Exhibit 10.1

 

NON-EXCLUSIVE AIRCRAFT DRY-LEASE AGREEMENT

 

Dated as of the 1st day of January, 2011

 

by and between

 

BH Holdings LLC,

as Lessor,

 

and

 

Intrepid Potash, Inc

as Lessee,

 

Canadair, Ltd. model CL-600-2B16 aircraft

 

U.S. registration number N518CL

 

INSTRUCTIONS TO COMPLY WITH TRUTH-IN-LEASING REQUIREMENTS

 

1.                                       Mail a copy of the lease to the
following address via certified mail, return receipt requested, immediately upon
execution of the lease (14 C.F.R. 91.23 requires that the copy be sent within
twenty-four hours after it is signed):

 

Federal Aviation Administration
Aircraft Registration Branch
ATTN:  Technical Section
P.O. Box 25724
Oklahoma City, Oklahoma 73125

 

2.                                       Telephone and notify the nearest Flight
Standards District Office as contemplated in 14 CFR §91.23.

 

3.                                       Carry a copy of the lease in the
aircraft at all times

 

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This AIRCRAFT LEASE AGREEMENT (this “Agreement”) is entered into by and between
BH Holdings LLC, a Colorado limited liability company, as lessor (“Lessor”), and
Intrepid Potash, Inc., a Delaware corporation, as lessee (“Lessee”) (Lessor and
Lessee are collectively the “Parties”), and is effective as of January 1, 2011.

 

W I T N E S S E T H:

 

WHEREAS, Lessor is the owner of the Aircraft defined below;

 

WHEREAS, Lessee desires to lease from the Lessor, and Lessor desires to lease to
Lessee, the Aircraft, without crew and on a non-exclusive basis, pursuant to the
terms and conditions of this Agreement; and

 

WHEREAS, Lessee intends to operate the Aircraft under Part 91 of the FARs, as
defined herein.

 

NOW, THEREFORE, in consideration of the mutual promises herein contained and
other good and valid consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.             DEFINITIONS

 

1.1   The follow terms shall have the meaning set forth herein:

 

“Aircraft” means the Airframe, the Engines, Auxiliary Power Unit(s) the Parts,
and the Aircraft Documents.  The Engines shall be deemed part of the “Aircraft”
whether or not from time to time attached to the Airframe or removed from the
Airframe.

 

“Aircraft Documents” means all flight records, maintenance records, historical
records, modification records, overhaul records, manuals, logbooks,
authorizations, drawings and data relating to the Airframe, any Engine, or any
Part, or that are required by Applicable Law to be created or maintained with
respect to the maintenance and/or operation of the Aircraft.

 

“Airframe” means that certain Canadair, Ltd. model CL-600-2B16 aircraft bearing
U.S. registration number N518CL, and manufacturer’s serial number 5180, together
with any and all Parts (including, but not limited to, landing gear and
auxiliary power units but excluding Engines or engines) so long as such Parts
shall be either incorporated or installed in or attached to the Airframe.

 

“Applicable Law” means, without limitation, all applicable laws, treaties,
international agreements, decisions and orders of any court, arbitration or
governmental agency or authority and rules, regulations, orders, directives,
licenses and permits of any governmental body, instrumentality, agency or
authority, including, without limitation, the FAR and 49 U.S.C. § 41101, et
seq., as amended.

 

“DOT” means the United States Department of Transportation or any successor
agency.

 

“Engines” means two (2) GE model CF-34-1A engines bearing manufacturer’s serial
numbers 807282 and 807284, together with any and all Parts so long as the same
shall be either incorporated or installed in or attached to such Engine.  Any
engine which may be, from time to time, substituted for an Engine shall be
deemed to be an Engine and subject to this Agreement for so long as it remains
attached to the Airframe.

 

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“FAA” means the Federal Aviation Administration or any successor agency.

 

“FAR” means collectively the Aeronautics Regulations of the FAA and the DOT, as
codified at Title 14, Parts 1 to 399 of the United States Code of Federal
Regulations.

 

“Fixed Costs” means the fixed costs and expenses incurred in relation to the
Aircraft, including those costs and expenses which are set forth on Schedule C
attached hereto.

 

“Flight Hour” means any hour or any part thereof measured from when the Aircraft
takes off until the Aircraft lands; Flight Hour shall be calculated to the
nearest one-tenth of one hour.

 

“FSDO Notice” means an FSDO Notification Letter in the form of Schedule B
attached hereto.

 

“Lien” means any mortgage, security interest, lease or other charge or
encumbrance or claim or right of others, including, without limitation, rights
of others under any airframe or engine interchange or pooling agreement, except
for mechanics liens to be discharged in the ordinary course of business.

 

“Home Base” means Centennial Airport, Englewood, Colorado.

 

“Parts” means all appliances, components, parts, instruments, appurtenances,
accessories, furnishings or other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine and includes replacement
parts.

 

“Variable Costs” means the variable costs and expenses incurred in relation to
the Aircraft, including “Specific Variable Costs” and “Averaged Variable Costs”
as defined on Schedule D attached hereto.

 

2.             LEASE AND ACCEPTANCE OF THE AIRCRAFT

 

2.1   Lease.  Lessor hereby leases the Aircraft to Lessee, and Lessee hereby
leases the Aircraft from Lessor on the terms and conditions of this Agreement.

 

2.2   Acceptance.  The Aircraft has been delivered to the Lessee at the Home
Base, on January 1, 2011 (the “Acceptance Date”), as evidenced by the execution
and delivery of an Aircraft Acceptance Receipt, substantially in the form of
Schedule A attached hereto.  With each additional delivery of the Aircraft
hereunder, unless the Lessee notifies the Lessor to the contrary, it shall be
presumed that the Lessee shall have fully inspected the Aircraft having
knowledge that it is in good condition and repair and that Lessee is satisfied
with and has accepted the Aircraft in such condition.

 

3.             TERM, SCHEDULING, AND RENT

 

3.1   Term.  This Agreement shall become effective on the Acceptance Date, and
shall continue in effect for a period of one (1) year, unless terminated sooner
pursuant to the express provisions herein contained, at which time this
Agreement shall automatically be renewed for an additional one (1) year period
indefinitely (the “Term”), except as otherwise provided herein.  Each party
shall have the right to terminate this Agreement, with or without cause, on
thirty (30) days written notice to the other party.

 

3.2   Rent.  Lessee shall pay Lessor the following rent for the use of the
Aircraft:

 

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3.2.1        On a monthly basis, one-third of the estimated monthly Fixed Costs
associated with the operation of the Aircraft, which Fixed Costs may be amended
or supplemented from time to time by the written agreement of the parties.  At
the end of each calendar year, Lessor and Lessee shall adjust the amount owed to
Lessor for Fixed Costs so that Lessee pays Fixed Costs equal to Lessee’s
percentage of the total actual usage of the Aircraft; provided however, Lessee
shall not pay less than twenty-five percent (25%) nor more than fifty percent
(50%) of the annual actual Fixed Costs.  In the event that the amount paid by
Lessee under this Section is less than twenty-five percent (25%) of the annual
actual Fixed Costs the Lessee shall pay the Lessor for such shortfall, and in
the event the amount paid by Lessee under this Section is greater than fifty
percent (50%) of the annual actual Fixed Costs the Lessor shall credit such
overpayment to Lessee to be applied to any amounts due under the terms of this
Agreement.

 

3.2.2        On a monthly basis, the amount of $2,700 for each Flight Hour that
Lessee utilizes the Aircraft, which is the estimated hourly Variable Costs;
provided however, at the end of each calendar year the actual Variable Costs
shall be determined as set forth on Schedule D attached hereto and Lessee shall
pay Lessor for any shortfall and Lessor shall credit to Lessee any overpayment,
and such credit shall be applied to any amounts due under the terms of this
Agreement.

 

3.3   Taxes.

 

3.3.1        Lessee shall be liable for, shall indemnify Lessor from and shall
pay on or before their due dates, all taxes including those assessed or levied
by any federal, state, county, local, airport, district, foreign, or other
governmental authority, including, without limitation, sales taxes, use taxes,
retailer taxes, federal air transportation excise taxes, federal aviation fuel
excise taxes, gasoline sales taxes, personal property taxes, business personal
property taxes, and assessments, or other taxes or governmental charges imposed
on or in connection with Lessee’s leasehold interest in the Aircraft, rental
paid under this Agreement or the possession, use and/or operation of the
Aircraft under this Agreement; provided, however, that nothing contained herein
shall be construed to require Lessee to pay or reimburse Lessor for (i) any
franchise, personal property or business property taxes imposed on Lessor or
(ii) any other tax, governmental charge or assessment based on Lessor’s
ownership or possession of the Aircraft not related to this Agreement, or
(iii) any tax computed on the basis of Lessor’s income, generally, and/or the
ownership of its assets other than the Aircraft.  Lessor shall promptly notify
Lessee and send Lessee any notices, reports, and inquiries of taxing authorities
concerning any taxes, assessments, fees, or other charges payable by Lessee that
may be received from time to time by Lessor with respect to the Aircraft

 

3.3.2        If any taxing authority requires that a tax required to be paid by
Lessee hereunder be paid to the taxing authority directly by Lessor, Lessee
shall, within thirty (30) days of his receipt of written notice from Lessee, pay
to Lessor the amount of such tax.

 

3.4   Scheduling.  Lessee acknowledges and agrees that the Aircraft shall not be
available for use by Lessee during periods when Lessor is using the Aircraft or
has reserved the Aircraft for use.

 

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4.             REPRESENTATIONS AND WARRANTIES

 

4.1   Representations and Warranties of Lessee.  Lessee represents and warrants
as of the date hereof and during the entire Term hereof as follows:

 

4.1.1        All pilots shall have at least the minimum total pilot hours
required by any policy of insurance covering the Aircraft and will meet or
exceed all requirements under any policy of insurance covering the Aircraft, and
all Applicable Law.

 

4.1.2        Lessee is a validly organized corporation under the laws of the
State of Delaware, and the person executing on behalf of Lessee has full power
and authority to execute this Agreement on behalf of Lessee and by such
execution shall bind Lessee under this Agreement.

 

4.1.3        No action, suit, or proceeding is currently pending or threatened
against Lessee which shall in any material way affect Lessee’s financial status
as of the date thereof, or impair the execution, delivery, or performance by
Lessee of this Agreement.

 

4.1.4        The execution and delivery of this Agreement by Lessee and the
performance of its obligations hereunder have been duly authorized by all
necessary corporate or limited liability company action, and do not conflict
with any provision of Lessee’s articles of organization, bylaws, operating
agreement, any governmental regulations, or any other agreements that Lessee may
now have with other parties.

 

4.1.5        Lessee is not subject to any restriction, which with or without the
giving of notice, the passage of time, or both, prohibits or would be violated
by or be in conflict with this Agreement.

 

4.1.6        Lessee will not permit the Aircraft to be operated in any unsafe
manner or contrary to any manual or instructions for the Aircraft or in
violation of the terms or conditions of any insurance policy covering the
Aircraft or any applicable statute, regulation, ordinance, or other law.

 

4.1.7        Lessee is leasing the Aircraft for either:

 

(a)          the transportation of Lessee’s officers, employees, consultants,
guests and property where such transportation is within the scope of or
incidental to Lessee’s business.

 

(b)         the personal transportation of Lessee and Lessee’s guests where no
charge, assessment or fee is made for such transportation; or

 

(c)          such other lawful operations as permitted pursuant to Part 91 of
the FAR.

 

4.1.8        Lessee shall not make the Aircraft available for charter or any
operation which could be considered commercial air transportation or air
transportation for hire as set out in the FAR.

 

4.2   Representations and Warranties of Lessor.  Lessor represents and warrants
as of the date hereof and during the entire Term hereof as follows:

 

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4.2.1        Lessor is a validly organized limited liability company under the
laws of the State of Colorado, and the person executing on behalf of Lessor has
full power and authority to execute this Agreement on behalf of Lessor and by
such execution shall bind Lessor under this Agreement.

 

4.2.2        No action, suit, or proceeding is currently pending or threatened
against Lessor which shall in any material way affect Lessor’s financial status
as of the date thereof, or impair the execution, delivery, or performance by
Lessor of this Agreement.

 

4.2.3        The execution and delivery of this Agreement by Lessor and the
performance of its obligations hereunder have been duly authorized by all
necessary limited liability company action, and do not conflict with any
provision of Lessor’s articles of organization, operating agreement, any
governmental regulations, or any other agreements that Lessee may now have with
other parties.

 

4.2.4        Lessor is not subject to any restriction, which with or without the
giving of notice, the passage of time, or both, prohibits or would be violated
by or be in conflict with this Agreement.

 

5.             REGISTRATION, USE, OPERATION, MAINTENANCE AND POSSESSION

 

5.1   Title and Registration.  Lessee acknowledges that Lessor owns and will
continue to own during the term hereof, all legal, beneficial, and equitable
title to the Aircraft.  Lessee shall undertake to protect or preserve Lessor’s
title to the Aircraft and will comply with Lessor’s reasonable requests in this
regard.

 

5.2   Use and Operation.

 

5.2.1        Lessee shall operate the Aircraft in accordance with Part 91 of the
FAR and shall not operate the Aircraft as a commercial operator, as a common
carrier, or otherwise for compensation or hire except to the extent permitted
under Sections 91.321 and 91.501 of the FAR, if applicable.  Lessee shall be
solely and exclusively responsible for the use, operation and control of the
Aircraft at all times under this Agreement.  Lessee agrees not to operate or
locate the Airframe or any Engine, or permit the Airframe or any Engine to be
operated or located, in any area excluded from coverage by any insurance policy
in effect or required to be maintained hereunder with respect to the Airframe or
Engines, or in any war zone.  Lessee agrees not to operate the Airframe or any
Engine or permit the Airframe or any Engine to be operated for a purpose for
which the Aircraft is not designed or reasonably suitable, in violation of any
Applicable Law, or contrary to any manufacturer’s operating manuals or
instructions.

 

5.2.2        Lessee will not base the Aircraft, or permit it to be based,
outside the limits of the United States of America, without the written consent
of Lessor.

 

5.2.3        Lessee shall maintain all records and logs required by the DOT or
the FAA with regard to its operations hereunder and shall make such records
available to Lessor upon reasonable. Additionally, upon termination of this
Agreement, such records shall be delivered to Lessor.

 

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5.3           Maintenance.  Lessor shall be responsible for the all major
servicing, repair, inspection, maintenance and overhaul to be done to the
Aircraft during the Lease Term, including all ferry flight and transportation
charges on replacement parts and accessories.  All inspections, repairs,
modifications, maintenance, and overhaul work to be accomplished by Lessor will
be performed by personnel certificated to perform such work and will be
performed in accordance with the standards set by the FAR.  Lessor shall
maintain all records, logs and other materials required by the DOT or the FAA
with respect to such servicing, repair, inspection, maintenance and overhaul of
the Aircraft.  Such records will be made available for examination by Lessee,
upon reasonable notice to Lessor.

 

5.3.1        Lessor, subject to the terms and conditions of this Agreement, at
its own cost and expense, shall service, repair, inspect and maintain the
Aircraft during the Lease Term (i) to keep the Aircraft in as good operating
condition and appearance as exist at Acceptance Date, normal wear and tear
excepted, and (ii) to keep the Aircraft in such operating condition to enable
the airworthiness certification of the Aircraft to be maintained in good
standing at all times during the Lease Term under all applicable governmental
rules and regulations and as required by the aircraft operating manual.

 

5.3.2        During the Lease Term, Lessor shall replace or have repaired at its
own expense certain appliances, parts, instruments, appurtenances, accessories,
furnishings, and other equipment or components of the Aircraft that may have
become worn out, lost, stolen, destroyed, damaged or otherwise rendered unfit
for use for any reason whatsoever.  All such replacements or repairs installed
on or incorporated into the Aircraft shall upon such installation or
incorporation become the property of Lessor.

 

5.3.3        Lessor may from time to time, at its option, perform any act which
Lessee agrees hereunder to perform under this Agreement and which Lessee shall
fail to perform after being requested to so perform by Lessor.  Lessee shall
reimburse Lessor for any such expenses (the “Lessee Expenses”).  Lessor may from
time to time take any other action which Lessor may reasonable determine
necessary for the maintenance, preservation or protection of the Aircraft.

 

5.4           Operational Control.  Lessee shall exercise operational control as
defined in Section 1.1 of the FARs (“Operational Control”) of the Aircraft at
all times during the Term.  Further, Lessee shall have exclusive possession,
command, and control of the Aircraft, and the pilots shall be under the
exclusive command of Lessee.  Lessee shall, (i) at its sole expense, locate and
retain (either through direct employment or contracting with an independent
contractor for flight services) a duly qualified flight crew (the “Flight
Crew”), and select the Pilot In Command, as defined in FAR §1.1, and (ii) be
responsible for all other physical and technical aspects of operating the
Aircraft, including, without limitation, flight following, dispatch, flight
planning, flight scheduling, communications, weather, weight and balance and
fueling.  The Flight Crew shall be appropriately certified, rated and trained in
compliance with, (i) all applicable FARs and (ii) the terms and conditions of
any and all insurance.

 

5.5           Authority of Pilot in Command.   Notwithstanding that Lessee shall
have operational control of the Aircraft during any flight conducted by Lessee,
the parties acknowledge that pursuant to Section 91.3 of the FAR, the Pilot in
Command of such flight is responsible for, and is obligated and entitled to
exercise final authority over, the safe operation of the flight, and the

 

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parties agree that the Pilot in Command may, in the exercise of such authority,
refuse to commence such flight, terminate such flight, or take any other
flight-related action that, in the judgment of the Pilot in Command, is required
to ensure the safety of the Aircraft, the flight crew, the passengers, and any
other persons and/or property.

 

5.6           Right to Inspect.  Lessor and/or Lessor’s agents shall have the
right to inspect the Aircraft or the Aircraft Documents at any reasonable time,
upon giving Lessee reasonable notice, to ascertain the condition of the Aircraft
and to satisfy Lessor that the Aircraft is being properly repaired and
maintained in accordance with the requirements of this Agreement.  All required
repairs shall be performed as soon as practicable after such inspection.

 

5.7           Modification of Aircraft.  Lessee shall not make or permit to be
made any modification, alteration, improvement, or addition to the Aircraft
without the express written consent of Lessor.  To the extent any such
modifications, alterations, improvements, or additions are made by Lessee to the
Aircraft they shall be accomplished at the sole cost and expense of Lessee at a
facility approved by the Lessor, and shall be the property of Lessor.

 

5.8           Fines, Penalties, and Forfeitures.  Lessee shall be solely
responsible for any fines, penalties, or forfeitures relating in any manner to
the operation, or use of the Aircraft by Lessee under this Agreement.  If such
fines or penalties are imposed on Lessor and paid by Lessor, Lessee will
reimburse Lessor for the amount thereof within thirty (30) days of receipt by
Lessee of written demand from Lessor.

 

6.             RETURN OF AIRCRAFT

 

6.1           Return.  Lessee agrees to return the Aircraft, at the conclusion
of each flight or series of flights conducted by Lessee under this Agreement and
at the completion of the Term, to Lessor at the Home Base or such other location
as is mutually agreeable to Lessor and Lessee, free and clear of all liens and
encumbrances created by Lessee.  The Aircraft will be in as good of operating
condition as exists at the Acceptance Date, normal wear and tear excepted,
undamaged, all systems functioning properly.  The Aircraft shall have a current
and valid Certificate of Airworthiness (Form FAA 8100-2), shall be airworthy and
otherwise maintained in accordance with manufacturer’s specifications and the
FARs.  Lessee will indemnify Lessor against any claim for loss or damage
occurring prior to the actual physical delivery of the Aircraft to Lessor. Upon
the termination of this Agreement, the Lessee and Lessor will execute an
appropriate lease termination in a form acceptable to the Lessor and recordable
with the FAA.

 

7.             LIENS

 

7.1           Lessee Liens.  Lessee shall ensure that no Liens are created or
placed against the Aircraft by Lessee or third-parties as a result of Lessee’s
actions.  Lessee shall notify Lessor promptly upon learning of any Liens not
permitted by these terms.  Lessee shall, at its own cost and expense, take all
such actions as may be necessary to discharge and satisfy in full any such Lien
promptly after the same becomes known to it.

 

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8.             INSURANCE

 

8.1           Liability.  Lessor shall maintain, or cause to be maintained,
bodily injury and property damage, liability insurance in an amount no less than
Three Hundred Million United States Dollars (US$300,000,000) Combined Single
Limit.  Additionally, Lessor shall maintain Medical Expense Coverage — Each
Person in an amount no less than Fifty Thousand United States Dollars (US$
50,000).  Said policy shall be an occurrence policy naming Lessee and Lessor as
named insureds.

 

8.2           Hull.  Lessor shall maintain, or cause to be maintained, all risks
aircraft hull insurance in the amount of Eight Million Five Hundred Thousand
United States Dollars (US$8,500,000), and such insurance shall name Lessor and
any first lien mortgage holder as loss payees as their interests may appear.

 

8.3           Insurance Certificates; Deductible.  Lessor will provide Lessee
with a Certificate of Insurance at any time as Lessee may request.  Lessee will
also bear the cost of paying any deductible amount on any policy of insurance in
the event of a claim or loss occurring while Lessee is in possession of the
Aircraft.

 

8.4           Conditions of Insurance.  Each insurance policy required under
this Section 8 shall insure the interests of Lessor regardless of any breach or
violation by Lessee of any warranties, declarations or conditions contained in
such policies.  Each such policy shall be primary without any right of
contribution from any insurance maintained by Lessor or Lessee and shall
expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured.  Each such policy shall insure Lessee’s contractual
liability to Lessor contained in this Agreement (with a Breach of Warranty
endorsement).  The geographic limits, if any, contained in each and every such
policy of insurance shall include at the minimum all territories over which
Lessee will operate the Aircraft for which the insurance is placed.  Each policy
shall contain an agreement by the insurer that notwithstanding the lapse of any
such policy for any reason or any right of cancellation by the insurer or
Lessee, whether voluntary or involuntary, such policy shall continue in force
for the benefit of Lessor for at least thirty (30) days (or such lesser time as
may be permitted in the case of War Risk Insurance, if such War Risk Insurance
so requires) after written notice of such lapse or cancellation shall have been
given by insured to Lessor.  Each policy shall contain an agreement by the
Insurer to provide Lessor with thirty (30) days’ advance written notice of any
deletion, cancellation or material change in coverage.  Each policy shall
contain a waiver by the underwriter thereof of any right of subrogation against
Lessor.

 

8.5           Insurance Companies.  Each insurance policy required under this
Section 8 shall be issued by a company or companies who are qualified to do
business in the United States and who (i) will submit to the jurisdiction of any
competent state or federal court in the United States with regard to any dispute
arising out of the policy of insurance or concerning the parties herein; and
(ii) will respond to any claim or judgment against Lessor in any competent state
or federal court in the United States or its territories

 

8.6           Approval of the Agreement.  Lessor will submit this Agreement for
approval to the insurance carrier for each policy of insurance on the Aircraft.

 

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9.                                      DEFAULTS AND REMEDIES

 

9.1         Upon the occurrence of any failure of Lessee to duly observe or
perform any of its obligations hereunder, and at any time thereafter so long as
the same shall be continuing, Lessor may, at its option, declare in writing to
the Lessee that this Agreement is in default; and at any time thereafter, so
long as Lessee shall not have remedied the outstanding default, Lessor may
cancel, terminate, or rescind this Agreement and take possession of the
Aircraft.

 

10.                               NOTICES

 

10.1                           All communications, declarations, demands,
consents, directions, approvals, instructions, requests and notices required or
permitted by this Agreement shall be in writing and shall be deemed to have been
duly given or made when delivered personally or transmitted electronically by
e-mail or facsimile, receipt acknowledged, or in the case of documented
overnight delivery service or registered or certified mail, return receipt
requested, delivery charge or postage prepaid, on the date shown on the receipt
therefor, in each case at the address set forth below:

 

Lessor

 

Lessee

 

 

 

Name:  BH Holdings LLC

 

Name:

Intrepid Potash, Inc.

Address:

700 17th Street, Suite 1750

 

Address:

707 17th Street, Ste. 4200

 

Denver, CO 80202

 

 

Denver, CO 80202

 

 

 

Phone: (303) 298-7262

 

Phone:

(303) 296-3006

Fax: (303) 623-3021

 

Fax:

(303) 298-7502

Email: vsirhall@ondrishcpa.com

 

Email:

martin.litt@intrepidpotash.com

Attention: Ginny Sirhall

 

Attention: General Counsel

 

11.                               EVENT OF LOSS AND INDEMNIFICATION

 

11.1                           Notification of Event of Loss.  In the event any
of the following occurs while the Aircraft is in the possession or control of
the Lessee under this Agreement: (i) damage to or destruction of, the Aircraft,
(ii) any whole or partial loss of the Aircraft, including, without limitation,
any loss resulting from the theft, condemnation, confiscation or seizure of, or
requisition of title to or use of, the Aircraft by private persons or by any
governmental or purported governmental authority; Lessee shall immediately:

 

11.1.1                  report the event of loss to Lessor, the insurance
company or companies,  any and all applicable governmental agencies, and to any
other person or entity designated by the Lessor; and

 

11.1.2                  furnish such information and execute such documents as
may be required and necessary to collect the proceeds from any insurance
policies.

 

11.2                           Repair or Termination.  In the event the Aircraft
is partially destroyed or damaged, Lessor shall have the option, in its sole
discretion, to either (i) fully repair the Aircraft in order that it shall be
placed in at least as good condition as it was prior to such partial destruction
or damage; or (ii) terminate this Agreement.  Within five (5) days after the
date of such partial destruction or damage, Lessor shall give written notice to
Lessee specifying whether Lessor has elected to fully repair the Aircraft or to
terminate this Agreement (such termination shall be

 

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effective immediately upon such written notice from Lessor to Lessee setting
forth Lessor’s election to so terminate this Agreement).  To the extent Lessor
elects to repair the Aircraft, Lessee has the option to accept such election or
to terminate this Agreement.  Such Lessee election shall be communicated to
Lessor in writing within five (5) days of receipt of Lessor’s election to
repair.  To the extent both Lessor and Lessee consent to the repair of the
Aircraft, rent shall abate during the period of time the Aircraft is being
repaired.  This section does not limit the remedies available to the parties by
this Agreement or applicable law.

 

11.3                           Indemnification.

 

11.3.1                  Lessee hereby releases, and shall defend, indemnify and
hold harmless Lessor and Lessor’s shareholders, members, directors, officers,
managers, employees, successors and assigns (collectively the “Lessor
Indemnitees”), from and against, any and all claims, damages, losses,
liabilities, demands, suits, judgments, causes of action, civil and criminal
legal proceedings, penalties, fines, and other sanctions, and any attorneys’
fees and other reasonable costs and expenses, directly or indirectly arising
from this Agreement, and/or Lessee’s operation, storage, or other use of the
Aircraft (“Lessor Losses”); provided however, such indemnification does not
apply to the extent of any Lessor Losses arising from or related to actions or
omissions of any Lessor Indemnitee.

 

11.3.2                  Lessor hereby releases, and shall defend, indemnify and
hold harmless Lessee and Lessee’s shareholders, members, directors, officers,
managers, employees, successors and assigns (collectively the “Lessee
Indemnitees”), from and against, any and all claims, damages, losses,
liabilities, demands, suits, judgments, causes of action, civil and criminal
legal proceedings, penalties, fines, and other sanctions, and any attorneys’
fees and other reasonable costs and expenses, directly or indirectly arising
from or related to any claims arising from or related to Lessor’s operation,
maintenance, storage, or other use of the Aircraft (“Lessee Losses”), provided
however, such indemnification does not apply to the extent of any Lessee Losses
arising from or related to actions or omissions of any Lessee Indemnitee.

 

11.4                           FSDO Notice.  Lessee shall provide notice to the
applicable FAA Flight Standards District Office as contemplated by 14 CFR
Section 91.23 and may, at its option, provide such notice by telephone or by
completing the FSDO Notice attached hereto as Schedule B and delivering the
completed FSDO Notice by facsimile to the applicable FSDO office.

 

12.                               MISCELLANEOUS

 

12.1                           Entire Agreement.  This Agreement, and all terms,
conditions, warranties, and representations herein, are for the sole and
exclusive benefit of the signatories hereto.  This Agreement constitutes the
entire agreement of the parties and supersedes all prior oral or written
agreements, understandings, statements, representations, commitments, promises,
and warranties made with respect to the subject matter of this Agreement
(including without limitation that certain Aircraft Dry Lease effective June 12,
2008, by and between Lessor and Lessee, which has been terminated).

 

12.2                           Prohibited and Unenforceable Provisions.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the

 

11

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extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

 

12.3                           Enforcement.  This Agreement, including all
agreements, covenants, representations and warranties, shall be binding upon and
inure to the benefit of, and may be enforced by Lessor, Lessee, and each of
their successors, assigns, agents, servants and personal representatives.

 

12.4                           Counterparts.  This Agreement may be executed by
the parties hereto in two (2) separate counterparts, each of which when so
executed and delivered shall be an original, and both of which shall together
constitute but one and the same instrument.

 

12.5                           Amendments.  No term or provision of this
Agreement may be amended, changed, waived, discharged, or terminated orally, but
only by an instrument in writing signed by Lessor and Lessee.

 

12.6                           No Waiver.  No delay or omission in the exercise
or enforcement or any right or remedy hereunder by either party shall be
construed as a waiver of such right or remedy.  All remedies, rights,
undertakings, obligations, and agreements contained herein shall be cumulative
and not mutually exclusive, and in addition to all other rights and remedies
which either party possesses at law or in equity.

 

12.7                           No Assignments.  Neither party may assign its
rights or obligations under this Agreement without the prior written permission
of the other.

 

12.8                           Governing Law.  This Agreement has been delivered
in the State of Colorado and shall in all respects be governed by, and construed
in accordance with, the laws of the State of Colorado, including all matters of
construction, validity and performance, without giving effect to its conflict of
laws provisions.

 

12.9                           Jurisdiction and Venue.  Exclusive jurisdiction
and venue over any and all disputes between the parties arising under this
Agreement shall be in, and for such purpose each party hereby submits to the
jurisdiction of, the state and federal courts serving the State of Colorado.

 

13.                               SECTION 13.  TRUTH IN LEASING

 

13.1                           TRUTH IN LEASING STATEMENT UNDER SECTION 91.23 OF
THE FAR’s.

 

13.1.1                  LESSEE HAS REVIEWED THE AIRCRAFT’S MAINTENANCE RECORDS
AND OPERATING LOGS AND HAS FOUND THAT, DURING THE TWELVE MONTHS PRECEDING THE
DATE OF THIS AGREEMENT, THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER
PART 91 AND PART 43 OF THE FEDERAL AVIATION REGULATIONS.

 

13.1.2                  LESSEE CERTIFIES THAT THE AIRCRAFT WILL BE MAINTAINED
AND INSPECTED UNDER FEDERAL AVIATION REGULATION PART 91 AND PART 43 FOR
OPERATIONS TO BE CONDUCTED UNDER THIS AGREEMENT.

 

12

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13.1.3                  LESSEE CERTIFIES THAT LESSEE AND NOT LESSOR IS
RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THIS AGREEMENT DURING
THIS AGREEMENT TERM.

 

13.1.4                  LESSEE FURTHER CERTIFIES THAT LESSEE UNDERSTANDS ITS
RESPONSIBILITY FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS. 
LESSEE UNDERSTANDS THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL
AND THE PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST
FAA FLIGHT STANDARDS DISTRICT OFFICE.  LESSEE CERTIFIES AND AGREES THAT A TRUE
COPY OF THIS AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT AT ALL TIMES, AND SHALL
BE MADE AVAILABLE FOR INSPECTION UPON REQUEST BY AN APPROPRIATELY CONSTITUTED
INDENTIFIED REPRESENTATIVE OF THE FEDERAL AVIATION ADMINISTRATION.

 

*     *     *     Signature Page Follows     *     *     *

 

13

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IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this Agreement to
be duly executed as of the Acceptance Date.

 

LESSOR:

 

LESSEE:

 

 

 

BH Holdings LLC

 

Intrepid Potash, Inc.

By: Intrepid Oil & Gas, LLC

 

 

 

Its: Manager

 

 

 

 

 

 

 

 

 

 

By:

/s/ Robert P. Jornayvaz III

 

 

 

Print:

Robert P. Jornayvaz III

 

By:

/s/ David W. Honeyfield

Title:

Manager

 

Print:

David W. Honeyfield

Date:

Dec. 9, 2011

 

Title:

President and Chief Financial Officer

 

 

 

Date:

Dec. 1, 2011

 

14

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AIRCRAFT LEASE AGREEMENT

 

Schedule A

 

Aircraft Acceptance Receipt

 

Intrepid Potash, Inc., (“Lessee”) hereby acknowledges delivery and acceptance of
one (1) model Canadair, Ltd. model CL-600-2B16 model aircraft bearing
manufacturer’s serial number 5180 and United States Registration Number N518CL,
together with the two (2) GE model CF-34-1A engines bearing manufacturer’s
serial numbers 807282  and 807284 as more fully described in that Aircraft Lease
Agreement (the “Agreement”) by and between Lessee and BH Holdings (“Lessor”)
dated as of the 1st day of January, 2011.  Lessee hereby accepts custody of the
Aircraft on the date noted below in good working order and airworthy condition
for the purposes set forth in the Agreement.

 

Acceptance as of January 1, 2011

 

Location of Acceptance:

 

 

 

Lessee:

Intrepid Potash, Inc.

 

 

 

 

 

By:

 

 

Print:

David W. Honeyfield

 

Title:

President and Chief Financial Officer

 

 

 

 

Acknowledgment

 

 

 

Lessor: BH Holdings, LLC

 

By: Intrepid Oil & Gas, LLC

 

 

Its: Manager

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Print:

Robert P. Jornayvaz III

 

 

 

 

Title:

Manager

 

 

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AIRCRAFT LEASE AGREEMENT

 

Schedule B

 

FSDO Notification Letter

 

Date:

 

Via Facsimile

Fax:

 

Federal Aviation Administration

 

 

RE:                          14 C.F.R. § 91.23 FSDO Notification;

One (1) Canadair, Ltd model CL-600-2B16 aircraft bearing manufacturer’s serial
number 5180 and United States registration number N518CL (the “Aircraft”)

 

To whom it may concern:

 

Pursuant to the requirements of 14 C.F.R. § 91.23(c)(3), please accept this
letter as notification that the undersigned has leased the Aircraft pursuant to
an Aircraft Lease Agreement effective January 1, 2011 between the undersigned as
Lessee and BH Holdings, LLC as Lessor, and that a flight of the Aircraft under
the lease will depart from                                               
Airport on the        day of                     , 2011, at approximately
            (am / pm) local time.

 

Should you require any additional information, please contact [our] pilot,
                              , at telephone: (        )            -
            .

 

 

Sincerely,

 

 

 

Intrepid Potash, Inc.

 

 

 

 

 

By:

 

 

Print:

David W. Honeyfield

 

Title:

President and Chief Financial Officer

 

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Schedule C

 

Fixed Costs

 

The Estimated Annual Fixed Costs are: $294,953, with a monthly payment of:
$8,193.14, which is equal to 1/3 of the Estimated Annual Fixed Costs.

 

The Fixed Costs are calculated based on the following items and such other items
as agreed to by the Parties to be included as Fixed Costs.

 

1.               Management Fees incurred for the management of the Aircraft,
provided however any such management fees shall not include any amount for the
compensation of pilots, or the reimbursement of any expenses related to pilots.

 

2.               Hangar rent at the Aircraft’s Home Base.

 

3.               Mechanic salary and benefits.

 

4.               Mechanic Training.

 

5.               Mechanic cell phones.

 

6.               Satcom / Air Cell Phone.

 

7.               Aircraft Liability and Hull Insurance.

 

8.               Property taxes on the Aircraft, state and federal registration
fees (if any) and other similar taxes.

 

It is understood and agreed to by the Parties that the Fixed Costs shall not
include any amount of fees, costs, expenses, or salaries relating to
compensation, training or expenses relating to pilots.

 

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Schedule D

 

Variable Costs

 

The Variable Costs are calculated based on the following items and such other
items as agreed to by the Parties to be included as Variable Costs.

 

1.               Specific Variable Costs.  The Specific Variable Costs will be
calculated on a Flight Hour or a per flight basis as applicable:

 

a.               Catering.

b.              Landing fees, ramp fees, parking fees, airport fees, overnight
storage fees incurred away from the Aircraft’s Home Base.

c.               Segment fees and other taxes or charges that are assessed with
regard to or in connection with the operation of the Aircraft under this
Agreement.

d.              Navigational charts (necessary for specific flights).

 

2.               Averaged Variable Costs. For purposes of this Agreement, the
Averaged Variable Costs will be calculated by using the gross dollar amount of
the items set forth below for the calendar year, divided by the total number of
hours the Aircraft has been operated for the calendar year, multiplied by the
total number of Lessee’s Flight Hours.

 

a.               Fuel.

b.              Aircraft Cleaning.

c.               Aircraft Parts.

d.              Maintenance.

e.               Inspections.

 

For the purposes of this Agreement, the Variable Costs shall be the sum of the
Specific Variable Costs and the Averaged Variable Costs.

 

It is understood and agreed to by the Parties that the Variable Costs shall not
include any amount of fees, costs, expenses, or salaries relating to
compensation, training or expenses relating to pilots.

 

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