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Exhibit
10.1
AGREEMENT AND
MUTUAL RELEASE
This
Agreement and Mutual Release (this “Agreement” or
“Mutual Release”) entered into on August 22, 2007,
(“Effective Date”) is by and between Blast Energy
Services, Inc., a California corporation, and Eagle Domestic
Drilling Operations, LLC, a Texas limited liability company
wholly owned by Blast (collectively referred to herein as
“Blast”) and Thornton Business Security Trust, a
Nevada Trust, (the “Trust”), collectively referred
to as the “Parties.”
1.
Facts.
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1.1
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As
of the Effective Date, the Trust is the owner and holder of
16,477,500 shares of Blast Common Stock (the “Trust Common
Stock”). The Trust Common Stock has not been registered by
Blast, as previously agreed at the time of purchase, and is not
freely tradable at this time.
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1.2
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The
trustee of the Trust has decided to offer to sell to Blast all
shares of the Trust Common Stock.
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1.3
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Sale
of the Trust Common Stock to Blast would result in a complete
redemption of the Trust Common Stock.
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1.4
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Subject
to the approval of the United States Bankruptcy Court for the
Southern District of Texas (the “Bankruptcy Court”)
having jurisdiction over Blast’s current Chapter 11
reorganization case, Blast has determined it is in the best
interest of Blast, its creditors and its Chapter 11 estate to
complete the repurchase of the Trust Common Stock on the Effective
Date and enter into this Mutual Release on the terms and conditions
set forth herein.
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2.
Settlement.
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2.1
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The
Trust
agrees
that in consideration for Blast agreeing to the terms and
conditions of Section 3.2 below; the Trust agrees to the terms and
conditions of Section 3.1 below (the “Blast
Consideration”).
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2.2
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Blast
agrees that in consideration for the Trust agreeing to the terms
and conditions of Section 3.1 below, Blast agrees to the terms and
conditions of Section 3.2_ below (the “Trust
Consideration”).
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2.3
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The
Trust agrees that it will receive full and valid consideration from
the Blast Consideration.
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2.4
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Blast
agrees that it will receive full and valid consideration from the
Trust Consideration.
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3.
Mutual Release.
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3.1
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In
consideration of the agreements and covenants set forth herein
above and below, the sufficiency of which is hereby acknowledged
and confessed, the Trust, for itself, its agents, servants,
attorneys, employees, successors and assigns, hereby covenant and
agree as follows:
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3.1.1
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That
the Trust hereby releases, acquits and forever discharges Blast,
its current and former agents, officers, directors, servants,
attorneys, representatives, successors, employees and assigns (the
“Blast Parties”) from any and all rights, obligations,
claims, demands and causes of action, whether in contract, tort,
under state and/or federal law, or state and/or federal securities
regulations, whether asserted or unasserted, whether known or
unknown, suspected or unsuspected, for or by reason of any matter,
cause or thing whatsoever, including all obligations arising
therefrom, and omissions and/or conduct of Blast, and/or
Blast’s agents, attorneys, servants, representatives,
successors, employees, directors, officers and assigns, relating
directly or indirectly thereto.
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3.1.3
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At
the time of payment of the Purchase Price which shall be made on or
before August 22, 2007, the Trust shall deliver the Trust Common
Stock appropriately endorsed by the trustee.
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3.1.4
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In
consideration of the terms of this Mutual Release, the Trust makes
the following representations and warranties to Blast and the
Bankruptcy Court in conjunction with Blast’s seeking approval
to consummate this Agreement, which warranties and representations
and agreements shall survive the Bankruptcy Court’s approval
of the Agreement:
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a)
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The
Trust has access to and that it has carefully read the following
disclosures:
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(i)
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Blast’s
Form 10-KSB for the period ended December 31, 2006 (the “Form
10-KSB”); and
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(ii)
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All
other documents filed by Blast with the SEC subsequent to the
Blast’s Form 10-KSB and prior to the date of this Agreement,
including without limitation, the “Risk Factors” in the
10-KSB; and
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(iii)
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There
are certain disclosures made in (i) and (ii) specifically with
respect to the Trust, which the Trust does not agree with and which
a Trust representative has pointed out to Blast orally and in
writing. At this time such differences have not yet been
resolved.
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b)
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With
respect to trust tax and other economic considerations that may be
involved in connection with this Agreement, the Trust is not
relying on Blast, other than through the opinion of Blast’s
corporate counsel in relation to exemption from securities
registration, as set forth below..
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c)
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The
Trust and/or the Trust’s advisor(s) has/have had a reasonable
opportunity to ask questions of and receive answers and to request
additional relevant information from a person or persons acting on
behalf of Blast concerning this Agreement and the consequences of
the sale of the Common Stock provided for in this
Agreement.
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d)
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The
Trust, its trustee and the Trust’s advisor(s) have such
knowledge and experience in financial, tax and business
matters
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