ex10-1.htm


    


    Exhibit
10(i)

    


    EXCLUSIVE
LICENSE AGREEMENT

    BETWEEN

    AVALON
OIL & GAS, INC.

    AND

    OILTEK,
INC.

    


    AGREEMENT
dated as of the 17th day of August, 2007 (this “Agreement”), by and between
Avalon Oil & Gas, Inc. a Nevada corporation (the “Licensor”) with an address
at 7808 Creekridge Circle, Suite 105, Minneapolis, MN 55439, and Oiltek, Inc., a
Delaware corporation (the “Licensee”) with an address at 7808 Creekridge Circle,
Suite 105, Minneapolis, MN 55439.

    


    WHEREAS, the Licensor has
acquired licenses (copies of which were filed with the Securities and Exchange
Commission as attachments to Avalon’s reports on Form 8-K filed December 15,
2006 and May 4, 2007) to make, use, offer for sale, and sell products utilizing
the claims contained in each of the Patents (as hereinafter defined in Paragraph
“D” of Article “2” of this Agreement) in the Territory (as hereinafter defined
in Paragraph “H” of Article “2” of this Agreement), and to sublicense any of
those rights.  Those licenses were acquired through the following
transactions:

    


    (A) On
July 12, 2006, Avalon acquired Ultrasonic Mitigation Technologies, Inc. (“UMTI”)
for 16,250,000 unregistered shares of the Licensor’s common
stock.  UMTI held an exclusive worldwide license pursuant to a license
agreement dated July 12, 2006 and expiring March 11, 2025, unless earlier
terminated pursuant to the terms of such license agreement (the “UMTI License
Agreement”), with respect to the Patent titled “System and Method for the
Mitigation of Paraffin Wax Deposition from Crude Oil by Using Ultrasonic
Waves”.  The terms of the UMTI License Agreement (i) allow the
inventor to (a) continue to use the technology for educational and research
purposes, and (b) publish and disseminate information about the technology, (ii)
allow non-profit organizations to use the technology for educational and
non-commercial research purposes within their own facilities, and (iii) require,
at the request of the inventor, UMTI to sublicense the technology to a third
party designated by the inventor, provided that such third party is in a field
which is of no commercial interest to UMTI;

    


    (B) On
November 8, 2006, Avalon acquired Intelli-Well Technologies, Inc. (“IWTI”) for
20,000,000 unregistered shares of the Licensor’s common stock.  IWTI
held a non-exclusive United States license pursuant to a license agreement dated
October 27, 2006 and expiring September 27, 2025, unless earlier terminated
pursuant to the terms of such license agreement (the “IWTI License Agreement”),
with respect to the Patent titled “Well Casing Based-Geophysical Sensor
Apparatus”; the U.S. Government also has the rights to use this Patent
throughout the world.  The terms of the IWTI License Agreement (i)
allow the inventor to (a) continue to make, use and practice the technology for
educational and research purposes, but not for commercial purposes and (b)
publish technical data resulting from his research, and (ii) allow non-profit
organizations to make, use and practice the technology for educational and
research purposes, but not for commercial purposes; and

    


    (C) On
March 28, 2007, Avalon acquired Leak Location Technologies, Inc. (“LLTI”) for
36,710,526 unregistered shares of the Licensor’s common stock.  LLTI
held an exclusive United States license pursuant to a license agreement dated
March 27, 2007 and expiring upon the later of (i) October 9, 2012 or (ii) the
last sale of a licensed product produced during the term of the license
agreement, unless earlier terminated pursuant to the terms of such license
agreement (the “LLTI License Agreement”) with respect to the Patent titled
“Detection of Leaks in Pipelines”.  The terms of the LLTI License
Agreement (i) allow the inventor to use the invention for educational and
research purposes, (ii) allow other non-profit organizations to use the
invention for educational and research purposes, and (iii) require LLTI to (a)
allow the inventor to use any improvement developed by LLTI for educational and
research purposes without paying a royalty to LLTI, and (b) allow other
non-profit organizations to use such improvement for non-commercial research
purposes without paying a royalty to LLTI;

    


    In
addition to the restrictions stated in paragraphs “(A)”, “(B)” and “(C)” above,
the UMTI License Agreement, IWTI License Agreement and LLTI License Agreement
exclude (1) know-how rights (rights to the inventor’s knowledge with respect to
the technology other than the information set forth in the actual patent or
patent application) and (2) rights to any improvements to those Patents which
their respective inventors develop at a later time;

    


    WHEREAS, the Licensee is
desirous of obtaining from the Licensor the rights to utilize the Patents in the
development of Technologies (as hereinafter defined in Paragraph “G” of Article
“2” of this Agreement) and Products (as hereinafter defined in Paragraph “E” of
Article “2” of this Agreement);

    


    WHEREAS, the Licensee seeks to
develop Technologies, manufacture and sell Products based upon those
Technologies, and to sublicense to third parties the Technologies and the rights
to manufacture and sell Products pursuant to the terms and conditions of this
Agreement; and

    


    WHEREAS, the Licensor is
willing to grant to the Licensee an exclusive right to utilize the Patents upon
the terms and conditions hereinafter set forth.

    


    NOW, THEREFORE, in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged,

    


    IT IS
AGREED:

    


    1. Recitals.  The
parties hereby adopt as part of this Agreement each of the recitals which is set
forth above in the WHEREAS clauses, and agree that such recitals shall be
binding upon the parties hereto by way of contract and not merely by way of
recital or inducement and such WHEREAS clauses are hereby confirmed and ratified
as being accurate by each party as to itself.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    2. Certain
Definitions.  The following terms as used in this Agreement
shall, unless specifically indicated otherwise in this Agreement, have the
following meanings:

     A. “Affiliate”
shall mean any corporation or other business entity in which the Licensee owns
or controls, directly or indirectly, at least ten (10%) percent  of
the outstanding stock or other voting rights entitled to elect directors, or in
which the Licensee is owned or controlled directly or indirectly by at least ten
(10%) percent  of the outstanding stock or other voting rights
entitled to elect directors; provided, however, that in any country where the
local law does not permit foreign equity participation of at least ten (10%)
percent, an “Affiliate” shall include any company in which the Licensee owns or
controls or is owned or controlled by, directly or indirectly, the maximum
percentage of outstanding stock or voting rights permitted by local law in such
foreign jurisdiction. 

     B. “Contract
Year” shall mean the one year period commencing on August 17,
2007.  Each subsequent Contract Year shall commence upon August
17. 

     C.  “Net
Sales” shall mean the total of the gross invoice prices of Products sold by the
Licensee, its Sublicensees or its Affiliates, or any combination thereof, less
the sum of the following actual and customary deductions where applicable and
separately listed: cash, trade, or quantity discounts, sales, use tariff,
import/export duties or other excise taxes imposed on particular sales (except
for value-add and income taxes imposed on the sales of the Products in foreign
countries), transportation charges, or credits to Licensee, its Sublicensees or
its Affiliates, or any combination thereof, because of rejections or
returns. 

     D. “Patents”
shall mean the Letters Patent and patent applications which are described on
Exhibit “A”, which is annexed hereto and made a part hereof, and which Letters
Patent and patent applications are filed with the United States Patent and
Trademark Office or equivalent foreign authorities. 

     E. “Products”
shall mean any products developed by the Licensee or by Sublicensees which
utilize the Patents, or any part thereof, or are covered by the claims contained
in the Patents, or the manufacture, use, sale, offer for sale, or importation of
which would constitute, but for the license granted to Licensee by Licensor
herein, an infringement of any pending or issued and unexpired claim with the
Patents. 

     F. “Sublicensee”
shall mean any entity which distributes units of the Products sold to it by the
Licensee, or which utilizes the Technologies sublicensed to it by the Licensee,
pursuant to, and subject to, the terms of this Agreement. 

     G. “Technologies”
shall mean all technologies developed by the Licensee or by Sublicensees
utilizing the Patents, or any part thereof, or are covered by the claims
contained in the Patents, or the manufacture, use, sale, offer for sale, or
importation of which would constitute, but for the license granted to Licensee
by Licensor herein, an infringement of any pending or issued and unexpired claim
with the Patents. 

     H.  “Territories”
shall mean the following geographic area with respect to each of the following
Patents: 

    


     “System
and Method for the Mitigation of Paraffin Wax Deposition From Crude Oil by Using
Ultrasonic Waves” – Worldwide 

    


     “Well
Casing Based-Geophysical Sensor Apparatus, System and Method” – United
States 

    


     “Detection
of Leaks in Pipelines” – United States 

    


     3. Term.  Subject
to the provisions of Article “12” of this Agreement, the Term of this Agreement
shall be five (5) years and shall terminate on May 31, 2012; provided, however,
that the Term may be extended in the Licensee’s sole and absolute discretion for
up to two (2) additional three-year (3) periods by the Licensee giving written
notice to the Licensor pursuant to Paragraph “C” of Article “21” of this
Agreement; provided, however, that such notice must be given at least one
hundred and eighty (180) days prior to the end of the applicable Term, and that
the Patent titled “Detection of Leaks in Pipelines” expires on October 9, 2012
and shall cease to be considered a Patent for the purposes of this Agreement
thereafter. 

    


    4. Exclusivity and Rights to
Distribution.

    A. Subject
to the Licensee's compliance with the terms of this Agreement, the Licensor
hereby grants to the Licensee during the Term, a non-assignable,
non-transferable exclusive right to use the Patents for any legal purpose,
including, but not limited to, research using the Patents in order to develop
Technologies and Products, the manufacture and sale of Products, the sublicense
to third parties of such Technologies, and the sublicense to third parties of
the rights to manufacture and sell such Products.

    B. The
Licensee shall have the right to retain and utilize Sublicensees; provided,
however, that as a condition of any such Sublicensee being retained and/or
utilized, the Licensee must (1) obtain the written consent of the Licensor,
which consent shall not be unreasonably withheld, and (2) each such Sublicensee
shall execute an agreement which shall be in the form of Exhibit “C” which is
annexed hereto and made a part hereof.

    C. The
Licensee or any Sublicensee shall be responsible for any costs which it incurs
with respect to any research involving, manufacture or sale of Products
involving, sublicense of Technologies involving, or other use of, the
Patents.

    D. The
Licensor retains no rights to the Patents during the Term of this
Agreement.  Subsequent to the Term of this Agreement, all rights
revert to the Licensor until the expiration date of each such Patent; the
Licensor shall not have any obligation to Sublicensees of the Licensee, and may
sell Products, sublicense Technologies, and sublicense the rights to manufacture
and sell Products to the Licensee’s Sublicensees and customers.

    


    5.           Purchase
Price.  The purchase price for the license is ten million
(10,000,000) shares of common stock of the Licensee, representing 75.6% of the
issued and outstanding shares of common stock of the Licensee, which has been
issued and delivered to the Licensor by the Licensee in consideration of, and
subject to, (A) the execution of this Agreement, and (B) a payment of fifty
thousand ($50,000) dollars by the Licensor to the Licensee.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.           Taxes.  The
Licensee agrees that it is responsible for the payment of any and all taxes,
excises, assessments, levies, imports, duties, costs, charges and penalties
(except for income taxes imposed upon the Licensor) which are imposed in
connection with this License Agreement.

    


    7.           Royalties.

    A.           The
Licensee shall be required to pay the Licensor the following:

    (i)           a
royalty which is equal to six (6 %) percent of all Net Sales of the Products by
the Licensee, its Sublicensees or its Affiliates; and

    (ii)           a
royalty which is equal to six (6 %) percent of all other revenues received by
the Licensee, including, but not limited to, sublicense fees other than payments
from Net Sales.  “Royalties” shall mean the sum of “(i)” and “(ii)” of
this Paragraph “A” of this Article “7” of this Agreement.

    B.           The
Licensee shall pay the Royalties with respect to each calendar quarter to
Licensor within fifteen (15) days after the end of such calendar
quarter.

    


    8.           Record Keeping,
Reports.

    A. Simultaneously
with each payment set forth in Article “7” of this Agreement, the Licensee shall
furnish the Licensor with a detailed statement, certified to be true and correct
by both its president and another executive officer, provided that the president
and such other executive officer are not the same person, setting forth with
respect to such calendar quarter period: (1) all sublicenses of the
Technologies, (2) all revenues derived from sublicenses of the Technologies, (3)
all sublicenses of the rights to manufacture and sell Products, (4) all revenues
derived from sublicenses of the rights to manufacture and sell Products, (5) all
Net Sales of Products by the Licensee, or its Sublicensees or Affiliates (6) any
trade discounts and allowances, and (7) all credits for returned units of the
Products and other similar adjustments together with copies of documents which
support the detailed statement.

    B. The
Licensee shall maintain true, complete, and correct books of account and records
of all transactions within the scope of this Agreement, in accordance with
generally accepted accounting principles, to enable the Licensor to ascertain
all amounts received from the sublicense of Technologies and the sale of
Products pursuant to this Agreement.  The Licensor and/or its duly
authorized representatives shall have the right, during regular business hours,
for the duration of this Agreement and for three (3) years thereafter, to
examine said books of account and records and all other documents (including,
but not limited to, sales invoices) and material in the possession or under the
control of the Licensee with respect to this Agreement and its activities
pursuant to this Agreement; and the Licensor shall have free and full access
thereto for said purposes and for the purpose of making extracts
therefrom.  The Licensor shall have the right at such inspection to
examine all information pertinent to this Agreement dating from the commencement
date of this Agreement.

    C. If, upon
an examination, it is revealed that there is due and owing by the Licensee an
amount which exceeds, by two (2%) percent or more, the amount which was paid to
the Licensor with respect to any Contract Year, then the entire cost of the
examination shall be borne by the Licensee.  For example, if the
Licensor were paid one million ($1,000,000) dollars, and the audit reveals that
the Licensee owes the Licensor an additional forty thousand ($40,000) dollars
(or four (4%) percent of the one million ($1,000,000) dollars which the Licensor
was paid), the Licensee shall bear the entire cost of the
examination.

    


     9.           The Licensor’s
Representations, Warranties and Covenants.  The Licensor
represents, warrants, and covenants to the Licensee that: 

    A. Corporate
Status.  The Licensor is a corporation duly organized, validly
existing and in good standing pursuant to the laws of the State of Nevada, with
all of the requisite power and authority to carry on its businesses as presently
conducted in all jurisdictions where presently conducted, to enter into this
Agreement and to consummate the transactions set forth in this
Agreement.

    B. Authority.  The
Licensor has the full right, power and legal capacity to enter into this
Agreement and to consummate the transactions contemplated hereby.  The
execution and delivery of this Agreement by the Licensor and the consummation by
it of the transactions contemplated hereby have been duly approved and
authorized by all necessary action of the Licensor's Board of Directors, and no
further authorization shall be necessary on the part of the Licensor for the
performance and consummation by the Licensor of the transactions contemplated
hereby.  A copy of the minutes of said action of the Board of
Directors is annexed hereto as Exhibit “D”.  The execution, delivery
and performance of this Agreement in accordance with its terms does not and
shall not require approval, consent or authorization of any governmental agency
or authority or any political subdivision thereof.

    C. Compliance with the Law and
Other Instruments.  The business and operations of the Licensor
have been and are being conducted in accordance with all applicable laws, rules,
and regulations of all authorities which affect the Licensor or its properties,
assets, businesses or prospects.  The performance of this Agreement
shall not result in any breach of, or constitute a default under, or result in
the imposition of any lien or encumbrance upon any property of the Licensor or
cause an acceleration under any arrangement, agreement or other instrument to
which the Licensor is a party or by which any of its assets are
bound.  The Licensor has performed all of its obligations which are
required to be performed by it pursuant to the terms of any such agreement,
contract, or commitment.

    D. Patents.  The
Licensor is the sole and exclusive owner of the license to make, use, offer for
sale, and sell products utilizing the claims contained in the Patents, and to
sublicense any of those rights, and has the sole and exclusive right to
sublicense the use thereof to the Licensee.  The Licensor has no
knowledge that any Patent infringes on any patent of any other
person.  The Licensor does not know or have any reason to believe that
there are any claims of any third parties with respect to the use of any Patent
within its Territory.

    E. Exclusive Right to
Use.  The Licensor has not granted and shall not, during the
Term, grant, directly or indirectly, to any other person any right (whether
current, future, contingent or otherwise) to use the Patents.

    F. No
Approval.  No approval of any third party including, but not
limited to, any governmental authority is required in connection with the
consummation of the transactions set forth in this Agreement.

    G. Survival.  The
covenants, representations and warranties made by the Licensor in or in
connection with this Agreement shall survive the execution and delivery of this
Agreement and shall continue in full force and effect during the Term and for
two (2) years after the expiration of the Term, it being agreed and understood
that each of such covenants, representations and warranties is of the essence to
this Agreement and the same shall be binding upon the Licensor and inure to the
Licensee, its successors and assigns.

    H. Complete
Disclosure.  The Licensor has no knowledge that any covenant,
representation or warranty of the Licensor which is contained in this Agreement
or in a writing furnished or to be furnished pursuant to this Agreement contains
or shall contain any untrue statement of a material fact, omits or shall omit to
state any material fact which is required to make the statements which are
contained herein or therein, not misleading.

    I. Notification of an
Event.  If, during the Term, any event occurs or any event
known to the Licensor relating to or affecting the Licensor shall occur as a
result of which (i) any provision of this Article “9” of this Agreement at that
time shall include an untrue statement of a fact, or (ii) this Article “9” of
this Agreement shall omit to state any fact necessary to make the statements
herein, in light of the circumstances under which they were made, not
misleading, the Licensor shall immediately notify the Licensee pursuant to
Paragraph “C” of Article “21” of this Agreement.

    J. No
Defense.  It shall not be a defense to a suit for damages for
any misrepresentation or breach of a covenant, representation or warranty that
the Licensee knew or had reason to know that any covenant, representation or
warranty in this Agreement contained untrue statements.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     10.           The Licensee’s
Representations, Warranties and Covenants.  The Licensee
represents, warrants and covenants to the Licensor as follows: 

    A. Company
Status.  The Licensee is a corporation duly organized, validly
existing and in good standing pursuant to the laws of the State of Delaware,
with all of the requisite power and authority to carry on its businesses as
presently conducted in all jurisdictions where presently conducted, to enter
into this Agreement and to consummate the transactions set forth in this
Agreement.

     B. Authority.  The
Licensee has the full right, power and legal capacity to enter into this
Agreement and to consummate the transactions contemplated hereby.  The
execution and delivery of this Agreement by the Licensee and the consummation by
it of the transactions contemplated hereby have been duly approved and
authorized by all necessary action of the Licensee’s Board of Directors, and no
further authorization shall be necessary on the part of the Licensee for the
performance and consummation by the Licensee of the transactions contemplated
hereby.  A copy of the minutes of said action of the Board of
Directors is annexed hereto as Exhibit “E”.  The execution, delivery
and performance of this Agreement in accordance with its terms does not and
shall not require approval, consent or authorization of any governmental agency
or authority or any political subdivision thereof. 

    C. Compliance with the Laws and
Other Instruments.  The business and operations of the Licensee
have been and are being conducted in accordance with all applicable laws, rules,
and regulations of all authorities which affect the Licensee or its properties,
assets, businesses or prospects.  The performance of this Agreement
shall not result in any breach of, or constitute a default under, or result in
the imposition of any lien or encumbrance upon any property of the Licensee or
cause an acceleration under any arrangement, agreement or other instrument to
which the Licensee is a party or by which any of its assets are
bound.  The Licensee has performed all of its obligations which are
required to be performed by it pursuant to the terms of any such agreement
contract, or commitment.

    D. Limited Right to
License.  The Licensee shall not grant, directly or indirectly,
to any other person other than a Sublicensee any right to use any right or
sublicense to use any Patent within its Territory.

    E. No
Approval.  No approval of any third party including, but not
limited to, any governmental authority is required in connection with the
consummation of the transactions set forth in this Agreement.

    F. Survival.  The
covenants, representations and warranties made by the Licensee in or in
connection with this Agreement shall survive the execution and delivery of this
Agreement and shall continue in full force and effect during the Term and for
two (2) years after the expiration of the Term, it being agreed and understood
that each of such covenants, representations and warranties is of the essence of
this Agreement and the same shall be binding upon the Licensee and inure to the
Licensor, its successors and assigns.

    G. Complete
Disclosure.  The Licensee has no knowledge that any covenant,
representation or warranty of the Licensee which is contained in this Agreement
or in a writing furnished or to be furnished pursuant to this Agreement contains
or shall contain any untrue statement of a material fact, omits or shall omit to
state any material fact which is required to make the statements which are
contained herein or therein, not misleading.

    H. Notification of an
Event.  If, during the Term, any event occurs or any event
known to the Licensee relating to or affecting the Licensee shall occur as a
result of which (i) any provision of this Article “10” of this Agreement at that
time shall include an untrue statement of a fact, or (ii) this Article “10” of
this Agreement shall omit to state any fact necessary to make the statements
herein, in light of the circumstances under which they were made, not
misleading, the Licensee shall immediately notify the Licensor pursuant to
Paragraph “C” of Article “21” of this Agreement.

    I. No
Defense.  It shall not be a defense to a suit for damages for
any misrepresentation or breach of a covenant, representation or warranty that
the Licensor knew or had reason to know that any covenant, representation or
warranty in this Agreement contained untrue statements.

    


    11.           Warranties. THE
LICENSOR HEREBY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES AND GUARANTIES WITH
RESPECT TO THE PATENTS, WHETHER WRITTEN, ORAL, IMPLIED OR INFERRED BY TRADE,
CUSTOM OR PRACTICE, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.  THE LICENSOR
SHALL NOT BE LIABLE UNDER ANY CIRCUMSTANCES FOR DAMAGES OF ANY KIND, WHETHER
DIRECT, CONSEQUENTIAL OR OTHERWISE RELATING TO THE PERFORMANCE OF ANY PRODUCT OR
ANY TECHNOLOGY.

    


    12.           Termination.

    A. Anything
in this Agreement notwithstanding, the Licensor shall have the right to
terminate this Agreement immediately if, the Licensee shall at any time default
in the performance of any of its obligations under, or otherwise commit any
breach of this Agreement, unless within ten (10) calendar days after receipt of
written notice of such default in accordance with Paragraph “C” of Article “21”
of this Agreement the Licensee cures such default or, if there is a default
which cannot, with due diligence, be cured within ten (10) calendar days, the
Licensee institutes within ten (10) calendar days steps reasonably necessary to
remedy the default and thereafter diligently prosecutes same to
completion.  The right of the Licensor to terminate this Agreement
pursuant to this Article “12” of this Agreement or otherwise shall be in
addition to and not exclusive of any other right or remedy that may exist at
law, equity or otherwise, that the Licensor may possess pursuant to this
Agreement, all of which rights and remedies shall survive such
termination.  The Licensor shall be required to provide the Licensee
with written notice of default on the first three (3) such occasions during any
Contract Year during the Term.  After such three (3) occasions, the
Licensor shall no longer be required to give notice to the Licensee and the
Licensor shall have the right to immediately terminate this Agreement if the
Licensee shall fail to perform any of its obligations pursuant to, or otherwise
commit any breach of, this Agreement.

    B. Notwithstanding
the provisions of Paragraph “A” of this Article “12” of this Agreement, the
Licensor shall have the right to terminate this Agreement without prior notice
to the Licensee if:

    i. The
Licensee does not pay the full amount of the Royalties and other amounts
specified in this Agreement as and when due;

    ii. The
Licensee fails to make any payments due to the Licensor when due;

    iii. Any
representation or warranty of the Licensee contained in this Agreement is untrue
when made;

    iv. The
Licensee admits in writing its inability to pay its debts as they
mature;

    v. The
Licensee files a petition in bankruptcy;

    vi. The
Licensee makes an assignment for the benefit of its creditors;

    vii. The
Licensee consents to the appointment of, or possession by, a custodian for
itself or for all or substantially all of its property;

    viii. A
petition in bankruptcy is filed with the consent of the Licensee;

    ix. The
Licensee fails to have a petition in bankruptcy which was filed without its
consent dismissed within one hundred twenty (120) days from the date upon which
such petition was filed;

    x. Notwithstanding
the one hundred twenty (120) day period set forth in Subparagraph “ix” of this
Paragraph “B” of this Article “12” of this Agreement, the Licensee is
adjudicated bankrupt on a petition in bankruptcy filed against it;

    xi. A court
of competent jurisdiction enters a final non-appealable order, judgment or
decree appointing, without the consent of the Licensee, a receiver, trustee or
custodian for the Licensee or for all or substantially all of the property or
assets of the Licensee;

    xii. A
proceeding is commenced to foreclose the security interest in, or lien on, any
property or assets to satisfy the security interest or lien therein of any
creditor of the Licensee;

    xiii. A court
of competent jurisdiction enters a final judgment for the payment of money
against the Licensee, which judgment the Licensee shall not discharge (or
provide for such discharge) in accordance with its terms within one hundred
twenty (120) days of the date of entry thereof, or procure a stay of execution
thereof within one hundred twenty (120) days from the date of entry thereof and,
within such one hundred twenty (120) day period, or such longer period during
which execution of such judgment shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal; or

    xiv. There is
an imposition of any attachment or levy, or an issuance of any note of eviction
against the assets or properties of the Licensee.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.           Effect of
Termination.  The termination of this Agreement for any reason
shall not release any party from any liability, obligation or agreement that,
pursuant to any provision of this Agreement, is intended to survive or be
performed after the termination of this Agreement.

    


    14.           Ownership of License to
Patents.  The license (the “License”) with respect to the
Patents to make, use, offer for sale, and sell products utilizing the claims
contained in the Patents, and to sublicense any of those rights shall remain the
exclusive property of the Licensor.

    


     15.           Licensor’s Exclusive Rights,
Title and Interest in and to Patents. 

    A. The
Licensee acknowledges the Licensor's exclusive right, title and interest in and
to the License, and shall not at any time do or cause to be done any act or
thing contesting or in any way impairing or tending to impair any part of such
right, title and interest. The Licensee shall not in any manner represent that
it has any ownership in the Patents or the License, and the Licensee
acknowledges that use of the Patents, shall not create in the Licensee's favor
any right, title or interest in or to the Patents or the License other than as
expressly provided in this Agreement.

    B. If the
applicable patent law requires, the Licensor shall make application to register
the Licensee as a Permitted User or Registered User of the Patents, and if
necessary, the Licensee undertakes to join in such application and to execute
any such documents and to take such action as may be necessary to implement such
application.

    C. The
Licensee acknowledges that the use of the Patents shall not create in the
Licensee any right, title or interest in or to the Patents or the License other
than as expressly provided in this Agreement.

    D. Upon
termination of this Agreement in any manner as provided in this Agreement, the
Licensee shall cease and desist from all use of the Patents in any
manner.

    


    16.           Nondisclosure of
Confidential Information.

    A. As used
in this Agreement, “Confidential Information” shall mean oral or written
information which is directly or indirectly presented to the Licensee, its past,
present or future subsidiaries, parents, officers, consultants, directors,
stockholders, affiliates, attorneys, employees, agents and its and their
respective Immediate Families (as defined below; all of the foregoing are
hereinafter collectively referred to as “Agents”) by the Licensor, including,
but not limited to, information which is developed, conceived or created by the
Licensor, or disclosed to the Licensee or its Agents or known by or conceived or
created by the Licensee or its Agents during the Term or after the termination
of this Agreement if disclosed to the Licensee or its Agents or known by or
conceived or created by the Licensee or its Agents as a result of this
Agreement, with respect to the Licensor, its business or any of its products,
processes, and other services relating thereto relating to the past or present
business or any plans with respect to future business of the Licensor, or
relating to the past or present business of a third party or plans with respect
to future business of a third party which are disclosed to the
Licensor.  Confidential Information includes, but is not limited to,
all documentation, hardware and software relating thereto, and information and
data in written, graphic and/or machine readable form, products, processes and
services, whether or not patentable, trademarkable or copyrightable or otherwise
protectable, including, but not limited to, information with respect to
discoveries; know-how; ideas; computer programs, source codes and object codes;
designs; algorithms; processes and structures; product information; marketing
information; price lists; cost information; product contents and formulae;
manufacturing and production techniques and methods; research and development
information; lists of clients and vendors and other information relating
thereto; financial data and information; business plans and processes;
documentation with respect to any of the foregoing; and any other information of
the Licensor that the Licensor informs the Licensee or its Agents or the
Licensee or its Agents should know, by virtue of its or their position or the
circumstances in which the Licensee or its Agents learned such other
information, is to be kept confidential including, but not limited to, any
information acquired by the Licensee or its Agents from any sources prior to the
commencement of this Agreement.  Confidential Information also
includes similar information obtained by the Licensor in confidence from its
vendors, licensors, sublicensees, customers and/or
clients.  Confidential Information may or may not be labeled as
confidential.

    “Immediate
Family” shall include the following: (A) any spouse, parent, spouse of a parent,
mother-in-law, father-in-law, brother-in-law, sister-in-law, child, spouse of a
child, adopted child, spouse of an adopted child, sibling, spouse of a sibling,
grandparent, spouse of a grandparent, and any issue or spouse of any of the
foregoing, and (B) such child or issue of such child which is born and/or
adopted during or after the term of this Agreement and the issue (whether by
blood or adoption) of such person; provided, however, that it shall not include
any person who was legally adopted after attaining the age of eighteen (18) by
any of the persons specified in this Paragraph “A” of this Article “16” of this
Agreement or any spouse or issue (whether by blood or adoption) of any such
person.  A parent of a specified person shall include an
affiliate.

     B. Except as
required in the performance of the Licensee’s or its Agents’ obligations
pursuant to this Agreement, neither the Licensee nor its Agents shall, during or
after the Term, directly or indirectly, use any Confidential Information or
disseminate or disclose any Confidential Information to any person, firm,
corporation, association or other entity.  The Licensee or its Agents
shall take reasonable measures to protect Confidential Information from any
accidental, unauthorized or premature use, disclosure or
destruction.  Information shall not be considered Confidential
Information if it: (i) is at the time of disclosure or thereafter a part of the
public domain without breach of this Agreement by the Licensee or its Agents;
provided, however, that the act of copyrighting shall not cause or be construed
as causing the copyrighted materials to be in the public domain, (ii) is
disclosed as reasonably required in a proceeding to enforce the Licensee’s
rights under this Agreement or (iii) is disclosed as required by court order or
applicable law; provided, however, that if either the Licensee or its Agents is
legally requested or required by court order or applicable law, including, but
not limited to, by oral question, interrogatories, request for information or
documents, subpoenas, civil investigative demand or similar process to disclose
any Confidential Information, the Licensee or its Agents, as the case may be,
shall promptly notify the Licensor of such request or requirement so that the
Licensor may seek an appropriate protective order; provided further, however;
that if such protective order is not obtained, the Licensee and its Agents agree
to furnish only that portion of the Confidential Information which they are
advised by their respective counsels is legally required. 

     C. Upon
termination of this Agreement for any reason or at any time upon request of the
Licensor, the Licensee and its Agents agree to deliver to the Licensor all
materials of any nature which are in the Licensee's or its Agents’ possession or
control and which are or contain Confidential Information, Work Product or Work
Products (hereinafter defined), or which are otherwise the property of the
Licensor or any vendor, licensor, sublicensee, customer or client of the
Licensor, including, but not limited to writings, designs, documents, records,
data, memoranda, tapes and disks containing software, computer source code
listings, routines, file layouts, record layouts, system design information,
models, manuals, documentation and notes.  The Licensee and its Agents
shall destroy all written documentation prepared by them for internal purposes
based in whole or in part on any Confidential Information and such destruction
shall be confirmed to the Licensor in writing by an officer of the Licensee
and/or its Agents. 

    D. All
ideas, inventions, discoveries or improvements, whether patentable or not,
conceived by the Licensee or its Agents (alone or with others) during the Term
(“Work Products”) shall be the exclusive property of and assigned to the
Licensor or as the Licensor may direct without compensation to the Licensee or
its Agents.  Any records with respect to the foregoing shall be the
sole and exclusive property of the Licensor and the Licensee or its Agents shall
surrender possession of such records to the Licensor upon termination of this
Agreement.  Any Work Product shall be deemed incorporated in the
definition of Confidential Information for all purposes hereunder.

    E. Neither
the Licensee nor its Agents shall assert any rights with respect to the
Licensor, its business, or any of its products, processes and other services
relating thereto, Work Product or any Confidential Information as having been
acquired or known by the Licensee or its Agents prior to the commencement of the
Term.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    17.           Protection of Patents;
Indemnification; Defense; Products Liability.

    A. If the
Licensee learns of any infringement of any Patents, Licensee shall promptly
notify the Licensor of such information.  Upon learning of such
information, the Licensor shall take such action as it deems advisable in its
sole and absolute discretion for the protection of the Patents.

    B. In order
to induce the Licensor to enter into this Agreement, the Licensee agrees, on its
own behalf and on behalf of its Agents, that they shall not during the Term and
for a period of five (5) years from the date of termination of this Agreement
(i) personally, or cause others to personally induce or attempt to induce any
employee to terminate their employment with the Licensor; (ii) interfere with or
disrupt the Licensor's relationship with its suppliers, vendors, customers or
employees; or (iii) solicit or entice any person to leave their employ with the
Licensor.

    C. The
Licensee agrees, on its behalf and on behalf of its Agents, that the duration,
scope and geographic area for which the provisions set forth in Paragraph “B” of
this Article “17” of this Agreement are to be effective are
reasonable.  If any court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable by reason of such
provision extending the covenants and agreements contained herein for too great
a period of time or over too great a geographical area, or by reason of it being
too extensive in any other respect, such agreement or covenant shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action.  Any
determination that any provision of this Agreement is invalid or unenforceable,
in whole or in part, shall have no effect on the validity or enforceability of
any remaining provision of this Agreement.

    D. Any
period of time set forth in this Agreement shall not be construed to permit the
Licensee or its Agents to engage in any of the prohibited acts set forth in this
Agreement after such period if such acts would otherwise be prohibited by any
applicable statute or legal precedent.

    


    18.           Indemnification.

    A. Indemnification by the
Licensee.  In order to induce the Licensor to enter into and
perform this Agreement, the Licensee does hereby indemnify, protect, defend and
save and hold harmless the Licensor and each of its shareholders, affiliates,
officers, directors, control persons, employees, attorneys, agents, partners and
trustees and personal representatives of any of the foregoing (“Indemnified
Parties”), from and against any loss resulting to any of them from any material
loss, liability, cost, damage, or expense which the Indemnified Parties may
suffer, sustain or incur arising out of or due to a breach by the Licensee of
the representations, warranties and covenants set forth in Article “10” of this
Agreement or in any documents delivered pursuant hereto, or of a breach by the
Licensee of any of its obligations pursuant to this Agreement or in any
documents delivered pursuant hereto.

    B. Indemnification by the
Licensor.  In order to induce the Licensee to enter into and
perform this Agreement, the Licensor does hereby indemnify, protect, defend and
save and hold harmless the Licensee and each of its members, affiliates,
officers, managers, control persons, employees, attorneys, agents, partners and
trustees and personal representatives of any of the foregoing (“Indemnified
Parties”), from and against any loss resulting to any of them from any material
loss, liability, cost, damage, or expense which the Indemnified Parties may
suffer, sustain or incur arising out of or due to a breach by the Licensor of
the representations, warranties and covenants set forth in Article “9” of this
Agreement or in any documents delivered pursuant hereto, or of a breach by the
Licensor of any of its obligations pursuant to this Agreement or in any
documents delivered pursuant hereto.

    C. Reasonable Costs,
Etc.  The indemnification which is set forth in this Article
“18” of this Agreement shall be deemed to include not only the specific
liabilities or obligation with respect to which such indemnity is provided, but
also all counsel fees, reasonable costs, expenses and expenses of settlement
relating thereto, whether or not any such liability or obligation shall have
been reduced to judgment.

    D. Third Party
Claims.  If any demand, claim, action or cause of action, suit,
proceeding or investigation (collectively, the “Claim”) is brought against an
Indemnified Party for which the Indemnified Party intends to seek indemnity from
the other party hereto (the “Indemnifying Party”), then the Indemnified Party
within twenty-one (21) days after such Indemnified Party's receipt of the Claim,
shall notify the Indemnifying Party pursuant to Paragraph “C” of Article “21” of
this Agreement which notice shall contain a reasonably thorough description of
the nature and amount of the Claim (the “Claim Notice”).  The
Indemnifying Party shall have the option to undertake, conduct and control the
defense of such claim or demand.  Such option to undertake, conduct
and control the defense of such claim or demand shall be exercised by notifying
the Indemnified Party within ten (10) days after receipt of the Claim Notice
pursuant to Paragraph “C” of Article “21” of this Agreement (such notice to
control the defense is hereinafter referred to as the “Defense
Notice”).  The failure of the Indemnified Party to notify the
Indemnifying Party of the Claim shall not relieve the Indemnifying Party from
any liability which the Indemnifying Party may have pursuant to this Article
“18” of this Agreement except to the extent that such failure to notify the
Indemnifying Party prejudices the Indemnifying Party.  The Indemnified
Party shall use all reasonable efforts to assist the Indemnifying Party in the
vigorous defense of the Claim.  All costs and expenses incurred by the
Indemnified Party in defending the Claim shall be paid by the Indemnifying
Party.  If, however, the Indemnified Party desires to participate in
any such defense or settlement, it may do so at its sole cost and expense (it
being understood that the Indemnifying Party shall be entitled to control the
defense).  The Indemnified Party shall not settle the
Claim.  If the Indemnifying Party does not elect to control the
defense of the Claim, within the aforesaid ten (10) day period by proper notice
pursuant to Paragraph “C” of Article “21” of this Agreement, then the
Indemnified Party shall be entitled to undertake, conduct and control the
defense of the Claim (a failure by the Indemnifying Party to send the Defense
Notice to the Indemnified Party within the aforesaid ten (10) day period by
proper notice pursuant to Paragraph “C” of Article “21” of this Agreement shall
be deemed to be an election by the Indemnifying Party not to control the defense
of the Claim); provided, however, that the Indemnifying Party shall be entitled,
if it so desires, to participate therein (it being understood that in such
circumstances, the Indemnified Party shall be entitled to control the
defense).  Regardless of which party has undertaken to defend any
claim, the Indemnifying Party may, without the prior written consent of the
Indemnified Party, settle, compromise or offer to settle or compromise any such
claim or demand; provided however, that if any settlement would result in the
imposition of a consent order, injunction or decree which would restrict the
future activity or conduct of the Indemnified Party, the consent of the
Indemnified Party shall be a condition to any such
settlement.  Notwithstanding the foregoing provisions of this Article
“18” of this Agreement, as a condition to the Indemnifying Party either having
the right to defend the Claim, or having control over settlement as indicated in
this Article “18” of this Agreement, the Indemnifying Party shall execute an
agreement, in the form annexed hereto and made a part hereof as Exhibit “F”,
acknowledging its liability for indemnification pursuant to this Article “18” of
this Agreement.  Whether the Indemnifying Party shall control and
assume the defense of the Claim or only participate in the defense or settlement
of the Claim, the Indemnified Party shall give the Indemnifying Party and its
counsel access, during normal business hours, to all relevant business records
and other documents, and shall permit them to consult with its employees and
counsel.

    


    19.           Equitable
Relief.  If the Licensee breaches this Agreement, the Licensor
shall have the right, at its election, to obtain equitable relief including, but
not limited to, an order for specific performance of this Agreement or an
injunction, without the need to: (i) post a bond or other security, (ii) to
prove any actual damage or (iii) to prove that money damages would not provide
an adequate remedy.  Resort to such equitable relief, however, shall
not be construed to be a waiver of any other rights or remedies which the
Licensor may have for damages or otherwise.

    


     20.           No
Agency.  Except as provided for in this Agreement, neither
party is the legal representative or agent of, or has the power to obligate the
other for any purpose whatsoever; and no partnership, joint venture, agent,
fiduciary, or employment relationship is intended or created by reason of this
Agreement.  It is the intent of the parties hereto that each party
shall be an independent contractor of the other.  Neither has the
authority to assume or create any obligation or liability, express or implied,
upon the other’s behalf or in its name or to bind the other in any manner
whatsoever.  The Licensee shall not sign any document as an authorized
person of the Licensor and none of its employees or shareholders shall hold
themselves out as officers, directors, or shareholders of the Licensor, or as
otherwise having any authority to enter into contracts binding upon the
Licensor, or to create any obligations on the part of the Licensor; provided,
however, that any employee of the Licensee who is an officer, director,
shareholder or employee of the Licensor may utilize such authority as is
appropriate to his or her position with the Licensor.  The Licensor
shall not sign any document as an authorized person of the Licensee and none of
its employees or shareholders shall hold themselves out as officers, managers,
or members of the Licensee, or as otherwise having any authority to enter into
contracts binding upon the Licensee, or to create any obligations on the part of
the Licensee; provided, however, that any employee of the Licensor who is an
officer, director, shareholder or employee of the Licensee may utilize such
authority as is appropriate to his or her position with the
Licensee. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    21.           Miscellaneous.

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

    B. Enforceability.  If
any provision which is contained in this Agreement should, for any reason, be
held to be invalid or unenforceable in any respect under the laws of any
jurisdiction, such invalidity or unenforceability shall not affect any other
provision of this Agreement and this Agreement shall be construed as if such
invalid or unenforceable provision had not been contained herein.

    C. Notices.  Any
notice or other communication required or permitted hereunder shall be
sufficiently given if sent by (i) mail by (a) certified mail, postage prepaid,
return receipt requested and (b) first class mail, postage prepaid (ii)
overnight delivery with confirmation of delivery or (iii) facsimile transmission
with an original mailed by first class mail, postage prepaid, addressed as
follows:

    


    To the
Licensor:                                                       
           Avalon Oil
& Gas, Inc.

    7808 Creekridge Circle

    Suite 105

     Minneapolis, MN 
55439 

    Attn: Mr. Kent Rodriguez,
President

    Fax No.: (952) 746-5216

    


    With a
copy
to:                                                          
         Mintz & Fraade,
P.C.

    488 Madison Avenue

    New York, New York 10022

    Attn: Frederick M. Mintz,
Esq.

    Fax No.: (212) 486-0701

    


    To the
Licensee:                                                      
            Oiltek,
Inc.

    7808 Creekridge Circle

    Suite 105

     Minneapolis, MN 
55439 

    Attn: Ms. Jill Allison

    Fax No.: (952) 746-5216

    


    With a
copy
to:                                                     
              Mintz
& Fraade, P.C.

    488 Madison Avenue

    New York, New York 10022

    Attn: Frederick M. Mintz,
Esq.

    Fax No.: (212) 486-0701

    


    or in
each case to such other address and facsimile number as shall have last been
furnished by like notice.  If all of the methods of notice set forth
in this Paragraph “C” of this Article “21” of this Agreement are impossible for
any reason, notice shall be in writing and personally delivered to the aforesaid
addresses.  Each notice or communication shall be deemed to have been
given as of the date so mailed or delivered as the case may be; provided,
however, that any notice sent by facsimile shall be deemed to have been given as
of the date so sent if a copy thereof is also mailed by first class mail on the
date sent by facsimile.  If the date of mailing is not the same as the
date of sending by facsimile, then the date of mailing by first class mail shall
be deemed to be the date upon which notice is given; provided further, however,
that any notice sent by overnight delivery shall be deemed to have been given as
of the date of delivery.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    D. Governing Law;
Disputes.  This Agreement shall in accordance with Section
5-1401 of the General Obligations Law of New York in all respects be construed,
governed, applied and enforced under the internal laws of the State of New York
without giving effect to the principles of conflicts of laws and be deemed to be
an agreement entered into in the State of New York and made pursuant to the laws
of the State of New York.  Except as otherwise set forth in Article
“19” of this Agreement, the parties agree that they shall be deemed to have
agreed to binding arbitration with respect to the entire subject matter of any
and all disputes relating to or arising under this Agreement including, but not
limited to, the specific matters or disputes as to which arbitration has been
expressly provided for by other provisions of this Agreement and that any such
arbitration shall be commenced exclusively in New York, New York.  Any
such arbitration shall be by a panel of three arbitrators and pursuant to the
commercial rules then existing of the American Arbitration Association in the
State of New York, County of New York.  In all arbitrations, judgment
upon the arbitration award may be entered in any court having
jurisdiction.  The parties specifically designate the courts in the
City of New York, State of New York as properly having jurisdiction for any
proceeding to confirm and enter judgment upon any such arbitration
award.  The parties hereby consent to and submit to the exclusive
jurisdiction of the courts of the State of New York in any action or proceeding
and submit to personal jurisdiction over each of them by such
courts.  The parties hereby waive personal service of any and all
process and specifically consent that in any such action or proceeding brought
in the courts of the State of New York, any service of process may be
effectuated upon any of them by certified mail, return receipt requested, in
accordance with Paragraph “C” of this Article “21” of this
Agreement.  Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law.

     The
parties agree, further, that the prevailing party in any such arbitration as
determined by the arbitrators shall be entitled to such costs and attorney's
fees, if any, in connection with such arbitration as may be awarded by the
arbitrators.  In connection with the arbitrators’ determination for
the purpose of which party, if any, is the prevailing party, they shall take
into account all of the factors and circumstances including, without limitation,
the relief sought, and by whom, and the relief, if any, awarded, and to
whom.  In addition, and notwithstanding the foregoing sentence, a
party shall not be deemed to be the prevailing party in a claim seeking monetary
damages, unless the amount of the arbitration award exceeds the amount offered
in a legally binding writing by the other party by fifteen (15%) percent or
more.  For example, if the party initiating arbitration (“A”) seeks an
award of one hundred thousand ($100,000) dollars plus costs and expenses, the
other party (“B”) has offered A fifty thousand ($50,000) dollars in a legally
binding written offer prior to the commencement of the arbitration proceeding,
and the arbitration panel awards any amount less than fifty-seven thousand five
hundred ($57,500) dollars to A, the panel should determine that B has
“prevailed”. 

     The
arbitration panel shall have no power to award non-monetary or equitable relief
of any sort.  It shall also have no power to award (i) damages
inconsistent with any applicable agreement between the parties or (ii) punitive
damages or any other damages not measured by the prevailing party’s actual
damages; and the parties expressly waive their right to obtain such damages in
arbitration or in any other forum.  In no event, even if any other
portion of these provisions is held invalid or unenforceable, shall the
arbitration panel have power to make an award or impose a remedy which could not
be made or imposed by a court deciding the matter in the same
jurisdiction. 

    Discovery
shall be permitted in connection with the arbitration only to the extent, if
any, expressly authorized by the arbitration panel upon a showing of substantial
need by the party seeking discovery.

    All
aspects of the arbitration shall be treated as confidential.  The
parties and the arbitration panel may disclose the existence, content or results
of the arbitration only as provided in the rules of the American Arbitration
Association in New York, New York.  Before making any such disclosure,
a party shall give written notice to all other parties and shall afford such
parties a reasonable opportunity to protect their interest.

     E. No Assignment by the
Licensee.  The rights granted pursuant to this Agreement shall
not be transferable by the Licensee, without the Licensor’s prior written
consent. 

    F. Assignment by the
Licensor.  This Agreement shall be transferable by the
Licensor.

    G. Construction.  Each
of the parties hereto hereby acknowledges and agrees that (i) Mintz &
Fraade, P.C. drafted this Agreement on behalf of both of the parties to this
Agreement and (ii) this Agreement shall not, therefore, be construed more
strictly against any party responsible for its drafting regardless of any
presumption or rule requiring construction against the party whose attorney
drafted this Agreement.

    H. Entire
Agreement.    This Agreement and all documents and
instruments referred to herein (i) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof, and (ii) are not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.  Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither the Licensor
nor the Licensee makes any other representations or warranties, and each hereby
disclaims any other representations and warranties made by itself or any of its
officers, directors, managers, employees, agents, financial and legal advisors
or other representatives, with respect to the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to the other or the other's representatives of any documentation
or other information with respect to any one or more of the
foregoing.

    I. Further
Assurances.  The parties agree to execute any and all such
other further instruments and documents, and to take any and all such further
actions which are reasonably required to effectuate this Agreement and the
intents and purposes hereof.

    J. Binding
Agreement.  This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
personal representatives, successors and assigns.

    K. Non-Waiver.  Except
as otherwise expressly provided herein, no waiver of any covenant, condition, or
provision of this Agreement shall be deemed to have been made unless expressly
in writing and signed by the party against whom such waiver is charged; and (i)
the failure of any party to insist in any one or more cases upon the performance
of any of the provisions, covenants or conditions of this Agreement or to
exercise any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants or conditions,
(ii) the acceptance of performance of anything required by this Agreement to be
performed with knowledge of the breach or failure of a covenant, condition or
provision hereof shall not be deemed a waiver of such breach or failure, and
(iii) no waiver by any party of one breach by another party shall be construed
as a waiver of any other or subsequent breach of this Agreement.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    L. Counterparts.  This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

    


    M. Facsimile
Signatures.  Any signature which is delivered via facsimile
shall be deemed to be an original and have the same force and effect as if such
facsimile signature were the original thereof.

    


    N. Modifications. This
Agreement may not be changed, modified, extended, terminated or discharged
orally, except by a written agreement specifically referring to this Agreement
which is signed by all of the parties to this Agreement.

    


    O. Exhibits.  All
Exhibits annexed or attached to this Agreement are incorporated into this
Agreement by reference thereto and constitute an integral part of this
Agreement.

    


    P. Survival.  All
of the provisions and obligations of this Agreement shall survive the
termination of this Agreement.

    


    Q. Severability.  The
provisions of this Agreement shall be deemed separable. Therefore, if any part
of this Agreement is rendered void, invalid or unenforceable, such rendering
shall not affect the validity or enforceability of the remainder of this
Agreement; provided that if the part or parts which are void, invalid or
unenforceable as aforesaid shall substantially impair the value of the whole
Agreement to either party, that party may cancel, and terminate the Agreement by
giving written notice to the other party.

    


    IN WITNESS WHEREOF, the
parties to this Agreement have set their hands and seals or caused these
presents to be signed of the day and year first above written.

    


    Avalon
Oil & Gas, Inc.

    


     By:   /s/ Kent
Rodriguez_______________ 

              Kent
Rodriguez, President 

    


     Oiltek,
Inc. 

    


     By:   /s/ Jill
Allison__________________ 

              Jill
Allison, President 

    


     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    List
of Exhibits

    


     

    
      
        	
                Exhibit
      A:

              	
                Patents

              
	 
      	 
      
	
                Exhibit
      B:

              	
                Territories

              
	 
      	 
      
	
                Exhibit
      C:

              	
                Agreement
      of Sublicensee

              
	 
      	 
      
	
                Exhibit
      D:

              	
                Minutes
      of Meeting of the Licensor’s Board of Directors

              
	 
      	 
      
	
                Exhibit
      E:

              	
                Minutes
      of Meeting of the Licensee’s Board of Directors

              
	 
      	 
      
	
                Exhibit
      F:

              	
                Form
      of Letter Agreement to be Executed Pursuant to Article “18” of the
      Agreement

              


      

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT
A

    


    PATENTS

     

    “Patents”
shall mean the following patent, patent applications, patents issuing from the
following applications, and all patents which are reissues, reexaminations,
extensions, continuations or divisionals of any of the following patent or
patents issuing from the following applications:

     

    
      	
              o

            	 
      	
              International
      Patent Application 2004/024309A2, filed 9/12/03, titled “System and Method
      for the Mitigation of Paraffin Wax Deposition From Crude Oil by Using
      Ultrasonic Waves,” Inventor: Brian Francis Towler,
  PhD

            


    

     

    
      	
              o

            	 
      	
              United
      States, Patent No. _______, filed 3/11/05, granted _______, “System and
      Method for the Mitigation of Paraffin Wax Deposition from Crude Oil by
      Using Ultrasonic Waves,” Inventor: Brian Francis Towler,
    PhD

            


    

     

    
      	
              o

            	 
      	
              Nationalized
      PCT Canada, Application No. 2,498,742 filed 3/11/05, “System and Method
      for the Mitigation of Paraffin Wax Deposition from Crude Oil by Using
      Ultrasonic Waves,” Inventor: Brian Francis Towler,
  PhD

            


    

     

    
      	
              o

            	 
      	
              United
      States, Application No. 11/237054 filed 9/27/05, “Well Casing
      Based-Geophysical Sensor Apparatus, System and Method,” Inventor William
      Daily.

            


    

    


    
      	
              o

            	 
      	
              United
      States, Patent No. 5,416,724 filed 10/9/92, granted 5/16/95, “Detection of
      Leaks in Pipelines,” Inventor Michael
Savic.

            


    

    


    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


     

    


    EXHIBIT
B

    


    TERRITORIES

    


    “System
and Method for the Mitigation of Paraffin Wax Deposition From Crude Oil by Using
Ultrasonic Waves” – Worldwide

    


    “Well
Casing Based-Geophysical Sensor Apparatus, System and Method” – United
States

    


    “Detection
of Leaks in Pipelines” – United States

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C

    


     AGREEMENT
OF SUBLICENSEE 

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    


    EXHIBIT
D

     

     MINUTES
OF MEETING OF THE LICENSOR’S BOARD OF DIRECTORS 

    


     UNANIMOUS
WRITTEN CONSENT 

     OF 

     THE
DIRECTORS 

     IN
LIEU OF A MEETING OF THE BOARD OF DIRECTORS 

     OF 

     AVALON
OIL & GAS, INC. 

    


              The
undersigned, being all of the directors of Avalon Oil & Gas, Inc. (the
"Corporation"), a Nevada Corporation, in accordance with Section 78.315 of the
Nevada Revised Statutes, the following resolutions with the same force and
effect as if they had been unanimously adopted at a duly convened meeting of the
Board of Directors of the Corporation: 

    


              WHEREAS,
the Board of Directors believes it is in the best interests of the Corporation
to enter into the License Agreement with Oiltek, Inc. ("Oiltek"), a copy of
which is annexed hereto as Exhibit "A", pursuant to which the rights to certain
technologies which the Corporation acquired from UTEK Corporation will be
licensed to Oiltek in consideration of a payment by the Corporation to Oiltek of
$50,000, and Oiltek will issue ten million (10,000,000) shares of Common Stock
of Oiltek to the Corporation. 

    


              NOW
THEREFORE, it is 

    


              RESOLVED,
that the Board of Directors hereby authorizes the Corporation to enter into the
License Agreement with Oiltek, a copy of which is annexed hereto as Exhibit "A",
pursuant to which the rights to certain technologies which the Corporation
acquired from UTEK Corporation will be licensed to Oiltek in consideration of a
payment by the Corporation to Oiltek of $50,000, and Oiltek will issue ten
million (10,000,000) shares of Common Stock of Oiltek to the
Corporation. 

    


              RESOLVED,
that the officers of the Corporation, and each of them, are hereby authorized
and empowered, in the name and on behalf of the Corporation, to execute such
documents and to take such additional action as they or any of them may deem
necessary or desirable in order to implement the intents and purposes of the
foregoing resolution. 

    


              IN
WITNESS WHEREOF, the undersigned have executed this Written Consent as of the
20th day of August 2007. 

     

    /s/
Douglas Barton           


     Douglas
Barton 

    


    /s/
Thad
Kaplan               


     Thad
Kaplan 

    


    /s/
Kent Rodriguez           


     Kent
Rodriguez 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
E

     

     MINUTES
OF MEETING OF THE LICENSEE’S BOARD OF DIRECTORS 

    


     UNANIMOUS
WRITTEN CONSENT 

     OF 

     THE
DIRECTORS 

     IN
LIEU OF A MEETING OF THE BOARD OF DIRECTORS 

     OF 

     OILTEK,
INC. 

    


     The
undersigned, being all of the directors of Oiltek, Inc. (the "Corporation"), a
Delaware Corporation, in accordance with Section 141(f) of the General
Corporation Law of the State of Delaware, the following resolutions with the
same force and effect as if they had been unanimously adopted at a duly convened
meeting of the Board of Directors of the Corporation: 

    


              WHEREAS,
the Board of Directors believes it is in the best interest of the Corporation to
enter into the License Agreement with Avalon Oil & Gas, Inc. ("Avalon"), a
copy of which is annexed hereto as Exhibit "A", pursuant to which the rights to
certain technologies which Avalon acquired from UTEK Corporation will be
licensed to the Corporation in consideration of the issuance by the Corporation
of ten million (10,000,000) shares of Common Stock of the Corporation in the
name of Avalon, and a payment by Avalon to the Corporation of
$50,000. 

    


              NOW
THEREFORE, it is 

    


              RESOLVED,
that the Board of Directors hereby authorizes the Corporation to enter into the
License Agreement with Avalon, a copy of which is annexed hereto as Exhibit "A",
pursuant to which the rights to certain technologies which Avalon acquired from
UTEK Corporation will be licensed to the Corporation in consideration of the
issuance by the Corporation of ten million (10,000,000) shares of Common Stock
of the Corporation in the name of Avalon, and a payment by Avalon to the
Corporation of $50,000. 

    


              RESOLVED,
that the officers of the Corporation, and each of them, are hereby authorized
and empowered, in the name and on behalf of the Corporation, to execute such
documents and to take such additional action as they or any of them may deem
necessary or desirable in order to implement the intents and purposes of the
foregoing resolution. 

    


              IN
WITNESS WHEREOF, the undersigned have executed this Written Consent as of the
20th day of August 2007. 

     

    /s/
Douglas
Barton                  


     Douglas
Barton 

    


    /s/
Thad
Kaplan                      


     Thad
Kaplan 

    


    /s/
Kent
Rodriguez                


     Kent
Rodriguez 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
F

    


     FORM
OF LETTER AGREEMENT TO BE 

     EXECUTED
PURSUANT TO ARTICLE 18 

     OF THE
AGREEMENT 

    


     From:      The
Indemnifying Party 

     (Name and Address) 

    


     To:          The
Indemnified Party 

     (Name and Address) 

    


     Date: 

    


     Gentlemen/Ladies: 

    


     This
shall confirm and acknowledge that pursuant to Article “18” of the Exclusive
License Agreement (the “Agreement”) dated as of the 17th day of August, 2007, by
and between Avalon Oil & Gas, Inc. and Oiltek, Inc. the undersigned
acknowledges its liability for indemnification to you with respect to
_________________ (description of claim) (the "Claim”), and shall not take the
position that it is not liable to you with respect to the Claim.  Such
obligation is subject to all of the provisions, terms and conditions of the
Agreement. 

    


     Very truly yours, 

    


     ___________________________ 

     Name of Indemnifying
Party 

    


     By:
___________________________ 

     (Authorized
Signature) 

     STATE
OF                      ) 

                                               )ss.: 

     COUNTY
OF                  ) 

    


     On the
____ day of __________, ____ before me personally came __________ to me known,
who, being by me duly sworn, did depose and say that that he or she is the
____________ of __________________________, the company described in and which
executed the foregoing instrument; that he or she knows the seal of said
company; that the seal affixed to said instrument is such company’s seal; that
it was so affixed by order of the board of directors of said company, and that
he or she signed his or her name thereto by like order. 

     

     

    _____________________________

    Notary
Public