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Exhibit 10.14  

 
 

ASSIGNMENT AND ASSUMPTION AGREEMENT    
    

        THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made and entered into as of January 20, 2004 (the "Effective Date") by CURLETT FAMILY
LIMITED PARTNERSHIP, LTD. ("CFLP"), a Wyoming Limited Partnership having a registered office at 4239 Pat O'Hara Mountain Drive, Cody, Wyoming 82414-9250, PRODRIL SERVICES
INCORPORATED ("PSI"), a Texas corporation having a registered office at 4239 Pat O'Hara Mountain Drive, Cody, Wyoming 82414, HARRY B. CURLETT ("CURLETT"), an individual, residing at 4239 Pat O'Hara
Mountain Drive, Cody, Wyoming 82414, CCORE TECHNOLOGY AND LICENSING, LTD ("CCORE"), a Texas limited partnership having a registered office at 4239 Pat O'Hara Mountain Drive, Cody, Wyoming
82414, PRODRIL SERVICES INTERNATIONAL LIMITED ("PSIL"), a Texas limited partnership having a registered office at 4239 Pat O'Hara Mountain Drive, Cody, Wyoming 82414, and PARTICLE
DRILLING, INC., a corporation organized and existing under the laws of the State of Texas, having a place of business at 808 Travis Street, Suite 850, Houston, Texas 77002 ("PARTICLE
DRILLING"). The parties, intending to be legally bound agree as follows: 

        WHEREAS, CFLP was previously the owner of the following: 

U.S.
Patent No. 6,386,300—issued May 14, 2002, entitled "Formation cutting method and system"; and 

Published
Patent Application No. 20020100615—filed March 12, 2002, entitled "Formation cutting method and system" and 

Unpublished
Patent Application No. 60/463,903—filed April 16, 2003, entitled "PID Drill Bit"; and 

Unpublished
Patent Application No. 60/473,832—filed May 27, 2003, entitled "PID Cutter Concepts" 

(Herein
referred to collectively as "CFLP Patents/Applications") 

as
well as the inventions embodied in the CFLP Patents/Applications and two (2) invention disclosures for "Injector System" and "PID Drill Bit (Nozzle only)" (collectively "CFLP Inventions")
and certain proprietary know-how pertaining specifically to the Particle Impact Drilling Process and System solely for applications dealing with or related to the oil and gas industry, it
being understood that the term "oil and gas industry" does not include the activity or providing drilling services for a well bore that produces geothermal energy that is utilized to produce
hydrocarbons; provided that such well bore does not produce hydrocarbons and provided further that Curlett does not own any direct or indirect ownership or other benefit in the hydrocarbons that are
thereby processed (collectively "CFLP Know-How"). 

        WHEREAS, in connection with the loan (the "Loan") from PARTICLE DRILLING to PSI evidenced by that certain Amended and Restated Revolving
Line of Credit Promissory Note dated August 13, 2003 in the maximum principal amount of $350,000, CFLP has previously assigned to PARTICLE DRILLING all of its right, title and interest in the
CFLP Patents/Applications, the CFLP Inventions, and the CFLP Know-How pursuant to that certain Assignment and Assumption Agreement dated June 1, 2003 (the "First Assignment"); 

        WHEREAS, in connection with the Loan, CFLP and PARTICLE DRILLING executed (i) that certain letter agreement dated May 20,
2003 pursuant to which, among other things, CFLP was granted the right to repurchase the CFLP Patents/Applications, CFLP Inventions, and CFLP Know-How from PARTICLE DRILLING under certain
circumstances (the "Purchase Option"), and (ii) that certain Exclusive License Agreement dated June 1, 2003 (the "License Agreement"); 

 

        WHEREAS, the Parties hereto have executed that certain Acquisition Agreement dated January 20, 2004, pursuant to which this
Agreement is required to be executed and delivered at the "Closing" referenced therein (the "Acquisition Agreement"); 

        WHEREAS, PARTICLE DRILLING desires to (i) receive assurances that PSI, PSIL, Curlett, and CCORE will not assert any ownership or
other rights against PARTICLE DRILLING with respect to the CFLP Patents/Applications, CFLP Inventions, and CFLP Know-How, and (ii) confirm the termination of the Purchase Option; 

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged: 

        1.     PSI,
PSIL, CCORE, and CURLETT hereby sell and assign to PARTICLE DRILLING, its successors and assigns, and CFLP hereby confirms the assignment made pursuant to the First
Assignment to PARTICLE DRILLING of CFLP's, PSI's, PSIL's, CCORE's, and CURLETT's entire right, title and interest throughout the world in and to: 

	a.
	CFLP
Inventions;

	b.
	CFLP
Patents/Applications;

	c.
	CFLP
Know-How;

	d.
	All
applications for patent or like protection on said CFLP Inventions or CFLP Know-How, including said CFLP Patents/Applications that have been made by CFLP or its legal
representatives, including any continuation, continuation-in-part and any other utility applications that may be based on the CFLP Inventions, CFLP Patents/Applications, or
CFLP Know-How, whether in the United States of America or any other place anywhere in the world, and all patents and like protection resulting therefrom, and all substitutions for and
divisions, continuations, continuations-in-part, renewals, reissues, extensions, and the like of said applications and patents and like grants, including without limitation,
those obtained or permissible under past, present and future laws and statutes;

	e.
	All
rights of action on account of past, present and future unauthorized use of the CFLP Inventions, CFLP Patents/Applications, or CFLP Know-How and for infringement of the
CFLP Inventions, CFLP Patents/Applications, or CFLP Know-How and like protection;

	f.
	The
right to file in its own name applications for patents and like protection for the CFLP Inventions, CFLP Patents/Applications, or CFLP Know-How in the United States of
America or any other place anywhere in the world; and

	g.
	All
international rights of priority associated with the CFLP Inventions; CFLP Patents/Applications; or CFLP Know-How; and like protection. 

        2.     The
assignment made pursuant to Section 1 of this Agreement shall be subject to the terms of the License Agreement. 

        3.     CFLP,
PSI, PSIL, CCORE, and CURLETT hereby further agree that they will (i) communicate to said PARTICLE DRILLING, or to its successors, assigns, and legal
representatives, any facts known to that person respecting the CFLP Inventions, CFLP Patents/Applications and CFLP Know-How, and at the expense of PARTICLE DRILLING, testify in any legal
proceedings, sign all lawful papers, execute all divisional, continuation, reissue and substitute applications, make all lawful oaths, and generally do everything possible to aid PARTICLE DRILLING,
its successors, assigns and nominees to obtain and enforce proper patent protection in all countries, (ii) promptly disclose to PARTICLE DRILLING any development or modifications made or
acquired by the Party that are improvements of the CFLP Inventions, whether or not patentable or unpatentable and whether developed solely or jointly with others, and (iii) and does hereby
assign to PARTICLE DRILLING his 

2

 

or
its entire right, title, and interest in any such improvements including the right to file patent applications therefor and have letters patent issued in its own name in all countries. 

        4.     CFLP,
PSI, PSIL, CCORE, and Curlett agree that they will communicate to PRODRIL ACQUISITION COMPANY, or to its successors, assigns and legal representatives, any facts
known to it respecting any such improvements to the CFLP Inventions, and at the expense of PARTICLE DRILLING, testify in any legal proceedings, sign all lawful papers, execute all divisional,
continuation, reissue or substitute applications, make all lawful oaths, and generally do everything possible to effectuate the intent of this Agreement and to aid PARTICLE DRILLING, its successors,
assigns and nominees to obtain and enforce proper patent protection in all countries 

        5.     For
and in consideration of the foregoing, including specifically the covenant set forth in Section 4 hereof, PARTICLE DRILLING has cancelled the Loan effective as
of the Closing, and agrees to pay an annual aggregate Royalty of 4% of PARTICLE DRILLING's Annual Gross Revenue, allocable as follows: 

	 	 	a.	 	CCORE	 	1.6	%
	

 	
 	

b.	
 	

PSI	
 	

1.2	
%
	

 	
 	

c.	
 	

PSIL	
 	

1.2	
%

        PARTICLE
DRILLING will pay the Royalty within 30 days after the end of each calendar year ending on 31 December in the amount of Royalty due for the immediately preceding year.
The term "Annual Gross Revenue" means all revenue of PARTICLE DRILLING directly stemming from, attributable to, derived from or received as a result of the CFLP Patents/Applications, CFLP Inventions,
and CFLP Know-How as determined under Generally Accepted Accounting Principles, consistently applied. "Annual Gross Revenue" shall expressly exclude, by way of example and not by way of
limitation, the sales or other taxes collected by PARTICLE DRILLING and amounts received as reimbursement of costs of PARTICLE DRILLING, such as freight costs. In addition, "Annual Gross Revenue"
includes an amount equal to the amount that would have been charged in an arms'-length transaction with an unaffiliated third party, if the CFLP Patents/Applications, CFLP Inventions, and CFLP
Know-How is made available to an affiliate of PAC or is used in an oil and gas operation by PAC. Notwithstanding the foregoing, however, "Annual Gross Revenue" shall not include any
revenue which is considered "Annual Gross Revenue" for purposes of that certain Exclusive License Agreement dated the date hereof from CCORE to PARTICLE DRILLING concerning the "dualjet" technology.
Curlett acknowledges that he has received adequate consideration for the assignment evidenced by this Agreement, through the value realized by him at the Closing both individually and as shareholder
of PSI, and a partner of CCORE and PSIL. 

        6.     The
obligation to pay Royalties pursuant to Section 5 shall terminate upon the expiration of the last CFLP Patents/Applications to expire. 

        7.     CFLP
hereby confirms the termination of the Purchase Option. 

        8.     The
First Assignment shall continue in full force and effect. 

3

 

        IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective
Date. 

	 	 	CURLETT FAMILY PARTNERSHIP, LTD.,

A Wyoming limited partnership
	 	 	 	 	 	 	 
	 	 	By:	 	Patriarch, LLC, a Wyoming limited liability

Company (its general partner)
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/  HARRY B. CURLETT      
 Harry B. Curlett, Manager
	 	 	 	 	 	 	 
	 	 	PRODRIL SERVICES INCORPORATED
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	/s/  JACK BOBO      
 Jack Bobo, Director
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	/s/  HARRY B. CURLETT      
 Harry B. Curlett
	 	 	 	 	 	 	 
	 	 	CCORE TECHNOLOGY AND LICENSING, LTD., a Texas limited partnership
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	/s/  HARRY B. CURLETT      
 Harry B. Curlett, General Partner
	 	 	 	 	 	 	 
	 	 	PRODRIL SERVICES INTERNATIONAL LIMITED, a Texas limited partnership
	 	 	 	 	 	 	 
	 	 	By:	 	LTL65429, L.P.,

a Texas limited partnership (its general partner)
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/  HARRY B. CURLETT      
 Harry B. Curlett, General Partner
	 	 	 	 	 	 	 
	 	 	PARTICLE DRILLING, INC.
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	/s/  PRENTIS TOMLINSON      
 Prentis Tomlinson, Chief Executive Officer

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Exhibit 10.15    
    

ROYALTY AGREEMENT  

        This Royalty Agreement is entered into by and between Particle Drilling, Inc., a Texas corporation
("Newco"), and ProDril Services Incorporated, a Texas corporation ("PSI") as of January 20, 2004. 

        WHEREAS,
Newco, PSI, and certain other parties have entered into that certain Acquisition Agreement dated January 20, 2004 (the "Acquisition
Agreement") pursuant to which, among other things, Newco has acquired certain assets of PSI in exchange for consideration from Newco, which consideration includes the
obligations of Newco set forth in this Agreement; 

        NOW
THEREFORE, for and in consideration the mutual premises and covenants contained herein and in the Acquisition Agreement, the parties hereto agree as follows: 

        1.    Royalty.    Newco shall pay PSI on or before February 15, May 15, August 15, and
November 15 of each year an amount (the "Royalty") equal to 18% of the EBITDA with respect to the calendar quarter ending December 31,
March 31, June 30, and September 30, respectively. The obligation to pay the Royalties hereunder shall terminate when PSI has received Royalties equaling US$67,500,000. 

        2.    Calculation of EBITDA.    The term "EBITDA" shall mean the
excess of the revenues of the Business over the expenses of the Business. The "Business" is the business operated by Newco which involves the generation of revenue from hydraulic jet drilling systems
utilized in oil and gas drilling operations or which involves technology which utilizes solid impactors which are introduced into oil and gas drilling fluid to impact the formation ahead of or in
conjunction with the drill bit, which in either case utilize any of the inventions subject to the Patents (as defined in the Acquisition Agreement). The revenues of the Business shall be determined on
the accrual basis in accordance with generally accepted accounting principles as consistently applied by Newco ("GAAP"). The expenses of the Business
shall consist of those expenses incurred by Newco which are allocable to the period in question on the accrual basis pursuant to GAAP, provided that expenses shall not include, however, any
(a) interest, (b) federal, state, and other income taxes, (c) amortization of Newco's goodwill or other intangible assets, or (d) depreciation of any of the tangible assets
of Newco. 

        3.    Reports.    Newco will on a quarterly basis provide PSI (i) its quarterly and
year-to-date income statement and balance sheet, prepared in accordance with GAAP, and (ii) a written report that sets forth the computation of the EBITDA for that
quarter, certified by the chief financial officer of Newco. Such a report shall be provided with respect to any quarter in which the Business has any revenue on or before the date payment would be
required with respect to such quarter. PSI shall keep such reports, and any information provided to it by Newco in connection with this Agreement, confidential. 

        4.    Inspections; Audits.    PSI shall be permitted on an annual basis to inspect and audit the books and records of
Newco which relate to the determination of EBITDA. Such audit shall be at the expense of PSI, unless it is determined that the Royalty has been underpaid by 10% or more, in which case the audit shall
be at the expense of Newco. 

        5.    Determinations by Newco.    All determinations by Newco with respect to the calculation of EBITDA shall be
assumed to be correct unless PSI is able to establish an error by a preponderance of the evidence. Newco has complete and absolute discretion regarding the manner in which it conducts the Business or
incurs expenses with respect to the Business. 

        6.    Assignments.    PSI may assign or transfer its rights hereunder only in connection with a dissolution expressly
permitted pursuant to the terms of the Acquisition Agreement. Newco may only assign the Patents (as defined in the Acquisition Agreement) if the assignee agrees to be bound by the terms of this
Agreement. 

        7.    Unaffiliated Shareholder.    Newco represents and warrants that it has at least five shareholders other than
ProDril Partners L.L.C. ("Parent") who are accredited investors not controlling, controlled by or under common control with the Parent (an "Independent
Shareholder") and who have acquired 

their
stock in Newco in exchange for an investment of at least $50,000. During any period that (i) the Parent directly or indirectly, through one or more affiliates, owns or controls more than
50% of the stock of Newco, and (ii) there are not at least five Independent Shareholders, Newco shall have a duty to PSI not to pay any of its officers compensation in an amount which breaches
the fiduciary duty owed to unaffiliated shareholders under Texas corporate law. 

        8.    Disclaimer of Fiduciary Duty.    Neither Newco nor its management shall owe a fiduciary duty to PSI or its
shareholders. 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth above. 

	 	 	PARTICLE DRILLING, INC.
	 	 	 	 	 
	 	 	By:	 	/s/  PRENTIS TOMLINSON      

	 	 	Name:	 	Prentis Tomlinson

	 	 	Title:	 	President and CEO

	 	 	Date:	 	January 20, 2004

	 	 	 	 	 
	 	 	 	 	 
	 	 	PRODRIL SERVICES INCORPORATED
	 	 	 	 	 
	 	 	By:	 	/s/  JACK BOBO      

	 	 	Name:	 	JACK BOBO

	 	 	Title:	 	Director

	 	 	Date:	 	January 20, 2004

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Exhibit 10.15

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