1
EXHIBIT 10.19
MASTER EQUIPMENT LEASE AGREEMENT
THIS AGREEMENT, dated July 3, 1996, is made between ▇▇▇▇▇▇ ▇▇▇▇
INVESTMENTS, LLC, a Wyoming limited liability company, having its address at
Two Midtown Plaza, Suite 1990, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ (together with any permitted assignee of any of the Equipment, the
"Lessor"), and AIR DRILLING SERVICES, INC., a Wyoming corporation having its
principal place of business at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the
"Lessee").
SECTION 1. DEFINITIONS.
"Acceptance Date" means the date on which Lessee executes a
Certificate of Acceptance with respect to any Items of Equipment to be leased
by Lessee pursuant to this Agreement.
"Agreement" means this Equipment Lease Agreement.
"Agreement Date" means the date as of which this Agreement is dated.
"Authorized Signatories" means such officers of Lessee as may be duly
authorized and designated in writing by Lessee to execute documents, agreements
and instruments on behalf of Lessee.
"Certificates of Acceptance" means those certain Certificates of
Acceptance to be executed by Lessee on the Agreement Date and thereafter,
substantially in the form attached hereto as Exhibit A.
"Equipment" means and includes the aggregate of all Items of Equipment
described on the Equipment Schedules.
"Equipment Lease Applications" means those certain Equipment Lease
Applications, to be made by Lessee and, in its sole discretion, accepted by
Lessor, from time to time with respect to certain Items of Equipment,
substantially in the form of Exhibit C attached hereto and made a part hereof.
"Equipment Schedules" means those certain Equipment Schedules,
numbered 1 through 3, which are attached to this Agreement, and any Equipment
Schedules subsequently attached to this Agreement with the mutual consent of
Lessor and Lessee, and includes any Certificate of Acceptance or other
attachment to any such Equipment Schedule; and "Equipment Schedule" means any
one of the foregoing Equipment Schedules.
"Event of Default" means any of the events specified in Section 20,
provided that any requirement for notice or lapse of time, or both, has been
satisfied.
2
"Event of Loss" means, with respect to any of the Equipment, any loss
or damage of any type or degree whatsoever, including without limitation, any
destruction, theft or governmental taking, however caused or occasioned,
whether partial or complete, and whether or not covered by insurance.
"Indemnified Parties" means the Lessor and any assignee of Lessor,
including but not limited to any Person to whom Lessor grants a security
interest in any Lease; and "Indemnified Party" means any one of the Indemnified
Parties.
"Items of Equipment" means and includes all of the items of equipment
described on any Equipment Schedule.
"Lease" means any individual Lease of any Items of Equipment created
pursuant to the terms of this Agreement and the particular Equipment Schedule
pertaining to such Items of Equipment.
"Lease Documents" means, without limitation, this Agreement, the
Equipment Lease Applications, the Equipment Schedules, the Certificates of
Acceptance, and any other document, instrument or agreement executed in
connection herewith or therewith or contemplated hereby or thereby.
"Litigating Party" means that party to this Agreement who resorts to
litigation to enforce any Manufacturer's warranty; and the "Nonlitigating
Party" means the other party to this Agreement.
"Loss" shall have the meaning ascribed to it in Section 16 hereof.
"Manufacturer" means, with respect to any Items of Equipment, the
manufacturer or distributor which sold such Items of Equipment to Lessor to be
leased to Lessee pursuant to this Agreement.
"Materially Adverse Effect" means any materially adverse effect upon
the business, assets, liabilities, financial condition, results of operations
or business prospects of Lessee or upon the ability of Lessee to perform its
obligations under this Agreement or any Lease Document.
"Modifications" means any modifications or alterations to the physical
condition of any Items of Equipment.
"Net Proceeds" means (i) the proceeds received by Lessor from a sale
of any Items of Equipment repossessed under Section 20 hereof, or the aggregate
rent paid to Lessor pursuant to a new lease of such Items of Equipment
discounted at the Discount Rate, whichever is greater, less (ii) all costs and
expenses (including attorneys' fees and disbursements) incurred by Lessor as a
result of Lessee's-default and Lessor's exercise of its remedies with respect
thereto.
2
3
"Overdue Rate" means, at any time, an interest rate equal to the
greater of (i) 12% percent per annum or (ii) 3% percent above the Prime Rate.
"Person" means any individual, corporation, partnership, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Prime Rate" means the rate of interest adopted by First Interstate
Bank of Denver, N.A. as its "prime rate".
"Rent" means the obligation of Lessee to pay Basic Rent, Supplemental
Rent and all other amounts due under the Lease Documents.
"Return Condition" means the condition in which the Equipment shall be
returned to Lessor by Lessee pursuant to Section 9(b) hereof.
"Supplemental Rent" means all amounts other than Basic Rent which are
due and payable or which become due and payable by Lessee to Lessor pursuant to
the terms of this Agreement or any Lease Document.
"Term" means, with respect to any Lease, the period between and
including the Acceptance Date and the Expiration Date, unless otherwise
provided herein or in any of the Lease Documents.
The terms "Overdue Rate," "First Basic Rent Date," "Last Basic Rent
Date," "Expiration Date," and "Casualty Value," when used with respect to the
leasing of any Items of Equipment, shall have the meanings set forth in the
applicable Equipment Schedule or Certificate of Acceptance attached to such
Equipment Schedule for such Items of Equipment.
SECTION 2. AGREEMENT FOR LEASE OF EQUIPMENT.
Subject to, and upon all of the terms and conditions contained in this
Agreement and in the Equipment Schedules attached hereto, Lessor hereby agrees
to lease to Lessee and Lessee hereby agrees to lease from Lessor all of the
Equipment which is delivered to and accepted by Lessee in the manner described
in Section 4 below. Each Equipment Schedule, with the attached Certificate of
Acceptance and all other documents attached thereto, when fully executed by
Lessor and Lessee as provided therein, shall constitute a separate Lease of the
Items of Equipment described on such Equipment Schedule. The terms and
provisions of this Agreement shall be incorporated by reference in each
Equipment Schedule, and such terms and provisions are intended to govern and be
applied to the rights and obligations of Lessor and Lessee regarding each of
the Items of Equipment and the Lease pertaining thereto.
3
4
SECTION 3. CONDITIONS PRECEDENT.
The obligation of Lessor to sign this Agreement and to lease any Items
of Equipment to Lessee is subject to the fulfillment of each of the following
conditions:
(a) the delivery by Lessee to Lessor on or prior to the Agreement
Date of each of the following documents in form and substance satisfactory to
Lessor:
(i) certified resolutions of Lessee's Board of Directors,
authorizing the lease of all of the Equipment and Lessee's execution, delivery
and performance of this Agreement, the other Lease Documents, and all other
related documents, which resolutions shall be in form and substance
satisfactory to Lessor;
(ii) an incumbency certificate for the Authorized
Signatories of Lessee, in form and substance satisfactory to Lessor;
(iii) certificates or other evidence of the insurance
coverage required under Section 12 hereof pertaining to the relevant Items of
Equipment;
(iv) such landlord's or mortgagee's waivers as may be
required by Lessor pursuant to Section 8 hereof, in form and substance
satisfactory to Lessor; and
(v) such other documents as Lessor may request,
including, without limitation, Uniform Commercial Code Financing Statements,
certified by an appropriate governmental official or an Authorized Signatory of
Lessee if so requested.
(b) written certification by an Authorized Signatory of Lessee
that, as of each applicable Acceptance Date:
(i) no event which is, or with notice or lapse of time or
both would become, an Event of Default hereunder has occurred and is
continuing; and
(ii) there has been no Materially Adverse Effect since the
date of the last financial statements of Lessee submitted to Lessor prior to
the applicable Acceptance Date.
SECTION 4. ACCEPTANCE OF EQUIPMENT.
Immediately upon delivery to Lessee of any Items of Equipment, Lessee
shall (i) inspect such Items of Equipment, and (ii) execute and deliver to
Lessor the Certificate of Acceptance attached to the Equipment Schedule for
such Items of Equipment. Lessee's execution of such Certificate of Acceptance
shall constitute (i) Lessee's unconditional acceptance of such Items of
Equipment for lease from Lessor on the Acceptance Date specified in such
Certificate of Acceptance, and (ii) Lessee's acknowledgment and certification
that such Items of Equipment have been delivered to and inspected by Lessee,
4
5
have been installed to Lessee's satisfaction, are in good working order, repair
and condition.
SECTION 5. TERM OF LEASE.
The Lease Term for any Items of Equipment shall commence on the
Acceptance Date for such Items of Equipment, provided that each of the
conditions precedent set forth in Section 3 hereof has been fulfilled to
Lessor's satisfaction as of that date. The Lease Term for any Items of
Equipment shall expire on the Expiration Date specified in the relevant
Certificate of Acceptance, unless sooner terminated or unless extended pursuant
to the provisions of the Lease for such Items of Equipment.
SECTION 6. RENTAL CHARGES.
Lessee shall pay to Lessor as rent for any Items of Equipment during
the Lease term therefor the following amounts (collectively, the "Rent"):
(a) On the Acceptance Date, an amount equal to the Interim Rent;
(b) Commencing on the First Basic Rent Date and on each Basic Rent
Date thereafter to and including the Last Basic Rent Date, an amount equal to
the Basic Rent;
(c) As Supplemental Rent, on or before the date required by the
terms hereof (or upon Lessor's demand if no such date is specified herein), any
other amount which Lessee is obligated to pay hereunder with respect to such
Items of Equipment including indemnity payments and payments of Casualty Value;
and
(d) If Lessee shall fail to pay when due all or any portion of any
payment of Rent, to the extent permitted by law such unpaid amount shall bear
interest for each day from the date it became so due until paid in full,
payable on demand, at the Overdue Rate.
SECTION 7. NET LEASE.
Each Lease created hereunder for any Items of Equipment shall be a net
lease and Lessee acknowledges that Lessee's obligations thereunder, including,
without limitation, its obligation to pay all Rent, shall be absolute and
unconditional and, except as provided in Section 13 hereof, Lessee shall not be
entitled to any abatement, reduction, defense, counterclaim, set-off or
recoupment, including, without limitation, abatements, deductions or set-offs
due or alleged to be due by reason of any past, present or future claim of
Lessee under any Lease, or any other agreement, contract or undertaking,
against Lessor, any assignee of Lessor, or any vendor or Manufacturer of
Equipment. Except as otherwise expressly provided herein, such Leases shall not
terminate, nor the obligations of Lessee or Lessor thereunder be otherwise
affected, for any reason whatsoever, including, without limitation, (i) any
defect in the Equipment or any part or Items of Equipment thereof or Lessor's
title thereto, or any damage or destruction to, loss of or interference with
the
5
6
possession or use of any Items of Equipment from any cause whatsoever; (ii) any
liens, encumbrances or rights of others with respect to all or any part of the
Equipment; (iii) the invalidity or unenforceability or lack of due
authorization of this Agreement or any Lease; (iv) any insolvency of or any
bankruptcy, reorganization or similar proceeding against Lessee or Lessor; or
(v) any other cause similar or dissimilar to the foregoing, any present or
future law to the contrary notwithstanding. It is the intention of the parties
hereto that all Rent and other amounts payable by Lessee hereunder shall
continue to be payable in all events in the same manner and times herein
provided, unless the obligation to pay them shall be terminated pursuant to the
express provisions of this Agreement. To the extent permitted by applicable
law, Lessee hereby waives any and all rights which it may now have or which at
any time hereafter may be conferred upon it, by statute or otherwise, to
cancel, quit or surrender this Agreement, any Lease or any of the Equipment,
except in accordance with the express provisions hereof. Each payment of Rent
made by Lessee hereunder shall be final, and Lessee shall not seek to recover
all or any part of such payment from Lessor or any assignee of Lessor for any
reason whatsoever.
SECTION 8. OWNERSHIP OF EQUIPMENT.
The Equipment shall at all times remain the property of Lessor and any
Items of Equipment may be removed from Lessee's premises or any other location
by Lessor or its representatives at any time after termination of the Lease
with respect thereto. Lessee shall, at its sole cost and expense, affix tags,
decals or plates to each of the Items of Equipment indicating ownership by
Lessor or Lessor's assignee, which type of tag, decal or plate and location may
be specified by Lessor, and Lessee shall not permit their removal or
concealment. In addition, Lessee shall, at its sole cost and expense, cause all
Items of Equipment to display the serial numbers specified in the Equipment
Schedules. Lessee agrees, at its sole cost and expense, to execute and deliver
such Uniform Commercial Code financing statements and other instruments,
including, without limitation, landlord's or mortgagee's waivers, as may be
necessary to protect the right, title and interest of Lessor and any assignee
of Lessor in and to this Agreement or the Equipment or any Items of Equipment
thereof. Lessee shall, at its own expense, protect and defend Lessor's title in
the Equipment and any Items of Equipment thereof against all claims and liens
of Lessee's creditors or any other person or entity whatsoever and shall at all
times keep all Items of Equipment free and clear of all claims, liens and
encumbrances except those running in favor of Lessor. Lessee shall not claim
any income tax deduction for depreciation with respect to the Equipment, nor,
unless specifically provided to the contrary in the relevant Equipment
Schedule(s), any investment tax credit with respect thereto.
SECTION 9. POSSESSION.
(a) Lessor warrants to Lessee that Lessee shall be entitled, as
against all persons claiming by, through or under Lessor, to possess each of
the Items of Equipment, subject to the terms of the individual Lease for such
Items of Equipment and the terms of this Agreement, so long as Lessee is not in
default hereunder or under such Lease.
6
7
(b) Upon the expiration or earlier termination of each such Lease,
Lessee shall, at its sole cost and expense and subject to the terms of this
Agreement, return the Items of Equipment leased thereunder to Lessor at the
place within the continental United States designated by Lessor in as good
condition and operating order as when delivered to Lessee, reasonable wear and
tear excepted.
SECTION 10. MAINTENANCE.
(a) Lessee at all times shall keep, repair, maintain and preserve
the Equipment in good order and operating condition.
(b) All repair, maintenance and service charges related to the
Equipment shall be borne by Lessee.
SECTION 11. LOCATION AND USE OF EQUIPMENT.
(a) During the term of each Lease for Items of Equipment, such
Items shall be located at the address indicated in the relevant Certificate of
Acceptance, or such other location as may be approved by the Lessor from time
to time. Items of Equipment may be removed from such address only with the
prior written consent of Lessor and any assignee of Lessor, and with the prior
execution and filing by Lessor, any assignee of Lessor and Lessee, of such
Uniform Commercial Code financing statements and other filings in such new
locations as are necessary to preserve the right, title and interest of Lessor
and any assignee of Lessor in the Items of Equipment.
(b) Lessee covenants and warrants that during the period that any
Equipment is leased to Lessee hereunder, such Equipment will be used and
operated at all times in compliance with the laws of the jurisdiction(s) in
which it is located, and in compliance with all actions, rules, regulations and
orders of any commission, board or other legislative, administrative, or
judicial body or officer having power to regulate or supervise the use or
operation of the Equipment. Lessee shall not install or use the Equipment or
any items thereof in such manner or in such circumstances that such Equipment
or any items thereof are deemed to be an accession to other personal property
or are deemed to be real property or a fixture thereon.
SECTION 12. INSURANCE.
During the period that any Equipment is leased to Lessee hereunder,
Lessee will, at all times and at its sole expense, carry and maintain, or cause
to be carried and maintained, the following insurance, satisfactory to Lessor
in form, substance and insurance carrier: (a) insurance for loss of or damage
to the Equipment caused by fire, lightning, rust, tornado and windstorms,
explosion, smoke and smudge, aircraft and motor vehicle damage, strikes, riots
and civil commotion, burglary and theft, vandalism and malicious mischief, and
other casualty events customarily insured against with respect to similar
equipment, in an amount not less
7
8
than the Casualty Value of the Equipment; and (b) public liability insurance
covering the Equipment, in such amounts and against such risks as is customary
with respect to similar equipment. Such policies will provide that (i) the
policies may not be invalidated against Lessor or any assignee of Lessor by
reason of any violation of a condition or breach of warranty of the policies or
the application therefor by Lessee, (ii) the policies may be cancelled or
materially altered or reduced in coverage by the insurer only after thirty
(30) days' prior written notice to Lessor and any assignee of Lessor, and (iii)
the insurer will give written notice to Lessor and any assignee of Lessor in
the event of nonpayment of premium by Lessee when due. On the Agreement Date,
and thereafter not less than thirty (30) days prior to their expiration, Lessee
shall deliver to Lessor or its assignees, as appropriate, originals of all
insurance policies covering the Equipment as required by this Section;
provided, however, that Lessor or any assignee of Lessor, as appropriate may,
in its sole discretion, agree to accept copies of the policies, certificates of
insurance, or other satisfactory evidence in lieu of original policies. Such
policies may be blanket policies covering other equipment not subject to the
Leases created hereunder and under the Equipment Schedules, provided that any
such blanket policy or certificate of insurance issued with respect thereto
shall specifically describe the Equipment as being included therein and covered
thereby to the full extent of the coverages and amounts required hereunder. If
Lessee shall fail to obtain or maintain the insurance required under this
Section, Lessor or any assignee of Lessor may obtain such insurance and Lessee
shall reimburse Lessor or any such assignee of Lessor, as the case may be, upon
demand, for the cost thereof as Supplemental Rent hereunder. With respect to
those insurance policies required by Section 12(a) above, Lessor and any
assignee of Lessor shall be named as the sole loss payees, as their interest
may appear; all insurance proceeds payable thereunder shall be payable and paid
solely to Lessor and to any assignee of Lessor, as their interests may appear.
With respect to those insurance policies referred to in Section 12(b), Lessor
and any assignee of Lessor shall be named as additional insureds.
SECTION 13. RISK OF LOSS; EVENT OF LOSS.
(a) Lessee hereby assumes and shall bear the entire risk of all
Events of Loss. No Event of Loss shall relieve Lessee of any of its obligations
under this Lease including, without limitation, its obligation to pay Rent.
Lessee shall immediately notify Lessor of any Event of Loss involving the
Equipment or any Items of Equipment or part thereof.
(b) If an Event of Loss occurs with respect to any Items of
Equipment, Lessee, at the option and direction of Lessor, shall: (i) repair or
restore the Items of Equipment to good repair, condition and working order; or
(ii) replace the Items of Equipment with identical equipment in good repair,
condition and working order, title to which shall be transferred to Lessor free
and clear of all liens, claims and encumbrances whatsoever; or (iii) pay Lessor
in cash the Casualty Value for any such Items of Equipment as set forth in the
relevant Certificate of Acceptance.
8
9
(c) If Lessor has directed Lessee to repair, restore or replace
any Item of Equipment pursuant to clause 13(b)(i) or 13(b)(ii) above and Lessee
has done so in accordance with the terms thereof, then, if Lessee is not in
default hereunder, Lessor shall pay to Lessee any insurance proceeds received
by it in connection with the Event of Loss affecting such Item of Equipment. In
the event of an election by Lessor pursuant to clause 13(b) (iii) above, and
upon payment by Lessee of the Casualty Value and any accrued and unpaid Rent
and all other amounts due under the Lease for such Items of Equipment, Lessee's
obligation to pay Rent with respect to such Items of Equipment shall terminate,
and Lessee shall become entitled to possession and ownership of such Items of
Equipment, or parts or components thereof, AS IS, WHERE IS, and without any
warranty by Lessor, express or implied, and all insurance proceeds from such
Event of Loss with respect thereto shall be paid to Lessee.
SECTION 14. ENFORCEMENT OF WARRANTY.
(a) Upon receipt of written request from Lessee, and so long as
this Agreement and the relevant Leases for Items of Equipment shall remain in
force, Lessor shall take all reasonable action requested by Lessee to enforce
any Manufacturer's warranty, express or implied, issued on or applicable to any
Items of Equipment, which is enforceable only by Lessor in its own name, or
only in conjunction with Lessor in its own name, provided, however, that Lessor
shall not be obligated to resort to litigation to enforce any such warranty
unless Lessee shall pay all expenses in connection therewith.
(b) Similarly, if any such warranty for any Items of Equipment
shall be enforceable only by Lessee in its own name, or only in conjunction
with Lessee in its own name, Lessee hereby agrees, upon receipt of written
request from Lessor and so long as this Agreement and the relevant Leases for
Items of Equipment shall remain in force, to take all reasonable action
requested by Lessor to enforce any such warranty, provided, however, that
Lessee shall not be obligated to resort to litigation to enforce any such
warranty unless Lessor shall pay all expenses in connection therewith.
(c) Lessor hereby assigns to Lessee any warranty rights which
Lessor may have against the Manufacturer with respect to any Items of
Equipment, to the extent such warranty rights are assignable. With respect to
such warranty rights as are not assignable, Lessor hereby appoints Lessee as
its agent and attorney-in-fact for the purpose of enforcing such warranty
rights at Lessee's expense for so long as no Event of Default hereunder shall
have occurred and be continuing.
(d) In the event that either Lessor or Lessee resorts to
litigation to enforce any warranty, it is agreed that the Litigating Party
shall have the right to take such action as it deems appropriate to settle,
compromise or otherwise dispose of any claim under any such warranty, provided
that the Nonlitigating Party shall not be bound by any rulings, judgments,
decisions, agreements, compromises and settlements made or handed down with
respect thereto or entered into by the Litigating Party unless the
Nonlitigating Party shall have agreed in writing to be bound thereby.
9
10
SECTION 15. DISCLAIMER OF WARRANTIES.
Lessor leases the Equipment to Lessee AS IS, WHERE IS, in whatever
condition it may be, without any agreement, warranty or representation, express
or implied, as to any matter whatsoever respecting the Equipment. Without
limiting the generality of the foregoing, Lessor expressly disclaims any
implied warranty of merchantability, fitness or adequacy for any particular
purpose or use, quality, productiveness or capacity.
SECTION 16. INDEMNIFICATION.
(a) Lessor shall not be liable to Lessee for, and Lessee shall
indemnity and hold the Indemnified Parties harmless on an after-tax basis from
and against any obligation, liability (including liability for negligence),
claim, demand, action, suit, judgment, cost, loss, damage or expense (including
litigation expenses and attorneys' fees) of any kind or nature imposed on,
incurred by or asserted against Lessor, caused, directly or indirectly, by or
relating to: (i) the inadequacy of any Items of Equipment for any purpose, (ii)
any deficiency or defect (patent or latent) in any Items of Equipment, (iii)
the use, operation or performance of any Items of Equipment, (iv) any
interruption or loss of service, use or performance of any Items of Equipment,
(v) any patent, trademark or copyright infringement relating to any Items of
Equipment, or (vi) any loss of business or other consequential damages whether
or not resulting from any of the foregoing. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, LESSOR SHALL NOT BE LIABLE FOR INJURIES TO PERSONS OR DAMAGE TO
THE EQUIPMENT OR ANY OTHER PROPERTY UNDER ANY THEORY OF STRICT LIABILITY, AND
LESSEE SHALL INDEMNIFY AND SAVE LESSOR AND EACH OTHER INDEMNIFIED PARTY
HARMLESS FROM ANY SUCH LIABILITY AND ALL COSTS AND EXPENSES IN DEFENDING
AGAINST SUCH LIABILITY. All of Lessor's rights under this Section 16 shall
survive the termination of the Leases created hereunder.
Lessee shall give each Indemnified Party prompt written notice of any
occurrence, event or condition known to Lessee as a consequence of which any
Indemnified Party may be entitled to indemnification hereunder. Lessee shall
forthwith upon demand by any such Indemnified Party reimburse such Indemnified
Party for amounts expended by it in connection with any of the foregoing or pay
such amounts directly. Lessee shall be subrogated to the rights of each
Indemnified Party to the extent Lessee has reimbursed such Indemnified Party or
paid directly expenses arising under this Section 16. If any action, suit or
proceeding is brought against any Indemnified Party in connection with any
claim indemnified against hereunder, such Indemnified Party will, promptly
after receipt of notice of the commencement of such action, suit or proceeding,
notify Lessee thereof in writing, enclosing a copy of all papers served upon
such Indemnified Party; provided, however, failure to give such notice or to
enclose such papers shall not relieve Lessee from any liability hereunder.
Lessee may, and upon such Indemnified Party's request will, at Lessee's
expense, resist and defend such action, suit or proceeding, or cause the same
to be resisted or defended by counsel selected by Lessee and reasonably
satisfactory to such Indemnified
10
11
Party. In the event of any failure by Lessee to so defend or resist, Lessee
shall pay all costs and expenses (including, without limitation, attorneys'
fees and expenses) incurred by such Indemnified Party in connection with such
action, suit or proceeding. The provisions of this Section, and the obligations
of Lessee under this Section, shall apply from the date of the execution of
this Agreement notwithstanding that the Term may not have commenced with
respect to any individual Lease of any Items of Equipment, and shall survive
and continue in full force and effect notwithstanding the expiration or earlier
termination of this Agreement or the Leases or any of them.
(b) Lessee shall pay, indemnity and hold Lessor and each other
Indemnified Party harmless on an after-tax basis from and against all taxes,
fees and other charges, however designated, which are levied or imposed by any
governmental authority upon any Items of Equipment or upon the sale, purchase,
ownership, lease, use, possession or disposition thereof or upon Rent payable
under the Lease therefor, including but not limited to sales and use taxes,
personal property taxes, privilege and excise taxes, franchise taxes, ad
valorem and value added taxes, leasing taxes, stamp taxes, gross receipts and
gross income taxes and license and registration fees, excluding however (except
as shall be necessary to hold any Indemnified Party harmless on an after-tax
basis from and against any amount or event otherwise indemnified hereunder),
taxes levied against Lessor upon or measured by Lessor's net income, net worth
or capital stock. To the event permitted by applicable law, Lessee shall
prepare (in such manner as will show Lessor's ownership of the Items of
Equipment) and timely file all tax returns required by law in connection with
taxes payable or indemnified by Lessee hereunder. With respect to any such tax
return required by law to be filed by Lessor, Lessee shall notify Lessor of
such requirement and furnish Lessor with all forms and information necessary
for the preparation and timely filing of such return.
(c) Except as may be otherwise indicated on any Equipment
Schedule, Lessor has agreed to lease the Items of Equipment to Lessee in part
upon the assumption that Lessor (which for purposes of this Section 16(c) shall
include any assignee of Lessor other than any Person to whom Lessor grants
solely a security interest in any Lease) will be entitled for federal income
tax purposes to cost recovery deductions with respect to the Items of Equipment
as provided for "five year property" by Section 168 of the Internal Revenue
Code of 1986, as amended, equal to Lessor's basis in such Items of Equipment
multiplied by the following percentages for the following taxable years of
Lessor, beginning with the taxable year in which Lessor acquires ownership of
such Items of Equipment: 20% percent for Year 1, 20% for Year 2, 20% for Year
3, 20% for Year 4, and 20% for Year 5. If, as the direct result of (i) any act
or omission of Lessee, including any act or omission permitted, but excluding
any act or omission required, by the Lease, or (ii) any breach by Lessee of any
representation, warranty or covenant contained in the Lease, Lessor shall lose,
shall not have or shall lose the right to claim, or shall suffer a disallowance
or recapture of or delay in claiming all or any portion of such cost recovery
deductions in computing Lessor's federal income tax liability (any such event
being referred to herein as a "Loss"), then Lessee shall pay to Lessor such
amount as will, after reduction by all federal, state and local taxes payable
by Lessor in respect of the receipt of such amount, be equal to the sum of (x)
the
11
12
present value (employing the Prime Rate) of the net increase in the federal
income tax liability of Lessor (after giving affect to any federal income tax
savings available to Lessor as a result of such Loss or the circumstances
giving rise thereto) attributable to such Loss, and (y) the amount of all
interest, penalties and additions to tax payable by Lessor in connection with
such Loss. In the event that a federal income tax benefit that was taken into
account in computing the indemnity payable to Lessor pursuant to the preceding
sentence shall for any reason be or become unavailable to Lessor or be
recaptured, then such unavailability or recapture shall be treated as a Loss.
SECTION 17. MODIFICATION OF EQUIPMENT.
(a) If subsequent to the Acceptance Date of the relevant Lease,
Lessee desires to make, or cause to be made, any Modifications to any Items of
Equipment then subject to the Lease, Lessee, with the prior written consent of
Lessor, which consent shall not be unreasonably withheld, may purchase and
install any Modifications at Lessee's own expense, and any such Modifications
shall be deemed to be part of the Items of Equipment leased under the relevant
Lease; and Lessee shall be responsible for all related transportation and
installation charges and maintenance charges for such Modifications.
(b) If, during the term of the relevant Lease for any Items of
Equipment, any Modifications which have been purchased by Lessee interfere with
the normal and satisfactory operation or maintenance of the Items of Equipment,
or any part thereof, Lessee shall, upon notice from Lessor to that effect,
promptly remove such Modifications and restore the Items of Equipment to their
original condition, reasonable wear and tear excepted. Upon termination of the
Lease of such Items of Equipment, unless Lessor directs otherwise in writing,
or unless retention of any Modifications purchased by Lessee is necessary to
maintain any Items of Equipment in Return Condition, Lessee shall remove any
such Modifications from such Items of Equipment and restore such Items of
Equipment to Return Condition.
(c) All Modifications with respect to any Items of Equipment which
cannot be readily removed without causing material damage to such Items of
Equipment, or which are not removed in accordance with the terms hereof, shall
become and remain the property of Lessor.
(d) In the event that the making of any Modifications require the
removal or physical replacement of any existing component of any Items of
Equipment leased under the relevant Lease, Lessee shall properly store any such
replaced component at the same location where the Items of Equipment are
located and, at the expiration or earlier termination of the Lease term, shall
return such replaced component to Lessor, or its designee, in Return Condition.
In the event that any such replaced component being stored by Lessee is lost,
stolen or damaged to the extent that it cannot be returned in Return Condition,
Lessee shall pay to Lessor an amount equal to the Casualty Value for such
replaced component.
12
13
(e) Anything in this Section 17 to the contrary notwithstanding,
Lessee shall make no nonseverable improvement to any Items of Equipment within
the meaning of Revenue Procedure 75-21 as amended by Revenue Procedure 79- 48
and by Revenue Procedure 81-71 which, if made, would not satisfy the conditions
imposed by Section 4(4).03 of Revenue Procedure 75-21 as so amended.
SECTION 18. TRANSPORTATION EXPENSES.
All transportation and installation expenses incurred in connection
with the delivery of the Equipment to Lessee shall be paid by Lessee. Necessary
packing equipment for the return of Items of Equipment to Lessor at the end of
the applicable Lease term, and such labor as may be necessary for the Equipment
when in the possession of Lessee, shall be furnished by Lessee at its expense.
Transportation expenses incurred in connection with redelivery of the Equipment
to Lessor shall be paid by Lessee.
SECTION 19. INSPECTION AND REPORTS.
(a) Upon request, Lessee shall permit Lessor or persons designated
by Lessor to inspect the Equipment.
(b) Lessee shall immediately notify Lessor of any accident or
damage arising out of the alleged or apparent improper manufacture,
installation, functioning or operation of the Equipment, or any other cause
whatsoever, the time, place and nature of the accident or damage, the names and
addresses of parties involved, persons injured, witnesses and owners of other
property damaged, and such other relevant information as may be known or can
readily be ascertained by Lessee, and shall promptly advise Lessor of all
correspondence, papers, notices and documents received by Lessee in connection
with any claim or demand related to such improper manufacturing, installation,
operation or functioning of the Equipment or charging Lessor with liability
with inspect thereto.
SECTION 20. EVENTS OF DEFAULT AND LESSOR'S REMEDIES.
(a) Any of the following events shall constitute an Event of
Default under any Lease created hereunder: (i) Lessee shall fail to pay any
Basic Rent or other amount due under any such Lease within ten (10) days of the
applicable due date; (ii) Lessee shall attempt to remove, sell, transfer,
encumber, part with possession of, assign or sublet (except as expressly
permitted by the provisions hereon) the Items of Equipment leased under such
Lease or any part thereof; (iii) any representation. or warranty made by Lessee
in this Agreement or in any document or certificate furnished to Lessor in
connection herewith, shall prove to have been incorrect in any material respect
when made; (iv) Lessee shall fail to perform or observe any other of its
covenants or obligations under the Lease for a continuous period of thirty (30)
days after receipt by Lessee of written notice thereof from Lessor; (v) Lessee
shall cease doing business as a going concern; (vi) a petition shall be filed
by or against Lessee under the Federal Bankruptcy Code or an amendment thereto
(including a petition
13
14
for reorganization or arrangement), and, if filed against Lessee, such petition
shall not have been discharged within sixty (60) days after such filing; (vii)
a receiver shall be appointed for Lessee or its property; or (viii) Lessee
shall become insolvent, make an assignment for the benefit of creditors, or
offer a composition of any of its indebtedness.
(b) Upon the occurrence of any Event of Default under such Lease,
as specified in subsection (a) of this Section 20, and at any time thereafter
so long as the same shall be continuing, Lessor or any assignee of Lessor with
respect to such Lease, at its sole option, may (i) declare immediately due and
payable by Lessee, as liquidated damages for loss of a bargain and not as a
penalty, an amount equal to the sum of (A) all unpaid Rent due under such Lease
up to the date of payment by Lessee under this clause (i), and (B) the Casualty
Value of the Items of Equipment leased under such Lease as of the Basic Rent
Date immediately preceding the date on which Lessor or its assignee declares an
Event of Default to exist; (ii) terminate the Lease, without prejudice to any;
other remedies of Lessor hereunder; (iii) whether or not the Lease has been
terminated pursuant to subsection (il) above, take possession of the Items of
Equipment subject to such Lease during Lessee's normal business hours, wherever
the Items of Equipment may be located, without demand, notice, court order or
other process of law, and Lessee hereby waives any right it may have to notice
and hearing before repossession. Lessee hereby further waives any and all
damages occasioned by such entry or taking of possession. Any taking of
possession pursuant to this subsection (b)(iii) shall not in itself constitute
termination of the Lease and shall not, in any event, relieve Lessee of its
obligations under the lease.
Lessee shall reimburse Lessor for all reasonable expenses (including
attorneys' fees) incurred by Lessor in enforcing its rights under this Section
20. Any unpaid Rent and any unpaid Casualty Value payable as liquidated damages
pursuant to clause (i) of this subsection 20(b) shall bear interest at the
Overdue Rate until paid in full.
Upon taking possession of any Items of Equipment after an Event of
Default, Lessor may, at its sole option and without notice to Lessee, lease the
repossessed Items of Equipment to any third party on such terms and conditions
as Lessor may determine, or sell such Items of Equipment at public auction or
at private sale, free and clear of any rights of Lessee and without any duty to
account to Lessee with respect to such sale or lease, except to the extent
specified in this subsection 20(b). In the event that Lessor leases or sells
any repossessed Items of Equipment, the Net Proceeds of such lease or sale
shall first be credited to any amounts due and owing by Lessee under clause (i)
above, and second, shall be used to reimburse Lessee for any payment already
made by Lessee on account of amounts owed under clause (i) above Any surplus
shall be retained by Lessor to the extent permitted by Section 2(c) of the
Waiver and Amendment No. 3 between Lessor and Lessee et al. dated July 2, 1996.
Lessee shall remain liable for any deficiency resulting from an excess of
amounts due and owing by Lessee over Net Proceeds. No right or remedy conferred
upon or reserved to Lessor hereunder shall be exclusive of any other right or
remedy, and each shall be cumulative and in addition to all other remedies
available at law or in equity. The failure of Lessor to exercise the rights
granted hereunder upon the occurrence of any Event of Default shall not
constitute a waiver of any further or subsequent Event of Default.
14
15
SECTION 21. SUBLEASES AND ASSIGNMENTS.
(a) Lessee may, at its sole cost and expense, sublease any Items
of Equipment, or assign its rights or obligations under the Lease for such
Items of Equipment, to Lyon Credit Corporation as security for its obligations
to that lender, and to Lessee's subsidiaries and affiliates for use in its
operations outside the continental United States.
(b) Lessor may, at any time and from time to time, without notice
to, or the consent of, Lessee: (i) assign, sell or transfer, in whole or in
part, Lessor's rights under any Leases created hereunder with respect to any
Items of Equipment, and any or all of Lessor's rights thereunder, including,
without limitation, the right to receive any or all Rent payable under such
Leases, in each case to First Interstate Bank of Denver, N.A.; (ii) sell,
transfer or assign legal title to and ownership of the Equipment or any Items
of Equipment thereof to any Person; and (iii) mortgage or grant a security
interest in any Leases or in the Equipment or any Items of Equipment thereof,
to any Person; provided, however, that any such assignment, sale, transfer,
mortgage or grant of security interest shall be subject to Lessee's rights
under any such Leases so long as no Event of Default has occurred and is
continuing thereunder. Subsequent to any such assignment by Lessor, Lessor
shall give Lessee written notice of such assignment, identifying therein the
name and address of the assignee. Any such assignee of Lessor shall have all of
the right, title and interest of Lessor as relate solely to the Items of
Equipment and Lease or Leases assigned sold, or transferred to such assignee,
and any assignee, other than an assignee to whom Lessor has only granted a
security interest, shall become for all purposes of this Agreement and the
relevant Lease, beginning on the date of such assignment, the Lessor of such
Items of Equipment. Lessee hereby consents to such assignments, and agrees to
acknowledge in writing any such assignment within five (5) days after receipt
of written notice thereof from Lessor, and in the case of any such assignment,
to take steps to confirm the status of any such assignee hereunder and under
the relevant Lease, including without limitation, providing to such assignee,
at Lessee's sole cost and expense, any document (including Uniform Commercial
Code financing statements or continuation or assignment statements) reasonably
requested by such assignee to evidence or protect such assignee's title or
other interest in the relevant Items of Equipment.
(c) So long as Lessor's rights hereunder are assigned to any
assignee, Lessee may not assert against any such assignee any defense,
counterclaim, recoupment or set-off Lessee
15
16
may have against Lessor. Lessee agrees that it will not seek to cancel or
terminate this Agreement or any of the Leases created hereunder (except as
expressly permitted herein) or otherwise avoid its obligations hereunder or
thereunder as against such assignee, and further agrees that it will pay to
such assignee all Rent due under such Leases and assigned to such assignee,
without regard to any such defense, counterclaim, recoupment or set-off, and
will not seek to recover any part of the same from such assignee.
SECTION 22. LESSEE'S AND LESSOR'S WARRANTIES.
(a) Lessee hereby warrants and represents to Lessor, its
successors and assigns as follows: (i) Lessee is a corporation duly organized,
validly existing and in good standing under the laws of the State of Wyoming,
and is qualified to do business in, and is in good standing in, each state or
other jurisdiction in which the nature of its business makes such
qualifications necessary (including each state or other jurisdiction in which
the Equipment or any part thereof will be located); (ii) Lessee has the
corporate power and due authority to execute and to perform its obligations
under this Agreement, the Lease Documents and any related documents and
certificates and to lease the Equipment under the Leases; (iii) the leasing of
the Equipment from Lessor, the execution and delivery of this Agreement, the
Lease Documents and any other related instruments, documents and agreements,
and the compliance by Lessee with the terms thereof do not conflict with and
will not result in a violation or breach of Lessee's Certificate or Articles of
Incorporation, its Bylaws, or any indenture, contract or agreement by which
Lessee is bound, or any statute, judgment, decree, rule or regulation binding
upon Lessee; (iv) no consent or approval of any trustee or holder of any
indebtedness or obligation of Lessee, or of any governmental authority, is
necessary (or, if required, such consent or approval has been obtained;) for
Lessee's execution or performance of this Agreement or any of the Lease
Documents; (v) this Agreement and the other Lease Documents, when executed by
Authorized Signatories, will constitute legal, valid and binding obligations of
Lessee, enforceable against Lessee in accordance with their terms, subject to
enforcement limitations imposed by rules of equity, bankruptcy or similar laws;
(vi) no further action, including any filing or recording of any document is
necessary or advisable in order to establish and perfect Lessor's title to and
interest in, the Equipment as against Lessee or third parties, or any of them,
in any applicable jurisdiction; (vii) no mortgage, deed of trust, deed to
secure debt or other lien which now covers or affects, or which may hereafter
cover or affect, any property or interest therein of Lessee, now attaches or
hereafter will attach to the Equipment or any Items of Equipment, or in any
manner affects or will affect adversely Lessor's right, title and interest
therein; (viii) there is no litigation or other proceeding now pending or, to
the best of Lessee's knowledge threatened, against or affecting Lessee in any
court or before any regulatory commission, board or other administrative
governmental agency which would directly or indirectly adversely affect or
impair the title of Lessor to the Equipment, or which, if decided adversely to
Lessee, would have a Materially Adverse Effect; (ix) all balance sheets,
statements of profit and loss and other financial data that have been delivered
to Lessor with respect to Lessee (A) are complete and correct in all material
respects, (B) accurately present the financial condition of Lessee on the
dates, and the results of its operations for the periods for which they have
16
17
been furnished, (C) have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods covered
thereby, and (D) disclose all known liabilities, direct and contingent, as of
their respective dates; add (x) there has been no change in the condition of
Lessee, financial or otherwise, since the date of the most recent financial
statements delivered to Lessor with respect to Lessee other than changes in the
ordinary course of business, none of which changes, either separately or in
aggregate, have had or may have a Materially Adverse Effect.
(b) Lessor hereby warrants and represents to Lessee, its
successors and assigns, that: (i) Lessor is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Wyoming, and is qualified to do business in, and is in good standing in the
State of Wyoming; (ii) Lessor has the power and authority to execute and
perform its obligations under this Agreement and the other Lease Documents;
(iii) the leasing of the Equipment from Lessor, the execution and delivery of
this Agreement and the other Lease Documents, and the compliance by Lessor with
the terms thereof, do not conflict with and will not result in a violation or
breach of Lessor's Certificate of Organization, its Operating Agreement or
conflict with any indenture, contract or agreement by which Lessor is bound, or
with any statute, judgment, decree, rule or regulation binding upon Lessor;
(iv) no consent or approval of any trustee or holder of any indebtedness or
other obligation of Lessor, or of any governmental authority, is necessary (or,
if required, such consent or approval has been obtained) for Lessor's execution
or performance of this Agreement and the other Lease Documents; and (v) this
Agreement and the other Lease Documents, when executed by the duly authorized
members of Lessor, will constitute legal, valid and binding obligations of
Lessor, enforceable against Lessor in accordance with their terms, subject to
enforcement limitations imposed by rules of equity, bankruptcy or similar laws.
SECTION 23. LESSOR'S RIGHT TO PERFORM FOR LESSEE.
If Lessee (i) fails to make any payment required to be made by it
hereunder or (ii) fails to perform or comply with any of its covenants or
agreements contained herein, then Lessor may itself, after notice to Lessee,
make any such payment or perform or comply with any such agreement, and the
amount of any such payment and the amount of the expenses of Lessor incurred in
connection with such payment or the performance of or compliance with such
covenant or agreement, as the case may be, shall, together with interest
thereon accruing from the date of demand by Lessor at the Overdue Rate, be
deemed Supplemental Rent due Lessor hereunder; provided, however, that no such
payment, performance or compliance by Lessor shall be deemed to cure any Event
of Default hereunder.
SECTION 24. FURTHER ASSURANCES.
Lessee will promptly and duly execute and deliver to Lessor, and any
assignee of Lessor, such other documents, and perform such further acts,
including, without limitation, providing such amendments to this Agreement or
any Lease created hereunder as may be
17
18
reasonably required by Lessor or by any assignee of Lessor from time to time in
order to carry out more effectively the intent and purposes of this Agreement
or any Lease created hereunder.
SECTION 25. NOTICES.
All notices provided for or required under the terms and provisions
hereof shall be in writing, and any such notice shall be deemed given when
personally delivered or when deposited in the United States mail, with proper
postage prepaid, for first class certified mail, addressed (i) if to Lessor or
Lessee, at their respective addresses as set forth herein or at such other
address as either of them shall, from time to time, designate in writing to the
other, and (ii) if to any assignee of Lessor, to the address of such assignee
as such assignee shall designate in writing to Lessor and Lessee.
SECTION 26. SEVERABILITY OF PROVISIONS.
In the event any one or more of the provisions contained herein shall
for any reason be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof.
SECTION 27. BENEFIT.
This Agreement shall be binding upon and shall inure to the benefit of
the parties, their respective heirs, legal representatives, successors and
permitted assigns.
SECTION 28. HEADINGS.
The paragraph headings hereof have been inserted for convenience only
and shall not affect the meaning or interpretation of any of the provisions of
this Agreement.
SECTION 29. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Wyoming.
SECTION 30. AMENDMENTS.
This Agreement and each other Lease Document collectively constitute
the entire agreement between Lessor and Lessee with respect to the leasing of
the Equipment and may be amended or modified only by a writing signed by the
parties hereto or their respective successors and assigns.
SECTION 31. PURCHASE OPTION.
Lessee shall have the right, at any time during the Term hereof, to
purchase the Equipment as of the first day of any month for a purchase price
equal to the amount for that month shown on the Schedule attached as Exhibit B
hereto.
18
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first above written.
LESSOR:
▇▇▇▇▇▇ ▇▇▇▇ INVESTMENTS, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
------------------------------------
Title: Member
---------------------------------
LESSEE:
AIR DRILLING SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Title: President
---------------------------------
[CORPORATE SEAL]
ATTEST: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
--------------------------------
Title: Secretary
---------------------------------
19
20
EQUIPMENT SCHEDULE
Equipment Schedule No. 1, dated July 3, 1996, to Master Equipment
Lease Agreement, dated July 3, 1996.
This Equipment Schedule hereby incorporates by reference, as though
set forth in its entirety, the provisions and definitions of the Master
Equipment Lease Agreement, dated July 3, 1996, between ▇▇▇▇▇▇ ▇▇▇▇ INVESTMENTS,
LLC, a Wyoming limited liability company ("Lessor") and AIR DRILLING SERVICES,
INC., a Wyoming corporation ("Lessee").
1. Equipment.
MANUFACTURER: Joy
Quantity Type Description
1 WB12 Booster
2. Definitions.
The Basic Rent for all Items of Equipment on this Schedule shall be
$2,466.67 per month and shall be payable on the first day of each calendar
month (to and including the Last Basic Rent Date identified on the relevant
Certificate of Acceptance), or, when the first day of the month falls on a
nonbusiness day, the first business day thereafter (each such date referred to
as a "Basic Rent Date"). The definitions on the relevant Certificate of
Acceptance are applicable to this Schedule.
CERTIFICATE OF ACCEPTANCE
Attached to and made a part of Equipment Schedule No. 1, dated July 3,
1996 to Master Equipment Lease Agreement (the "Equipment Lease") dated July 3,
1996, between ▇▇▇▇▇▇ ▇▇▇▇ INVESTMENTS, LLC, a Wyoming limited liability
company ("Lessee") and AIR DRILLING SERVICES, INC., a Wyoming corporation
("Lessor").
CONDITION OF EQUIPMENT.
The Lessee certifies that all Items of Equipment described below have
been delivered to the location indicated below, properly installed, tested and
inspected by the Lessee, found to be in good order, and accepted as Items of
Equipment under the Equipment Lease, all on the date indicated.
20
21
First basic rent date: July 1, 1996 Manufacturer: Joy
Last basic rent date: June 1, 2001 Location of Equipment: Casper
Expiration date: June 30, 2001 Acceptance date: July 3
Overdue rate:________________________
Items of Equipment: Booster
Model Serial Casualty
Features Number Value
Joy Booster, #B93
Model #WB-12 A40O47/12VA55688 $165,000.00
The Lessee hereby represents and warrants to Lessor that (i) no Event
of Default or event which, with the giving of notice or the lapse of time, or
both, would become such an Event of Default under the Equipment Lease has
occurred and is continuing, and (ii) the Lessee has obtained and there are in
full force and effect, all insurance policies with respect to the Equipment
required to be obtained under terms of the Equipment Lease.
All capitalized terms used herein without definition shall be used as
defined in the Equipment Lease.
LESSEE: AIR DRILLING SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
-----------------------------------
Title: V. President
--------------------------------
[CORPORATE SEAL] ATTEST: /s/ H. ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Title: Chairman
--------------------------------
21
22
EQUIPMENT SCHEDULE
Equipment Schedule No. 2, dated July 3, to Master Equipment
Lease Agreement, dated July 3, 1996.
This Equipment Schedule hereby incorporates by reference, as though
set forth in its entirety, the provisions and definitions of the Master
Equipment Lease Agreement, dated July 3, 1996, between ▇▇▇▇▇▇ ▇▇▇▇ INVESTMENTS,
LLC, a Wyoming limited liability company ("Lessor") and AIR DRILLING SERVICES,
INC., a Wyoming corporation ("Lessee").
1. Equipment.
MANUFACTURER: Joy
Quantity Type Description
1 WB12 Booster
2. Definitions.
The Basic Rent for all Items of Equipment on this Schedule shall be
$2,466.67 per month and shall be payable on the first day of each calendar
month (to and including the Last Basic Rent Date identified on the relevant
Certificate of Acceptance), or, when the first day of the month falls on a
nonbusiness day, the first business day thereafter (each such date referred to
as a "Basic Rent Date"). The definitions on the relevant Certificate of
Acceptance are applicable to this Schedule.
CERTIFICATE OF ACCEPTANCE
Attached to and made a part of Equipment Schedule No. 2, dated July 3,
to Master Equipment Lease Agreement (the "Equipment Lease") dated July 3,
between ▇▇▇▇▇▇ ▇▇▇▇ INVESTMENTS, LLC, a Wyoming limited liability company
("Lessee") and AIR DRILLING SERVICES, INC., a Wyoming corporation ("Lessor").
CONDITION OF EQUIPMENT.
The Lessee certifies that all Items of Equipment described below have
been delivered to the location indicated below, properly installed, tested and
inspected by the Lessee, found to be in good order, and accepted as Items of
Equipment under the Equipment Lease, all on the date indicated.
22
23
First basic rent date: - July 1, 1996 Manufacturer: Joy
Last basic rent date: June 1, 2001 Location of Equipment: Casper
Expiration date: June 30, 2001 Acceptance date: July 3
Overdue rate:________________________
Items of Equipment: Booster
Model Serial Casualty
Features Number Value
Joy Booster, #B94
Model #WB-12 A40048/12VA71033 $165,000.00
The Lessee hereby represents and warrants to Lessor that (i) no Event
of Default or event which, with the giving of notice or the lapse of time, or
both, would become such an Event of Default under the Equipment Lease has
occurred and is continuing, and (ii) the Lessee has obtained and there are in
full force and effect, all insurance policies with respect to the Equipment
required to be obtained under terms of the Equipment Lease.
All capitalized terms used here in without definition shall be used as
defined in the Equipment Lease.
LESSEE: AIR DRILLING SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
-----------------------------------
Title: Vice President
--------------------------------
[CORPORATE SEAL] ATTEST: /s/ H. ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Title: Chairman
-------------------------------
23
24
EQUIPMENT SCHEDULE
Equipment Schedule No. 3, dated July 3, to Master Equipment
Lease Agreement, dated July 3, 1996.
This Equipment Schedule hereby incorporates by reference, as though
set forth in its entirety, the provisions and definitions of the Master
Equipment Lease Agreement, dated July 3, 1996, between ▇▇▇▇▇▇ ▇▇▇▇ INVESTMENTS,
LLC, a Wyoming limited liability company ("Lessor") and AIR DRILLING SERVICES,
INC., a Wyoming corporation ("Lessee").
1. Equipment.
MANUFACTURER: Joy
Quantity Type Description
1 WB12 Booster
2. Definitions.
The Basic Rent for all Items of Equipment on this Schedule shall be
$2,466.67 per month and shall be payable on the first day of each calendar month
(to and including the Last Basic Rent Date identified on the relevant
Certificate of Acceptance), or, when the first day of the month falls on a
nonbusiness day, the first business day thereafter (each such date referred to
as a "Basic Rent Date"). The definitions on the relevant Certificate of
Acceptance are applicable to this Schedule.
CERTIFICATE OF ACCEPTANCE
Attached to and made a part of Equipment Schedule No. 3, dated July 3,
to Master Equipment Lease Agreement (the "Equipment Lease") dated July 3,
between ▇▇▇▇▇▇ ▇▇▇▇ INVESTMENTS, LLC, a Wyoming limited liability company
("Lessee") and AIR DRILLING SERVICES, INC., a Wyoming corporation ("Lessor").
CONDITION OF EQUIPMENT.
The Lessee certifies that all Items of Equipment described below have
been delivered to the location indicated below, properly installed, tested and
inspected by the Lessee, found to be in good order, and accepted as Items of
Equipment under the Equipment Lease, all on the date indicated.
24
25
First basic rent date: - July 1, 1996 Manufacturer: Joy
Last basic rent date: June 1, 2001 Location of Equipment: Casper
Expiration date: June 30, 2001 Acceptance date: July 3
Overdue rate:________________________
Items of Equipment: Booster
Model Serial Casualty
Features Number Value
Joy Booster, #B95
Model #WB-12 A40049/12VA68528 $165,000.00
The Lessee hereby represents and warrants to Lessor that (i) no Event
of Default or event which, with the giving of notice or the lapse of time, or
both, would become such an Event of Default under the Equipment Lease has
occurred and is continuing, and (ii) the Lessee has obtained and there are in
full force and effect, all insurance policies with respect to the Equipment
required to be obtained under terms of the Equipment Lease.
All capitalized terms used here in without definition shall be used as
defined in the Equipment Lease.
LESSEE: AIR DRILLING SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
-----------------------------------
Title: Vice President
--------------------------------
[CORPORATE SEAL] ATTEST: H. ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Title: Chairman
---------------------------------
25
26
EXHIBIT B
AIR DRILLING SERVICES, INC.
SCHEDULE OF REPURCHASE OPTION
MASTER LEASE AGREEMENT - EQUIPMENT
DATE OPTION PRICE
---- ------------
Up to Aug-1-96 $350,000.00
-------------------------------------
Up to Sep-1-96 $345,389.96
-------------------------------------
Up to Oct-1-96 $340,744.38
-------------------------------------
Up to Nov-1-96 $336,062.99
-------------------------------------
Up to Dec-1-96 $331,345.52
-------------------------------------
-------------------------------------
Up to Jan-1-97 $326,591.68
-------------------------------------
Up to Feb-1-97 $321,801.20
-------------------------------------
Up to Mar-1-97 $316.973.79
-------------------------------------
Up to Apr-1-97 $312,109.17
-------------------------------------
Up to May-1-97 $307,207.05
-------------------------------------
Up to Jun-1-97 $302,267.14
-------------------------------------
Up to Jul-1-97 $297,289.16
-------------------------------------
Up to Aug-1-97 $292,272.80
-------------------------------------
Up to Sep-1-97 $287,217.78
-------------------------------------
Up to Oct-1-97 $282,123.79
-------------------------------------
Up to Nov-1-97 $276,990.53
-------------------------------------
Up to Dec-1-97 $271,817.71
-------------------------------------
-------------------------------------
Up to Jan-1-98 $266,605.01
-------------------------------------
Up to Feb-1-98 $261,352.13
-------------------------------------
Up to Mar-1-98 $256,058.76
-------------------------------------
Up to Apr-1-98 $250,724.59
-------------------------------------
Up to May-1-98 $245,349.30
-------------------------------------
Up to Jun-1-98 $239,932.57
-------------------------------------
Up to Jul-1-98 $234,474.09
-------------------------------------
Up to Aug-1-98 $228,973.53
-------------------------------------
Up to Sep-1-98 $223,430.57
-------------------------------------
Up to Oct-1-98 $217,844.89
-------------------------------------
Up to Nov-1-98 $212,216.15
-------------------------------------
Up to Dec-1-98 $206,544.02
-------------------------------------
-------------------------------------
Up to Jan-1-99 $200,828.17
-------------------------------------
Up to Feb-1-99 $195,068.26
-------------------------------------
Up to Mar-1-99 $189,263.95
-------------------------------------
Up to Apr-1-99 $183,414.90
-------------------------------------
Up to May-1-99 $177,520.76
-------------------------------------
Up to Jun-1-99 $171,581.19
-------------------------------------
Up to Jul-1-99 $165,595.84
-------------------------------------
Up to Aug-1-99 $159,564.35
-------------------------------------
Up to Sep-1-99 $153,486.37
-------------------------------------
Up to Oct-1-99 $147,361.53
-------------------------------------
Up to Nov-1-99 $141,189.48
-------------------------------------
Up to Dec-1-99 $134,969.86
-------------------------------------
-------------------------------------
Up to Jan-1-00 $128,702.29
-------------------------------------
Up to Feb-1-00 $122,386.41
-------------------------------------
Up to Mar-1-00 $116,021.85
-------------------------------------
Up to Apr-1-00 $109,608.23
-------------------------------------
Up to May-1-00 $103,145.17
-------------------------------------
Up to Jun-1-00 $96,632.29
-------------------------------------
Up to Jul-1-00 $90,069.20
-------------------------------------
Up to Aug-1-00 $83,455.52
-------------------------------------
Up to Sep-1-00 $76,790.86
-------------------------------------
Up to Oct-1-00 $70,074.83
-------------------------------------
Up to Nov-1-00 $63,307.03
-------------------------------------
Up to Dec-1-00 $56,487.06
-------------------------------------
-------------------------------------
Up to Jan-1-01 $49,614.52
-------------------------------------
Up to Feb-1-01 $42,689.01
-------------------------------------
Up to Mar-1-01 $35,710.11
-------------------------------------
Up to Apr-1-01 $28,677.42
-------------------------------------
Up to May-1-01 $21,590.52
-------------------------------------
Up to Jun-1-01 $14,448.99
-------------------------------------
Up to Jul-1-01 $7,252.41
-------------------------------------
Up to Aug-1-01 $0.00
-------------------------------------
Page 1
27
MEMORANDUM OF LEASE
▇▇▇▇▇▇ ▇. ▇▇▇▇, III and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ hereby certify the following
information regarding the two leases:
1. A master equipment lease agreement dated June 23, 1996 between
▇▇▇▇▇▇ ▇▇▇▇ Investments, LLC and Air Drilling Services, Inc. has the following
material provisions:
A. Property: 3 Joy WBI2 Boosters
B. Term of the Lease: July 1, 1996 to June 30, 2001
2. An industrial lease dated July 3, 1996 between ▇▇▇▇▇▇ ▇▇▇▇
Investments, LLC as Landlord and Air Drilling Services, Inc., as Tenant has the
following material:
A. Property: Real Estate located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ as more particularly described on the attached
exhibit.
B. Term of the lease: July 1, 1996 to June 30, 2001
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, III
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, III
Member, ▇▇▇▇▇▇ ▇▇▇▇ Investments, LLC
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President, Air Drilling Services, Inc.
THE STATE OF COLORADO )
COUNTY OF ARAPAHOE )ss.
The foregoing instrument was acknowledged before me by ▇▇▇▇▇▇ ▇. ▇▇▇▇
III, Member of ▇▇▇▇▇▇ ▇▇▇▇ Investments, LLC and by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
of Air Drilling Services Inc. this 1st day of July, 1996.
Witness my hand and official seal.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
[NOTARY SEAL] ---------------------------------------
Notary Public: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires: December 7, 1999.
