SFD Technology License Agreement

SFD Technology License Agreement

This SFD Technology License Agreement (the " Agreement "), dated as of December 31, 2000, is entered into by and between NXT Energy USA Inc. , a Nevada corporation ( "NXT Energy USA "), NXT Energy USA Inc. , a Nevada corporation ( "NXT Energy USA "), NXT Energy Canada Inc. , a federal Canadian corporation ( "NXT Energy Canada "), Momentum Resources Corporation , a Bahamas corporation (" Momentum "); George Liszicasz, an individual (" Liszicasz" ), and R. Dirk Stinson , an individual (" Stinson "), with reference to the following facts:

Recitals:

WHEREAS, Momentum is the owner of the Stress Field Detector (as that term is defined below), a quantum physics-based device which can be used to identify hydrocarbon accumulations;

WHEREAS, Momentum is owned and managed equally by Liszicasz, who is the inventor of the Stress Field Detector, and Stinson;

WHEREAS, NXT was formed by Liszicasz and Stinson to exploit the ability of the SFD Technology to identify hydrocarbon accumulations;

WHEREAS, Liszicasz is a principal stockholder and an officer and director of NXT, and Stinson is a principal stockholder of NXT;

WHEREAS, pursuant to the terms of a Restated Technology Agreement dated August 1, 1996 and amended on April 3, 1998 (collectively, the " Initial License "), Momentum agreed to collect SFD Data (as that term is defined below) for NXT, and NXT agreed to use that data for the purpose of exploring for and commercially exploiting hydrocarbon accumulations on an exclusive, worldwide basis;

WHEREAS, pursuant to the terms of Data License Agreements dated April 1, 1997, NXT sublicensed its two wholly-owned subsidiaries, NXT Energy USA and NXT Energy Canada, the exclusive rights to use SFD Data collected pursuant to the terms of the Initial License for the purposes of exploring for and commercially exploiting hydrocarbon accumulations within the United States and Canada, respectively, while NXT reserved the right and responsibility to continue research and development activities with respect to both the Stress Field Detector owned by Momentum and the SFD Data Acquisition Systems (as that term is defined below) owned by NXT;

WHEREAS, in view of the mutual satisfaction of the parties to date with the results and operations of the SFD Technology and NXT's exploration efforts, the parties now desire to amend the Initial License to provide, among other things, for (i) the direct license of the Stress Field Detector and all SFD Data collected through its operation; and (ii) the reimbursement to NXT of funds it may expend in research and development activities relating to the Stress Field Detector;

WHEREAS , it is the intent of the parties that this Agreement amend, restate and supersede the Initial License in its entirety.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and for valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties to this Agreement (collectively "parties " and individually a "party ") agree as follows:

Agreement: DEFINITIONS

Set forth below are definitions of capitalized terms which are generally used throughout this Agreement, or references to sections containing those definitions (capitalized terms used only in a specific section of this Agreement are defined in that section):"NXT Business Information" means any written or tangible property (other than the SFD Technology Information) owned or used by NXT in the conduct of its business including, among other things, SFD Signals, SFD Data, and interpretative information, data, reports and materials relating to the identification and determination of SFD Anomalies, SFD Leads, SFD Prospects, and SFD Lands, such as, by way of example, summary tables, survey flight data, comments and ranking; geological summaries and GeoGraphix plats."Petroleum Substances" means all petroleum, natural gas and related hydrocarbons and includes any other substances of value, whether gases, fluids or solids and whether hydrocarbons or not, rights to which are customarily included in oil and gas leases."SFD Anomalies" means SFD Data which has been screened for anomalous SFD Signals that may be associated with subsurface mechanical and hydraulic stresses."SFD Data" means acquired SFD Signals which are processed and marked with their global positioning satellite or "GPS" coordinates."SFD Data Acquisition System" means the computer and other electronic data acquisition and processing equipment and software used to process SFD Signals and to convert those processed signals into SFD Data and to interpret that data."SFD Lands" means any lands or leasehold interests in lands or rights to Petroleum Substances under those lands identified and acquired through exploration using the SFD Technology."SFD Leads" means SFD Anomalies which have been determined, after initial geological and geophysical evaluation, to contain anomalous SFD Signals prospective of subsurface geological structures and formations that may trap hydrocarbon accumulations, as well as subsurface hydraulic stresses associated with hydrocarbon accumulations."SFD License" means that exclusive license to use the Stress Field Detector as described in section 2 ."SFD Properties" collectively refers to SFD Leads, SFD Prospects and SFD Lands."SFD Prospect" means lands or leasehold interests in those lands which are recommended for acquisition for extraction of prospective hydrocarbon accumulations under those lands based upon the geological and geophysical evaluation of the SFD Leads associated with those lands."SFD Royalty" means that royalty to be in consideration of the license of the Stress Field Detector as described in section 4(a) ."SFD Signals" means variations in non-electromagnetic energy fields or patterns captured and emitted from the Stress Field Detector in the form of digital signals."SFD Survey System" collectively refers to the Stress Field Detector and SFD Data Acquisition System."SFD Surveys" means aerial or ground surveys using the SFD Survey System conducted by NXT for the purpose of procuring SFD Data in order to identify SFD Leads and SFD Prospects and ultimately acquire SFD Lands."SFD Technology" means the Stress Field Detector and all technologies and scientific theories upon which the Stress Field Detector and its operation is based."SFD Technology Information" means any written or tangible property owned or used by NXT under this license relating to the manufacture, construction, materials, operation and scientific principals of the SFD Technology. The SFD Technology Information shall be broadly construed, and shall include, but not be limited to, any and all devices, parts, files, lists, books, notebooks, records, documents, memoranda, reports, patterns, schematics, compilations, designs, drawings, technologies, data, test results, literature, correspondence, spread sheets, computer programs and printouts and any other written or graphic records, whether originals, copies, duplicates or summaries thereof, affecting or relating to the SFD Technology. "Stress Field Detector" or "SFD" means a quantum physics-based device which can measure or respond to variations in non-electromagnetic energy fields or patterns captured and emitted from the Stress Field Detector in the form of digital signals that are associated with subsurface mechanical and hydraulic stresses. GRANT OF SFD LICENSE

On the terms and subject to the conditions of this Agreement, Momentum hereby grants to NXT a license (the " SFD License") to use the Stress Field Detector and any SFD Signals collected in connection with that use to identify, acquire and exploit prospective SFD Properties on an exclusive, worldwide basis. As part of the SFD License, NXT shall have the exclusive right, for the intended purposes of this Agreement, to the possession and use of:all Stress Field Detectors currently used by Momentum to acquire SFD Data under the terms of the Initial License, as well as the right to construct new Stress Field Detectors for its intended use under this Agreement, including modified or enhanced Stress Field Detectors designed and constructed by NXT's research & development personnel; andall SFD Signals and SFD Data previously provided by Momentum NXT under the terms of the Initial License. TITLE Title to Stress Field Technology . Anything in this Agreement to the contrary notwithstanding, title to the Stress Field Technology; including all Stress Field Detectors currently used by Momentum to acquire SFD Signals on behalf of NXT; and all Stress Field Detectors constructed in the future by NXT, will continue to vest exclusively in Momentum under license during the term of this Agreement, and NXT shall cause all Stress Field Detectors and all SFD Technology Information to be promptly returned to Momentum at NXT's sole cost upon the termination of this Agreement in good condition, ordinary wear and tear excepted.Title to NXT Property. Subject to in section 3(a) of this Agreement, title to the Data Acquisition System, any aircraft or vehicles used by NXT to conduct SFD Surveys, SFD Signals and SFD Data collected to date or hereafter (subject to the license-back described in section 9(b) ); and any other NXT Business Information collected to date or hereafter; will continue to vest exclusively in NXT notwithstanding the expiration of this Agreement. PAYMENT OF SFD ROYALTY Amount . Subject to offsets for reimbursements described in section 5(a) of this Agreement, NXT shall pay a royalty (the " SFD Royalty" ) to Momentum, determined and payable on a calendar-quarter basis, equal to five percent (5%) of NXT's "Net SFD Profits" for that quarter, as hereinbelow calculated. The obligation to pay the SFD Royalty shall continue following the termination of this Agreement with respect to any SFD Properties identified by NXT on or before the effective date of such termination.Determination Of Net SFD Profits.NXT's Net SFD Profits shall be deemed to equal the aggregate of all consideration, whether in cash or kind, actually paid to and received by NXT with respect to the commercial exploitation of any SFD Property for that quarter, net of:all unreimbursed amounts to date expended by NXT to identify, acquire and develop the SFD Property (hereinafter referred to as "Direct Acquisition And Development Costs") , including:survey operations and data analysis expenditures incurred by NXT, net of reimbursements by joint venture partners, if any;costs to acquire SFD Properties, including rights to extract and sell subsurface Petroleum Substances,seismic, drilling, completion, tie-in and abandonment costs; andfinancing costs; andin the case of the receipt of proceeds from the sale of Petroleum Substances attributable or arising from that SFD Property, all operating costs actually incurred and accrued by NXT to extract, produce, market and distribute those Petroleum Substances (hereinafter referred to as "Direct Operation Costs") .The calculation of Net SFD Profits shall be made on an SFD Property-by-SFD Property basis. The determination and allocation of Direct Acquisition And Development Costs and Direct Operation Costs with respect to each SFD Property and cash flows from that property shall be made by NXT in good faith accordance with its ordinary practice for preparation of its financial statements and consistent with generally accepted accounting principles.It is intended that the SFD Royalty be construed liberally to apply to each and every transaction by which NXT exploits SFD Properties to ensure that Momentum receives the benefit of its bargain.It is contemplated that NXT will not only directly exploit SFD Properties for its own account, but will also indirectly SFD Properties through joint venture or other collaborative efforts, in which case NXT's Net SFD Profits shall be determined in accordance with its share in those ventures, after taking into consideration any deductions for expenses, costs, and reserves or repayment of capital made pursuant to the terms of that venture.Notwithstanding the foregoing, the following events shall not be construed to trigger an obligation to pay the SFD Royalty under this Agreement:NXT elects to take Petroleum Substances in kind under any royalty or operating agreement (although the subsequent sale of those Petroleum Substances shall trigger the obligation to pay the SFD Royalty); andinter-company transfers of SFD Properties amongst NXT and its subsidiaries. Terms of Payment of SFD Royalty . The SFD Royalty shall be paid to Momentum no later than the last day of the calendar month which follows the calendar quarter in which NXT receives Royalties Revenues with respect to any SFD Property and pursuant to which an obligation to pay the SFD Royalty with respect to that property has been triggered (i.e., after any recoveries to which NXT is entitled. Reports. NXT shall deliver to Momentum no later than the last day of the calendar month which follows the calendar quarter in which NXT receives Royalties Revenues, irrespective of whether any Net SFD Profits are then due to Momentum:a complete and accurate written statement at the end of each calendar month setting forth in reasonable details the computation of Net SFD Profits, including permitted offsets and deductions; andsuch other information reasonably requested by with respect to each SFD Property, in specific detail so as to allow an audit of underlying documents.Books and Records. NXT shall keep or cause to be kept accurate, complete and up-to-date books of accounts separately stating records of all revenues earned, accrued and/or collected with respect to each SFD Property, and all costs, expenses and investments in those properties, for a period of not less than three (three) calendar years after the calendar year of revenue recognition or payment of expenses.Audit. During the period that NXT shall be obligated to pay the SFD Royalty under this agreement, Momentum or its authorized representatives shall have the right to inspect all records of NXT with respect to the SFD Properties, and to make copies of said records utilizing the facilities of NXT without charge, and shall have free and full access thereto on reasonable notice during the normal business hours of. In the event that such inspection or audit reveals an underpayment by NXT of SFD Royalties and/or any other amounts then due to Momentum under this Agreement, NXT shall upon written notice pay to Momentum the balance of all such amounts found to be due pursuant to such audit inspection, together with interest thereon at the "best commercial customer" rate of the largest bank in terms of assets in the eleventh district of the Federal Reserve, plus four percent (4%) per annum from the date such amounts first became due to Momentum, until all such amounts have been paid in full. If such inspection or audit discloses that, for the annual period reviewed or audited, NXT has underpaid or understated its SFD Royalty obligation under this Agreement by five percent (5%) or more, then NXT shall also pay the reasonable professional fees of the independent representatives engaged to conduct or review such inspection or audit.NXT's Right To Delegate Payment Obligations. NXT may elect to transfer or delegate its obligations under this section 4 to its subsidiaries to the extent they identify, acquire, develop and exploit the SFD Properties that generate that royalty; provided, however, under no circumstances shall such transfer or delegation relieve NXT of its obligation to pay the delegated SFD Royalty and satisfy the other obligation of NXT under this section 4 should the subsidiary default under its obligations.Momentum's Right To Assign Payment Rights. Anything in this Agreement to the contrary notwithstanding, Momentum may assign its right to payment of all or any portion of the SFD Royalty under this section 4 to its shareholders or any third party.Severability of SFD Royalty Payment Obligation. The parties acknowledge that the SFD Royalty is separate from:any salary, compensation or other benefits payable by NXT or Momentum to Liszicasz and/or Stinson attributable to their capacities as officers, directors, employees or consultants of or to either of those corporations and/or of any of their respective subsidiaries; orany distributions by NXT or Momentum to Liszicasz and/or Stinson attributable to their capacities as stockholders of either of those corporations and/or of any of their respective subsidiaries. OFFSET OF SFD MANUFACTURING AND RESEARCH AND DEVELOPMENT COSTS Allowable Offsets . Subject to the limitations contained in section 5(b) , NXT agrees that any Direct SFD Manufacturing Costs and Direct SFD Research & Developments Costs that NXT may incur in any calendar quarter, including periods prior to the date of this Agreement, shall be reimbursable to NXT by way of an offset against any SFD Royalties to be paid pursuant to section 4(a) of this Agreement with respect to that or subsequent calendar quarters. Limitations on Offsets . The aggregate amount of Direct SFD Manufacturing Costs and Direct SFD Research & Developments Costs incurred in any one calendar quarter that are eligible for reimbursement (the " Allowable Quarterly Reimbursable Amount ") shall not exceed the aggregate of:Fifty thousand dollars ($50,000) (the " Mandatory Quarterly Reimbursable Amount "), plusan amount (exclusive of the Mandatory Quarterly Reimbursement Amount) to be determined pursuant to section 5(c) (the " Budgeted Quarterly Reimbursable Amount ")."Direct SFD Manufacturing Costs" means the following direct manufacturing costs reasonably and actually incurred and paid by NXT to construct Stress Field Detectors:materials, parts, supplies and non-capitalized tools, machinery and equipment used to manufacture Stress Field Detectors;salary and employee benefits (excluding bonuses, retirement contributions and compensation expense related to stock options and stock grants) payable to NXT manufacturing personnel with respect to their time reasonably allocated to manufacture Stress Field Detectors;depreciation and amortization of capitalized tools, machinery and equipment used to manufacture Stress Field Detectors; andfees reasonably paid to outside consultants, designers and engineers involved in manufacturing activities, where applicable."Direct SFD Research & Development Costs" means the following direct research and development costs reasonably and actually incurred and paid by NXT to design more reliable and efficacious Stress Field Detectors:materials, parts, supplies; and non-capitalized tools, machinery and equipment used in research and development activities;salary and employee benefits (excluding bonuses, retirement contributions and compensation expense related to stock options and stock grants) payable to NXT research and development personnel with respect to their time reasonably allocated toward research and development activities;depreciation and amortization of capitalized tools, machinery and equipment used in research and development activities; andfees reasonably paid to outside consultants, designers and engineers involved in research and development activities, where applicable.Any Allowable Quarterly Reimbursable Amount shall be recovered at the rate of one dollar ($1) of reimbursements per two dollars ($2) in license fees payable.Any Allowable Quarterly Reimbursable Amounts that are not fully recovered in the quarter of incurrence as a consequence of insufficient revenues for that quarter to facilitate a full offset shall nevertheless be recoverable as an offset against future quarterly SFD Royalties payable. Determination of Budgeted Reimbursable Amounts . NXT agrees to provide Momentum, Liszicasz and Stinson for their consent and approval, which they agree they will not unreasonably withhold, with an annual budget detailing all Direct SFD Manufacturing Costs and Direct SFD Research & Developments Costs which NXT proposes to expend under this Agreement. Momentum, acting though Stinson, shall have the right to audit these costs and to have such costs approved by an independent auditor as fair, reasonable and necessary costs for the development of the SFD Technology.COVENANTS OF NXTConduct Of SFD Surveys. NXT agrees that it will use its best efforts to:conduct SFD Surveys of selected geographic areas throughout the world which NXT believes, in the reasonable judgment of its management as to the abilities of the Stress Field Detector, to prospectively contain commercial quantities of Petroleum Substances;to interpret SFD Data acquired in connection with those surveys and to SFD Prospects; andacquire SFD Lands associated with those SFD Prospects, for the purpose of extracting Petroleum Substances therefrom.

The surveys shall be conducted by airplane, vehicle or such other method of transportation as reasonably selected by NXT, using personnel trained by NXT to operate the SFD Survey System and to interpret SFD Data.Capital Costs. NXT agrees to provide, at its own cost and expense, such customized aircraft and vehicles, with such customized equipment including the SFD Survey System as are reasonably required to conduct SFD surveys.Exploitation Of SFD Prospects. NXT agrees that it shall use its best efforts, either directly or through its wholly-owned subsidiaries, or indirectly through joint ventures and/or other collaborative efforts with third parties, to commercially and economically exploit SFD Properties. Such exploitation may occur through one or a combination of the following, as selected by NXT in its reasonable discretion, and/or such other method of exploitation as shall be determined to be reasonable by NXT:the direct acquisition of SFD Lands by NXT and/or its wholly-owned subsidiaries of the legal rights for the further exploration, development and production of Petroleum Substances with respect to those lands;the indirect acquisition of SFD Lands by NXT and/or its wholly-owned subsidiaries of the legal rights for the further exploration, development and production of Petroleum Substances with respect to those lands through joint-ventures or other arrangements with third parties; and/orthe sale by NXT and/or its wholly-owned subsidiaries and/or its joint venture partners of the legal rights for the further exploration, development and production of Petroleum Substances with respect to the SFD Lands.

NXT will use its best efforts to commercially exploit the SFD Properties through one or more of the foregoing methods, and will diligently pursue such efforts, unless it is not, in NXT's opinion, commercially reasonable to make any such acquisition and/or to pursue such exploration, development and/or production, and/or enter into any such agreement with a joint venture partner and/or other third party.SECURITY INTERESTS GRANTED TO MOMENTUM

As security for NXT's obligation to pay the SFD Royalty, it agrees that it shall execute a security agreement in form reasonably acceptable to Momentum with respect to its interest in any SFD Lands acquired by NXT and/or its subsidiaries, which will grant to Momentum a security interest in any revenues generated by NXT and/or its subsidiaries in such lands. The grant of the security interest shall not exceed the anticipated aggregate SFD Royalty payable to Momentum with respect to that property. PERFORMANCE WARRANTS Grant of Performance Warrants. Commencing January 1, 2001, and thereafter during the term of this Agreement as it may be renewed, and subject to any restrictions imposed by any federal, state or provincial securities or corporate law and/or the rules of any stock exchange as may be applicable, NXT shall grant to Momentum, on a monthly basis based upon the aggregate production of Petroleum Substances by SFD Properties during that month, warrants (the "Performance Warrants ") entitling Momentum to purchase such number of shares of NXT common stock (the "Warrant Shares ") as determined in accordance with subsection 8(b) below. The obligation to grant options shall terminate upon the termination of this Agreement. Each Performance Warrant shall be exercisable in whole or in part during its applicable term. NXT shall, as soon as possible following each month in which the Performance Warrants are earned, deliver a written stock option certificate to Momentum to evidence the grant of the Performance Warrant, and containing such reasonable terms as are usual or customary in stock option certificates. Notwithstanding the foregoing, the Performance Warrants shall not be subject to any vesting conditions. Number of Warrant Shares . For each month in which the SFD Properties or any of them produce Petroleum Substances, Momentum shall be granted Performance Warrants to purchase sixteen thousand (16,000) Warrant Shares if and only if the number of barrels of Petroleum Substances produced in the aggregate by those SFD Properties during that month exceeds twenty thousand (20,000) barrels or barrel equivalents per month. Notwithstanding the foregoing, the number of shares of NXT common stock to be subject to Performance Warrants under the prospective monthly grant shall not exceed the difference between (x) eight percent (8%) of the total number of shares of NXT common stock outstanding as of the last day of that month, and (y) the total number of unexpired and unexercised Warrant Shares as of the last day of that month, including those to be granted with respect to production of Petroleum Substances in that month.

For purposes of calculation: (i) production of Petroleum Substances with respect to any SFD Properties not then owned by NXT and/or its subsidiaries and/or indirectly owned by NXT and/or its subsidiaries through any joint venture and/or third party arrangement shall be disregarded; and (ii) production of Petroleum Substances with respect to any SFD Properties indirectly owned by NXT and/or its subsidiaries through any joint venture and/or third party arrangement shall be multiplied by a fraction, the numerator of which shall be the participation percentage of NXT and/or its subsidiaries in such joint venture or third party arrangement, and the denominator of which shall be the participation percentages of all parties to such joint venture or third party arrangement.Price of Performance Warrants. The exercise price for the Performance Warrants (the " Warrant Price ") shall be in United States dollars, and shall be equal to the " Fair Market Value" of NXT's common stock on the last business day of the month of calculation, determined in accordance with the following principles:if the NXT common stock is traded on a stock exchange on the date in question, the Fair Market Value of the Warrant Shares will be equal to the closing bid price of common stock on the principal exchange on which the common stock is then trading as reported by such exchange, or if the common stock is not traded on such date, on the next preceding trading day during which a sale occurred;if the common stock is traded over-the-counter on the Nasdaq National Market on the date in question, the Fair Market Value of the Warrant Shares will be equal to the last sales price of the common stock as reported by Nasdaq, or if the common stock is not traded on such date, on the next preceding trading day;if the common stock is traded over-the-counter on the Nasdaq SmallCap Market, or on the NASD Electronic Bulletin Board or Pink Sheets on the date in question, the Fair Market Value of the Warrant Shares will equal the mean between the closing representative bid and asked price for the common stock on that date as reported by Nasdaq or the NASD (as the case may be), or if the common stock is not traded on such date, on the next preceding trading day;if the common stock is not publicly traded on an exchange and is not traded over-the-counter on Nasdaq or the NASD Electronic Bulletin Board or the NASD Pink Sheets, the Fair Market Value of the Warrant Shares shall be determined by the Board of Directors of NXT acting in good faith on such basis as it deems appropriate; andanything in subsections (i) through (iv) above to the contrary notwithstanding, under no circumstances shall the Fair Market Value of the Warrant Shares be less than their par value, if any.

Notwithstanding the foregoing, the Warrant Price shall not be less than (1) that allowed under the exemption from registration or qualification under the applicable federal, state or provincial securities laws as selected pursuant to subsection 8(g) below; and (2) if the common stock is traded on a stock exchange or over-the-counter on Nasdaq, the Warrant Price may not be less than the minimum price permitted by such stock exchange or by Nasdaq.Term of Performance Warrants. The effective date of the grant of the Performance Warrants shall be the first day of the first month following the month of calculation, and such Performance Warrants shall lapse and terminate to the extent not fully exercised within three (3) years from the effective date of grant.Payment for Warrant Shares. Full payment for the Warrant Shares to be purchased by exercise of the associated Performance Warrant shall be made by Momentum as follows (or any combination of the following):in immediately available funds, in United States dollars; and/orif expressly consented to by NXT:the surrender or relinquishment of options, warrants or other rights to acquire common stock held Momentum and/or its affiliates, with a Fair Market Value on the date of such surrender or relinquishment equal to the aggregate Warrant Price of the Warrant Shares with respect to which t ...