Marketing Representative Agreement

 

                  EXCLUSIVE MARKETING REPRESENTATIVE AGREEMENT

 

THIS EXCLUSIVE MARKETING REPRESENTATIVE AGREEMENT (this "Agreement") is made

and entered into as of September 30, 2004, by and between Bi-Comp, L.L.C.  

("BI-COMP") and Permian Energy Services, L.P. ("Representative"), with

reference to the following facts:

 

WHEREAS, BI-COMP and its affiliated company, ABI Technology, has developed and

plans to market the Thermal Dynamic Pulse Lifting Unit ("TPU") for use in gas

compression, gas lift production of oil and gas, chemical, solvent, and fluid

injection down oil and gas wells.

 

WHEREAS, Representative is developing its proprietary well treating, chemical

injection, and H2S injection process for both in-situ and mobile service;  

 

WHEREAS, Representative is developing a customer base and cyclic system for

in-situ gas injection for thermal recovery of tar sand hydrocarbons;

 

WHEREAS, Representative desires the right to purchase, to lease, and/or to

market the device for the benefit of both BI-COMP and Representative.

 

NOW, THEREFORE, for and in consideration of the premises and of the mutual

promises and conditions herein contained, the parties do hereby agree as

follows:

 

1.     APPOINTMENT

 

(a) BI-COMP hereby grants to Representative the exclusive right to purchase, to

lease, or to sell   BI-COMP products specified on Exhibit A hereto referred to

as the ("Products") for use as part of   the Representative's proprietary well

treatment and H2S injection process starting in the protected geographical

areas specified in Exhibit B hereto referred to as the ("Territory(ies))".   

BI-COMP will extend this exclusive right to other special projects and/or

customer bases developed by the Representative that are not part of BI-COMP's

normal operations.    BI-COMP will establish four categories of Territories:

 

      (i).         Secured

      (ii)   Selective

      (iii) Provisional

      (iv)   Direct   Sales

 

(b) BI-COMP recognizes that conflicts will occur between Representative and

other authorized agents of BI-COMP and/or ABI Technology where individual oil

and gas companies have a large regional, national, and/or international

presence.   BI-COMP will establish a protocol and procedure that will allow

Representative to operate outside its Secured Territory when the following

cases exist:

 

      (i)    if Representative owns its own oil and gas production outside

            its Secured Territory

      (ii)   if there is a documented and historical relationship between the

            prospective client and Representative

      (iii) if the Representative has created a "home office" relationship,

            historical or otherwise, with senior level management that leads to

            an integrated development and expansion of Products and their use beyond

            its defined Territory(ies)

      (iv) if one representative sells a TPU that is to be put into service in the

            Territory of another representative.

 

(c) Representative recognizes the relationship between BI-COMP, ABI

Technology, and Expro International, Houston, Texas.   Should Representative

develop sales of the TPU outside the United States, Representative will work

within the guidelines of the ABI-Technology and Expro agreements.

 

(d) Representative recognizes the relationship between BI-COMP, ABI

Technology, and LCL Company, Columbus, Texas.   Representative will work

within the guidelines of the ABI-Technology and LCL Company and their

respective agreements.

 

2. PURCHASES AND TERMS

 

(a) BI-COMP's policy is to rent or lease units for ABI Technology's patented

TPU.   ABI Technology will allow BI-COMP to sell equipment for the

Representative's proprietary treating process and other uses developed by

Representative.

 

(b) Subject to the terms and conditions of this Agreement, with respect to

each model of any Product, BI-COMP shall sell to Representative the products

at the price FOB factory -- as determined by BI-COMP and described in Section

7 Pricing.    Subject to clause (c) below, all such sales shall be final and

binding upon placement hereunder by Representative of an order therefore and

BI-COMP's acceptance of such order.   It is understood that BI-COMP will

establish a Representative Discount Price List with added discount incentives

for volume purchases in consideration of Representative's marketing and sales

efforts, and accordingly BI-COMP shall not have any obligation, under any

circumstances, to pay Representative any commission, fee, expense

reimbursement, or other amount with respect to Representative's work or

activities as contemplated hereunder, except to the extent (if any) expressly

provided he reunder.

 

(c) Purchased Unit Payment terms will be determined as they arise, typical

terms are as follows:

     

      (i)    50% on order as down payment

      (ii)   40% on Date of Shipment

      (iii) 10% Net 30 days from date of shipment.

 

All other invoices net thirty. Variance from the above Payment terms can be

discussed and initiated on a case by case basis when mutually agreed to by

BI-COMP and Representative.

 

(e) It is understood that representative will be purchasing Products hereunder

for its own use or resale to its "clients" for Representative's exclusive

process.   Nonetheless, all sales to Representative shall be binding and final,

and Representative shall have no right to cancel or rescind any such sale,

provided, however, that Representative shall be entitled to return Products

purchased hereunder, and receive a refund of amounts paid by Representative

therefore, to the extent and only to the extent that Representative's client

purchasing such Products would have been able to effect such a return and

refund under BI-COMP's standard written contracts, policies, and procedures

as in effect at the time of such attempted return, had such client purchased

the Products in question directly from BI-COMP under Representative's purchase

of such Products.

 

(f) BI-COMP will charge a yearly licensing fee PER UNIT for the use of the

patented technology as part of the Representative's process.   The amount of

this licensing fee shall be no more than SEVEN AND ONE HALF PERCENT (7.5%) of

the purchase price.   Payment will be made yearly no later than January 31st

of the current calendar year.   Permanent applications of a unit solely for the

TPU will fall under the terms of Rental or Lease units.

 

3. TERM

 

(a) The term of this Agreement shall commence on the date hereof and shall

continue until 12-31-2005 and continuing with a year to year evergreen

extension or until terminated as provided in Section 3(b).   The following

minimum sales performance criteria for the Representative's company wide

program have been agreed to:

 

2004 year sales:         1 Unit

2005 year sales:         10 Units (2 per quarter minimum)

2006-2008                Yearly Increase of 50% by unit volume

2009 & Ongoing years           Yearly Increase of 15% by unit volume     

                                                       

      (i)    If these sales criteria are not realized, BI-COMP can, if desired,

            terminate this agreement.  

      (ii)   If these performance criteria are met, this contract is renewable

            without contest.

 

(b) If either party breaches this Agreement, the non-breaching party will

advise the breaching party in writing of the breaching party's obligations.  

The breaching party shall have 30 days to remedy the breach.   Failure to

remedy the breach within such thirty (30) day period will allow the non-

breaching party the option to terminate this Agreement.

 

(c) Upon expiration or termination of this Agreement for any reason,

Representative shall cease all marketing or promotion of any Products and

shall, at its expense, (i) return to BI-COMP all copies of any Confidential

Information (as defined below) and all copies of the Documentation and

Promotional Materials (as defined below) in Representative's possession or

under Representative's control, and (ii) deliver to BI-COMP a statement

executed by an officer of Representative certifying that Representative has

complied with all of its obligations under this Section 3(c).

 

(d) The provisions of Sections 3(c), 5(e), 5(f), 8, 11, 12, 13, 16 and 17

shall survive any termination or expiration of this Agreement and shall

remain fully enforceable thereafter for five (5) years.  

 

4. PROMOTIONAL MATERIALS AND TRAINING

 

(a) In accordance with BI-COMP's then current standard policies in effect from

time to time, BI-COMP shall supply to Representative documentation,

instructions, catalogs, price lists, and promotional materials relating to the

Products ("Documentation and Promotional Materials") in reasonable quantities

as determined by BI-COMP.

 

(b) BI-COMP shall supply all technical and marketing training that

Representative's personnel require to perform Representative's obligations

hereunder, as determined by BI-COMP in the exercise of its sole discretion.  

All training shall occur at BI-COMP's facility or at selected field locations

at times reasonably scheduled by BI-COMP and Representative.   Representative

or its personnel shall pay all travel, lodging, meals, and other expenses

incurred by its personnel in obtaining such training. Training provided by

BI-COMP at the Representative's site will be at the Representative's

expense.   Representative shall pay for all travel, lodging, meals, and other

expenses incurred by BI-COMP personnel in providing such training.  

Representative shall ensure that all Representative personnel who market,

resell, or provide services in connection with any Products shall, before

commencing so to market, resell, or provide services, receive all training

required by BI-COMP pursuant to this Section 4(b).  

 

5. DUTIES OF REPRESENTATIVE

 

(a) Representative shall exert its best efforts to promote and market Products

and solicit orders therefore as provided above.   Without limiting the

foregoing, Representative shall maintain and conduct its business in the

Territory in a proper, lawful, and reputable manner so as to reflect

positively on BI-COMP and the Products.

 

(b) Representative shall thoroughly and carefully investigate each proposed

product sale, and all surrounding circumstances of proposed sale, in order to

verify that the intended use of the Products by the proposed buyer and

environment in which such proposal use will occur are appropriate for the

Products and do not give rise to an unusual degree of risk of Product failure

or non-performance.

 

(c) Representative shall ensure that all of its personnel engaged in

performing Representative's duties hereunder are fully qualified to perform

such duties in a competent and professional manner.

 

(d) Representative shall be responsible for all costs and expenses incurred

by Representative in the exercise of its rights or the performance of its

duties under this Agreement.

 

(e) Representative shall indemnify BI-COMP and hold it harmless from any

liabilities to any Users or other third parties arising out of, and any costs

and expenses of defending or settling, any claim based in whole or part on any

allegation of (i) negligence, recklessness, or intentional misconduct by

Representative, (ii) any act or occurrence that would constitute a breach by

Representative of this Agreement, or (iii) any other breach of contract by

Representative.

 

(f) Subject to Section 12 & 13 of the agreement, BI-COMP shall indemnify

Representative and hold it harmless from any liabilities to any Users or

other third parties arising out of, and any costs and expenses of defending

or settling, any claim made by BI-COMP in whole or in part on any allegation

of (i) negligence, recklessness, or intentional misconduct, (ii) any act or

occurrence that would constitute a breach by BI-COMP of this agreement any

other breach of contract by BI-COMP or (iii) that there have been personal

injuries or death or damage to property arising out of defects, a negligence

in design, material, or manufacture of any Products.   All of BI-COMP's

promises, duties, and obligations to Representative under this paragraph (f)

shall be subject to Representative's complete and timely satisfaction of all

Representative's duties under Section 5 of this agreement.

 

6. DESIGN BASIS & ORDERS

 

(a) All design parameters both surface and downhole must meet with the

approval of BI-COMP.   BI-COMP will validate the proper size and configuration

of the equipment needed by the Representative or its clients.   BI-COMP will

supply unit engineering/performance calculations assuring the design

requirements for the application.   BI-Comp makes no guarantee of the

effectiveness of the products/services supplied beyond that stated in the unit

performance data calculations.

 

(b) All orders for Products hereunder shall be in the form of a standard

BI-COMP order form (an "Order Form") signed by the Representative and

submitted to BI-COMP by Representative.   Furthermore, all orders, acceptances,

contracts, terms and conditions, and other documents or instruments of sale or

transfer ("Client Order Forms") between Representative and Representative's

clients relating to Products shall be in forms that have been approved in

writing prior to Representative's execution thereof by BI-COMP.    No order

shall be binding upon BI-COMP unless and until accepted by BI-COMP as

evidenced by BI-COMP's written acknowledgment delivered to Representative.  

BI-COMP shall have the right in its sole discretion to accept or reject any

order.   BI-COMP shall provide its standard Order Form(s) to Representative

upon execution hereof by Representative and by BI-COMP.   BI-COMP may change

such standard form(s) at any time, with or without notice to Representative.  

BI-COMP shall determine, in the exercise of its sole discretion, whether the

Order Form(s) will allow distribution of Products by means of sale, lease,

other methods of distribution, or any combination of the foregoing.  

 

7. PRICE

 

(a) BI-COMP has established and published a Suggested Retail and Wholesale

Price List for the standard TPU units.   The prices to the Representative are

in the nature of a Wholesale Price and related discount.   The initial price

list for both the Suggested Retail Price and Wholesale Price is put in Exhibit

D.   These prices are FOB Houston, Texas.   No additional commissions or

incentives will be forthcoming to the Representative.  

 

(b) Representative Wholesale Discounts

 

      (i)    2-4 Units -        7.5% off of Representative's Wholesale prices currently

                        published at the time of order.

      (ii)   5+ Units-          12.5% off of Representative's Wholesale prices currently

                        published at the time of order.

      (iii) Unit quantities are for units ordered at the same time.

      (iv)   Discounts apply to base unit configuration only.

 

(c) Price Increase

 

      (i)    BI-COMP will be allowed to raise its Wholesale pricing to Representative

            annually with a maximum increase of no more than FIVE PERCENT (5%).   This

            increase can be more than FIVE PERCENT (5%) should the cost of raw goods,

            labor, and equipment exceed the five percent (5%) as correlated to the

            Manufactures Price Index.

 

      (ii)   BI-COMP will be allowed to raise its Retail pricing at any time at its

            sole discretion.   These increases will be in reaction to market conditions

            and to business opportunities.

 

(d) FORCE MAJEURE

 

BI-Comp shall not be liable for