EXHIBIT 10.10
(PACCAR LOGO) [d81087d8108700.gif]
October 25, 2010     
Francis Drilling Fluids Ltd
240 Jasmine Road
Crowley, LA 70526
Dear Francis Drilling Fluids Ltd,
I would personally like to welcome you to PACCAR Financial and thank you for
selecting us as your financial services provider. Your business is highly valued
and we appreciate this opportunity to serve you.
My contact information is listed below and all of us at the Southwest Area
office are available to assist you with questions about your account, insurance
needs and future financing options. Again, welcome, and we are looking forward
to working with you!
As legal owner and lessor, we are required to assure or verify payment of many
of the taxes associated with the operation of your leased vehicle(s). These
include:

  •   State and Local Taxes     •   Federal Excise Tax (FET)     •   Federal
Highway Use Tax (FHUT)     •   State Highway Use and Fuel Taxes     •   Property
Taxes

Sales Tax and Federal Excise Tax
Sales Tax and FET are typically included as part of your monthly lease payment.
In some cases, the leasing arrangement or State tax laws will result in you
receiving separate monthly billing for Sales Tax.
Federal Highway Use Tax (FHUT)
You the lessee, are responsible for filing IRS Form 2290 and paying directly to
the IRS FHUT on all vehicles leased from us. Because we are the owner of the
vehicles, we must verify your payment when you file the initial IRS Form 2290
and annually thereafter. Proof of payment consists of a copy of your Form 2290
and a receipted (IRS verified) Schedule 1 or both sides of your cancelled FHUT
payment check. Please submit these items within 45 days of filing to the PACCAR
Financial office listed at the bottom of the next page, just above the payment
coupon.
Other Taxes
State Highway Use and Fuel Taxes, Personal Property Taxes and other taxes not
specifically mentioned above are your responsibility as lessee, unless state or
local laws preclude such arrangements.
Additionally, we may require verification of other tax payments where required
by law and/or additional information as needed to meet our responsibilities as
legal owner and lessor of the leased vehicle(s). Your cooperation in these
instances is appreciated.

 

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Payments
Please make note of your first payment due date. This date is located on the
coupon attached to the bottom of this letter. You should receive a coupon book
within two weeks. However, if your first payment is due prior to that time,
please use the payment coupon below. Note: the address on the coupon is for
payments only. All other correspondence should be sent to the address printed
above the coupon.
If you would like to use a more convenient method to make your payments,
consider our Automated Truck Payment (ATP) program. The ATP program allows your
monthly payment to be automatically drawn from your designated bank account. An
ATP enrollment form is enclosed for your convenience. This program is
economical, reliable and designed to save you time. To sign up, complete the
enclosed form (including your signature) and attach a voided check from the
account you wish to use to make your payments. Mail your completed agreement to
the PACCAR Financial address printed on the form As soon as your account has
been set-up, you will receive a follow-up confirmation letter. Note: If your
first payment is due before you receive a confirmation letter from us, please
use the payment coupon at the bottom of this letter.
If I can be of further assistance, please do not hesitate to contact me.

            Sincerely,
      /s/ Susan F. Farmer       Susan F. Farmer      Contract Administrator
(940) 484-8100     

PACCAR Financial Corp.
1700 Woodbrook St Denton, TX 76205 Phone: (940) 484-8100 / Fax: (940) 484-8160
Temporary Coupon

                  No.   Account Number   Due Date   Amount Due   Installment 1  
900-651-600-00006068985   Nov 6,10   $9,381.11   Loan Credit Francis Drilling
Fluids Ltd

IF YOU HAVE ANY QUESTIONS CALL: (940) 484-8100   LATE CHARGES
ADDITIONAL PAYMENT       FOR PROPER CREDIT RETURN THIS COUPON WITH YOUR PAYMENT
                          TOTAL PAYMENT        

PACCAR Financial Corp.
PO Box 530491
Atlanta, GA 30353-0491   (PACCAR LOGO) [d81087d8108701.gif]

90065160000006068985 15801 000938111

 

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Account Information:

          Account Number   Equipment   Due Date 900-651-600-00006068985  
Peterbilt VIN: 1XPWDU9X2BD126800   Nov 6, 10 900-651 -600-00006068985  
Peterbilt VIN: 1XPWDU9X4BD126801   Nov 6,10 900-651-600-00006068985   Peterbilt
VIN: 1XPWDU9X6BD126797   Nov 6,10 900-651-600-00006068985   Peterbilt VIN:
1XPWDU9X8BD126798   Nov 6,10 900-651-600-00006068985   Peterbilt VIN:
1XPWDU9XXBD126799   Nov 6, 10

 

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(PACCAR LOGO) [d81087d8108700.gif]   EQUIPMENT LEASE AGREEMENT   SCHEDULE A:
RENTAL PAYMENTS

Schedule A is made a part of the Equipment Lease Agreement dated August 30, 2010
between PACCAR Financial Corp. (“Lessor”) and Francis Drilling Fluids, Ltd.
(“Lessee”).

          COMMENCEMENT DATE:   TERM OF LEASE(NO. OF MONTHS):   LOCATION OF THE
EQUIPMENT: October 6, 2010   60   240 Jasmine Road Crowley, LA 70526 STATE OF
JURISDICTION:   STATE TITLING EQUIPMENT:   BASE PLATE REGISTRATION (STATE,
COUNTY, CITY): Louisiana   Louisiana   Louisiana, Acadia, Crowley

                                                  DESCRIPTION OF EQUIPMENT      
                                  VEHICLE IDENTIFICATION     “TAXABLE    
SCHEDULE A     MONTHLY   YEAR   MAKE     MODEL     NUMBER     GROSS WEIGHT    
VALUE     RENTAL PMT  
2011
  Peterbilt     388       1XPWDU9X6BD126797       80000     $ 109,856.00     $
1,733.23  
2011
  Peterbilt     388       1XPWDU9X8BD126798       80000       109.856.00      
1,733.23  
2011
  Peterbilt     388       1XPWDU9XXBD126799       80000       109,856.00      
1,733.23  
2011
  Peterbilt     388       1XPWDU9X2BD126800       80000       109,856.00      
1,733.23  
2011
  Peterbilt     388       1XPWDU9X4BD126801       80000       109,856.00      
1,733.23  

 

*   The reported taxable gross weight must be no more than the highest gross
weight declared for any purpose including registering a vehicle in a state.

                 
MONTHLY RENTALS
               
1. Schedule A Value (Total Equipment Cost)
          $ 549,280.00  
2. Adjustments
            0.00  
3. Adjusted Schedule A Value
            549,280.00  
4. Base Monthly Value
            8,666.15  
5. Tax Additions
               
State Louisiana
    4.0000 %     346.65  
County Acadia
    4.2500 %     368.31  
City Crowley
    0.0000 %     0.00  
ICC #                                          (If exempt from state & local
taxes)
6. Total Monthly Rentals
          $ 9,381.11  
 
               
AMOUNT DUE AT DELIVERY
               
1. Advance Rentals 1 @ $9,381.11
          $ 9,381.11  
2. Security Deposit (refundable)
            0.00  
3. Interim Rent (Extra Days)
            0.00  
4. License, Title, UCC & Registration
            0.00  
5. Other n/a
            0.00  
6. Document Preparation Fee
            0.00  
7. Total Amount Due at Delivery
          $ 9,381.11  
Advance rental payment and interim rent are due at delivery, thereafter monthly
rental payments are due on the same day of each month beginning November 6,
2010.

                     
LESSOR: PACCAR Financial Corp.
      LESSEE: Francis Drilling Fluids, Ltd.    
 
                   
BY:
  /s/ Kimberly Slater       BY:   /s/ Michael Francis    
 
                   
 
              Michael Francis    
 
  TITLE:           TITLE: President    
 
  DATE October 6, 2010           DATE October 6, 2010    

CAT. NO. 4053 LDM

 

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(PACCAR LOGO) [d81087d8108700.gif]   TERMINAL RENTAL ADJUSTMENT CLAUSE

This Terminal Rental Adjustment Clause (“TRAC”) Supplement is made a part of the
Equipment Lease Agreement (“Agreement”) dated August 30, 2010 between PACCAR
Financial Corp. (“Lessor”) and Francis Drilling Fluids, Ltd. (“Lessee”) and the
provisions hereof shall have the same force and effect as though they had been
expressly set forth in the Agreement.

                                  DESCRIPTION OF EQUIPMENT   YEAR   MAKE    
MODEL     VEHICLE IDENTIFICATION NUMBER     TRAC VALUE     2011   Peterbilt  
388     1XPWDU9X6BD126797     $ 21,971.20   2011   Peterbilt   388    
1XPWDU9X8BD126798       21,971.20   2011   Peterbilt   388     1XPWDU9XXBD126799
      21,971.20   2011   Peterbilt   388     1XPWDU9X2BD126800       21,971.20  
2011   Peterbilt   388     1XPWDU9X4BD126801       21,971.20  

By executing total TRAC Supplement, Lessee elects and agrees that there shall be
an adjustment of the rental price to be paid under the Agreement for the
Equipment identified above. The rental adjustment shall be determined by
reference to the net proceeds (as defined in Section 26 of the Agreement)
realized by the Lessor upon the sale or other disposition of such Equipment.
As to each item of Equipment identified above, if the net proceeds received by
Lessor from the sale or other disposition after expiration of the Term
(including the net proceeds from any sale under section 19 of the Agreement but
excluding any payments recovered on account of Lessee’s Holdover Liability
defined in Section 18 of the Agreement) are less than the TRAC Value for such
Equipment as stated above, the Lessee shall be liable for and shall immediately
pay to Lessor the amount of such deficiency as additional rental hereunder. If
the net proceeds are in excess of the TRAC Value, then 100.00000 percent of such
excess shall be returned to Lessee as a reduction in the rental payments for
such Equipment the TRAC Value shall not be reduced by any Holdover Liability (as
defined in Section 18 of the Agreement). However, Lessor is entitled to retain
all or any portion of such amount to satisfy any of Lessee’s obligation under
the Agreement, including any Holdover Liability.

                      LESSOR: PACCAR Financial Corp.       LESSEE: Francis
Drilling Fluids, Ltd.    
 
                   
BY:
          BY:   /s/ Michael Francis    
 
                   
 
              Michael Francis         TITLE:           TITLE: President        
DATE: October 6, 2010           DATE: October 6, 2010    

REQUIRED STATEMENT BY LESSEE:
Lessee hereby certifies, under penalty of perjury, that

  (i)   Lessee intends that more than 50% of the use of the Equipment subject to
this Modified TRAC Supplement is to be used in a trade or business of the
Lessee, and     (ii)   Lessee has been advised, and Lessee understands and
agrees that Lessee will not be treated as the owner of the Equipment identified
above for Federal Income Tax purposes.

            LESSEE: Francis Drilling Fluids, Ltd.
      BY:   /s/ Michael Francis                      

CAT. NO. 4420 LDM Revision 3/22/07

 

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(PACCAR LOGO) [d81087d8108700.gif]   CASUALTY AND
TERMINATION SCHEDULE

This Casualty and Termination Schedule is made a part of the Equipment Lease
Agreement dated August 30, 2010 between PACCAR Financial Corp. (“Lessor”) and
Francis Drilling Fluids, Ltd. (“Lessee”). Termination values assume that all
rental payments, fees, and other payments due under the agreement are paid. The
table below reflects the percentage of original cost for casualty or termination
at each rental month.

                  Period   Date     Percentage    
1
    11/6/10       100.28  
2
    12/6/10       99.51  
3
    1/6/11       98.56  
4
    2/6/11       97.53  
5
    3/6/11       96.48  
6
    4/6/11       95.42  
7
    5/6/11       94.35  
8
    6/6/11       93.26  
9
    7/6/11       92.16  
10
    8/6/11       91.04  
11
    9/6/11       89.91  
12
    10/6/11       88.76  
13
    11/6/11       87.59  
14
    12/6/11       86.42  
15
    1/6/12       85.22  
16
    2/6/12       84.02  
17
    3/6/12       82.79  
18
    4/6/12       81.55  
19
    5/6/12       80.31  
20
    6/6/12       79.05  
21
    7/6/12       77.79  
22
    8/6/12       76.52  
23
    9/6/12       75.23  
24
    10/6/12       73.94  
25
    11/6/12       72.63  
26
    12/6/12       71.30  
27
    1/6/13       69.98  
28
    2/6/13       68.63  
29
    3/6/13       67.27  
30
    4/6/13       65.90  
31
    5/6/13       64.52  
32
    6/6/13       63.13  
33
    7/6/13       61.74  
34
    8/6/13       60.33  
35
    9/6/13       58.90  
36
    10/6/13       57.48  
37
    11/6/13       56.03  
38
    12/6/13       54.58  
39
    1/6/14       53.12  
40
    2/6/14       51.64  
41
    3/6/14       50.15  
42
    4/6/14       48.64  
43
    5/6/14       47.13  
44
    6/6/14       45.61  
45
    7/6/14       44.08  
46
    8/6/14       42.54  
47
    9/6/14       40.99  
48
    10/6/14       39.43  
49
    11/6/14       37.86  
50
    12/6/14       36.27  
51
    1/6/15       34.69  
52
    2/6/15       33.08  
53
    3/6/15       31.46  
54
    4/6/15       29.83  
55
    5/6/15       28.20  
56
    6/6/15       26.57  
57
    7/6/15       24.95  
58
    8/6/15       23.30  
59
    9/6/15       21.65  
60
    10/6/15       20.00  

                      LESSOR: PACCAR Financial Corp.       LESSEE: Francis
Drilling Fluids, Ltd.    
 
                   
BY:
  /s/ Kimberly Slater       BY:   /s/ Michael Francis    
 
                   
 
              Michael Francis    
 
  TITLE:           TITLE: President    
 
  DATE: October 6, 2010           DATE: October 6, 2010    

CAT. NO. 4144 LMD

 

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      (LOGO) [d81087d8108700.gif]         EQUIPMENT ACCEPTANCE ACKNOWLEDGMENT  
   

Regarding the Equipment Lease Agreement dated August 30, 2010 between PACCAR
Financial Corp. (“Lessor”) and Francis Drilling Fluids, Ltd. (“Lessee”) the
undersigned Lessee hereby acknowledges that:

  1.   The Equipment leased under the above Equipment Lease Agreement and the
Schedule A dated October 6, 2010       (a) has been delivered to and, as of this
date, is unconditionally accepted by the Lessee;       (b) is in good condition
(operating and otherwise) and repair;       (c) is in full compliance with the
terms of said Agreement;       (d) is marked to show Lessor’s interest in the
manner requested by the Lessor.     2.   Unless otherwise specified on any
Schedule(s) the Commencement Date under any Schedule(s) is, and the obligation
of the Lessee to pay rental with respect to said Equipment commences on, the
date of this Acknowledgment.     3.   In the event that the Lessee shall at any
time hereafter have any problems with said Equipment, it will look solely to the
manufacturer for satisfaction and will nevertheless continue to pay rentals to
Lessor free of any setoff, counterclaim or defense.

Lessee further certifies that (i) no event has occurred and is continuing which
constitutes a default by Lessee under the Agreement, (ii) no event has occurred
and is continuing which, with the giving of notice, passage of time, or both
would constitute such a default by Lessee under the Agreement, and (iii) that
there has not occurred any material adverse change in the financial or business
condition of Lessee or any guarantor of lessee’s obligation to Lessor since the
date of the last financial statements submitted to Lessor by Lessee or any such
guarantor and (iv) no representation or warranties over than those appearing in
the Agreement have been made to Lessee.

      Accepted as of this sixth day of October, 2010

            LESSEE:  Francis Drilling Fluids, Ltd.       By:   /s/ Michael
Francis         Michael Francis        TITLE: President    

CAT. NO. 4121 LDM

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(PACCAR FINANCIAL LOGO) [d81087d8108700.gif]
  REQUEST FOR LEASE INSURANCE CERTIFICATION

          TO: INSURANCE COMPANY OR AGENT       FROM: LESSEE          
NAME:     Louisiana Companies
      NAME:     Francis Drilling Fluids, Ltd.         
 
       
ADDRESS:     2201 West Congress Blvd.
      ADDRESS:     240 Jasmine Road         
 
       
CITY, STATE, ZIP:     Lafayette, LA 70506
      CITY, STATE, ZIP:     Crowley, LA 70526         
 
       
AGENT:     Annette Latiolais
  PHONE NUMBER:     337-233-3932    
 
       

COVERAGE CERTIFICATION REQUESTED

         
þ LIABILITY*
  þ PHYSICAL DAMAGE   o POLLUTION LIABILITY *
 
       
$1,000,000 minimum combined single limits per occurrence.
  $5,000 maximum deductible, comprehensive (or C.A.C.) and collision.   $
                                         minimum for transportation of hazardous
materials.
 
       
EXCEPTION:
  EXCEPTION:           7,500   EXCEPTION:

 
*  The insurance must be underwritten by an insurance company currently rated
“A-” or better by A.M. Best & Co. Territory limitation, commodity restrictions,
or driver exclusions to the policy are not allowed.
Please be advised that the equipment described below will require insurance
coverage under the Equipment Lease Agreement dated August 30, 2010 through
PACCAR Financial Corp. (Lessor).

                      COMMENCEMENT               VEHICLE INDENTIFICATION   TERM
DATE   YEAR   MAKE   MODEL   NUMBER   (YEARS)
10/6/2010
  2011   Peterbilt   388   1XPWDU9X6BD126797   5.00
10/6/2010
  2011   Peterbilt   388   1XPWDU9X8BD126798   5.00
10/6/2010
  2011   Peterbilt   388   1XPWDU9XXBD126799   5.00
10/6/2010
  2011   Peterbilt   388   1XPWDU9X2BD126800   5.00
10/6/2010
  2011   Peterbilt   388   1XPWDU9X4BD126801   5.00

Preliminary verification of insurance was received on October 6, 2010 via FAX.
We have agreed that PACCAR Financial Corp. as Lessor and owner of the above
equipment, shall be an Additional Insured and Loss Payee on our policy or
policies under which such equipment is to be insured and that insurance
certificates will be provided. We have further agreed that you shall give
30 days prior written notice to PACCAR Financial Corp. for any changes or
cancellations of such insurance. The policy shall provide that Lessor’s interest
shall not be invalidated by any acts, omissions or neglect of anyone other than
Lessor.
Please accept this as authorization for your compliance in forwarding the
necessary documents as promptly as possible to PACCAR Financial Corp. at the
address indicated below.

     
PACCAR Financial Corp.
BY:  /s/ Michael Francis
 
   
 
  Michael Francis
ADDRESS:     P.O. Box 2374
  TITLE:     President
CITY, STATE, ZIP:     Denton, TX 76202
  DATE:     October 6, 2010
FAX:     (425) 468-8561
   
 
   

CAT. NO. 4055a LDM 7/2008