Document:

monarch10_3.htm

    Exhibit
      10.3

     

    PLACEMENT
      AGENT AND ADVISORY

    SERVICES
      AGREEMENT

    

    This
      Placement Agent and Advisory Services Agreement (this "Agreement") is
      made as of May 11, 2007 (the “Effective Date”), by and between Monarch
      Staffing, Inc., a Nevada corporation (together with its subsidiaries, the
      "Company"), and Monarch Bay Associates, LLC, a California limited
      liability company ("MBA").  MBA and the Company agree as
      follows:

    

    
      	
               

            	
              1.

            	
              Engagement
                of MBA:  The Company hereby engages MBA, and MBA
                hereby accepts such engagement, to act
                as:

            

    

    

    
      	
               

            	
              (a)   the
                Company's placement agent on an exclusive basis with respect to finding
                investors (the “Investors”) for an offering of the Company’s capital stock
                in a transaction or transactions exempt from registration under the
                Securities Act of 1933, as amended, and in compliance with the applicable
                laws and regulations of any jurisdiction in which securities are
                sold
                under this Agreement (a “Private Placement”);
                and

            

    

    

    
      	
               

            	
              (b)
                the Company’s advisor, on an exclusive basis, in identifying and
                introducing prospective parties to an acquisition, merger, joint
                venture
                or any other similar transaction or relationship, directly or indirectly,
                involving the Company (a
“Transaction”).

            

    

    

    The
      Company acknowledges and agrees that MBA's obligations hereunder are on a
      reasonable best efforts basis only and that the execution of this Agreement
      does
      not constitute a commitment by MBA to purchase the securities and does not
      ensure the successful placement of the securities or any portion thereof or
      the
      success of MBA with respect to securing any other financing or a Transaction
      on
      behalf of the Company.  MBA will act solely as a broker with respect
      to identifying and negotiating with potential investors in securities that
      may
      be issued in the Private Placement and potential parties to a Transaction.
      MBA
      will not act as an underwriter in any Private Placement or
      Transaction.

    

    
      	
              2.

            	
              MBA's
                Compensation:  The Company hereby agrees to pay MBA
                fees in such amount and upon such terms and conditions contained
                herein
                upon the successful completion of a Private Placement as
                follows:

            

    

    

    
      	
               

            	
              (a)  Retainer.  Upon
                execution of this Agreement, the Company will issue to MBA 5,000
                shares of
                its Series A Preferred Stock, par value $.001 per share, as a
                non-refundable retainer fee for the services provided by MBA
                hereunder.

            

    

    

    
      	
               

            	
              (b)
                Success Fees.  The Company will pay MBA a
                Success Fee, as described below, when the Company closes on a Private
                Placement or a Transaction during the Term (as hereinafter defined)
                of
                this Agreement or during a one-year period thereafter, so long as
                any
                purchasers of the Company’s capital stock or parties to a Transaction were
                identified by or introduced to the Company by MBA (or are affiliates
                of
                any person so identified or
                introduced).

            

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Computation
      and Payment of Success Fees.

    

    (i)  Private
      Placements.  For each Private Placement, the Success Fee will be
      (x) a cash fee equal to 9% of gross proceeds raised in the Private Placement
      (including, without limitation, upon exercise of any warrants issued in Private
      Placement) and (y) warrants (the “MBA Warrants”) to purchase 9% of the
      total number of shares of common stock issued and issuable by the Company to
      Investors under and in connection with the Private Placement, including (without
      limitation) shares issuable upon conversion or exercise of the securities sold
      in the Private Placement, at an exercise price equal to the purchase price
      of
      the common stock sold in the Private Placement or, in the event that securities
      convertible into common stock are sold in the Private Placement, the conversion
      price of such securities.

    

    The
      cash
      portion of the Success Fee will be due and payable upon the closing of each
      Private Placement and will be payable directly to MBA from the escrow
      established for such closing or in such other manner as may be acceptable to
      MBA.

    

    MBA
      Warrants will have a five (5) year term (or such longer term as is provided
      in
      any warrants issued in the Private Placement) and will provide for cashless
      exercise (even if the Investors do not have such a right).  MBA
      Warrants will have the benefit of full ratchet anti-dilution protection against
      issuances of securities at prices (or with conversion or exercise prices, in
      the
      case of convertible securities, warrants, options or rights) below the exercise
      price of MBA Warrants. MBA Warrants will not be callable or redeemable. The
      shares underlying MBA Warrants will be included in the first registration
      statement filed by the Company covering the securities issued in the Private
      Placement (or securities issuable upon conversion or exercise
      thereof).  MBA Warrants will be transferable within MBA’s
      organization, at MBA’s discretion.  MBA Warrants will contain such
      other terms and conditions no less favorable to MBA than the term and conditions
      of any warrants issued to the Investors in the Private Placement.

    

    (ii)  Transactions.  For
      each Transaction, the Success Fee will be a cash fee equal to 3% of the Total
      Consideration (as defined below) with respect to such Transaction.  As
      used herein. “Total Consideration" means, with respect to any
      Transaction, the total value of all cash, securities, or other property paid
      or
      received, directly or indirectly, by the Company or its owners (at closing
      or in
      the future) in connection with such Transaction, including (without limitation)
      in respect of (i) the assumption (by contract, operation of law or otherwise)
      of
      any indebtedness or (ii) consulting, non-compete or similar
      agreements.

    

    The
      Success Fee will be due and payable upon the closing of each Transaction and
      will be payable directly to MBA from the escrow established for such closing
      or
      in such other manner as may be acceptable to MBA; provided that in the
      case of any installment or contingent payment made in respect of the
      Transaction, the Success Fee in respect of such installment or contingent
      payment shall be due and payable on the date such payment is made.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              3.  

            	
              Certain
                Matters Relating to MBA’s
                Duties:

            

    

    

    
      	
              (a)  

            	
              MBA
                shall (i) assist the Company in the preparation
                of   information documents to be shared with potential
                Investors and parties to Transactions (ii) identify and screen potential
                Investors and parties to Transactions, and (iii) perform other related
                duties.

            

    

    

    
      	
              (b)  

            	
              MBA
                shall perform its duties under this Agreement in a manner consistent
                with
                the instructions of the Company. Such performance shall include the
                delivery of information to potential interested parties, conducting
                due
                diligence, and leading discussions with potential Investors and parties
                to
                Transactions.

            

    

    

    
      	
              (c)  

            	
              MBA
                shall not engage in any form of general solicitation or advertising
                in
                performing its duties under this Agreement. This prohibition includes,
                but
                is not limited to, any mass mailing, any advertisement, article or
                notice
                published in any magazine, newspaper or newsletter and any seminar
                or
                meeting where the attendees have been invited by any mass mailing,
                general
                solicitation or advertising.

            

    

    

    
      	
              (d)  

            	
              MBA
                is and will hereafter act as an independent contractor and not as
                an
                employee of the Company and nothing in this Agreement shall be interpreted
                or construed to create any employment, partnership, joint venture,
                or
                other relationship between MBA and the Company. MBA will not hold
                itself
                out as having, and will not state to any person that MBA has, any
                relationship with the Company other than as an independent contractor.
                MBA
                shall have no right or power to find or create any liability or obligation
                for or in the name of the Company or to sign any documents on behalf
                of
                the Company.

            

    

    

    
      	
              4.  

            	
              Certain
                Matters Relating to Company’s
                Duties:

            

    

    

    
      	
               

            	
              (a)

            	
              The
                Company shall promptly provide MBA with all relevant information
                about the
                Company (to the extent available to the Company in the case of parties
                other than the Company) that shall be reasonably requested or required
                by
                MBA, which information shall be complete and accurate in all material
                respects at the time furnished.

            

    

    

    
      	
               

            	
              (b)

            	
              The
                Company recognizes that in order for MBA to perform properly its
                obligations in a professional manner, it is necessary that MBA be
                informed
                of and, to the extent practicable, participate in meetings and discussions
                between the Company and any third party, including, without limitation,
                any prospective purchaser of the Company’s securities, relating to the
                matters covered by the terms of MBA's
                engagement.

            

    

    

    
      	
               

            	
              (c)

            	
              The
                Company agrees that any report or opinion, oral or written, delivered
                to
                it by MBA is prepared solely for its confidential use and shall not
                be
                reproduced, summarized, or referred to in any public document or
                given or
                otherwise divulged to any other person without MBA's prior written
                consent, except as may be required by applicable law or
                regulation.

            

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (d)

            	
              The
                Company represents and warrants that: (i) it has full right, power
                and
                authority to enter into this Agreement and to perform all of its
                obligations hereunder; (ii) this Agreement has been duly authorized
                and
                executed by and constitutes a valid and binding agreement of the
                Company
                enforceable in accordance with its terms; and (iii) the execution
                and
                delivery of this Agreement and the consummation of the transactions
                contemplated hereby do not conflict with or result in a breach of
                the
                Company's certificate of incorporation or by-laws. Further, this
                Agreement
                and the transactions contemplated herein shall not conflict with
                or result
                in the breach of any agreement to which the Company is a party at
                the time
                the transactions contemplated herein are
                consummated.

            

    

    

    
      	
              5.  

            	
              Term;
                Termination of Agreement. The term of this Agreement shall
                commence on the Effective Date and shall expire one year thereafter
                unless
                terminated earlier pursuant to the terms of this paragraph (the
                “Term”).  Either party may terminate this Agreement prior to its
                expiration by notifying the other party in writing upon a material
                breach
                by that other party, unless such breach is curable and is in fact
                cured
                within fifteen (15) days after such
                notice.    Notwithstanding the foregoing, all
                provisions of this Agreement (including Exhibit A hereto) other than
                Sections 1, 3 and 4 (a) and (b) shall survive the termination or
                expiration of this Agreement.  MBA shall be entitled to
                compensation under Section 2 (and payment for non-accountable expenses
                under Section 12) based on the completion of a Private Placement
                or a
                Transaction prior to the termination or expiration of this Agreement
                or
                during the period one year following termination so long as any Investors
                or party to a Transaction, as the case may be, (or any affiliate
                of any
                such person or entity) were identified by or introduced to the Company
                by
                MBA.  MBA will provide to the Company within ten business days
                after the expiration or termination of this Agreement a list of all
                persons or entities identified by or introduced to the Company by
                MBA
                pursuant to this Agreement (the “Introduction List”).  Within
                five business day following the delivery of the Introduction List
                to the
                Company, the Company will provide MBA with written notice of any
                objections to the inclusion of any person or entity in the Introduction
                List and state the basis for each objection in reasonable
                detail.   The inclusion of a person or entity in the
                Introduction List shall be deemed conclusive in making a later
                determination as to whether a Success Fee is payable hereunder, unless
                the
                Company shall have made a timely and proper objection.  The
                parties will cooperate to resolve the status of any person or entity
                as to
                which the Company shall have made a timely and proper
                objection.

            

    

    

    Except
      as
      otherwise specifically provided for herein, the Company shall have no liability
      to MBA should the Company terminate this Agreement prior to the completion
      of a
      Private Placement or a Transaction.

    

    
      	
              6.  

            	
              Indemnification.  The
                indemnification provisions set forth in Exhibit A hereto are incorporated
                by reference and are a part of this
                Agreement.

            

    

    

    
      	
              7.  

            	
              Notices.
                Any notice, consent, authorization or other communication to be given
                hereunder shall be in writing and shall be deemed duly given and
                received
                when delivered personally, when transmitted by fax during the normal
                business hours of the party receiving such notice so long a copy
                of that
                notice is also send by certified mail, return receipt requested at
                the
                time it is transmitted by fax,  five business  days
                after being mailed by certified mail, return receipt requested or
                one
                business day after being sent by a nationally recognized overnight
                delivery service, charges and postage prepaid, properly addressed
                to the
                party to receive such notice, at the following address or fax number
                for
                such party (or at such other address or fax number as shall hereafter
                be
                specified by such party by like
                notice):

            

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a)           If
      to the Company, to:

    

    Monarch
      Staffing, Inc.

    ATTN:
      Chief Executive Officer

    30950
      Rancho Viejo Rd #120

    San
      Juan
      Capistrano, California 92675

    Telephone
      Number:

    Fax
      Number:

    E-mail:                      

    

    (b)           If
      to MBA, to:

    

    David
      Walters, Managing Director

    Monarch
      Bay Associates, LLC

    30950
      Rancho Viejo Rd #120

    San
      Juan
      Capistrano, California 92675

    Telephone
      Number:                  (949)
      260-0150

    Fax
      Number:                                (815)
      301-8756

    E-mail:

    

    
      	
              8.  

            	
              Company
                to Control Transactions.  The
                terms and conditions under which the Company would enter into a Private
                Placement or a Transaction shall be at the sole discretion of the
                Company.  Nothing in this Agreement shall obligate the Company
                to actually consummate a Private Placement or a
                Transaction.  The Company may terminate any negotiations or
                discussions at any time and reserves the right not to proceed with
                a
                Private Placement or a Transaction.

            

    

    

    
      	
              9.  

            	
              Confidentiality
                of Company Information. MBA, and its officers, directors,
                employees and agents shall maintain in strict confidence and not
                copy,
                disclose or transfer to any other party (1) all confidential business
                and
                financial information regarding the Company and its affiliates, including
                without limitation, projections, business plans, marketing plans,
                product
                development plans, pricing, costs, customer, vendor and supplier
                lists and
                identification, channels of distribution, and terms of identification
                of
                proposed or actual contracts and (2) all confidential technology
                of the
                Company. In furtherance of the foregoing, MBA agrees that it shall
                not
                transfer, transmit, distribute, download or communicate, in any
                electronic, digitized or other form or media, any of the confidential
                technology of the Company. The foregoing is not intended to preclude
                MBA
                from utilizing, subject to the terms and conditions of this Agreement,
                the
                Private Placement or Offering Memorandum and/or other documents prepared
                or approved by the Company.  Further, the Company must approve
                the Private Placement or Offering Memorandum, being prepared by MBA,
                before it is mailed to prospective Investors or parties to a
                Transaction.

            

    

    

    All
      communications regarding any possible transactions, requests for due diligence
      or other information, requests for facility tours, product demonstrations or
      management meetings, will be submitted or directed to the Company, and MBA
      shall
      not contact any employees, customers, suppliers or contractors of the Company
      or
      its affiliates without express permission.  Nothing in this Agreement
      shall constitute a grant of authority to MBA or any representatives thereof
      to
      remove, examine or copy any particular document or types of information
      regarding the Company, and the Company shall retain control over the particular
      documents or items to be provided, examined or copied. If a Private Placement
      or
      a Transaction is not consummated, or if at any time the Company so requests,
      MBA
      and its representatives will return to the Company all copies of information
      regarding the Company in their possession.

    

    The
      provisions of this Section shall survive any termination of this
      Agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              10.  

            	
              Press
                Releases, Etc.  The Company shall control all press
                releases or announcements to the public, the media or the industry
                regarding any Private Placement, Transaction or business relationship
                involving the Company or its affiliates.  Except for
                communication to Investors in furtherance of this Agreement, MBA
                will not
                disclose the fact that discussions or negotiations are taking place
                concerning a possible Private Placement or a Transaction involving
                the
                Company, or the status or terms and conditions
                thereof.

            

    

    

    
      	
              11.  

            	
              Due
                Diligence: Neither the Company, nor any of
                its directors, officers or stockholders, should, in any way rely
                on MBA to
                perform any due diligence with respect to the Company.  It is
                expressly understood and agreed that the Investors and parties to
                any
                Transaction will conduct their own due diligence on the Company and
                the
                opportunity.

            

    

    

    
      	
              12.  

            	
              Expenses,
                Etc. The Company will pay to MBA a non-accountable expense
                fee equal to 2% of gross proceeds raised in each Private Placement
                (the
                “Non-Accountable Fee”), which will be used to pay MBA’s travel and other
                expenses.  The Non-Accountable Fee will be paid in the same time
                and manner as the Success Fee.    The Company will pay
                all other costs and expenses incident to the issuance, offer, sale
                and
                delivery of each Private Placement, including but are not limited
                to state
                “Blue Sky” fees, legal fees, printing costs, travel costs, mailing,
                couriers, and personal background
                checks.

            

    

    

    
      	
              13.  

            	
              Compliance
                with Laws.  MBA represents and warrants that it
                shall conduct itself in compliance with applicable federal and state
                laws.  MBA represents that it is not a party to any other
                Agreement, which would conflict with or interfere with the terms
                and
                conditions of this Agreement.

            

    

    

    
      	
              14.  

            	
              Assignment
                Permissable.  MBA reserves the right to assign a
                portion of this Agreement to one or more sub-agents with respect
                to any
                Private Placement or Transaction, subject to the prior written consent
                of
                the Company.  Any approved sub-agent shall be paid a portion of
                Success Fees as may be determined by MBA.    The
                Company does acknowledge that MBA may pay other consultants or agents
                in
                connection with the Private Placement(s) and
                Transaction(s).

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              15.  

            	
              Amendments.  Neither
                party may amend this Agreement or rescind any of its existing provisions
                without the prior written consent of the other
                party.

            

    

    

    
      	
              16.  

            	
              Governing
                Law; Dispute Resolution.  This Agreement shall be
                deemed to have been made in the State of California and shall be
                construed, and the rights and liabilities determined, in accordance
                with
                the law of the State of California, without regard to the conflicts
                of
                laws rules of such jurisdiction. Any controversy or claim relating
                to or
                arising from this Agreement (an "Arbitrable Dispute") shall be settled
                by
                arbitration in accordance with the Commercial Arbitration Rules of
                the
                American Arbitration Association (the "AAA") as such rules may be
                modified
                herein or as otherwise agreed by the parties in controversy. The
                forum for
                arbitration shall be Orange County, California. Following thirty
                (30) days
                notice by any party of intention to invoke arbitration, any Arbitrable
                Dispute arising under this Agreement and not mutually resolved within
                such
                thirty (30) day period shall be determined by a single arbitrator
                upon
                which the parties agree.

            

    

    

    
      	
              17.  

            	
              Waiver.  Neither
                MBA’s nor the Company’s failure to insist at any time upon strict
                compliance with this Agreement or any of its terms nor any continued
                course of such conduct on their part shall constitute or be considered
                a
                waiver by MBA or the Company of any of their respective rights or
                privileges under this Agreement.

            

    

    

    
      	
              18.  

            	
              Severability.
                If any provision herein is or should become inconsistent with any
                present
                or future law, rule or regulation of any sovereign government or
                regulatory body having jurisdiction over the subject matter of this
                Agreement, such provision shall be deemed to be rescinded or modified
                in
                accordance with such law, rule or regulation.  In all other
                respects, this Agreement shall continue to remain in full force and
                effect.

            

    

    

    
      	
              19.  

            	
              Counterparts.
                This Agreement may be executed in two or more counterparts, each
                of which
                shall be deemed an original, and will become effective and binding
                upon
                the parties at such time as all of the signatories hereto have signed
                a
                counterpart of this Agreement.  All counterparts so executed
                shall constitute one Agreement binding on all of the parties hereto,
                notwithstanding that all of the parties are not signatory to the
                same
                counterpart.  Each of the parties hereto shall sign a sufficient
                number of counterparts so that each party will receive a fully executed
                original of this Agreement.

            

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              20.  

            	
              Entire
                Agreement.  This Agreement (together with Exhibit A
                hereto) constitutes the entire agreement between the Company and
                MBA. No
                other agreements, cove­nants, representations or warranties, express
                or implied, oral or written, have been made by any party hereto to
                any
                other party concerning the subject matter hereof.  All prior and
                contemporaneous conversations, negotiations, possible and alleged
                agreements, representations, covenants and warranties concerning
                the
                subject matter hereof are merged herein and shall be of no further
                force
                or effect.

            

    

    

    

    

    Monarch
      Bay Associates, LLC (the “MBA”)

    

    

    By:                                                                

                David
      Walters

    
      	
               

            	
              Title:

            	
              Managing
                Director

            

    

    

    

    Monarch
      Staffing, Inc. (the “Company”)

    

    

    By:                                                                

    Joel
      Williams

    Title:                      Chief
      Executive Officer

    

         

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                                                               
      EXHIBIT
      A

    Indemnification

    

    The
      Company agrees that it shall
      indemnify and hold harmless, MBA, its stockholders, members directors, officers,
      employees, agents, affiliates and controlling persons within the meaning of
      Section 20 of the Securities Exchange Act of 1934 and Section 15 of the
      Securities Act of 1933, each as amended (any and all of whom are referred to
      as
      an "Indemnified Party"), from and against any and all losses, claims, damages,
      liabilities, or expenses, and all actions in respect thereof (including, but
      not
      limited to, all legal or other expenses reasonably incurred by an Indemnified
      Party in connection with the investigation, preparation, defense or settlement
      of any claim, action or proceeding, whether or not resulting in any liability),
      incurred by an Indemnified Party with respect to, caused by, or otherwise
      arising out of any transaction contemplated by this Agreement or MBA's
      performing the services contemplated hereunder; provided, however, the Company
      will not be liable to the extent, and only to the extent, that any loss, claim,
      damage, liability or expense is finally judicially determined to have resulted
      primarily from MBA's gross negligence or bad faith in performing such
      services.

    

    If
      the indemnification provided for
      herein is conclusively determined (by an entry of final judgment by a court
      of
      competent jurisdiction and the expiration of the time or denial of the right
      to
      appeal) to be unavailable or insufficient to hold any Indemnified Party harmless
      in respect to any losses, claims, damages, liabilities or expenses referred
      to
      herein, then the Company shall contribute to the amounts paid or payable by
      such
      Indemnified Party in such proportion as is appropriate and equitable under
      all
      circumstances taking into account the relative benefits received by the Company
      on the one hand and MBA on the other, from the transaction or proposed
      transaction under the Agreement or, if allocation on that basis is not permitted
      under applicable law, in such proportion as is appropriate to reflect not only
      the relative benefits received by the Company on the one hand and MBA on the
      other, but also the relative fault of the Company and MBA; provided, however,
      in
      no event shall the aggregate contribution of MBA and/or any Indemnified Party
      be
      in excess of the net compensation actually received by MBA and/or such
      Indemnified Party pursuant to this Agreement.

    

                  The
      Company shall not settle or compromise or consent to the entry of any judgment
      in or otherwise seek to terminate any pending or threatened action, claim,
      suit
      or proceeding in which any Indemnified Party is or could be a party and as
      to
      which indemnification or contribution could have been sought by such Indemnified
      Party hereunder (whether or not such Indemnified Party is a party thereto),
      unless such consent or termination includes an express unconditional release
      of
      such Indemnified Party, reasonably satisfactory in form and substance to such
      Indemnified Party, from all losses, claims, damages, liabilities or expenses
      arising out of such action, claim, suit or proceeding.

    

                  In
      the event any Indemnified Party shall incur any expenses covered by this Exhibit
      A, the Company shall reimburse the Indemnified Party for such covered expenses
      within ten (10) business days of the Indemnified Party's delivery to the Company
      of an invoice therefor, with receipts attached. Such obligation of the Company
      to so advance funds may be conditioned upon the Company's receipt of a written
      undertaking from the Indemnified Party to repay such amounts within ten (10)
      business days after a final, non-appealable judicial determination that such
      Indemnified Party was not entitled to indemnification hereunder.

    

                  The
      foregoing indemnification and contribution provisions are not in lieu of, but
      in
      addition to, any rights which any Indemnified Party may have at common law
      hereunder or otherwise, and shall remain in full force and effect following
      the
      expiration or termination of MBA's engagement and shall be binding on any
      successors or assigns of the Company and successors or assigns to all or
      substantially all of the Company's business or assets.Exhibit 10.1

    
      

    

    Exhibit
      10.1

    

    SETTLEMENT
      AGREEMENT

    

    This
      Settlement Agreement is entered into by and between the Objecting Party
      Entities, the Laurus Entities, the Houston Debtors, and the Committee, (all
      as
      separately defined below) (collectively, the “Parties,” and each a “Party”) who,
      by so executing this Settlement Agreement, respectively agree to be bound by
      each of its terms, conditions and obligations as of the Effective Date (as
      defined below).

    

    Definitions

    

    Unless
      the context otherwise requires, capitalized terms within this Settlement
      Agreement shall have the meanings assigned to them in this Definitions section.
      The meanings shall be equally applicable to both the singular and plural forms
      of these terms. The words “herein,” “hereof,” “hereunder” and other words of
      similar import refer to the Settlement Agreement as a whole and not to any
      particular section, subsection or clause contained in the Settlement Agreement
      unless the context requires otherwise. Whenever it appears appropriate from
      the
      context, each term stated in the masculine, feminine or neuter gender include
      the masculine, feminine and neuter.

    

    	1.  	
            “Adkins
              Hill Property Lease” means the Real Property Lease Agreement dated August
              24, 2006 between Adkins Hill Property, LLC and Blast Energy Services,
              Inc.
              with respect to Tracts 14 and 15.

          

    	2.  	
            “Affiliates”
              means, with respect to each entity, such entity’s current and former
              officers, directors, managers, members, shareholders, accountants,
              agents,
              appraisers, attorneys, employees or consultants in their capacity as
              such.

          

    	3.  	
            “Amended
              Bid Procedures Order” means the order entered by the Bankruptcy Court on
              March 16, 2007 [Docket No. 194].

          

    	4.  	
            “Bankruptcy
              Court” means the United States Bankruptcy Court for the Southern District
              of Texas, Houston Division.

          

    	5.  	
            “Bid
              Procedures Order” means the order entered by the Bankruptcy Court on
              February 2, 2007 [Docket No. 69] establishing certain bidding procedures
              in connection with the Sale Motion.

          

    	6.  	
            “Boom”
              means Boom Drilling, LLC or the Boom entity(ies) that is or will take
              title to the assets being sold pursuant to the Sale
              Motion.

          

    	7.  	
            “Committee”
              means the official committee of unsecured creditors appointed in the
              Houston Debtors’ bankruptcy cases.

          

    	8.  	
            “Effective
              Date” means the date upon which all of the following conditions are first
              satisfied: (i) the Bankruptcy Court enters an order or orders (a)
              approving the Sale Motion; (b) approving this Settlement Agreement;
              (c)
              dismissing the Oklahoma Bankruptcy Cases that are currently pending
              in the
              Bankruptcy Court; and (d) vacating the Venue-Transfer Order and the
              findings and conclusions entered in connection therewith and causing
              the
              docket to reflect such vacation; and (ii) the sale to Laurus or its
              designee closes.

          

    	9.  	
            “Hallwood”
              means Hallwood Petroleum, L.L.C. and Hallwood Energy,
              L.P.

          

    	10.  	
            “Houston
              Debtors” means Blast Energy Services, Inc. and Eagle Domestic Drilling
              Operations, LLC, whose bankruptcy cases are pending in the Bankruptcy
              Court under jointly administered case number 07-30424.
              

          

    	11.  	
            “Laurus”
              means Laurus Master Fund Ltd. 

          

    	12.  	
            “Laurus
              Entities” means Laurus Master Fund Ltd. and Laurus Capital Management
              LLC.

          

    	13.  	
            “New
              York Nondebtor State Court Action” means the case styled Laurus
              Master Fund Ltd. v. Glenn A. Foster et al.,
              Index No. 106000107 in the Supreme Court of the State of New York,
              New
              York County.

          

    	14.  	
            “Objecting
              Parties” means Thornton Oilfield Holdings LLC, Second Bridge LLC, Eagle
              Drilling, LLC, Adkins Hill Property Lot #11 LLC, Adkins Hill Property
              Lot
              #12 LLC, Adkins Hill Property Lot #13 LLC, Adkins Hill Property Lot
              #14
              LLC, Adkins Hill Property Lot #15 LLC.

          

    	15.  	
            “Objecting
              Party Entities” means the Objecting Parties, together with Rodney D.
              Thornton, individually and in his capacity as Trustee of the Rodney
              D.
              Thornton Revocable Trust; the Rodney D. Thornton Revocable Trust; Richard
              D. Thornton, individually and in his capacity as Co-Trustee of the
              Thornton Family Irrevocable Trust; the Thornton Family Irrevocable
              Trust;
              Adkins Hill Property, LLC; Dirk O’Hara, individually and in his capacity
              as a Co-Trustee of the Thornton Family Irrevocable Trust; Glenn A.
              Foster,
              Jr.; Norman Senior Care LLC; Jeffrey Brown, individually and in his
              capacity as Trustee of the Thornton Business Security Trust; the Thornton
              Business Security Trust; Herman Livesay; Thornton Construction Company,
              Inc.; Thornton DRLG; Tom A. Hemry; Tom A. Hemry, P.C. Attorney at Law;
              Stanley M. Ward; Ward & Glass, L.L.P.; and Lisa
              Barnard.

          

    	16.  	
            “Oklahoma
              Bankruptcy Cases” means the Chapter 11 bankruptcy cases commenced by the
              Oklahoma Debtors in the United States Bankruptcy Court for the Western
              District of Oklahoma and assigned Case Numbers 07-10735 and 07-10755
              and
              currently pending in the Bankruptcy Court as Case Numbers 07-32012
              and
              07-32014.

          

    	17.  	
            “Oklahoma
              Debtors” means Thornton Oilfield Holdings LLC and Second Bridge LLC, whose
              bankruptcy cases are currently pending in the Bankruptcy Court under
              bankruptcy case numbers 07-32014 and 07-32012,
              respectively.

          

    	18.  	
            “Oklahoma
              Nondebtor State Court Action” means the case styled Eagle
              Drilling, LLC et al. v. Laurus Master Fund Ltd., et al.,
              Case No. CJ-2007-587 in the District Court in and for Cleveland County,
              Oklahoma, as currently removed to the United States Bankruptcy Court
              for
              the Western District of Oklahoma under Adversary Proceeding No.
              07-01063.

          

    	19.  	
            “Quicksilver”
              means Quicksilver Resources, Inc.

          

    	20.  	
            “Sale
              Motion” means the Expedited Motion to Sell Property Free and Clear of
              Liens, Claims and Encumbrances and to Permit Credit Bid Pursuant to
              11
              U.S.C § 363(b), (f), and (k) and to Assume and Assign Certain Executory
              Contracts [Docket No. 14], as amended by the Debtors’ Amended Motion to
              Sell Property Free and Clear of Liens, Claims and Encumbrances and
              to
              Permit Credit Bid Pursuant to 11 U.S.C. § 363(b), (f), and (k) [Docket No.
              199].

          

    	21.  	
            “Venue-Transfer
              Motion” means the motion filed by Laurus on March 19, 2007 [Docket No.
              201], seeking to transfer the Oklahoma Bankruptcy Cases to the Bankruptcy
              Court.

          

    	22.  	
            “Venue-Transfer
              Order” means the order of the Bankruptcy Court entered on March 26, 2007
              [Case No. 07-30424, Docket No. 243; Case No. 07-32014, Docket No. 4;
              Case
              No. 07-32012, Docket No. 5], granting the Venue-Transfer Motion and
              any
              findings and conclusions associated therewith, as well as the related
              Orders for Transfer entered by the United States Bankruptcy Court for
              the
              Western District of Oklahoma on March 29,
              2007.

          

    Recitals

    	1.  	
            On
              January 19, 2007, the Houston Debtors each filed a voluntary petition
              for
              Chapter 11 relief in the Bankruptcy
              Court.

          

    	2.  	
            On
              January 22, 2007, the Houston Debtors filed their Sale Motion, seeking
              to
              sell substantially all of their assets to Laurus, and their Bid Procedures
              Motion, seeking to establish certain procedures in connection with
              the
              sale.

          

    	3.  	
            On
              February 1, 2007, the Committee was appointed by the United States
              Trustee
              for the Southern District of Texas [Docket No.
              61].

          

    	4.  	
            On
              February 2, 2007, the Court entered the Bid Procedures Order, and on
              March
              16, 2007, upon motion by the Debtors and Laurus, the Court entered
              the
              Amended Bid Procedures Order.

          

    	5.  	
            On
              March 14 and 15, 2007, the Oklahoma Debtors filed voluntary petitions
              for
              Chapter 11 relief in the United States Bankruptcy Court for the Western
              District of Oklahoma.

          

    	6.  	
            On
              March 19, 2007, Laurus filed its Venue-Transfer
              Motion.

          

    	7.  	
            On
              March 26, 2007, the Bankruptcy Court made findings of fact and conclusions
              of law on the record in connection with the Venue-Transfer Motion,
              and on
              that same date the Bankruptcy Court entered the Venue-Transfer Order.
              The
              Oklahoma Bankruptcy Cases subsequently were transferred to the Bankruptcy
              Court.

          

    	8.  	
            The
              Objecting Parties have objected to the Sale Motion and the Amended
              Bid
              Procedures Order, asserting—among other things—that the Bankruptcy Court
              cannot authorize the sale of certain property asserted to be owned
              by
              certain parties other than the Houston Debtors. The Houston Debtors
              have
              contested the Objecting Parties’ assertion of
              ownership.

          

    	9.  	
            Second
              Bridge has asserted liens on certain property owned by the Houston
              Debtors
              and has asserted that such liens prime the liens of Laurus. Laurus,
              the
              Houston Debtors, and the Committee, on the other hand, assert that
              (a)
              Second Bridge does not have valid liens, (b) if Second Bridge does
              have
              valid liens, such liens are primed by the liens of Laurus; and (c)
              Second
              Bridge’s liens should be avoided. 

          

    	10.  	
            The
              Objecting Parties have asserted that the Bankruptcy Court does not
              have
              the power and authority to “estimate” ownership of property or “estimate”
              Second Bridge’s secured claim. The Houston Debtors, the Committee, and
              Laurus all contest the Objecting Parties’ assertions.
              

          

    	11.  	
            Litigation
              related to the foregoing lien and ownership issues is pending in the
              Houston Debtors’ bankruptcy cases under Case No. 07-30424 (including the
              Houston Debtors’ Expedited Motion to Determine Status of Secured Claim
              Pursuant to 11 U.S.C. § 506(a) and (d) [Docket No. 287]), as well as in
              Adversary Proceeding Numbers 07-3102 and
              07-3025.

          

    	12.  	
            The
              Houston Debtors the Committee and the Laurus Entities have threatened
              to
              bring other claims and causes of action against the Objecting Parties
              and
              certain of the Objecting Party Entities.

          

    	13.  	
            On
              or about April 4, 2007, certain parties who are neither Houston Debtors
              nor Oklahoma Debtors filed the Oklahoma Nondebtor State Court Action
              against the Laurus Entities and others.

          

    	14.  	
            On
              or about April 23, 2007, the Laurus Entities filed a Notice of Removal
              of
              the Oklahoma Nondebtor State Court Action. The Oklahoma Nondebtor State
              Court Action, as removed, currently is pending before the United States
              Bankruptcy Court for the Western District of Oklahoma as Adversary
              Proceeding No. 07-01063.

          

    	15.  	
            On
              or about May 3, 2007, the Laurus Entities filed their New York Nondebtor
              State Court Action against certain parties who are neither Houston
              Debtors
              nor Oklahoma Debtors.

          

    	16.  	
            The
              Parties have engaged in extensive negotiations in an effort to settle
              their respective disputes. The Parties now wish to seek approval of
              their
              settlement, under the terms and conditions set forth in this
              Agreement.

          

    	17.  	
            In
              consideration of the promises, covenants and representations set forth
              herein, the sufficiency of which is hereby acknowledged and confessed,
              the
              Parties hereby expressly agree as
              follows:

          

    Terms
      of Settlement

    	1.  	
            On
              the Effective Date, the Laurus Entities shall pay to Second Bridge
              LLC the
              sum of $1.8 million by wire transfer of immediately available funds
              in
              accordance with the following wire
              instructions:

          

    Wire
      to
      Bank of Oklahoma, Second Bridge LLC - Account No. 209909693, Routing No.
      103900036

    	2.  	
            The
              Objecting Parties shall support the Sale Motion and will not object
              to the
              provisions of the order (the “Sale Order”) related to the sale of assets
              to Laurus and/or to Boom’s taking title to any assets; the Objecting
              Parties shall have an opportunity to review and approve the form of
              order.
              The Objecting Party Entities agree (but do not represent or warrant),
              to
              the extent of any interest such Objecting Party Entity maintains, that
              the
              sale of the assets by the Houston Debtors shall provide for good, clear,
              and marketable title free and clear of liens, claims, and
              encumbrances.

          

    	3.  	
            The
              Houston Debtors, the Oklahoma Debtors, the Laurus Entities, and the
              Committee shall jointly move for and support without
              condition—

          

    	a.  	
            dismissal
              of the Oklahoma Debtors’ bankruptcy cases, and this motion shall be heard
              in conjunction with and as part of the Sale Motion.
              

          

    	b.  	
            vacation
              of the Venue-Transfer Order; such vacation shall include terms that
              render
              all findings of fact and conclusion of law entered in connection therewith
              or read into the record as null and void and of no effect; such vacation
              shall also remove the “hot link” to the Venue-Transfer Order on the docket
              of the Houston Debtors’ bankruptcy cases.

          

    	4.  	
            Mutual
              Releases / Waivers 

          

    	a.  	
            On
              the Effective Date, the Houston Debtors and their respective bankruptcy
              estates, the Committee, and the Laurus Entities (together, the “Sale
              Proponents”), for themselves and their respective successors and assigns,
              hereby waive, release and forever discharge the Objecting Party Entities
              and each of their respective Affiliates from any and all claims,
              obligations, demands, actions, causes of action and liabilities, of
              whatsoever kind and nature, character and description, whether in law
              or
              equity, whether sounding in tort, contract, quantum meruit, an avoidance
              cause of action under 11 U.S.C. Sections 544, 545, 547, 548, 550 or
              553, a
              turnover cause of action under 11 U.S.C. Section 542, or under other
              applicable law, whether known or unknown, and whether anticipated or
              unanticipated, that the Sale Proponents and their successors and assigns
              ever had or now have against the Objecting Party Entities or their
              respective Affiliates; provided, however, that the Sale Proponents
              do not
              hereby waive, release or discharge the Objecting Party Entities from
              any
              of their obligations, representations or warranties under this Settlement
              Agreement or the Sale Order.

          

    	b.  	
            Concurrently
              with receipt of the $1.8 million described in paragraph 1 above, the
              Objecting Party Entities, for themselves and their respective successors
              and assigns, hereby waive, release and forever discharge the Sale
              Proponents, United Security of Norman, Inc. and each of their respective
              Affiliates from any and all claims, obligations, demands, actions,
              causes
              of action and liabilities, of whatsoever kind and nature, character
              and
              description, whether in law or equity, whether sounding in tort, contract,
              quantum meruit, an avoidance cause of action under 11 U.S.C. Sections
              544,
              545, 547, 548, 549, 550 or 553, a turnover cause of action under 11
              U.S.C.
              Section 542, or under other applicable law, whether known or unknown,
              and
              whether anticipated or unanticipated, that the Objecting Party Entities
              and their successors and assigns ever had or now have against the Sale
              Proponents or their respective Affiliates; provided, however, that
              the
              Objecting Party Entities do not hereby waive, release or discharge
              the
              Sale Proponents from any of their obligations, representations or
              warranties under this Settlement Agreement. Subject to the terms of
              paragraphs 6 and 27 below, nothing herein shall discharge or impair
              the
              rights of any Objecting Party Entities in respect of its shareholder
              rights in any shares of the Houston
              Debtors.

          

    	c.  	
            Notwithstanding
              anything in this paragraph 4, the Houston Debtors and their estates
              are
              not releasing the officers and directors, past or present, exclusive
              of
              the Objecting Party Entities, of the Houston
              Debtors.

          

    	d.  	
            After
              the receipt of the $1.8 million referenced in paragraph 1 above, upon
              the
              receipt by the Objecting Party Entities of a release, in the nature
              of the
              releases given above, from Boom, Boom will be simultaneously released
              by
              the Objecting Party Entities to the same scope and
              extent.

          

    	5.  	
            The
              releases in the foregoing paragraph include a release of any and all
              liens, claims, and encumbrances on the respective parties’ properties or
              estates.

          

    	6.  	
            Within
              two business days of the Effective Date of this Settlement Agreement,
              Second Bridge shall physically deliver to Blast all of its common stock
              of
              Blast and the same shall be taken in by Blast and shall become Treasury
              Stock of Blast. The Houston Debtors shall pay $900 to Second Bridge
              on the
              date of tender.

          

    	7.  	
            Ownership
              of Assets (as of the Effective Date)

          

    	a.  	
            East
              Yard.
              The Objecting Parties or the Objecting Party Entities or any one or
              more
              of them (as determined in their sole discretion) shall be deemed to
              be the
              owner, and shall receive possession, of all of the 30 items in the
              East
              Yard shown on Exhibit A attached hereto. All other items of personal
              property on the East Yard shall be deemed owned by the Houston Debtors
              and
              may be sold to Laurus or its designee. The Objecting Party Entities
              shall
              not remove from the East Yard the 30 items shown on Exhibit A until
              after
              Laurus or its designee removes the other assets thereon. The parties
              shall
              segregate the 30 items so as not to be removed by Laurus or its
              designee.

          

    	b.  	
            West
              Yard.
              The Houston Debtors shall be deemed to be the owner of, and shall receive
              possession of, the equipment in the West Yard identified on Exhibit
              B, and
              such equipment shall be sold to Laurus or its designee. All other items
              of
              personal property on the West Yard shall be deemed to owned by the
              Objecting Parties, who shall be given or retain possession
              thereof.

          

    

    	8.  	
            The
              Objecting Party Entities shall not enter into any settlement agreement
              that requires Rodney Thornton or any corporate designee of the Objecting
              Parties to testify voluntarily on behalf of Quicksilver or Hallwood.
              Nothing in this provision shall preclude, nor shall it be a violation
              of
              this Settlement Agreement, for Rodney Thornton or any corporate designee
              of the Objecting Parties to testify in response to a subpoena or other
              legal process whereby he/it is compelled to
              testify.

          

    	9.  	
            Laurus
              shall be entitled to be reimbursed from the Houston Debtors the total
              sum
              of $2.1 million (the “Laurus Retained Claim”) and such Laurus Retained
              Claim shall be secured and treated in the manner provided for in the
              Sale
              Order.

          

    	10.  	
            The
              Houston Debtors and Laurus shall split the proceeds of the liquidation
              of
              all assets of the Houston Debtors’ estates as provided in the Sale
              Order.

          

    	11.  	
            The
              Objecting Party Entities and the Laurus Entities shall promptly dismiss
              with prejudice the Oklahoma Nondebtor State Court Action, the New York
              Nondebtor State Court Action, and any other litigation pending by,
              against, or among such parties (including the litigation described
              on
              Attachment 1 hereto), with the parties thereto to bear their own fees
              and
              expenses. 

          

    	12.  	
            Subject
              to the terms of the lease, the Houston Debtors shall pay accrued and
              unpaid lease rentals under the Adkins Hill Property Lease through 30
              days
              after entry of the order approving this Settlement Agreement.
              

          

    	13.  	
            Only
              upon the transfer of the assets acquired from the Houston Debtors,
              Boom
              shall have 30 days (weather permitting) to remove the assets to which
              it
              is taking title from the East Yard and the West Yard. If said property
              is
              not removed within said 30 days, Boom shall be responsible for the
              payment
              of rent at the current contract rate of $7500 per month. The Houston
              Debtors shall keep the Adkins Hill Property Lease in place and shall
              not
              reject the lease until all such assets are removed. Such assets shall
              be
              removed no later than June 15, 2007 (weather permitting).
              

          

    	14.  	
            The
              Houston Debtors shall assume and continue to abide by any environmental
              remediation obligations imposed by governmental authorities.
              

          

    	15.  	
            The
              Houston Debtors shall remove from the East Yard the broken derrick
              formerly associated with Rig #12 within 30 days after entry of the
              order
              approving this Settlement Agreement and the sale order, and such property
              shall not be part of the assets sold. A picture of the derrick is attached
              hereto as Exhibit C.

          

    	16.  	
            Orders
              approving this Settlement Agreement, the Motion to Vacate the
              Venue-Transfer Order, Dismissing the cases of the Oklahoma Debtors,
              and
              the Sale Motion shall be entered
              simultaneously.

          

    	17.  	
            If
              the Effective Date does not occur, this Settlement Agreement shall
              be null
              and void. 

          

    	18.  	
            No
              Admissions.
              The Parties understand and acknowledge that this Agreement is in
              compromise of disputed claims and defenses. Accordingly, neither this
              Agreement, nor any of its provisions, shall constitute, or be deemed
              or
              construed as, an admission of any liability on any of the claims
              referenced herein, the viability of any defenses to such claims, or
              otherwise. 

          

    	19.  	
            Warranty
              of Authority.
              Each of the signatories hereto hereby warrants that (a) he has the
              authority to execute this Agreement on behalf of the Party(ies) for
              whom
              he is signing; and (b) each Party has not assigned or otherwise
              transferred the claims being released herein and each such Party is
              the
              owner thereof and has full authority to settle and release those
              claims.

          

    	20.  	
            Entire
              Agreement.
              This Agreement is the complete and final agreement of the Parties as
              to
              all of the matters set forth herein, and supersedes all previous and
              contemporaneous agreements, promises, covenants, negotiations,
              discussions, understandings and representations by and/or between the
              Parties, all of which have become merged and integrated into this
              Agreement. The Parties hereby acknowledge that there are no other written
              or oral agreements between them concerning the matters set forth in
              this
              Agreement.

          

    	21.  	
            Terms
              Understood.
              Each Party represents that prior to the execution of this Agreement
              by its
              duly-authorized representative, such Party was fully informed of its
              terms, contents, conditions and effects, and that such Party had the
              benefit and advice of counsel of his/her/its own choosing in entering
              into
              this Agreement. Each Party further represents that he/she/it relied
              solely
              and exclusively on his/her/its own judgment and the advice of his/her/its
              own counsel in entering into this Agreement. The Parties agree that
              the
              terms and language of this Settlement Agreement were the result of
              negotiations among them and, as a result, there shall be no presumption
              that any ambiguities shall be resolved against any Party. Any controversy
              over construction of the Settlement Agreement shall be decided without
              regard to events of authorship or
              negotiation.

          

    	22.  	
            Governing
              Law and Exclusive Jurisdiction.
              This Agreement shall be governed by and interpreted pursuant to the
              laws
              of the State of Texas. The Bankruptcy Court shall have exclusive
              jurisdiction to resolve disputes that arise under or on account of
              this
              Settlement Agreement.

          

    	23.  	
            Modifications.
              This Agreement shall not be modified except by an instrument in writing
              signed by all of the Parties.

          

    	24.  	
            Counterparts.
              The Parties may execute this Agreement in multiple counterparts, each
              of
              which shall be deemed an original, and all of which, when taken together,
              shall constitute but one and the same instrument. The facsimile of
              an
              originally-signed signature page shall serve as, and constitute, an
              originally-executed copy of such signature
              page.

          

    	25.  	
            Representation
              re: Entities.
              Each Objecting Party Entity and Objecting Party represents and warrants
              to
              all the Parties that no person or entity related to or affiliated with
              the
              Objecting Party Entities and the Objecting Parties, other than the
              Objecting Party Entities and the Objecting Parties themselves, holds
              claims against or interests in (a) the Houston Debtors or (b) the Laurus
              Entities and the Laurus Entities’
Affiliates.

          

    	26.  	
            No
              Purchase.
              Each Objecting Party Entity and Objecting Party covenants and agrees
              that
              it will not purchase or acquire claims against the Houston Debtors
              or
              purchase or acquire additional shares of capital stock of the Houston
              Debtors. The agreement contained in this paragraph 26 shall expire
              upon
              the effective date of any plan of reorganization confirmed in the Chapter
              11 bankruptcy cases of the Houston Debtors or upon the conversion of
              the
              Chapter 11 bankruptcy cases of the Houston Debtors to cases under Chapter
              7.

          

    	27.  	
            Voting
              Provision.
              Prior to the date that the Houston Debtors plan of reorganization becomes
              effective, Richard D. Thornton, Herman Livesay, Glenn A. Foster, Jr.,
              and
              the Thornton Business Security Trust and their successors, including
              successor Trustees, transferees, assigns, and beneficiaries will take
              no
              action to call or support a special shareholder meeting of the Blast
              shareholders. Additionally, Richard D. Thornton, Herman Livesay, Glenn
              A.
              Foster, Jr., and the Thornton Business Security Trust and their
              successors, including successor Trustees, transferees, assigns, and
              beneficiaries will not vote their shares prior to the effective date
              of
              the Houston Debtors plan of reorganization; provided, however, that
              any of
              them will be entitled to vote their shares on a matter requiring
              shareholder vote called by a third party shareholder, except with respect
              to removal of the members of the board of directors or corporate officers
              as to which they will not be entitled to
              vote.

          

    In
      the
      event that the above referenced effective date does not occur by May 10, 2008,
      the voting restrictions provided for herein will be of no further force and
      effect. Unless the sale of Blast stock by the parties referenced in this
      paragraph 27 would result in a reduction or loss of net operating loss carry
      forward benefits (“NOL Benefits”) Blast will authorize any proposed sale of
      Blast stock by any of the parties identified in this paragraph 27 which sale
      complies with applicable law, and Blast will not take action to impede any
      such
      sale. The Parties agree that if such a sale would result in a reduction or
      loss
      of NOL Benefits, such sale will not be made. Nothing in this paragraph 27 shall
      limit the right of any Blast shareholder to vote in connection with a plan
      of
      reorganization in the Blast bankruptcy case.

    

    AGREED
      TO AND ACCEPTED:

    

    BLAST
      ENERGY SERVICES, INC.

    By: /s/
      John O’Keefe   

    Name: John
      O’Keefe    

    Title:
       CEO     

    Date: 5/11/07    

    

    EAGLE
      DOMESTIC DRILLING OPERATIONS LLC

    By: /s/
      David M. Adams   

    Name: David
      M. Adams   

    Title:
       President    

    Date: 5/11/07    

    

    LAURUS
      MASTER FUND, LTD.

    By: /s/
      David Grin    

    Name: David
      Grin    

    Title:
       Director    

    Date: 5/11/07    

    

    LAURUS
      CAPITAL MANAGEMENT LLC

    By: /s/
      David Grin    

    Name: David
      Grin    

    Title:
       Principal    

    Date: 5/11/07    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    THE
      OFFICIAL COMMITTEE OF UNSECURED CREDITORS

    By: /s/
      S.
      Margie Venus   

    Name: S.
      Margie Venus   

    Title:
       Counsel    

    Date: 5/11/07    

    

    SECOND
      BRIDGE LLC

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07     

    

    THORNTON
      OILFIELD HOLDINGS LLC

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    EAGLE
      DRILLING LLC

    By: /s/
      Rodney D. Thornton  

    Name: Rodney
      D. Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    RODNEY
      D.
      THORNTON

    By: /s/
      Rodney D. Thornton  

    Date: 5/11/07     

    

    RODNEY
      D.
      THORNTON, IN HIS CAPACITY AS TRUSTEE OF THE RODNEY D. THORNTON REVOCABLE
      TRUST

    By: /s/
      Rodney D. Thornton  

    Date: 5/11/07    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    THE
      RODNEY D. THORNTON REVOCABLE TRUST

    By: /s/
      Rodney D. Thornton  

    Name: Rodney
      D. Thornton   

    Title:
       Trustee     

    Date: 5/11/07     

    

    RICHARD
      D. THORNTON

    By: /s/
      Richard D. Thornton  

    Date:
       5-11-07    

    

    RICHARD
      D. THORNTON, IN HIS CAPACITY AS CO-TRUSTEE OF THE THORNTON FAMILY IRREVOCABLE
      TRUST

    By: /s/
      Richard D. Thornton, Trustee 

    Date: 5/-11-07    

    

    THE
      THORNTON FAMILY IRREVOCABLE TRUST 

    By: /s/
      Dirk O’Hara   

    Name: Dirk
      O’Hara    

    Title:
       Trustee     

    Date: 5/11/07    

    

    ADKINS
      HILL PROPERTY, LLC

    By: /s/
      Rodney Thornton  

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    ADKINS
      HILL PROPERTY LOT #11 LLC

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ADKINS
      HILL PROPERTY LOT #12 LLC

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    ADKINS
      HILL PROPERTY LOT #13 LLC

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    ADKINS
      HILL PROPERTY LOT #14 LLC

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    ADKINS
      HILL PROPERTY LOT #15 LLC

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    DIRK
      O’HARA, INDIVIDUALLY

    By: /s/
      Dirk O’Hara   

    Date: 5/11/07    

    

    DIRK
      O’HARA, IN HIS CAPACITY AS CO-TRUSTEE OF THE THORNTON FAMILY IRREVOCABLE
      TRUST

    By: /s/
      Dirk O’Hara   

    Date: 5/11/07    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    GLENN
      A.
      FOSTER, JR.

    By: /s/
      Glenn A. Foster, Jr.  

    Date: 5/11/07    

    

    NORMAN
      SENIOR CARE LLC

    By: /s/
      Dirk O’Hara   

    Name: Dirk
      O’Hara    

    Title:
       Managing
      Member   

    Date: 5/11/07    

    

    JEFFREY
      BROWN

    By: /s/
      Jeffrey Brown    

    Date: 5/11/07    

    

    JEFFREY
      BROWN, IN HIS CAPACITY AS TRUSTEE OF THE THORNTON BUSINESS SECURITY
      TRUST

    By: /s/
      Jeffrey Brown    

    Date: 5/11/07    

    

    THORNTON
      BUSINESS SECURITY TRUST

    By: /s/
      Jeffrey Brown   

    Name: Jeffrey
      Brown    

    Title:
       Trustee     

    Date: 5/11/07    

    

    HERMAN
      LIVESAY

    By: /s/
      Herman Livesay   

    Date: 5/11/07    

    

    THORNTON
      CONSTRUCTION COMPANY, INC.

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       President    

    Date: 5/11/07    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    THORNTON
      DRLG [this entity does not legally exist]

    By: /s/
      Rodney Thornton   

    Name: Rodney
      Thornton   

    Title:
       Manager    

    Date: 5/11/07    

    

    TOM
      A.
      HEMRY

    By: /s/
      Tom A. Hemry   

    Date: 5/11/07    

    

    TOM
      A.
      HEMRY, P.C. ATTORNEY AT LAW

    By: /s/
      Tom A. Hemry   

    Name: Tom
      A.
      Hemry   

    Title:
       President    

    Date: 5/11/07    

    

    STANLEY
      M. WARD

    By: /s/
      Stanley M. Ward   

    Date: 5/11/07    

    

    WARD
      & GLASS, L.L.P.

    By: /s/
      Woodrow K. Glass   

    Name: Woodrow
      K. Glass   

    Title:
       Partner     

    Date: 5/11/07    

    

    LISA
      BARNARD

    By: /s/
      Lisa Barnard   

    Date: 5/11/07     

     

    UNITED
      SECURITY OF NORMAN, INC.

    By: /s/
      Gerald Stone   

    Name: Gerald
      Stone    

    Title:
       President    

    Date: 5/11/07

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]