted at all times in accordance with
prudent business management.

    


    4.5           Information and
Records.  The Company shall maintain its books and records in
accordance with U.S. generally accepted accounting principles, applied on a
consistent basis.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    4.6           Notice of Defaults. The
Company will promptly notify the Holder in writing of the occurrence of any
Event of Default under this Note.

    


    4.7           Compliance with Laws. The
Company will promptly comply in all material respects with all laws, ordinances
and governmental rules and regulations to which it is subject, the violation of
which would materially and adversely affect the Company.

     

    ARTICLE
V

     

    MISCELLANEOUS

    


    5.1           Consent to Amendments. This
Note may be amended, and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, if and only if
the Company shall obtain the written consent to such amendment, action or
omission to act from the holders of a majority of the aggregate principal amount
of this Note.

    


    5.2           Benefits of Note; No Impairment of
Rights of Holder of Senior Indebtedness. Nothing in this Note, express or
implied, shall give to any Person, other than the Company, Holder, and their
successors any benefit or any legal or equitable right, remedy or claim under or
in respect of this Note.

    


    5.3           Successors and Assigns. All
covenants and agreements in this Note contained by or on behalf of the Company
and the Holder shall bind and inure to the benefit of the respective successors
and assigns of the Company and the Holder.

    


    5.4           Restrictions on
Transfer.  Holder shall not transfer this Note except with the
prior written consent of the Company, such consent not to be unreasonably
withheld.  Any lender to which Holder grants a security interest in
this Note shall be entitled to exercise all remedies to which it is entitled by
contract or by law, including (without limitation) transferring this Note into
its own name or into the name of any purchaser at any sale undertaken in
connection with enforcement by such lender of its remedies.

    


    5.5           Notice; Address of Parties.
Except as otherwise provided, all communications to the Company or Holder
provided for herein or with reference to this Note shall be deemed to have been
sufficiently given or served for all purposes (i) upon receipt if sent by hand
delivery or overnight courier, (ii) upon receipt if sent by facsimile, or (iii)
on the third business day after being sent as certified or registered mail,
postage and charges prepaid, to the following addresses: if to the Company at
14550 Torrey Chase Boulevard, Suite 330, Houston, Texas 77014-1022, Attn: John
O’Keefe, or at any other address designated by the Company in writing to Holder;
if to Holder: Eric  A. McAfee at 10600 N de Anza Blvd Suite 250,
Cupertino, CA 95014, or at any other address designated by Holder to the Company
in writing.

    


    5.6           Separability Clause. In case
any provision in this Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions in such jurisdiction shall not in any way be affected or impaired
thereby; provided, however, such construction does not destroy the essence of
the bargain provided for hereunder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    5.7           Governing Law; Arbitration.
This Note shall be governed by, and construed in accordance with, the internal
laws of the State of Texas (without regard to principles of choice of
law).  All claims arising from or related in any way to this Agreement
shall be submitted to and resolved by binding arbitration with the American
Arbitration Association (“AAA”) through its office in Harris County,
Texas.  Except as to injunctions and other provisional relief, this
section on mandatory arbitration applies to any dispute, claim or controversy
arising out of or related in any way to this Agreement, including but not
limited to its enforceability, validity, or interpretation.  The
arbitration shall be conducted under rules of the AAA which are incorporated
herein unless expressly contradicted by the language of this
paragraph.  One neutral arbitrator shall be used. The arbitrator shall
provide a written decision setting forth his or her essential findings and
conclusions on which the award is based and judicial review of the arbitration
award shall be allowed to the extent required by any applicable federal, state
or local law.  Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction.  This paragraph shall be
governed by the Federal Arbitration Act.  Consistent with the
expedited nature of arbitration, each party to any arbitration filed under this
paragraph will, upon the written request of the other party, promptly provide
the other with copies of documents relevant to the issues raised by any claim or
counterclaim.  Additionally, each party shall allow any other party to
depose witnesses under that party's control and shall cooperate with the other
party in scheduling depositions. Any dispute regarding discovery, or the
relevance or scope thereof, shall be determined by the
arbitrator.  All discovery shall be completed within 90 days following
the appointment of the arbitrator, unless the arbitrator finds that there is
good cause for extending the discovery period. Without waiving any remedy under
this Agreement, either party may seek from any court having jurisdiction
injunctive relief or any interim or provisional relief that is necessary to
protect the rights or property of that party, pending the arbitrator’s final
determination on the merits.  Any provision of this section on
mandatory arbitration that is found to be unconscionable shall be severed and
this section on mandatory arbitration shall be enforced without the severed
provision.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    5.8           Usury. It is the intention of
the parties hereto to conform strictly to the applicable laws of the State of
Texas and the United States of America, and judicial or administrative
interpretations or determinations thereof regarding the contracting for,
charging and receiving of interest for the use, forbearance, and detention of
money (hereinafter referred to in this Section 5.8 as "Applicable Law"). The
Holder shall have no right to claim, to charge or to receive any interest in
excess of the maximum rate of interest, if any, permitted to be charged on that
portion of the amount representing principal which is outstanding and unpaid
from time to time by Applicable Law. Determination of the rate of interest for
the purpose of determining whether this Note is usurious under Applicable Law
shall be made by amortizing, prorating, allocating and spreading in equal parts
during the period of the actual time of this Note, all interest or other sums
deemed to be interest (hereinafter referred to in this Section 5.8 as
"Interest") at any time contracted for, charged or received from the Company in
connection with this Note. Any Interest contracted for, charged or received in
excess of the maximum rate allowed by Applicable Law shall be deemed a result of
a mathematical error and a mistake. If this Note is paid in part prior to the
end of the full stated term of this Note and the Interest received for the
actual period of existence of this Note exceeds the maximum rate allowed by
Applicable Law, Holder shall credit the amount of the excess against any amount
owing under this Note or, if this Note has been paid in full, or in the event
that it has been accelerated prior to maturity, Holder shall refund to the
Company the amount of such excess, and shall not be subject to any of the
penalties provided by Applicable Law for contracting for, charging or receiving
Interest in excess of the maximum rate allowed by Applicable Law. Any such
excess which is unpaid shall be canceled.

    


    IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed on
the date first above written.

    


    BLAST
ENERGY SERVICES, INC.

    


    


    


    By:/s/John
O’Keefe

    John O’Keefe

    Chief
Executive Officer