Terms and Conditions Under Which Drill Pipe, Tools and Other Equipment are Rented and Sold,

1. Term of Agreement:
   The rental and term of this lease begins when the drill pipe, tools or other equipment leaves the Lessor’s yard and the rental continues until the drill pipe, tools other equipment is returned hereto and accepted by an authorized official of the Lessor.


2. Rental Charges: Lessee will pay Lessor, and Lessor will accept as payment from Lessee, as rental for leased drill pipe, tools or other equipment, the rental charges specified in Lessor’s scheduled rental rates. All prices are subject to change without notice.
   
   Lessee agrees to pay rent when due irrespective of any claims, demands, set-offs, defenses, actions, suits or proceedings that it may have or assert against Lessor or any supplier or manufacturer of drill pipe, tools or other equipment or any portion thereof.
   
   Scheduled rental rates for drill pipe apply for workover of deepening job inside casing only. Apply for rate when drill is needed for drilling well top to bottom. If it is necessary to sub-rent equipment from third parties at a higher rate, their rate will be charged. Standby rates will be charged on individual tools at current rates.


3. Transportation Charges: All transportation charges including freight, rail or air express and drayage charges must be paid by Lessee.


4. Well Conditions: Well conditions which prevent satisfactory operation of drill pipe, tools or other equipment do not relieve Lessee of his responsibility for rental charges.


5. Terms of Payment: Net Cash — No Discount. All rental charges or other payments due or to become due hereunder shall be due and payable at 9525 – 62 Avenue, Edmonton, Alberta, thirty (30) days from the date of the invoice. The maximum legal rate of interest is applicable to unpaid invoices commencing thirty (30) days after the due dates thereof. If the invoiced amount is not paid when due and the account is placed in the hands of an attorney for collection or if suit is filed to collect the account, or any part thereof, Lessee (or Purchaser asthe case may be) agrees to additionally pay all costs and a reasonable sum as attorney’s fees.
6. Return of Equipment: Lessee warrants, upon acceptance of delivery of any drill pipe, tools or other equipment that it is in proper operating order and appearance and that, as between Lessee and Lessor, that the equipment was delivered in good repair. Lessee assumes all responsibility for equipment while out of the possession of the Lessor and agrees to return such equipment to the Lessor in as good condition as it was at the effective date of the lease, ordinary wear and tear from a reasonable use thereof and damage by public enemy alone excepted. Lessee will pay for any repairs required to place the equipment in its original condition.


7. Damaged or Lost Equipment: All drill pipe, tools or other equipment lost or damaged beyond repair will be paid for by the Lessee at the current catalogue price (replacement cost new). In the event Lessee shall return such equipment to the Lessor in a damaged but repairable condition, Lessee shall have the option to secure and pay for all repair necessary to restore such equipment to its original condition or in the alternative, to appoint Lessor agent for the sole purpose of securing the repairs necessary on behalf of Lessee.
   
   In the event Lessee shall appoint Lessor agent for the sole purpose of securing the necessary repairs, Lessee agrees to pay Lessor for said repairs in accordance with the Terms of Payment set forth herein. Accrued rental charges cannot be applied against the purchase price or cost of repairs of such damaged or lost equipment. Equipment billed as a sale after having been damaged beyond repair will be held for the purchaser for sixty (60) days. If not claimed at the expiration of that period, title to said equipment will be subject to disposal at the discretion of said Lessor.


8. Default: If Lessee breaches his obligation to pay rental charges when due or if Lessee breaches any of the terms or conditions hereof or if Lessee becomes insolvent, bankrupt or his financial responsibility becomes impaired or if the equipment of any part of it is abused, illegally used or misused or whenever Lessor deems the rentals or equipment insecure, all rental charges and/or repair charges and/or other claims of indebtedness arising hereunder shall at the option of Lessor and without notice be accelerated and become due and payable forthwith, and Lessee authorizes Lessor to enter with or without legal process any premises where equipment may be and take possession thereof without being liable to any suit or action or proceeding by Lessee. Upon Lessor’s re taking said possession of the said equipment the rental agreement shall terminate but said termination shall be without prejudice to any right or claim for arrears of rental, if any, or for damages on account of any preceding breaches of the terms and conditions hereof.


9. Exclusion of Liability: All equipment is furnished and leased to Lessee at Lessee’s sole riskand expense. Lessor assumes no liability of any type, nature or degree, to any source for equipment leased to Lessee. Lessor shall not be responsible for personal injury or death, property damage (real or personal), delays, economic loss or direct, indirect, incidental or consequential damages or other claims or liabilities of whatsoever nature, from whatsoever source, arising out of or in any manner related to the condition, use, operation or possession of the equipment while leased by Lessee. Lessee shall be solely responsible for damages, injuries, deaths, delays or losses of any kind or nature, from anysource, occasioned by or related to the use of said equipment, whether used or operated by Lessee, its agents, employees or sub-contractors, and their employees or whether resulting from the acts or omissions of Lessor or any of its agents, servants, employees or otherwise.


10. Indemnity by Lessee: Lessee agrees to protect, indemnify and hold harmless the Lessor, its officers, agents and employees, from every kind and character of damages, losses, expenses, demands, claims and causes of action arising in favor of Lessee, its officers, agents, employees and its sub-contractors, their officers, agents, employees or any other persons, firm or corporation whatsoever, on account of personal injuries, death claims or damages to property arising from any cause whatsoever growing out of or incident to such equipment rental whether such injuries, death or damage result from or are claimed to have resulted from the negligence of the Lessor, its officers, agents, or employees, the negligence of the Lessee, its officers, agents, or employees, or its subcontractors, their officers, agents or employees and Lessee at its own expense shall defend any suit or action brought against the Lessor based on any alleged injury, death or damage, and shall pay all damages, costs and expenses, including attorney’s fees in connection therewith or in any manner resulting there from.
11. Examination and Inspection: Lessee agrees to afford Lessor access to the leased equipment for the purpose of examination and inspection at all reasonable times during the term hereof.


12. Disclaimer: Lessor makes no representation or warranty of any kind, express or implied, with respect to drill pipe, tools or other equipment. Lessee understands and agrees that no warranty is to be implied with respect to the condition of the equipment, its merchantability, the fitness of the equipment for a particular purpose, or with respect to infringement or the like, the Lessor shall not in any event be liable for any special, direct, indirect, incidental or consequential damages. Nothing herein contained shall be construed as depriving the Lessee of whatever rights, if any, Lessee may have against the supplier or manufacturer of the equipment.

Terms: Net Cash — No Discount. All charges are due and payable at 9525 – 62 Avenue, Edmonton, Alberta, on or before the thirtieth (30th) day following the date of invoice with interest charged after thirty (30) days at the rate of 24 percent per annum or 2 percent per month.

13.3% environmental charge will apply to all equipment supplied to a maximum of $950 per invoice.