Document:

Exhibit 10.6

     

    Exhibit
      10.6

     

    MEMBER
      PLEDGE AGREEMENT

     

    THIS
      MEMBER PLEDGE AGREEMENT (as
      the
      same may be amended, restated, modified and otherwise supplemented from time
      to
      time, this “Pledge
      Agreement”),
      dated
      as of August 25, 2006 is made by BLAST
      ENERGY SERVICES, INC.,
      a
      California corporation (“Pledgor”),
      in
      favor of LAURUS
      MASTER FUND, LTD.,
      a
      Cayman Islands company (“Laurus”).

    W
      I T N E
      S S E T H :

    WHEREAS,
      pursuant to the terms of (a) that certain Securities Purchase Agreement dated
      as
      of August 25, 2006 by and between Pledgor and Laurus (including all annexes,
      exhibits and schedules thereto, dated as of the date hereof and as otherwise
      from time to time amended, restated, supplemented and otherwise modified, the
      “Securities
      Purchase Agreement”),
      and
      (b) that certain Secured Term Note executed by Pledgor in favor of Laurus in
      the
      aggregate principal amount of Forty Million Six Hundred Thousand Dollars
      ($40,600,000) (as from time to time amended, restated, supplemented and
      otherwise modified, the “Note”),
      Laurus has agreed to provide certain financial accommodations to
      Pledgor;

     

    WHEREAS,
      Pledgor
      is the legal and beneficial owner of the Pledged Interests (as hereinafter
      defined); and

     

    WHEREAS,
      in order
      to induce Laurus to continue to provide financial accommodations to Pledgor
      under the Securities Purchase Agreement and the Note, Pledgor agreed to secure
      its obligations under the Securities Purchase Agreement, the Note and the
      Related Documents (as defined in the Securities Purchase Agreement) by, among
      other things, pledging the Pledged Interests to Laurus in accordance
      herewith.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and to induce Laurus to enter into the Securities
      Purchase Agreement and to continue to provide financial accommodations to
      Pledgor, Pledgor hereby agrees with Laurus as follows:

     

    1. Defined
      Terms.

     

    (a)Unless
      otherwise defined herein, terms defined in the Securities Purchase Agreement
      and
      used herein shall have the meanings given to them in the Securities Purchase
      Agreement, and the following terms which are defined in the Code (as defined
      below) are used herein as so defined: Accounts, Chattel Paper, General
      Intangibles and Instruments.

     

    (b)The
      following terms shall have the following meanings:

     

    “Code”
means
      the Uniform Commercial Code from time to time in effect in the State of New
      York.

     

    “Collateral”
means
      (i) the Pledged Interests, (ii) all General Intangibles arising out of or
      constituted by the LLC Agreement in respect of the Pledged Interests, (iii)
      all
      Accounts arising

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    out
      of
      the LLC Agreement in respect of any Pledged Interests, and (iv) to the extent
      not otherwise included, all Proceeds of any and all of the
      foregoing.

     

    “Documents”
means
      this Pledge Agreement, the Securities Purchase Agreement, the Note, the other
      Related Agreements and all other documents, instruments, agreements and
      certificates at any time delivered by any Person executed in connection herewith
      or therewith.

     

    “Event
      of Default”
      shall
      have the meaning given to such term in
      Section 9.

     

    “Governmental
      Authority”
means
      any nation or government, any state or other political subdivision thereof,
      and
      any agency, department or other entity exercising executive, legislative,
      judicial, regulatory or administrative functions of or pertaining to
      government.

     

    “Issuers”
      shall
      have the meaning given to such term in Section
      5(a).

     

    “LLC
      Agreement”
means
      the Amended and Restated Regulations
      of Eagle Domestic Drilling Operations LLC,
      a Texas
      limited liability company, dated as of August ___, by and between Eagle Domestic
      Drilling Operations LLC and Pledgor, as amended, restated, supplemented and
      otherwise modified from time to time in accordance with the terms
      thereof.

     

    “Permitted
      Transfer”
means
      any sale, assignment, transfer, exchange or other disposition of any Pledged
      Interests by Pledgor or any permitted successor or assign, whether in exchange
      for money or other property, gift, bequest or otherwise, permitted under the
      LLC
      Agreement and under the terms of this Pledge Agreement.

     

    “Person”
means
      an individual, a partnership, a corporation (including a business trust), a
      joint stock company, a trust, an unincorporated association, a joint venture,
      a
      limited liability company, a limited liability partnership or other entity,
      or a
      government or any agency, instrumentality or political subdivision
      thereof.

     

    “Pledged
      Interests”
means
      the interest of Pledgor listed on Schedule
      1
      hereto
      in the Issuers, including, without limitation, all of Pledgor’s right, title and
      interest to participate in the operation or management of the Issuers, if any,
      and all of Pledgor’s rights to properties, assets, membership interests and
      distributions under the LLC Agreement, if any, together with all certificates,
      options or rights of any nature whatsoever that may be issued or granted by
      the
      Issuers to Pledgor in respect of the Pledged Interests while this Pledge
      Agreement is in effect and any other limited liability company interest obtained
      by Pledgor in the Issuers during the term hereof.

     

    “Proceeds”
means
      all “proceeds” as such term is defined in Section 9-102(a)(64) of the Code and,
      in any event, shall include, without limitation, all dividends or other income
      from the Pledged Interests, collections thereon or distributions with respect
      thereto.

     

    “Secured
      Obligations”
means
      all unpaid principal of and interest on (including, without limitation, interest
      accruing at the then applicable rate provided in the Note after the maturity
      of
      the Note and interest accruing at the then applicable rate provided in the
      Note
      after the filing of any petition in bankruptcy, or the commencement of any
      insolvency, reorganization or like

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    proceeding,
      relating to the Pledgor, whether or not a claim for post-filing or post-petition
      interest is allowed in such proceeding) all obligations and liabilities of
      Pledgor to Laurus under the Note and the other Documents and all other
      obligations and liabilities of Pledgor to Laurus, whether direct or indirect,
      absolute or contingent, due or to become due, or now existing or hereafter
      incurred, which may arise under, out of, or in connection with, the Note, the
      other Documents, or any other document made, delivered or given in connection
      herewith or therewith, in each case whether on account of principal, interest,
      reimbursement obligations, fees, indemnities, costs, expenses or otherwise
      (including, without limitation, all fees and disbursements of counsel to Laurus
      that are required to be paid by Pledgor pursuant to the terms of the Note and
      the other Documents).

     

    2. Pledge;
      Grant of Security Interest.
      Pledgor
      hereby transfers and assigns to Laurus all of the Pledged Interests of Pledgor
      and hereby grants to Laurus a first priority security interest in the Collateral
      of Pledgor, as collateral security for the prompt and complete payment and
      performance when due (whether at the stated maturity, by acceleration or
      otherwise) of the Secured Obligations. 

     

    3. Delivery
      to Laurus.

     

    (a)Pledgor
      shall deliver to Laurus (i) simultaneously with or prior to the execution and
      delivery of this Pledge Agreement, all certificates representing the Collateral
      and (ii) promptly upon the receipt thereof by or on behalf of Pledgor, all
      other
      certificates and instruments constituting Collateral of Pledgor. Prior to
      delivery to Laurus, all such certificates and instruments constituting
      Collateral of Pledgor shall be held in trust by Pledgor for the benefit of
      Laurus pursuant hereto. All such certificates shall be delivered in suitable
      form for transfer by delivery or shall be accompanied by duly executed
      instruments of transfer or assignment in blank, substantially in the form
      provided in Schedule 2 attached hereto.

     

    (b)If
      any
      amount payable under or in connection with any of the Collateral shall be or
      become evidenced by any promissory note, other Instrument or Chattel Paper,
      such
      note, Instrument or Chattel Paper shall be immediately delivered to Laurus,
      duly
      endorsed in a manner satisfactory to Laurus, to be held as Collateral pursuant
      to this Pledge Agreement.

     

    (c)Pledgor
      authorizes Laurus to file such UCC or other applicable financing statements
      as
      may be reasonably requested by Laurus in order to perfect and protect the
      security interest created hereby in the Collateral.

     

    (d)Pledgor
      agrees to execute and deliver to Laurus such other consents, acknowledgments,
      agreements, instruments and documentation as Laurus may reasonably request
      from
      time to time to effectuate the conveyance, transfer, assignment and grant to
      Laurus of all of Pledgor’s right, title and interest in and to the Collateral
      and any distributions with respect thereto.

     

    4. Transfer
      Powers.
      If at
      any time any equity interest in any Issuer is evidenced by a certificate or
      other written instrument or document (a “certificate”), Pledgor shall
      immediately deliver such certificate to Laurus and, concurrently with the
      delivery to Laurus of each certificate by Pledgor, Pledgor shall deliver an
      undated transfer power covering such certificate, duly

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    executed
      in blank with, upon the request of Laurus, signature guaranteed, in the form
      attached hereto in Schedule 2 or such other form as reasonably acceptable to
      Laurus to be held as part of the Collateral pursuant hereto.

     

    5. Representations
      and Warranties.
      Pledgor
      represents and warrants that:

     

    (a)The
      Pledged Interests identified in Schedule 1 and set forth adjacent to Pledgor’s
      name constitutes all of Pledgor’s limited liability company interests or other
      beneficial interests of any kind in
      the
      issuers as shown thereon (the “Issuers”) and
      accurately reflects the ownership interest of Pledgor in the
      Issuers.

     

    (b)All
      equity contributions required to be made under the LLC Agreement or applicable
      law to Issuers by Pledgor have been made in connection with Pledgor’s Pledged
      Interests.

     

    (c)Pledgor
      is the record and beneficial owner of, and has good and marketable title to,
      the
      Pledged Interests of Pledgor, free of any and all liens or options in favor
      of,
      or claims of, any other Person, except for the security interest created by
      this
      Pledge Agreement or otherwise pursuant to the LLC Agreement.

     

    (d)To
      the
      best of Pledgor’s knowledge, the exercise by Laurus of its rights and remedies
      hereunder will not violate any law or governmental regulation or any material
      contractual restriction, in each case, binding on or affecting Pledgor or any
      of
      its property.

     

    (e)No
      authorization, approval or action by, and no notice of filing with any
      Governmental Authority or with any Issuer is required either (i) for the pledge
      made by Pledgor or for the granting of the security interest by Pledgor pursuant
      to this Pledge Agreement or (ii) to the best of Pledgor’s knowledge, for the
      exercise by Laurus of its rights and remedies hereunder (except as may be
      required by the Uniform Commercial Code in the applicable jurisdiction or laws
      affecting the offering and sale of securities).

     

    (f)The
      Pledged Interest are “securities” for purposes of Article 8 of the Code (as
      defined below) and “investment property” for the purposes of Article 9 of the
      Code, and the terms of the LLC Agreement so provides.

     

    (g)Upon
      the
      delivery by Pledgor to Laurus of the certificates representing the Collateral
      and duly executed transfer powers with respect thereto, the security interest
      created by this Pledge Agreement will constitute a valid, perfected
      first-priority security interest in the Pledged Interests of Pledgor and in
      the
      other Collateral arising therefrom, enforceable in accordance with its terms
      against all creditors of Pledgor, each Issuer or any Person purporting to
      purchase any Pledged Interests of Pledgor (or any portion thereof) therefrom
      or
      otherwise claiming by, through or under Pledgor or such Issuer, except as
      affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
      moratorium and other similar laws relating to or affecting creditors’ rights
      generally, and general equitable principles (whether considered in a proceeding
      in equity or at law).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (h)In
      the
      case of any Pledged Interest that are uncertificated, upon full execution and
      delivery of a control agreement by and among Pledgor, Issuer and Laurus, by
      virtue of the execution and delivery by the Pledgor of this Pledge Agreement,
      Laurus will have a valid and perfected first lien upon and security interest
      in
      the Pledged Interests as security for the payment and performance of the
      Obligations.

     

    6. Covenants.
      Pledgor
      covenants and agrees with Laurus that, from and after the date of this Pledge
      Agreement until this Pledge Agreement is terminated and the security interests
      created hereby are released, that:

     

    (a) If
      Pledgor shall, as a result of its ownership of the Pledged Interests of Pledgor,
      become entitled to receive or shall receive any certificate (including, without
      limitation, any certificate representing a dividend or a distribution in
      connection with any reclassification, increase or reduction of capital or any
      certificate issued in connection with any reorganization), option or rights,
      whether in addition to, in substitution of, as a conversion of, or in exchange
      for any shares of the Pledged Interests of Pledgor, or otherwise in respect
      thereof, Pledgor shall accept the same as the agent of Laurus, hold the same
      in
      trust for Laurus and deliver the same forthwith to Laurus in the exact form
      received, duly endorsed by Pledgor to Laurus, if required, together with an
      undated transfer power covering such certificate duly executed in blank by
      Pledgor and with signature guaranteed, to be held by Laurus, subject to the
      terms hereof, as additional collateral security for the Secured Obligations.
      Any
      sums paid upon or in respect of the Pledged Interests of Pledgor as a dividend
      or other distribution or upon the liquidation or dissolution of any Issuer
      shall
      be paid over to Laurus to be held by it hereunder as additional collateral
      security for the Secured Obligations, and in case any distribution of capital
      shall be made on or in respect of the Pledged Interests of Pledgor or any
      property shall be distributed upon or with respect to the Pledged Interests
      of
      Pledgor pursuant to any recapitalization, reclassification or reorganization
      of
      any Issuer, the property so distributed shall be delivered to Laurus to be
      held
      by it hereunder as additional collateral security for the Secured Obligations.
      If any sums of money or property so paid or distributed in respect of the
      Pledged Interests of Pledgor shall be received by Pledgor, Pledgor shall, until
      such money or property is paid or delivered to Laurus, hold such money or
      property in trust for Laurus, segregated from other funds of Pledgor, as
      additional collateral security for the Secured Obligations. If any amount
      payable under or in connection with any of the Collateral shall be or become
      evidenced by any promissory note, other instrument or chattel paper, such note,
      instrument or chattel paper shall be immediately delivered to Laurus, duly
      endorsed in a manner satisfactory to Laurus, to be held as Collateral pursuant
      to this Pledge Agreement.

     

    (b) Without
      the prior written consent of Laurus, Pledgor shall not (1) except for any
      Permitted Transfer, sell, assign, transfer, exchange, or otherwise dispose
      of,
      or grant any option with respect to, the Collateral or any portion thereof,
      (2)
      create, incur or permit to exist any security interest, encumbrance, lien or
      option in favor of, or any claim of any Person with respect to, any of the
      Collateral, or any interest therein, except for the security interests created
      by this Pledge Agreement or (3) enter into any agreement or undertaking
      restricting the right or ability of any Issuer to sell, assign or transfer
      any
      of the Collateral. Notwithstanding the foregoing, any Permitted Transfer shall
      be further conditioned on the following conditions being
      satisfied:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i) No
      Event
      of Default shall exist prior to, and taking into account, the proposed transfer,
      including without limitation pursuant to the Note, or immediately
      thereafter;

     

    (ii) The
      transferee with respect to such transfer shall have executed and delivered
      a
      pledge agreement in substance and form similar in all material respects to
      this
      Pledge Agreement and shall have agreed to be bound thereby;

     

    (iii) Laurus
      shall have received an opinion of counsel of the transferee, in form and
      substance reasonably satisfactory to Laurus, if so requested by Laurus;
      and

     

    (iv) The
      transferee of the transfer shall have delivered to Laurus an undated transfer
      power covering any certificate or certificates to be issued to such transferee,
      such undated transfer power to be duly executed in blank with signature
      guaranteed.

     

    Upon
      satisfaction by the Pledgor and the transferee of the conditions set forth
      herein, in such case, the applicable Issuer shall cause the certificate (if
      any)
      evidencing the Pledged Interests of such transferring Pledgor that is subject
      to
      the Permitted Transfer to be cancelled and shall immediately
      thereafter cause a new certificate evidencing the equity interests subject
      to
      the Permitted Transfer to be issued in the name of the transferee and shall
      deliver such certificate to Laurus to be held pursuant to and under the terms
      of
      this Pledge Agreement.

     

    (c) Pledgor
      shall warrant and defend title to and ownership of the Collateral at its own
      expense against the claims and demands of all other parties claiming an interest
      therein, shall maintain the security interest created by this Pledge Agreement
      as a first priority security interest and shall defend such security interest
      against claims and demands of all Persons whomsoever.

     

    (d) Pledgor
      acknowledges and agrees that it will not permit the terms of the LLC Agreement
      to be amended to change the status of any Pledged Interests as “securities” or
“investment property” as set forth in Section 5(f), without the express written
      consent of Laurus. As of the date hereof, the Pledged Interests are represented
      by those certificates indicated on Schedule 1.

     

    (e) Pledgor
      will not, and Pledgor will not permit Issuer to, (i) change the location of
      its
      chief executive office or principal place of business, (ii) change its name,
      identity or legal status as, in the case of the Pledgor, a corporation, and
      in
      the case of Issuer, a limited liability company, (iii) reorganize under the
      laws
      of another jurisdiction, or (iv) issue and new Pledged Interests, except to
      Pledgor or as permitted under Section 6(b) hereof.

     

    (f) Pledgor
      shall not participate in any amendment to the LLC Agreement of any Issuer (i)
      that would extend any voting rights to any owner of any equity interest in
      such
      Issuer unless such equity interest is subject to the terms and provisions of
      this Pledge Agreement or such other pledge agreement as is reasonably acceptable
      to Laurus, (ii) that would otherwise impair the Collateral or adversely affect
      in any material respect the rights,

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    privileges,
      benefits and security interests provided to or intended to be provided to Laurus
      or (iii) that in any way adversely affects the perfection of the security
      interest of Laurus in the Collateral.

     

    (g) At
      any
      time and from time to time, upon the written request of Laurus, Pledgor shall
      promptly and duly execute and deliver to Laurus such further instruments and
      documents, provide such additional information and take such further actions
      at
      its expense as Laurus may reasonably request for the purposes of obtaining
      or
      preserving the full benefits of this Pledge Agreement and of the rights and
      powers herein granted.

     

    7. Voting
      Rights.
      Unless
      an Event of Default shall have occurred and be continuing, Pledgor shall be
      permitted to exercise all voting and company rights with respect to the Pledged
      Interests; provided, however, that no vote shall be cast or company right
      exercised or other action taken which, in Laurus’ reasonable judgment, would
      impair the Collateral or which would be inconsistent with or result in any
      violation of any provision of this Pledge Agreement.

     

    8. Rights
      of Laurus. 

     

    (a) All
      money
      Proceeds received by Laurus hereunder shall be applied as provided in Section
      10(a) hereof.

     

    (b) If
      an
      Event of Default shall occur and be continuing, at Laurus’ option, (i) Laurus
      shall have the right to receive any and all cash dividends or other
      distributions paid in respect of the Pledged Interests and make application
      thereof to the Secured Obligations in such order as Laurus may determine, and
      (ii) the Pledged Interests shall be registered in the name of Laurus or its
      nominee, and Laurus or its nominee may thereafter exercise (A) all voting and
      other rights pertaining to the Pledged Interests at any meeting of owners of
      the
      applicable Issuer or otherwise and (B) any and all rights of conversion,
      exchange, subscription and any other rights, privileges or options pertaining
      to
      such Pledged Interests as if it were the absolute owner thereof (including,
      without limitation, the right to exchange at its discretion any and all of
      the
      Pledged Interests upon the merger, consolidation, reorganization,
      recapitalization or other fundamental change in the company structure of any
      Issuer, or upon the exercise by Pledgor or Laurus of any right, privilege or
      option pertaining to such Pledged Interests, and in connection therewith, the
      right to deposit and deliver any and all of the Pledged Interests with any
      committee, depository, transfer agent, registrar or other designated agency
      upon
      such terms and conditions as Laurus may determine), all without liability except
      to account for property actually received by it, but Laurus shall have no duty
      to Pledgor to exercise any such right, privilege or option and shall not be
      responsible for any failure to do so or delay in so doing.

     

    9. Events
      of Default. Each
      of
      the following shall constitute an event of default (“Event of Default”)
      hereunder:

     

    (a) An
“event
      of default” shall occur under any Note, the Securities Purchase Agreement or any
      other Document;

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Pledgor
      shall fail to perform or observe any covenant or condition to be performed
      or
      observed hereunder within fifteen (15) days of the occurrence thereof or, if
      longer, any applicable cure period; or

     

    (c) Any
      representation or warranty made by Pledgor herein shall prove to be false or
      erroneous in any material respect.

     

    10. Remedies.

     

    (a) If
      an
      Event of Default shall have occurred and be continuing, at any time at Laurus’
election, Laurus may apply all or any part of Proceeds held by Laurus in payment
      of the Secured Obligations in such order as Laurus may elect.

     

    (b) If
      an
      Event of Default shall have occurred and be continuing, Laurus may exercise,
      in
      addition to all other rights and remedies granted in this Pledge Agreement
      and
      in any other instrument or agreement securing, evidencing or relating to the
      Secured Obligations, all rights and remedies of a secured party under the Code.
      Without limiting the generality of the foregoing, Laurus, without resort to
      any
      other collateral or remedy under the Note or demand of performance or other
      demand, presentment, protest, advertisement or notice of any kind (except any
      notice required by law referred to below) to or upon Pledgor or any other Person
      (including without limitation the Issuers) (all and each of which demands,
      defenses, advertisements and notices are hereby waived), may in such
      circumstances forthwith collect, receive, appropriate and realize upon the
      Collateral, or any part thereof, and/or may forthwith sell, assign, give an
      option or options to purchase or otherwise dispose of and deliver the Collateral
      or any part thereof (or contract to do any of the foregoing), in one or more
      parcels at public or private sale or sales, in the over-the-counter market,
      at
      any exchange, broker’s board or office of Laurus or elsewhere upon such terms
      and conditions as it may deem advisable and at such prices as it may deem best,
      for cash or on credit or for future delivery without assumption of any credit
      risk. Laurus shall apply any Proceeds from time to time held by it and the
      net
      proceeds of any such collection, recovery, receipt, appropriation, realization
      or sale, after deducting all reasonable costs and expenses of every kind
      incurred in respect thereof or incidental to the care or safekeeping of any
      of
      the Collateral or in any way relating to the Collateral or its rights hereunder,
      including, without limitation, actual and reasonable attorneys’ fees and
      disbursements of counsel to Laurus, to the payment in whole or in part of the
      Secured Obligations, in such order as Laurus may elect, and only after such
      application and after the payment by Laurus of any other amount required by
      any
      provision of law, including, without limitation, Section 9-615 of the Code,
      need
      Laurus account for the surplus, if any, to Pledgor. To the extent permitted
      by
      applicable law, Pledgor waives all claims, damages and demands it may acquire
      against Laurus arising out of the exercise by it of any rights hereunder except
      for any claim, damage or demand arising from the gross negligence or willful
      misconduct of Laurus. If any notice of a proposed sale or other disposition
      of
      Collateral shall be required by law, such notice shall be deemed reasonable
      and
      proper if given at least ten (10) days before such sale or other disposition.
      The Pledgor shall remain liable for any deficiency if the proceeds of any sale
      or other disposition of Collateral are insufficient to pay the Secured
      Obligations and the reasonable fees and disbursements of any attorneys employed
      by Laurus to collect such deficiency.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11. Irrevocable
      Authorization and Instruction to Issuers. The Pledgor hereby authorizes and
      instructs the Issuers to comply with any instruction received by Pledgor (or
      any
      of them) from Laurus in writing that (a) states that an Event of Default has
      occurred and (b) is otherwise in accordance with the terms of this Pledge
      Agreement, without any other or further instructions from Pledgor (or any of
      them), and Pledgor agrees that the Issuers shall be fully protected in so
      complying.

     

    12. Appointment
      as Attorney-in-Fact.

     

    (a) The
      Pledgor hereby irrevocably constitutes and appoints Laurus and any officer
      or
      agent of Laurus, with full power of substitution, as its true and lawful
      attorney-in-fact with full irrevocable power and authority in the place and
      stead of Pledgor and in the name of Pledgor and in Laurus’ own name, from time
      to time in Laurus’ discretion, for the purpose of carrying out the terms of this
      Pledge Agreement, to take any and all appropriate action and to execute any
      and
      all documents and instruments which may be necessary or desirable to accomplish
      the purposes of this Pledge Agreement, including, without limitation, any
      financing statements, endorsement, assignment or other instruments of
      transfer.

     

    (b) The
      Pledgor hereby ratifies all that said attorneys shall lawfully do or cause
      to be
      done pursuant to the power of attorney granted in Section 12(a) hereof. All
      powers, authorizations and agencies contained in this Pledge Agreement are
      coupled with an interest and are irrevocable until this Pledge Agreement is
      terminated and the security interests created hereby are released.

     

    13. Duty
      of Laurus.
      Laurus’
sole duty with respect to the custody, safekeeping and physical preservation
      of
      the Collateral in its possession, under Section 9-207 of the Code or otherwise,
      shall be to deal with it in the same manner as Laurus deals with similar
      securities and property for its own account. Neither Laurus nor any of its
      respective directors, officers, employees or agents shall be liable for failure
      to demand, collect or realize upon any of the Collateral or for any delay in
      doing so or shall be under any obligation to sell or otherwise dispose of any
      Collateral upon the request of Pledgor or any other Person or to take any other
      action whatsoever with regard to the Collateral or any part
      thereof.

     

    14. No
      Assumption.
      Notwithstanding any of the foregoing, whether or not an Event of Default shall
      have occurred hereunder and whether or not Laurus elects to foreclose on the
      security interest in the Collateral as set forth herein, neither the execution
      of this Pledge Agreement, receipt by Laurus of any of Pledgor’s rights, title
      and interests in and to any distributions, now or hereafter due to Pledgor
      from
      any Issuer, nor Laurus’ foreclosure of the security interest in the Collateral,
      shall in any way be deemed to obligate Laurus to assume any of Pledgor’s
      obligations, duties, expenses or liabilities under the LLC Agreement as
      presently existing or as hereafter amended, or under any and all other
      agreements now existing or hereafter drafted or executed (collectively, the
“LLC
      Obligations”), unless Laurus otherwise expressly agrees to assume any or all of
      the LLC Obligations in writing. In the event of foreclosure by Laurus, Pledgor
      shall remain bound and obligated to perform the LLC Obligations and Laurus
      shall
      not be deemed to have assumed any of such LLC Obligations except as provided
      in
      the preceding sentence.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    15. Financing
      Statements and Further Documentation.
      Pledgor
      hereby authorizes Laurus to file financing statements with respect to the
      Collateral in such
      form and
      in such filing offices as Laurus reasonably determines appropriate to perfect
      the security interests of Laurus under this Pledge Agreement and agrees to
      execute all such instruments as may be required to perfect the security interest
      created hereby. Pledgor shall pay the cost of filing or recording the same
      in
      the public records specified by Laurus.

     

    16. Indemnification.
      Pledgor
      hereby agrees to indemnify, defend and hold Laurus and its respective successors
      and assigns harmless from and against any and all damages, losses, claims,
      costs
      or expenses (including reasonable attorneys’ fees) and any other liabilities
      whatsoever that Laurus or its respective successors or assigns may incur by
      reason of this Pledge Agreement or by reason of any assignment of a Pledgor’s
      right, title and interest in and to any or all of the Collateral.

     

    17. Consent
      and Waiver.
      Pledgor
      agrees that, without the prior written consent of Laurus, Pledgor shall not
      take
      any action that would operate to dilute the interest of Pledgor in any Issuer
      other than as permitted by this Pledge Agreement. Pledgor further agrees that,
      upon the written request of Laurus after an Event of Default has occurred and
      is
      continuing, Pledgor may be removed as a member of any Issuer and replaced with
      the assignee designated in such request. If Laurus so requests after an Event
      of
      Default has occurred and is continuing, Pledgor covenants and agrees to execute
      an amendment to the LLC Agreement of the relevant Issuer to reflect any such
      assignee’s substitution in place of Pledgor as a member of such Issuer, provided
      that such assignee shall adopt such LLC Agreement, and agrees to be bound by
      the
      terms and provisions thereof. In the event that any such assignee is admitted
      as
      a member of any Issuer in substitution of Pledgor, Pledgor agrees that such
      assignee shall not be liable for the obligations of Pledgor with respect to
      such
      Issuer arising before such assignee’s admission to such Issuer, except to the
      extent required by law. Pledgor hereby expressly waives any rights it may have
      under the LLC Agreement as a result of the enforcement by Laurus of any of
      its
      rights hereunder or the transfer (or agreement to transfer) by Laurus of any
      of
      its rights in any Issuer. Pledgor also hereby expressly waives any and all
      rights under the LLC Agreement of any Issuer which, whether exercised by Pledgor
      or not, would prevent, inhibit or interfere with the granting of a security
      interest in the Collateral, the foreclosure of such security interest in the
      Collateral by Laurus or the full realization by Laurus of any of its other
      rights under this Pledge Agreement or otherwise.

     

    18. Notices.
      Any
      notice, request,
      instruction or other document or communication hereunder shall be in
writing
      and
      shall be given in accordance with the terms of the Securities Purchase
      Agreement.

     

    19. Severability.
      Any
      provision of this Pledge Agreement which is prohibited or unenforceable in
      any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability
      without
      invalidating the remaining provisions hereof, and any such prohibition or
      unenforceability in any jurisdiction shall not invalidate or render
      unenforceable such provision in any other jurisdiction.

     

    20. Amendments
      in Writing; No Waiver; Cumulative Remedies.
      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a) None
      of
      the terms or provisions of this Pledge Agreement may be waived, amended,
      restated, supplemented or otherwise modified except by a written instrument
      executed by Pledgor and Laurus, provided that any provision of this Pledge
      Agreement may be waived by Laurus in a letter or agreement executed by Laurus
      or
      by facsimile transmission from Laurus.

     

        (b) Laurus
      shall not by any act (except by a written instrument pursuant to Section 20(a)
      hereof), delay, indulgence, omission or otherwise be deemed to have waived
      any
      right or remedy hereunder or to have acquiesced in any Event of Default or
      in
      any breach of any of the terms and conditions hereof. No failure to exercise,
      nor any delay in exercising on the part of Laurus, any right, power or privilege
      hereunder shall operate as a waiver thereof. No single or partial exercise
      of
      any right, power or privilege hereunder shall preclude any other or further
      exercise thereof or the exercise of any other right, power or privilege. A
      waiver by Laurus of any right or remedy hereunder on any one occasion shall
      not
      be construed as a bar to any right or remedy which Laurus would otherwise have
      on any future occasion.

     

        (c) The
      rights and remedies herein provided are cumulative, may be exercised singly
      or
      concurrently and are not exclusive of any other rights or remedies provided
      by
      law.

     

    21. Section
      Headings.
      The
      section headings used in this Pledge Agreement are for convenience of reference
      only and are not to affect the construction hereof or be taken into
      consideration in the interpretation hereof.

     

    22. Successors
      and Assigns.
      This
Pledge
      Agreement shall be binding upon the successors and assigns of Pledgor and shall
      inure to the benefit of Laurus and its successors and assigns, provided that
      Pledgor may not assign its rights or obligations under this Pledge Agreement,
      except as otherwise expressly provided in Section 6(b) hereof, without the
      prior
      written consent of Laurus, and any such purported assignment not expressly
      provided for in Section 6(b) hereof or in this section shall be null and
      void.

     

    23. Governing
      Law, Jurisdiction and Waiver of Jury Trial.

     

    (a)THIS
      PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
      PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAW.

     

    (b)PLEDGOR
      HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
      COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
      HEAR
      AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN PLEDGOR, ON THE ONE HAND, AND
      LAURUS, ON THE OTHER HAND, PERTAINING TO THIS PLEDGE AGREEMENT OR TO ANY MATTER
      ARISING OUT OF OR RELATED TO THIS AGREEMENT;

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    PROVIDED,
      THAT LAURUS AND PLEDGOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
      HAVE
      TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF
      NEW
      YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS PLEDGE AGREEMENT SHALL BE
      DEEMED OR OPERATE TO PRECLUDE LAURUS FROM BRINGING SUIT OR TAKING OTHER LEGAL
      ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON
      THE
      COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS, OR TO ENFORCE
      A
      JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LAURUS. PLEDGOR EXPRESSLY SUBMITS
      AND
      CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
      ANY
      SUCH COURT, AND PLEDGOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED
      UPON
      LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. PLEDGOR
      HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
      ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
      COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
      ADDRESSED TO PLEDGOR AT THE ADDRESS SET FORTH IN SECTION 11.8 OF THE SECURITIES
      PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
      THE
      EARLIER OF PLEDGOR’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
      THE U.S. MAILS, PROPER POSTAGE PREPAID.

     

    (c)THE
      PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
      APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
      OF
      THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS
      TO
      TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
      WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LAURUS AND PLEDGOR
      ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP
      ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS PLEDGE AGREEMENT OR THE
      TRANSACTIONS RELATED HERETO.

    

    [Remainder
      of Page Intentionally Left Blank]

     

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

     

    IN
      WITNESS WHEREOF, the undersigned has caused this Member Pledge Agreement to
      be
      duly executed and delivered as of the date first above written.

     

    

     

    BLAST
      ENERGY SERVICES, INC.

     

     

    By:
      /s/
      John O’Keefe   

    Name:
      John O’Keefe

    Title:
      EVP, CFO, and Co-CEO

     

    

     

    LAURUS
      MASTER FUND, LTD.

    

     

    By:
      /s/
      Laurus Master Fund, LTD.   

    Name:

    Title:

     

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

     

    SCHEDULE
      1

     

    DESCRIPTION
      OF PLEDGED SECURITIES

     

    

    
      	
              Issuer

            	
              Owner

            	
              Certificate
                Number

            	
              Number
                of

              Units

            	
              Total
                Percentage

              of
                Ownership

            
	
              Eagle
                Drilling Operations LLC

            	
              Blast
                Energy Services, Inc.

            	
              1

            	
              N/A

            	
              100%

            

    

     

    

     

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

     

    SCHEDULE
      2

     

    IRREVOCABLE
      TRANSFER POWER

    

    FOR
      VALUE
      RECEIVED, BLAST ENERGY SERVICES, INC., hereby sells, assigns and transfers
      unto
      __________________________________ ____(___) units of the membership interests
      of Energy Domestic Drilling Operations LLC standing in our name on the books
      of
      said limited liability company represented by Certificate(s) No(s). _____
      herewith, and do hereby irrevocably constitute and appoint
      ___________________________________ attorney to transfer the said membership
      interests on the books of said limited liability company with full power of
      substitution in the premises.

     

    Dated:
      ___________________

     

    BLAST
      ENERGY SERVICES, INC.

    
 

     

    By:_____________________________

     

    Name:

     

    Title:

     

    

     

    In
      presence of:

     

    __________________________SExhibit
      10.7

     

    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT

     

    THIS
      INTELLECTUAL PROPERTY SECURITY AGREEMENT (this “Agreement”),
      dated
      as of August 25, 2006, is made by BLAST
      ENERGY SERVICES, INC.,
      a
      California corporation (“Blast
      Energy Services”),
      and
      EAGLE DOMESTIC DRILLING OPERATIONS LLC, a Texas limited liability company
      (“Eagle”,
      and
      together with Blast Energy Services, each a “Grantor”
and
      collectively, the “Grantors”),
      in
      favor of LAURUS MASTER FUND, LTD. (“Laurus”).

     

    WHEREAS,
      pursuant to that certain Securities Purchase Agreement dated as of the date
      hereof by and between Blast Energy Services and Laurus (as from time to time
      amended, restated, supplemented or otherwise modified, the “Purchase
      Agreement”),
      Laurus has agreed to provide certain financial accommodations to Blast Energy
      Services;

     

    WHEREAS,
      pursuant to that certain Guaranty dated as of the date hereof made by Eagle
      (the
“Guarantor”)
      in
      favor of Laurus (as from time to time amended, restated, supplemented or
      otherwise modified, the “Guaranty”),
      the
      Guarantor guaranteed all of the obligations and liabilities of Blast Energy
      Services under the Purchase Agreement and the Related Agreements (as defined
      in
      the Purchase Agreement).

     

    WHEREAS,
      Laurus is willing to enter into the Purchase Agreement, but only upon the
      condition, among others, that Grantors shall have executed and delivered to
      Laurus this Agreement;

     

    NOW,
      THEREFORE, in consideration of the premises and mutual covenants herein
      contained and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
      follows:

     

    Section
      1DEFINED
      TERMS. 

     

    (a)When
      used
      herein the following terms shall have the following meanings:

     

    “Copyright
      Licenses”
means
      all written agreements naming any Grantor as licensor or licensee, granting
      any
      right under any Copyright, including the grant of rights to manufacture,
      distribute, exploit and sell materials derived from any Copyright, and whether
      any Grantor is named as licensor, licensee or otherwise.

     

    “Copyrights”
means
      all copyrights arising under the laws of the United States, any other country
      or
      any political subdivision thereof, whether registered or unregistered and
      whether published or unpublished, all registrations and recordings thereof,
      and
      all applications in connection therewith, including all registrations,
      recordings and applications in the United States Copyright Office, and the
      right
      to obtain all renewals of any of the foregoing.

     

    “General
      Intangibles”
shall
      have the meaning provided thereto in Section 9-102 of the UCC, as amended,
      restated or otherwise modified from time to time.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Intellectual
      Property”
shall
      mean all rights, title and interests in or relating to intellectual property
      and
      industrial property of each Grantor and all IP Ancillary Rights relating
      thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names
      and IP Licenses.

    

    “Internet
      Domain Names” means all rights, title and interests (and all related IP
      Ancillary Rights) of each Grantor in or relating to internet domain
      names.

     

    “IP
      Ancillary Rights”
shall
      mean with respect to any Copyrights, Patents, Trademarks, Internet Domain Names
      and IP Licenses, as applicable, all foreign counterparts to, and all
      divisionals, reversions, continuations, continuations-in-part, reissues,
      reexaminations, renewals and extensions of, such intellectual property and
      all
      income, royalties, proceeds and liabilities at any time due or payable or
      asserted under or with respect to any of the foregoing or otherwise with respect
      to such intellectual property, including all rights to sue or recover at law
      or
      in equity for any past, present or future infringement, misappropriation,
      dilution, violation or other impairment thereof, and, in each case, all rights
      to obtain any other IP Ancillary Right.

     

    “IP
      Licenses”
shall
      mean Copyright Licenses, Patent Licenses and Trademark Licenses.

     

    “Master
      Security Agreement”
shall
      have the meaning provided thereto in Section 5 hereof.

     

    “Obligations”
shall
      have the meaning provided thereto in the Master Security Agreement.

     

    “Patent
      Licenses”
means
      all agreements, whether written or oral, relating to any Patent, including
      agreements providing for the grant by or to any Grantor of any right to
      manufacture, use or sell any invention covered in whole or in part by a Patent,
      and whether any Grantor is named as licensor, licensee or
      otherwise.

     

    “Patents”
means
      (a) all letters patent of the United States, any other country or any political
      subdivision thereof, and all reissues and extensions of such letters patent,
      (b)
      all applications for letters patent of the United States or any other county
      and
      all divisions, continuations and continuations-in-part thereof, and (c) all
      rights to obtain any reissues or extensions of the foregoing.

     

    “Trademark
      Licenses”
means,
      collectively, each agreement, whether written or oral, relating to any
      Trademark, including agreements providing for the grant by or to any Grantor
      of
      any right to use any Trademark, and whether any Grantor is named as licensor,
      licensee or otherwise. 

     

    “Trademarks”
means
      (a) all trademarks, trade names, corporate names, business names, fictitious
      business names, trade styles, services marks, logos, and other source or
      business identifiers, and all goodwill associated therewith, now existing or
      hereafter adopted or acquired, all registrations and recordings thereof, and
      all
      applications in connection therewith, whether in the United States Patent and
      Trademark Office or in any similar office or agency of the United States, any
      State thereof or any other country or political subdivision thereof, or
      otherwise, and all common-law rights thereto, and (b) the right to obtain all
      renewals, reissues or extensions thereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “UCC”
shall
      have the meaning provided thereto in the Master Security Agreement.

     

    (b)All
      capitalized terms used but not otherwise defined herein have the meanings given
      to them in the Purchase Agreement.

     

    Section
      2GRANT
      OF SECURITY INTEREST IN INTELLECTUAL PROPERTY COLLATERAL.
      To
      secure the complete and timely payment of all the Obligations of the Grantors
      now or hereafter existing from time to time, each Grantor hereby grants to
      Laurus a continuing first priority security interest in all of such Grantor’s
      right, title and interest in, to and under the following, whether presently
      existing or hereafter created or acquired (collectively, the “Collateral”):

     

    (a) all
      of
      its Patents and Patent Licenses to which it is a party including those referred
      to on Schedule
      I
      hereto;

     

    (b) all
      of
      its Trademarks and Trademark Licenses to which it is a party including those
      referred to on Schedule
      II
      hereto;

     

    (c) all
      of
      its Copyrights and Copyright Licenses to which it is a party including those
      referred to on Schedule
      III
      hereto;

     

    (d) all
      of
      its Internet Domain Names including those referred to on Schedule
      IV
      hereto;

     

    (e) all
      IP
      Ancillary Rights; 

     

    (f) all
      goodwill of the business connected with the use of, and symbolized by, any
      of
      the Intellectual Property; and

     

    (g) all
      products and proceeds of the foregoing, including, without limitation, any
      claim
      by such Grantor against third parties for past, present or future (i)
      infringement or dilution of any Intellectual Property or Intellectual Property
      licensed under any IP License and (ii) injury to the goodwill associated with
      any Intellectual Property or any Intellectual Property licensed under any IP
      License. 

     

    Section
      3REPRESENTATIONS
      AND WARRANTIES.
      Each
      Grantor represents and warrants that:

     

    (a) Such
      Grantor does not have any interest in, or title to, (a) any Patents or Patent
      Licenses except as set forth on Schedule I, (b) any Trademarks or Trademark
      Licenses except as set forth on Schedule II, (c) any Copyrights or Copyright
      Licenses except as set forth on Schedule III or (d) any Internet Domain Names
      except as set forth on Schedule IV.

     

    (b) Each
      of
      its Patents, Trademarks and Copyrights is valid and enforceable, and there
      is no
      claim that the use of any of them violates the rights of any third party.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) The
      IP
      Licenses are in full force and effect, and such Grantor is not in breach or
      default under any of the IP Licenses.

     

    (d) This
      Agreement is effective to create a valid and continuing first priority lien
      on
      and perfected security interests in favor of Laurus in all of such Grantor’s
      Patents, Trademarks, Copyrights, IP Licenses and Internet Domain Names and
      such
      perfected security interests are enforceable as such as against any and all
      creditors of, and purchasers from, such Grantor. 

     

    (e) Upon
      filing of this Agreement with the United States Patent and Trademark Office
      and
      the United States Copyright Office and the filing of appropriate financing
      statements, all action necessary or desirable to protect and perfect Laurus’
Lien on each Grantor’s Patents, Trademarks, Copyrights and Internet Domain Names
      shall have been duly taken.

     

    Section
      4COVENANTS.
      Each
      Grantor covenants and agrees with Laurus that from and after the date of this
      Agreement:

     

    (a) Such
      Grantor shall notify Laurus immediately if it knows or has reason to know that
      any application or registration relating to any Patent, Trademark or Copyright
      (now or hereafter existing) may become abandoned or dedicated, or of any adverse
      determination or development (including the institution of, or any such
      determination or development in, any proceeding in the United States Patent
      and
      Trademark Office, the United States Copyright Office or any court) regarding
      such Grantor’s ownership of or right to use any Patent, Trademark or Copyright,
      its right to register the same, or to keep and maintain the same.

     

    (b) In
      no
      event shall such Grantor, either directly or through any agent, employee,
      licensee or designee, file an application for the registration of any Patent,
      Trademark or Copyright with the United States Patent and Trademark Office,
      the
      United States Copyright Office or any similar office or agency without giving
      Laurus prior written notice thereof, and, upon request of Laurus, such Grantor
      shall execute and deliver a supplement hereto (in form and substance
      satisfactory to Laurus) to evidence Laurus’ lien on such Patent, Trademark or
      Copyright, and the General Intangibles of such Grantor relating thereto or
      represented thereby.

     

    (c) Such
      Grantor shall take all actions necessary or requested by Laurus to maintain
      and
      pursue each application, to obtain the relevant registration and to maintain
      the
      registration of each of the Patents, Trademarks and Internet Domain Names (now
      or hereafter existing), including the filing of applications for renewal,
      affidavits of use, affidavits of noncontestability and opposition and
      interference and cancellation proceedings.

     

    (d) In
      the
      event that any of the Collateral is infringed upon, misappropriated or diluted
      by a third party, such Grantor shall notify Laurus promptly after such Grantor
      learns thereof. Such Grantor shall, unless it shall reasonably determine that
      such Collateral is in no way material to the conduct of its business or
      operations, promptly sue

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    for
      infringement, misappropriation or dilution and to recover any and all damages
      for such infringement, misappropriation or dilution, and shall take such other
      actions as Laurus shall deem appropriate under the circumstances to protect
      such
      Collateral.

     

    (e) Upon
      the
      request of Laurus, such Grantor shall execute and deliver to Laurus, in form
      and
      substance reasonably acceptable to Laurus and suitable for recording with the
      appropriate internet domain name registrar, a duly executed form of assignment
      for all Internet Domain Names of such Grantor (together with appropriate
      supporting documentation as may be requested by Laurus).

     

    Section
      5MASTER
      SECURITY AGREEMENT.
      The
      security interests granted pursuant to this Agreement are granted in conjunction
      with the security interests granted to Laurus by each Grantor pursuant to the
      Master Security Agreement, dated as of the date hereof, among the Grantors
      and
      Laurus (as amended, restated or otherwise modified from time to time, the
“Master
      Security Agreement”).
      Each
      Grantor and Laurus hereby acknowledges and affirms that the rights and remedies
      of Laurus with respect to the security interest in the Collateral made and
      granted hereby are more fully set forth in the Master Security Agreement, the
      terms and provisions of which are incorporated by reference herein as if fully
      set forth herein.

     

    Section
      6REINSTATEMENT.
      This
      Agreement shall remain in full force and effect and continue to be effective
      should any petition be filed by or against any Grantor for liquidation or
      reorganization, should any Grantor become insolvent or make an assignment for
      the benefit of any creditor or creditors or should a receiver or trustee be
      appointed for all or any significant part of any Grantor’s assets, and shall
      continue to be effective or be reinstated, as the case may be, if at any time
      payment and performance of the Obligations, or any part thereof, is, pursuant
      to
      applicable law, rescinded or reduced in amount, or must otherwise be restored
      or
      returned by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance
      had not been made. In the event that any payment, or any part thereof, is
      rescinded, reduced, restored or returned, the Obligations shall be reinstated
      and deemed reduced only by such amount paid and not so rescinded, reduced,
      restored or returned.

     

    Section
      7INDEMNIFICATION.
      (a)
      Each Grantor assumes all responsibility and liability arising from the use
      of
      the Patents, Trademarks and/or Copyrights and each Grantor hereby indemnifies
      and holds Laurus harmless from and against any claim, suit, loss, damage or
      expense (including reasonable attorneys’ fees) arising out of such Grantor’s
      operations of its business from the use of the Patents, Trademarks and/or
      Copyrights. (b) In any suit, proceeding or action brought by Laurus under any
      IP
      License for any sum owing thereunder, or to enforce any provisions of such
      IP
      License, Grantors will indemnify and keep Laurus harmless from and against
      all
      expense, loss or damage suffered by reason of any defense, set off,
      counterclaim, recoupment or reduction or liability whatsoever of the obligee
      thereunder, arising out of a breach by the applicable Grantor of any obligation
      thereunder or arising out of any other agreement, indebtedness or liability
      at
      any time owing to or in favor of such obligee or its successors from such
      Grantor, and all such obligations of such Grantor shall be and remain
      enforceable against and only against such Grantor and shall not be enforceable
      against Laurus.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      8NOTICES.
      Whenever it is provided herein that any notice, demand, request, consent,
      approval, declaration or other communication shall or may be given to or served
      upon any of the parties by any other party, or whenever any of the parties
      desires to give and serve upon any other party any communication with respect
      to
      this Agreement, each such notice, demand, request, consent, approval,
      declaration or other communication shall be in writing and shall be given in
      the
      manner, and deemed received, as provided for in the Purchase Agreement with
      respect to Blast Energy Services and the Guaranty with respect to the
      Guarantor.

     

    Section
      9TERMINATION
      OF THIS AGREEMENT.
      Subject
      to Section
      6
      hereof,
      this Agreement shall terminate upon indefeasible payment in full in cash of
      all
      Obligations and irrevocable termination of the Purchase Agreement and the
      Guaranty.

    [Signature
      Page to Follow]

    

     

    IN
      WITNESS WHEREOF, each Grantor has caused this Intellectual Property Security
      Agreement to be executed and delivered by its duly authorized officer as of
      the
      date first set forth above. 

    

    
      	 	
              BLAST
                ENERGY SERVICES, INC.

              By:
                /s/
                John O’Keefe 

              Name:
                John O’Keefe

              Title:
                EVP, CFO, & Co-CEO

            
	 	
              EAGLE
                DOMESTIC DRILLING OPERATIONS LLC

              By:
                BLAST ENERGY SERVICES, INC., its  sole
                member

              By:
                /s/
                David M. Adams 

              Name:
                David M. Adams

              Title:
                President & Co-CEO

            
	
              ACCEPTED
                AND ACKNOWLEDGED BY:

              LAURUS
                MASTER FUND, LTD.

              By:
                /s/
                Laurus Master Fund, LTD. 

              Name:
                

              Title:

            	 

    

    

    
      
        
          

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

     

    STATE
      OF
TEXAS )

    ) ss:

    COUNTY
      OF
HARRIS )

     

    On
      the
      24th day of August, 2006, before me personally came John O’Keefe to me known,
      who being by me duly sworn, did depose and say he is the Executive Vice
      President, Chief Financial Officer and Co-CEO of Blast Energy Services, Inc.,
      the corporation described in and which executed the foregoing instrument; and
      that he signed his name thereto by order of the board of directors of said
      corporation.

     

    

    /s/
      Delores M. Trapani 

    Notary
      Public

    My
      Commission Expires: March 04, 2009

    

     

     

    STATE
      OF
TEXAS )

    ) ss:

    COUNTY
      OF
HARRIS )

     

    On
      the
      24th day of August, 2006, before me personally came David Adams to me known,
      who
      being by me duly sworn, did depose and say he is the President and Co-CEO of
      Blast Energy Services, Inc., the sole member of Eagle Domestic Drilling
      Operations LLC, the limited liability company described in and which executed
      the foregoing instrument; and that he signed his name thereto by order of the
      board of directors of said corporation.

     

    

    /s/
      Delores M. Trapani 

    Notary
      Public

    My
      Commission Expires: March 04, 2009

    

     

    

    

    

    

    

    

    
      
        
          

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

     

    SCHEDULE
      I

     

    TO

     

    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT

    
      	
              I. PATENT
                REGISTRATIONS

            
	
              Grantor

            	
              Patent

            	
              Reg.
                No.

            	
              Date

            
	
              None.

            	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

     

    

    
      	
              II. PATENT
                APPLICATIONS

            
	
              Grantor

            	
              Patent

            	
              Application
                No.

            	
              Filing
                Date

            
	
              Blast
                Energy Services, Inc. (50% owner of the Patent)

            	
              Method
                and Apparatus for Jet-Fluid Abrasive Cutting

            	
              60/527,308

            	
              November
                12, 2004

            
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

     

    

    
      	
              III. PATENT
                LICENSES

            
	
              Grantor

            	
              Patent

            	
              Reg.
                No.

            	
              Owner

            	
              Date

            	
              Exclusivity

            	
              Type
                of License

            
	
              Blast
                Energy Services, Inc.

            	
              Method
                of an Apparatus for Horizontal Well Drilling

            	
              5,413,184

            	
              Carl
                Landers

            	
              5/9/95

            	
              Not
                Exclusive

            	
              Sublicense
                to Blast Energy Services under terms of license sale to Maxim
                TEP

            
	
              Blast
                Energy Services, Inc.

            	
              Method
                of and Apparatus for Horizontal Well Drilling

            	
              5,853,056

            	
              Carl
                Landers 

            	
              12/29/98

            	
              Not
                Exclusive

            	
              Sublicense
                to Blast Energy Services under terms of license sale to Maxim
                TEP

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
      II

     

    TO

     

    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT

     

    (m) TRADEMARK
      REGISTRATIONS

    
      	
              GRANTOR

            	
              REG.
                NO.

            	
              MARK

            	
              COUNTRY

            	
              REG.
                DATE

            
	
              None.

            	 	 	 	 
	 	 	 	 	 

    

     

    (n) TRADEMARK
      APPLICATIONS

    
      	
              GRANTOR

            	
              SER.
                NO.

            	
              MARK

            	
              COUNTRY

            	
              FILING
                DATE

            
	
              None.

            	 	 	 	 
	 	 	 	 	 

    

     

    

     

    (o) TRADEMARK
      LICENSES

    
      	
              GRANTOR

            	
              REG.
                NO.

            	
              MARK

            	
              COUNTRY

            	
              REG.
                DATE

            	
              EXCLUSIV-ITY

            	
              TYPE
                OF LICENSE

            
	
              None.

            	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

     

    

    
      
        
          

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

     

    SCHEDULE
      III

     

    TO

     

    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT

    
      	
              (a) COPYRIGHT
                REGISTRATIONS

            
	
              Grantor

            	
              Copyright

            	
              Reg.
                No.

            	
              Date

            
	
              None.

            	 	 	 
	 	 	 	 
	
              (b) COPYRIGHT
                APPLICATIONS

            
	
              Grantor

            	
              Copyright

            	
              Date

            	 
	
              None.

            	 	 	 
	 	 	 	 
	
              (c) COPYRIGHT
                LICENSES

            
	
              Grantor

            	
              Copyright

            	
              Reg.
                No.

            	
              Date

            	
              Exclusivity

            	
              Type
                of License

            
	
              None.

            	 	 	 	 	 
	 	 	 	 	 	 

    

     

    

    
      
        
          

        

         

      

      
         

        
          

        

      

      
         

        
          

        

      

    

     

    SCHEDULE
      IV

     

    TO

     

    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT

     

    

     

    INTERNET
      DOMAIN NAMES

     

    blastenergyservices.com

     

    blast-es.com

     

    verdisys.com

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