MASTER RENTAL CONTRACT
XXXXXX OIL COMPANY September 9, 1999
THIS CONTRACT IS MADE AND ENTERED INTO BY AND BETWEEN UNIVERSAL COMPRESSION,
INC. ("UCI") and XXXXXX OIL COMPANY ("Customer"). For and in consideration
of the mutual covenants and agreements set forth herein, the adequacy and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
I. RESPONSIBILITIES OF THE PARTIES
UCI and Customer shall furnish the equipment, supplies, and services
respectively as indicated below:
Furnished By
UCI Customer
Treatment Facility............................. X
Gas Compressors including oil and antifreeze.................. X
Existing Gas-liquid and solid separation equipment ............. X
All fees, assessments and taxes (including sales, use and ad valorem taxes)
relating to Equipment or Treatment Facility X
Property damage insurance on UCI equipment and public liability insurance. X
Compressor foundation(s) (concrete in skid only)........... .....X
Site preparation, including suitable sand or gravel pad X
All existing equipment currently in place relating to suction, discharge,
fuel bypass and pressure control X
Initial installation supervision and start-up time X
Competent and prudent equipment operators to operate compressors and Treatment
Facility, perform inspections, and submit monthly reports to UCI........X
Preventive maintenance, inspections and repairs to all compressor engines,
compressors and accessory parts X
All maintenance, inspections and repairs to all Treatment Facility equipment
and accessory parts (including without limitation all liquids,
parts, etc.)........... X
All repairs caused by Customer's negligence or failure of Customer's equipment X
Fuel gas with 950 to 1200 BTU/cu. ft. and no more than 4 ppm H2S for compressors
and plant facility X
Air/gas pressure of 250 PSIG with sufficient volume for engine starting X
Removal of all free liquids and solids from gas before compression X
Collection and disposal of all liquids from skid drains and liquids incidental
to compressor operations X
Equipment site with ingress and egress X
Site fencing (if required) X
Disconnection of equipment and site restoration expenses X
Any and all necessary equipment, supplies, and services not specifically
indicated above
Third-party services or materials not listed above as UCI responsibilities
which are furnished by UCI at Customer's written request or approval will be
charged to Customer at actual cost, plus 20%. UCI services or materials not
listed above as UCI responsibilities, which are furnished by UCI at Customer's
request, will be charged to Customer at UCI's prevailing standard rates.
II. MONTHLY RENTAL AND TERM
This Agreement shall be in effect for a period of five (5) years from and after
the date hereof ("Primary Term"). At the end of the Primary Term, Xxxxxx shall
have the option to renew this Agreement for one additional five (5) year period
on substantially similar terms but at then current market rates, upon the
delivery of written notice to UCI at least 120 days prior to the expiration of
the Primary Term. In the event that Xxxxxx does not exercise its renewal
option as set forth herein, Xxxxxx shall be deemed to have exercised the
purchase option described in Article IV below with respect to the Treatment
Facility and the Compression Equipment, and shall pay to UCI the applicable
Purchase Price payable by wire transfer before 11:00 a.m. Central Time to an
account or accounts specified by UCI on the last day of the Primary Term.
All rentals shall be payable monthly in advance by wire transfer to account or
accounts designated by UCI, unless otherwise notified in writing by UCI.
III. MONTHLY EQUIPMENT AVAILABILITY
1. UCI will endeavor to provide a monthly availability of the Compressor
Equipment furnished in this lease of 97% ("Proposed Monthly Availability")
subject to the provisions below.
2. Any month when the actual monthly availability is less than the proposed
monthly availability, the rental rate shall be adjusted by an availability
factor in accordance with the following:
(a) To determine actual monthly availability, the following formula
shall be used:
- Hours Compressor Equipment available during month
24 x number of days in month x 100 = %
(b) To determine the availability factor, the following formula shall be used:
Actual monthly availability
Proposed monthly availability
(c) In the event the actual monthly availability for any calendar
month is less than 97%, the rental rate shall be adjusted in accordance with
the following:
Monthly Rental Rate x Availability Factor = Adjusted Rental Rate
- Eight hours per month allowed for scheduled preventive maintenance.
3. There shall be no reduction in the rental rate if the compression
equipment was not available due to force majeure or to the fault of
CUSTOMER or CUSTOMER'S operation.
4. Paragraphs 1 and 2 above shall not be effective during the first thirty
(30) days after commencement of the term or during the first thirty (30)
days after which UCI replaces or substitutes equipment.
5. In the event of breakdown or non-availability of Compressor equipment for
any cause, UCI's liability to CUSTOMER shall be limited to a reduction of
the rental rate as provided above and in no event shall UCI be liable to
CUSTOMER for any consequential loss, damage or expense as a result
thereof.
6. Downtime begins when UCI is notified the unit is down.
7. Request for downtime credit must be received by UCI, Houston, Texas in
writing thirty (30) days from the end of the month in which the downtime
occurred.
8. NOTWITHSTANDING ANY PROVISION CONTAINED HEREIN, UCI MAKES NO WARRANTIES,
EXPRESSED OR IMPLIED WITH RESPECT TO ANY EQUIPMENT, PARTS OR OTHER
PERSONAL PROPERTY COMPRISING A PART OR ALL OF THE TREATMENT FACILITY,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR USE, ALL SUCH WARRANTIES BEING HEREBY EXPRESSLY DISCLAIMED.
ADDITIONALLY UCI MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO, IS
NOT RESPONSIBLE FOR, THE DESIGN OF THE TREATMENT FACILITY OR ITS FAILURE
TO MEET OR MAINTAIN ANY PERFORMANCE SPECIFICATIONS. CUSTOMER UNDERSTANDS
AND AGREES THAT THE OPERATION AND MAINTENANCE OF THE FACILITY IS THE SOLE
RESPONSIBILITY OF CUSTOMER AND UCI SHALL HAVE NO LIABILITY OR OBLIGATION
WITH RESPECT THERETO.
IV. PURCHASE OPTION
Customer shall have the right and option, on September 9th of each year
during the Primary Term hereof, (the "Purchase Date") commencing September 9,
2000, to purchase all of the Treatment Facility, and if the Treatment
Facility is purchased prior to or simultaneous with the Compressor Equipment,
the Compressor Equipment described in Exhibit 1.1 to the General Conveyance,
Assignment and Xxxx of Sale between Customer and UCI dated as of the date
hereof, for the specified purchase price ("Purchase Price") as follows:
Treatment Facility Compression Equipment
Purchase Date Purchase Price Purchase Price
September 9, 2000 $1,504,000 $3,662,000
September 9, 2001 $1,299,000 $3,450,000
September 9, 2002 $1,095,000 $3,211,000
September 9, 2003 $ 788,000 $2,914,000
September 9, 2004 $ 487,000 $2,574,000
Customer and UCI acknowledge and agree that the Purchase Price represents a
fair and reasonable estimate of the fair market value of the applicable
equipment as of the respective date. Notwithstanding any provision contained
herein, Customer shall not be entitled to purchase the Compression Equipment
unless the Treatment Facility is purchased simultaneously with or prior to
the date of purchase of the Compression Equipment. Customer shall exercise
such right and option by the delivery of written notice to UCI at least 120
days prior to any Purchase Date, notifying UCI of its intent to purchase the
Treatment Facility and/or the Compression Equipment (if such purchase is
allowed hereunder). Such notice shall be irrevocable, and upon delivery of
such notice, Customer shall purchase the applicable equipment for the
applicable Purchase Price which shall be tendered by wire transfer before
11:00 a.m. Central Time on the Purchase Date to an account or accounts
specified by UCI.
Upon receipt of such Purchase Price, UCI shall convey title to the purchased
Equipment. All Equipment transferred to Customer by UCI shall be conveyed
"AS IS, WHERE IS AND WITH ALL FAULTS", and UCI will make no representation or
warranty of any kind express or implied, including without limitation any
warranty of merchantability or fitness for a particular purpose, and Customer
shall unconditionally execute an indemnity in form and substance satisfactory
to UCI pursuant to which Customer will indemnify UCI for all liabilities of
any kind arising out of or in connection with the Treatment Facility for all
periods prior to, during and subsequent to UCI's ownership thereof. Any and
all taxes of any kind incurred or imposed in connection with or as a result
of the exercise by Customer of its purchase option or the purchase by
Customer of all or a part of the Equipment pursuant hereto shall be the
responsibility of Customer .
V. TERMINATION
Should Customer default in payment of any sum to be paid hereunder, or breach
any other term or covenant in this Agreement or in any Schedule(s), and such
default or breach continues for ten (10) days after receipt by Customer of
written notice of default, or should Customer commit an act of bankruptcy or
be the subject of any proceeding under the Bankruptcy Act (unless the same is
an involuntary proceeding which is stayed or removed within sixty (60) days
from the date of commencement) or become insolvent, or should any substantial
part of Customer's property be subject to any levy, seizure, assignment,
application or sale for or by any creditor or governmental agency, UCI, at
its option, may (i) proceed by appropriate court action or actions to enforce
performance of the applicable covenants and terms of this Agreement or to
recover any and all damages or expenses, including reasonable legal costs,
which UCI shall have sustained by reason of default in any covenant of this
Agreement or on account of UCI's enforcement of its remedies hereunder; (ii)
terminate Customer's rights under this Agreement; or (iii) take possession of
all of the Equipment supplied hereunder (damages occasioned by such taking
possession are hereby expressly waived by the Customer) and thereupon
Customer's right to the possession thereof shall terminate. Damages to which
UCI shall be entitled shall include but not be limited to the following: (i)
any and all sums owed to UCI hereunder, whether existing on the date of
default or arising thereafter; (ii) the balance due for the remainder of the
primary term of each Schedule, as set forth in the Schedule(s); (iii) any and
all costs and expenses incurred by UCI in taking repossession of the
Equipment including, without limitation, reasonable legal costs; (iv)
interest at the maximum rate allowed by law on any and all damages,
commencing on the date the same are incurred. UCI shall have no obligation
to rent or otherwise dispose of any Equipment provided hereunder that may be
repossessed. No right or remedy conferred upon or reserved to UCI by this
Agreement shall be exclusive of any right or remedy herein or by law
provided; all rights and remedies conferred upon UCI by this Agreement or by
law shall be cumulative and in addition to every other right and remedy
available to UCI.
Upon termination of this Agreement prior to the expiration of the Primary
Term, for any reason other than the exercise by Customer of the Purchase
Option, Customer shall be deemed to have exercised the Purchase Option set
forth in Article IV hereof with respect to the Treatment Facility and, at
UCI's option, the Compression Equipment and Customer shall purchase the
Treatment Facility (and the Compression Equipment if so specified by UCI) and
pay the specified Purchase Price set forth in Article IV hereof (for the
September 9 immediately preceding the date of termination) on the Termination
Date, which shall be tendered by wire transfer before 11:00 a.m. Central Time
on the Purchase Date to an account or accounts specified by UCI; provided
however, that in the event this Agreement is terminated by UCI, for
Customer's default, the purchase price shall be equal to 110% of such
applicable Purchase Price
VI. ALL RENTAL QUOTATIONS AND RENTALS OF EQUIPMENT ARE SUBJECT TO
THE FOLLOWING TERMS AND CONDITIONS:
1. Quotations shall remain in effect for a period of thirty (30) days from
the date quoted unless sooner revoked by UCI, by written notice to
Customer. Such notice of revocation shall be deemed given when placed in
the U. S. Mail, postage prepaid, and addressed to Customer at the address
shown on page one (1) of the quotation.
2. Upon acceptance of a quotation, Customer agrees to accept delivery of the
equipment upon the terms and conditions stated herein and to execute
UCI's standard Rental Contract, if not previously executed by Customer,
applicable to the type of equipment or services described in the
quotation. Any order for equipment and services by Customer which varies
from the terms of this Master Rental Contract is subject to acceptance by
UCI and shall not constitute an agreement until so accepted by UCI.
3. The rental rates or fees stated in a quotation are as of the date of the
quotation. The quotation is conditioned upon the specifications requested
by Customer as of the date of the quotation, and no increase in the
"Manufacturer's" or "Seller's" price or prices which have been quoted to
UCI, whether due to variations in design, manufacture, classification or
any other reason. In the event of such an increase, either before or
after Customer's acceptance of the quotation, Customer will be notified
of any resultant increase in the said rental rates or fees and will have
a reasonable time, not to exceed ten (10) days, to either accept or
reject the same. In the event of rejection neither party shall be deemed
to be bound by any acceptance of the quotation.
4. The quotation assumes the existence of the field, production, operation
and product conditions that may be specified. Accordingly, the quotation
is conditioned upon said conditions actually existing as so specified.
In the event of any variations between the specifications and conditions
quoted herein and actual conditions, then, at its option, UCI shall not
be bound by the quotation nor any agreement executed pursuant thereto.
Such option shall be exercised by the giving of written notice to
Customer of UCI's intention not to be so bound. Such notice shall be
deemed given under the same conditions as specified in Paragraph 1 above.
Moreover, acceptance of the quotation shall constitute Customer's
agreement to indemnify and hold UCI free and harmless from any and all
loss or damage suffered by UCI in reliance on the conditions specified on
page one hereof.
5. CUSTOMER AGREES TO PROTECT, INDEMNIFY AND HOLD HARMLESS UCI FROM ALL
CLAIMS, DEMANDS, ACTIONS, FINES, PENALTIES, DAMAGES (INCLUDING WITHOUT
LIMITATION PUNITIVE DAMAGES AND DAMAGES ARISING OUT OF ANY BREACH OF ANY
APPLICABLE LAWS, RULES, REGULATIONS, STATUTES, ORDINANCES OR GOVERNMENTAL
ORDERS RELATING TO THE PROTECTION OF THE ENVIRONMENT) AND COSTS OF EVERY
KIND INCLUDING WITHOUT LIMITATION LEGAL COSTS, RESULTING FROM, DIRECTLY
OR INDIRECTLY, THE RENTAL, INSTALLATION, USE, MAINTENANCE AND OPERATION
OF THE EQUIPMENT AND/OR THE TREATMENT FACILITY, FOR BODILY INJURY, DEATH
OR PROPERTY DAMAGE RESULTING THEREFROM, INCLUDING, WITHOUT LIMITATION,
CUSTOMER'S EMPLOYEES AND PROPERTY, THIRD PARTIES AND UCI, WHETHER SUCH
CLAIMS, DEMANDS, ACTIONS OR COSTS SHALL ARISE IN CONTRACT OR TORT, EXCEPT
WITH RESPECT TO THE COMPRESSOR EQUIPMENT SOLELY TO THE EXTENT OF THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF UCI. IN ADDITION TO ANY
PROPERTY DAMAGE INSURANCE AS MAY BE REQUIRED ELSEWHERE IN THIS QUOTATION,
CUSTOMER ALSO AGREES TO MAINTAIN PUBLIC LIABILITY INSURANCE IN AMOUNTS
SATISFACTORY TO UCI. UCI MAKES NO WARRANTIES, EXPRESS, IMPLIED OR
OTHERWISE, REGARDING THE EQUIPMENT AND TREATMENT FACILITY SUPPLIED
HEREUNDER, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. UCI SHALL NOT BE
LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES SPECIFICALLY
INCLUDING BUT NOT LIMITED TO WELL DAMAGE, LOSS OF USE OF FACILITIES, LOSS
OF PRODUCTION, LOSS OF OPERATING SUPPLIES OR LOSS OF REVENUES, PROFITS OR
INCOME.
6. Customer, at its sole expense, shall: (i) comply with all applicable
rules and regulations of any Federal, State, County, City, local,
municipal or regulatory agency (hereinafter referred to as "Governing
Bodies") relating to the construction, use or operation of the Equipment
and the construction, maintenance and operation of the Treatment Facility
and/or all applicable federal, state and local environmental laws, rules
and regulations requirements associated therewith; and (ii) obtain and
maintain throughout the rental term, or any extension thereof, any and
all licenses and/or permits of any kind required or in connection with
the lease or operation of the Equipment, including without limitation
any applicable air quality and other environmental permits. Customer
further agrees to defend, protect, indemnify and hold harmless UCI from
any and all liability associated with its failure to comply with the
foregoing provisions.
7. The delivery date specified is based on that given UCI by the
"Manufacturer" or "Seller" of the equipment. UCI shall use its best
efforts to obtain delivery to Customer on or before such date.
Accordingly, the delivery date is subject to being extended for an
additional period or periods of time. In the event that the
"Manufacturer" or "Seller" of the equipment cannot deliver the equipment
within said time, as may be extended, the Customer's acceptance of the
quotation and any agreement executed pursuant thereto, shall be
automatically canceled without liability to either party, except that
Customer agrees to reimburse UCI for any and all direct costs or
penalties incurred by UCI in reliance upon Customer's acceptance of the
quotation. In any event, it is understood and agreed that UCI shall have
no liability to Customer for loss or damage arising out of or connected
with such late delivery or cancellation.
8. The equipment specified herein shall be ordered for Customer by UCI from
the "Manufacturer" or "Seller" of the equipment upon Customer's
acceptance of the quotation. In the event Customer cancels such order
with UCI, Customer shall be liable to UCI for such penalties and costs as
may be incurred by UCI as a result of such cancellation.
9. In the event UCI is required to provide property damage insurance on the
equipment rented hereunder, as set out on page one (1) of the quotation,
Customer shall be liable to UCI for the deductible required by the policy
of insurance in the event of a loss of the equipment. The current
deductible amount shall be supplied to Customer upon request.
10. All quotations are subject to the terms of credit being approved as to
this transaction by Universal Compression, Inc.'s Credit Department,
Houston, Texas.
11. This Agreement may be assigned in whole or in part by UCI. Customer
shall not assign this Agreement in whole or in part to any other party
whatsoever without the prior written consent of UCI, which shall not be
unreasonably withheld.
12. Customer agrees to cooperate with UCI in connection with any proposed
financing relating to the Equipment leased, and/or rental payments due,
hereunder, and agrees to execute any and all documents and agreements,
including without limitation any assignment reasonably requested by UCI
and/or any lender in connection therewith.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
XXXXXX OIL COMPANY UNIVERSAL COMPRESSION, INC.
By: _______________________________ By: _________________________
Name: _____________________________ Name: Xxxx X. Xxxxxxxx
Title: ____________________________ Title: Vice President
EXHIBIT "A"
TO
MASTER RENTAL CONTRACT
RENTAL QUOTATION AND CONTRACT
(Compressors Only)
EQUIPMENT DESCRIPTION
(See Attached)
DESIGN CONDITIONS AND EQUIPMENT PERFORMANCE
The Equipment is presently on location. [Design conditions to be specified.]
RENTAL AND TERMS
(Compressors)
Monthly Rental Rate: $94,000 Term: Five (5) years
To Be Furnished By
Universal Customer
Maintenance (parts & labor) Per attached Agreement
Lubricants (oil & antifreeze) X
Operation X
Transportation (N/A) X
Transportation (return to Farmington, New Mexico) X
This quotation as a result of acceptance by Customer is subject to approval by
Universal Compression's general office as set forth below, at which point it
becomes a contract between the parties hereto and subject to the terms and
conditions of the Master Rental Contract between Universal Compression, Inc. and
Xxxxxx Oil Company.
Submitted by: _______________________________
Name: Xxxx X. Xxxxxxxx
Title: Vice President
Accepted this ___ day of September, 1999. Accepted this __ day of September,
1999.
XXXXXX OIL COMPANY UNIVERSAL COMPRESSION, INC.
By: _________________________________ By: ___________________________________
Name: _______________________________ Name: _________________________________
Title: _____________________________ Title: _______________________________
EXHIBIT "B"
TO
MASTER RENTAL CONTRACT
RENTAL QUOTATION AND CONTRACT
(Plant Only)
EQUIPMENT DESCRIPTION
(See Attached)
DESIGN CONDITIONS AND EQUIPMENT PERFORMANCE
The Equipment is presently on location. [Design conditions to be specified.]
RENTAL AND TERMS
(Treatment Facility)
Monthly Rental Rate: $31,750 Term: Five (5) years
To Be Furnished By
Universal Customer
Maintenance (parts & labor) X
Lubricants (all) X
Operation X
Transportation (N/A)
Transportation (return to Farmington, New Mexico) X
This quotation as a result of acceptance by Customer is subject to approval by
Universal Compression's general office as set forth below, at which point it
becomes a contract between the parties hereto and subject to the terms and
conditions of the Master Rental Contract between Universal Compression, Inc.
and Xxxxxx Oil Company.
Submitted by: _______________________________
Name: Xxxx X. Xxxxxxxx
Title: Vice President
Accepted this __ day of September, 1999. Accepted this __ day of September,
1999.
XXXXXX OIL COMPANY UNIVERSAL COMPRESSION, INC.
By: _________________________________ By: ___________________________________
Name: _______________________________ Name: _________________________________
Title: _____________________________ Title: _______________________________
