EXHIBIT 10.5
INDIVIDUAL LEASING RECORD NO. 58
Relating to Lease Schedule No. 58 dated September 19, 2008, to
Equipment Leasing Agreement Described Below.

                          EQUIPMENT LEASED     New or                     Qty.  
  Used   Make/Manufacturer and Description   Model No.   Serial No.
 9
  New   2009 Stephen Semi-Trailers   P-41-1000   1S9AL15B79H474027     166  
 
              1S9AL15BX9H474068     167  
 
              1S9AL15B19H474069     168  
 
              1S9AL15B09H474077     169  
 
              1S9AL15B29H474078     170  
 
              1S9AL15B49H474079     171  
 
              1S9AL15B09H474080     172  
 
              1S9AL15B29H474081     173  
 
              1S9AL15B49H474082     174  

                         
Location of Equipment:
  240 Jasmine Road   Crowley   Acadia   LA   70526
 
  (Street Address)   (Town/City)   (Parish)   (State)   (Zip)

Date of Delivery of Equipment: August 7, 2008 thru September 5, 2008

1.   Total Acquisition Cost: $516,852.00.   2.   Lease Term: Sixty (60) calendar
months (plus, if applicable, any partial first month) commencing on the date of
this Individual Leasing Record and ending on October 9, 2013.   3.  
Rent: (a) for each full calendar month: $7,962.19 (plus applicable sales/use
tax), payable on the 9th day of each calendar month, in advance, commencing on
October 9, 2008, and the same amount on the 9th day of each consecutive month
thereafter throughout the lease term.

     (b) for partial first month: $5,573.61 (plus applicable sales/use tax),
payable on September 19, 2008.

4.   The undersigned Lessee hereby acknowledges that it has reviewed and
approved the purchase order, supply contract or purchase agreement covering each
Item of Equipment described above and that each such Item (i) was selected by
Lessee, (ii) has been, as of the Date of Delivery of Equipment specified
hereinabove, delivered to, and inspected by, Lessee, (iii) is of a size, design,
capacity, and manufacture acceptable to Lessee and suitable for purposes of
accepting those items under the Lease and making them subject to the Schedule
and the Lease, (iv) is in good working order, repair, and condition, (v) has
been installed to Lessee’s satisfaction and unconditionally and irrevocably
accepted by Lessee, and (vi) has been tested by Lessee (to the extent Lessee
deems appropriate in order to make this certification. The undersigned Lessor
and the undersigned Lessee hereby agree that the Equipment described above is
hereby leased from Lessor to Lessee under the Equipment Leasing Agreement
between Lessor and Lessee dated as of October 2, 2001 (the “Lease”), is subject
to all of the terms, conditions, and provisions thereof, as supplemented by the
terms, conditions, and provisions of the above-referenced Lease Schedule and any
Riders annexed to and made a part of said Lease Schedule, and the terms and
conditions hereof, and that this Individual Leasing Record is made a part of,
and incorporates by reference all of the terms, conditions, and provisions of,
the Lease. The undersigned Lessee hereby agrees to pay the rent for all Items of
Equipment covered by this Individual Leasing Record, in the amounts and at the
times specified above and reaffirms its acknowledgments and agreements in
Section 4 of the Lease. Capitalized terms used herein shall have the meaning
given to such terms in the Lease.

Dated: September 19, 2008

                      Francis’ Drilling Fluids, Ltd.       Capital One, National
Association     (Lessee)       (Lessor)    
 
                   

                     
By:
/s/ Michael G. Francis       By:        

                     
Name:
 
 
Michael G. Francis       Name:  
 
   
Title:
  President       Title:        

ELF#14A
Ind. Leg. Rec.
Capital One ELF #14.1 (04/24/06)

 

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LEASE SCHEDULE NO. 58
     Lease Schedule No. 58 to, and made part of, Equipment Leasing Agreement
dated as of October 2, 2001 (herein called the “Lease”), between Capital One,
National Association (herein called “Lessor”) and Francis’ Drilling Fluids, Ltd.
(herein called “Lessee”). All capitalized terms used herein which are defined in
the Lease are used herein so defined.

1.   Description of the Equipment covered by this Schedule (the “Equipment”):

                      New or             Qty.     Used   Make/Manufacturer and
Description   Model No.   Serial No.
  9
  New   2009 Stephens Semi-Trailers   9-41-1000   1S9AL15B79H474027
 
              1S9AL15BX9H474068
 
              1S9AL15B19H474069
 
              1S9AL15B09H474077
 
              1S9AL15B29H474078
 
              1S9AL15B49H474079
 
              1S9AL15B09H474080
 
              1S9AL15B29H474081
 
              1S9AL15B49H474082

                     
2.      Location of Equipment:
  240 Jasmine Road
(Street Address)   Crowley
(Town/City)   Acadia
(Parish)   LA
(State)   70526
(Zip)

3.   The aggregate Acquisition Cost of the Equipment shall not exceed
$516,852.00, and the Equipment shall not be delivered and accepted by Lessee
after December 31, 2008, unless Lessor otherwise agrees in writing. Lessor shall
have no obligation to acquire and lease any Item of Equipment to Lessee if (a) a
material adverse change in the financial condition of Lessee (or of any
guarantor of Lessee’s obligations under the Lease) has occurred since January 9,
2008, or (b) an event which is (or with notice or lapse of time or both would
become) an Event of Default under the Lease has occurred.   4.   Rent (as a
percentage of Acquisition Cost of each Item of the Equipment): 1.540517% for
each full calendar month, and N/A% for each day of any partial first month.
Lessee shall pay the rent to Lessor in advance during the lease term on the
dates specified in the Individual Leasing Record for each Item of the Equipment.
  5.   Lease Term of the Equipment: sixty (60) full calendar month (plus any
partial first month), commencing, as to each Item, on the date of the Individual
Leasing Record therefore, and unless sooner terminated in accordance with the
provisions of the Lease, ending on the date specified in such Individual Leasing
Record.   6.   Terminal Rental Adjustment Clause: See Section 24 of the Lease.  
7.   Casualty Loss Value Payment Date:

  þ   The rent payment date next preceding or coincident with the date of loss
(if rent is paid in advance); or     o   The rent payment date next following
the date of loss (if rent is paid in arrears).

8.   Comprehensive Public Liability Insurance: $1,000,000.00 per occurrence.

Property Damage Insurance: In an amount equal to the Acquisition Cost.   9.  
Other Conditions or Riders (if none, so state): Tax Indemnification Rider, Motor
Vehicle Rider, Terminal Rental Adjustment Rider, and Trac Rider Business Use.

Dated: September 19, 2008.

                      Francis’ Drilling Fluids, Ltd.       Capital One, National
Association     (Lessee)       (Lessor)    
 
                   

                     
By:
/s/ Michael G. Francis       By:        

                     
Name:
 
 
Michael G. Francis       Name:  
 
   
Title:
  President       Title:        

ELF#7B
Lse. Sched. 2/TRAC
Capital One ELF #7.2 (04/24/06)

 

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SCHEDULE OF CASUALTY LOSS VALUES
THIS SCHEDULE is annexed to, and made part of, Individual Leasing Record No. 58
of Lease Schedule No. 58, to the Equipment Leasing Agreement dated as of October
2, 2001, between Capital One, National Association (“Lessor”) and Francis’
Drilling Fluids, Ltd. (“Lessee”).
Francis Drilling Fluids, Ltd
Schedule 58, Record 58
Termination Schedule

                              termination       termination     value   date  
value     % of basis  
Sep-08
    511,278.39       98.92162360  
Oct-08
    506,152.45       97.92986261  
Nov-08
    500,991.69       96.93136404  
Dec-08
    495,787.35       95.92443276  
Jan-09
    490,482.91       94.89813528  
Feb-09
    485,142.99       93.86497247  
Mar-09
    479,767.45       92.82491891  
Apr-09
    474,352.62       91.77726279  
May-09
    468,870.66       90.71661885  
Jun-09
    463,348.97       89.64828735  
Jul-09
    457,759.80       88.56690038  
Aug-09
    452,134.09       87.47844426  
Sep-09
    446,468.05       86.38218576  
Oct-09
    440,734.07       85.27278040  
Nov-09
    434,963.01       84.15620225  
Dec-09
    429,151.03       83.03170563  
Jan-10
    423,270.62       81.89396974  
Feb-10
    417,352.60       80.74895626  
Mar-10
    411,396.82       79.59663826  
Apr-10
    405,403.74       78.43710414  
May-10
    399,370.20       77.26974089  
Jun-10
    393,299.04       76.09509941  
Jul-10
    387,187.16       74.91257937  
Aug-10
    381,036.82       73.72261607  
Sep-10
    374,848.37       72.52528122  
Oct-10
    368,618.81       71.31999357  
Nov-10
    362,350.35       70.10717842  
Dec-10
    356,043.31       68.88689738  
Jan-11
    349,694.77       67.65858846  
Feb-11
    343,306.88       66.42266687  
Mar-11
    336,879.50       65.17910446  
Apr-11
    330,415.52       63.92845918  
May-11
    323,926.66       62.67300152  
Jun-11
    317,400.94       61.41041187  
Jul-11
    310,850.15       60.14297076  
Aug-11
    304,259.26       58.86777223  
Sep-11
    297,631.09       57.58536021  
Oct-11
    260,977.50       56.29803188  
Nov-11
    284,283.45       55.00287254  
Dec-11
    277,551.68       53.70041732  
Jan-12
    270.794.17       52.39298019  
Feb-12
    263,995.79       51.07763767  
Mar-12
    257,156.41       49.75436052  
Apr-12
    250,278.71       48.42367140  
May-12
    243,374.79       47.08790799  
Jun-12
    236,432.30       45.74468106  
Jul-12
    229,463.37       44.39633881  
Aug-12
    222,452.79       43.03993986  
Sep-12
    215,403.20       41.67599218  
Oct-12
    208,326.82       40.30686140  
Nov-12
    201,208.40       38.92959700  
Dec-12
    194,050.52       37.54469774  
Jan-13
    186,865.50       36.15454682  
Feb-13
    179,638.03       34.75618452  
Mar-13
    172,367.97       33.34958046  
Apr-13
    165,066.80       31.93695599  
May-13
    157,796.32       30.53027110  
Jun-13
    150,494.72       29.11756546  
Jul-13
    143,223.82       27.71079913  
Aug-13
    135,910.16       26.29575996  
Sep-13
    128,565.21       24.87466556  
Oct-13
    129,213.00       25.00000000  

Dated: September 19, 2008.

                      Francis’ Drilling Fluids, Ltd.       Capital One, National
Association     (Lessee)       (Lessor)    
 
                   
By:
/s/ Michael G. Francis       By:      
Name:
 
 Michael G. Francis       Name:
 
   
Title:
   President       Title:        

ELF#8
Sched. Cas. LossValues
Capital One ELF #8 (04/24/06)

 

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MOTOR VEHICLE RIDER
THIS RIDER, is annexed to, and made a part of Lease Schedule No. 58 (the
“Schedule”), to the Equipment Leasing Agreement dated as of October 2, 2001 (the
“Lease”), between Capital One, National Association (“Lessor”) and Francis
Drilling Fluids. Ltd. (“Lessee”).
Lessor and Lessee acknowledge that certain of the Equipment to be leased under
the Lease will consist of motor vehicles (“Vehicular Equipment”). In addition
to, and not in limitation of, all of the terms, conditions, and provisions of
the Lease and Schedule, the following terms and provisions shall apply to each
unit of Vehicular Equipment.
(a) Lessee shall not use Vehicular Equipment, nor allow the same to be used, for
any unlawful purpose, nor for the transportation of any property or material
deemed extra hazardous except material normally needed and used in Lessee’s
business, and Vehicular Equipment shall be operated only by safe, careful, and
licensed drivers to be selected, employed, controlled, and paid by Lessee;
(b) Lessee’s drivers shall conclusively be presumed to be the agents of Lessee,
shall be required to operate Vehicular Equipment with reasonable care and
diligence and to use normal reasonable precautions to prevent loss or damage to
Vehicular Equipment because of fire, theft, or collision, and Lessee’s drivers,
servants, and agents shall cooperate fully with Lessor and all insurance
companies providing insurance under this Lease in the investigation and defense
of any claims and suits arising from the operation of Vehicular Equipment;
(c) Lessee will, at its sole expense, (i) supply and replace all parts and tires
for Vehicular Equipment, (ii) supply the necessary gasoline, oil, grease, and
other items required in the operation of Vehicular Equipment, and (iii) arrange
for the satisfactory garaging, if applicable, of Vehicular Equipment;
(d) Lessee will, at its expense, obtain all titles, registrations, registration
plates, permits, and licenses, including all renewals thereof, required for the
lawful ownership, use, and operation of Vehicular Equipment, and will (i) cause
Vehicular Equipment to be titled and registered in the name of Lessor as owner
and with Lessee to be shown as the lessee, and (ii) cause all such certificates
of title to be promptly furnished to Lessor and all certificates of registration
(and where required by applicable law, a copy of the Lease) to be retained in
the unit(s) of Vehicular Equipment. Lessor shall furnish Lessee with appropriate
powers of attorney for the sole and limited purpose of effecting said titling,
registration, and licensing. Lessee will not place Vehicular Equipment in
operation until same has been properly titled, registered, and licensed as
aforesaid;
(e) In addition to the insurance coverages specified in Section 11 of the Lease,
Lessee will also cause to be carried and maintained, at its sole expense, and in
the same amounts required under said Section, theft and collision insurance,
with such deductible as may be satisfactory to Lessor;
(f) In addition to the indemnities set forth in Section 7 of the Lease, Lessee
will pay when due, and will indemnify, protect, save, defend, and hold Lessor
and its assigns harmless from and against (i) any obligations, license or other
fees, liabilities, losses, damages, penalties, claims, actions, suits, costs,
and expenses, including legal expenses, of every kind and nature whatsoever
imposed on, incurred by, or asserted against Lessor, its agents, employees,
officers, directors, successors, and assigns in any way relating to or arising
out of any power of attorney issued by Lessor to any person or persons
designated in writing by Lessee to apply on behalf of Lessor for applications
for the licensing, re-licensing, titling, re-titling, registration or
re-registration of Vehicular Equipment, or any odometer certification with
respect to Vehicular Equipment, and (ii) all towing charges, parking tolls,
fines, parking and speeding tickets, and other civil and criminal motor vehicle
violations (and all fines, penalties, and interest applicable thereto) with
respect to Vehicular Equipment. All capitalized or other terms used herein which
are not defined herein shall have the meaning given to such terms in the Lease.
Dated: September 19, 2008.

                      Francis’ Drilling Fluids, Ltd.       Capital One, National
Association     (Lessee)       (Lessor)    
 
                   
By:
  /s/ Michael G. Francis       By:        
Name:
 
 
Michael G. Francis       Name:  
 
   
Title:
  President       Title:        

 

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TAX INDEMNIFICATION RIDER
THIS RIDER is annexed to Lease Schedule No. 58 (the “Lease Schedule”) to the
Equipment Leasing Agreement dated as of October 2, 2001 (the “Lease”), between
Capital One. National Association (“Lessor”) and Francis’ Drilling Fluids, Ltd.
(“Lessee”).
Lessor has executed the Lease Schedule on the basis of Lessor’s assumptions
that, with respect to each Item of Equipment described in the Lease Schedule (an
“Item of Schedule Equipment” or “Item”) Lessor will (i) be entitled to cost
recovery deductions for Federal income tax purposes under the Accelerated Cost
Recovery System provided for in Section 168 of the Internal Revenue Code of
1986, as in effect on the date of the Lease Schedule (the “Code”), and
depreciation or cost recovery deductions for state income tax purposes for the
State of Louisiana based upon one hundred percent (100%) of the Acquisition Cost
of each Item of Schedule Equipment and on the basis that each such Item shall
have the applicable recovery period and property classification, and that Lessor
will be entitled to use the applicable method of depreciation and depreciation
convention (the “Recovery Deduction”), and be entitled to deductions for Federal
and Louisiana income tax purposes for interest payable with respect to any
indebtedness incurred by Lessor in connection with any financing by Lessor of
any portion of the Acquisition Cost of such Item (the “Interest Deduction”), and
(ii) be subject to tax for each year, including any year in which a Tax Loss
(hereinafter defined) occurs, be at a composite Federal and state corporate
income tax rate that is equal to the highest marginal rate for corporations
provided for under the Code and the laws of Louisiana (the “Highest Composite
Marginal Tax Rate”). If, for any reason whatsoever, Lessor shall lose the
benefit of, or shall not have or shall lose the right to claim, or shall suffer
a disallowance or recapture of, or delay in claiming, all or any portion of the
Recovery Deduction or (if Lessor finances any portion of its Acquisition Cost)
the Interest Deduction, with respect to any Item of Schedule Equipment, or for
Federal, foreign, state or local income tax purposes, any item of income, toss
or deduction with respect to any Item of Schedule Equipment is treated as
derived from, or allocable to, sources outside the United States (whether or not
any foreign income taxes imposed as a result thereof may be credited against
Federal, state or local income taxes of Lessor), or there shall be included in
the gross income of Lessor for Federal, state or local income tax purposes any
amount on account of any addition, modification or improvement to or in respect
of any Item of Schedule Equipment made or paid for by Lessee (any such loss,
failure to have or loss of the right to claim, disallowance, recapture, delay in
claiming, treatment or inclusion being hereinafter called a “Tax Loss”), then,
within thirty (30) days of Lessee’s receipt of written notice from Lessor that a
Tax Loss has occurred, Lessee shall pay to Lessor such lump sum amount as shall
(after deduction of all taxes required to be paid by Lessor in respect of the
receipt or accrual of such payment under the laws of the United States, any
state or any political subdivision thereof or any foreign taxing authority) be
necessary to maintain Lessor’s after-tax yield and aggregate after-tax cash
flows in respect of such Item at levels which are each not less than the levels
of Lessor’s after-tax yield and aggregate after-tax cash flows that would have
been applicable if such Tax Loss had not occurred, and Lessee shall also pay to
Lessor an amount which, after the deduction of any additional taxes required to
be paid by Lessor in respect of the receipt or accrual of such amount, shall be
equal to the amount of any interest, penalty or additions to tax which may be
imposed in connection with such Tax Loss. Lessor’s after-tax yield and aggregate
after-tax cash flows shall be determined by taking into account (i) the
assumptions used by Lessor in originally calculating rent and Casualty Loss
Value percentages, including the assumptions set forth above (as such
assumptions may have been revised pursuant to the next sentence hereof) and
(ii) the Highest Composite Marginal Tax Rate actually in effect during each year
from the date of such original calculations to the date of such Tax Loss, both
dates inclusive. In the event Lessor shall suffer a Tax Loss with respect to
which Lessee is required to pay an indemnity hereunder, and the full amount of
such indemnity has been paid or provided for hereunder, the aforesaid
assumptions, without further act of the parties hereto, shall thereupon be and
be deemed to be amended, if and to the extent appropriate, to reflect such Tax
Loss. In the event any indemnity payments shall be paid to Lessor under this
Rider with respect to any Item(s) of Schedule Equipment, the Casualty Loss
Values (and, if applicable, Termination Values) of such Item(s) shall be
adjusted appropriately. The indemnification obligations of Lessee under this
Rider shall survive the expiration or termination of the Lease and the lease
term of each Item of Schedule Equipment. As used herein, the term “Lessor” will
include any corporation consolidated with Lessor for tax purposes (and, if
Lessor is a partnership, the partners thereof) and their respective successor(s)
in interest and assigns. All capitalized terms used herein which are not defined
herein shall have the meaning given to such terms in the Lease.
Dated: September 19, 2008.

                      Francis’ Drilling Fluids, Ltd.       Capital One, National
Association     (Lessee)       (Lessor)    
 
                   
By:
  /s/ Michael G. Francis       By:        
Name:
 
 
Michael G. Francis       Name:  
 
   

ELF#10
Tax Indem. Rider
Capital One ELF #10 (04/24/06)

 

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TRAC RIDER — BUSINESS USE
Certification by Lessee
This Certification is provided by the undersigned (“Lessee”) in connection with
that certain Master Lease Agreement dated as of October 2, 2001, with Capital
One National Association The Parties intend and agree that the Lease constitutes
a “qualified vehicle operating agreement” within the meaning of Section 7701(h)
of the Internal Revenue Code of 1986, as now or hereafter amended, and this
Certification is required to be provided pursuant to that Section.
Lessee hereby certifies, under penalty of perjury, that it intends that more
than fifty (50%) percent of the use of the Equipment (as such term is defined in
the Lease) is to be in a trade or business of the Lessee.
Lessee acknowledges that it has been advised that it will not be treated as the
owner of the Equipment for Federal income tax purposes.
IN WITNESS WHEREOF, Lessee has caused this Certification to be dully executed,
under seal, as of the 19th of September, 2008.

                      Francis’ Drilling Fluids, Ltd.       Capital One, National
Association     (Lessee)       (Lessor)    
 
                   
By:
  /s/ Michael G. Francis       By:        
Name:
Title:
 
 
Michael G. Francis
President       Name:
Title:  
 
   

Capital One Confidential/Proprietary

 

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CONTINUING GUARANTY
     This Continuing Guaranty (this “Agreement”), is dated September 19, 2008.
The undersigned (hereinafter, whether one or more, individually referred to as
“Guarantor”), guarantees the Indebtedness (hereinafter defined) of Francis’
Drilling Fluids, LTD (hereinafter, whether one or more, individually and
collectively referred to as “Lessee”) to Capital One, National Association, Post
Office Box 61540, New Orleans, Louisiana 70161 (hereinafter “Lessor”).
     FOR VALUE RECEIVED, and in consideration of and for credit and financial
accommodations extended, to be extended or continued, to or for the account of
Lessee, the undersigned Guarantor, whether one or more, hereby jointly,
severally and solidarity, agrees as follows:
1. Guarantor hereby irrevocably and unconditionally guarantees to Lessor the
prompt, complete and punctual payment, full performance, observance and
satisfaction of any and all loans, extensions of credit and/or other obligations
and duties that Lessee may now and/or in the future owe to and/or incur in favor
and for the benefit of Lessor including but not limited to the punctual payment
of all rents due and payable and the performance of any and all obligations and
duties of Lessee under any and all Equipment Leasing Agreement(s) by and between
Lessor, as Lessor, and Lessee, as Lessee (any and all such Equipment Leasing
Agreement(s), together with any and all Riders Schedules Addenda Purchase Orders
Individual Leasing Records and/or other documentation ancillary thereto are
hereinafter collectively referred to as “Lease”) whether such indebtedness
and/or obligations are direct or indirect, or by way of assignment, and whether
such indebtedness and/or obligations are absolute or contingent, liquidated or
unliquidated, due or to become due, secured or unsecured, and whether now or
hereafter arising, of any nature or kind whatsoever (with all of Lessee’s
indebtedness and/or obligations being hereinafter individually and collectively
referred to under this Agreement as the “Indebtedness”) GUARANTOR FURTHER AGREES
TO INDEMNIFY AND HOLD HARMLESS LESSOR FROM ANY AND ALL LOSSES, DAMAGES, COSTS
AND EXPENSES INCLUDING, WITHOUT LIMITATION, COSTS OF COURT AND ATTORNEYS’ FEES
INCURRED BY LESSOR) IN THE EVENT OF ANY DEFAULT BY GUARANTOR OF HIS OBLIGATIONS
UNDER THIS AGREEMENT.
     If Lessor agrees, and notwithstanding any other provision contained herein
to the contrary, the maximum principal amount of Lessee’s Indebtedness in favor
of Lessor guaranteed by Guarantor under this Agreement is limited to Five
Hundred Sixteen Thousand Eight Hundred Fifty Two Dollars and Zero
Cents($516,852.00) DOLLARS Notwithstanding the limitation on principal set forth
above interest, costs and attorneys’ fees under Lessee’s Indebtedness are fully
guaranteed hereunder.
2. Guarantor agrees that Guarantor’s obligations and liabilities for the prompt
and punctual payment performance and satisfaction of all of Lessee’s
Indebtedness shall be on a “joint and several” and “solidary” basis along with
Lessee to the same degree and extent as if Guarantor had been or will be a
co-borrower, co-principal obligor and/or co-maker of all of Lessee’s
Indebtedness. In the event that there is more than one guarantor under this
Agreement, or in the event that there are other guarantors, endorsers or
sureties of all or any portion of Lessee’s Indebtedness, Guarantor’s obligations
and liabilities hereunder shall be on a “joint and several” and “solidary” basis
along with such other guarantor or guarantors, endorsers and/or sureties
Guarantor further agrees that in any right of action which shall accrue to
Lessor with respect to Lessee’s Indebtedness or under this Agreement Lessor may,
at its option, proceed against Lessee alone (without having made any prior
demand upon Guarantor or having commenced any action against Guarantor or having
obtained or having attempted to satisfy any judgment against Guarantor) or may
proceed against Guarantor and Lessee, jointly severally and solidarity, or may
proceed against Guarantor alone (without having made any prior demand upon
Lessee or having commenced any action against Lessee or having obtained or
having attempted to satisfy any judgment against Lessee), With the exception
only of the defense of prior performance by Lessee (of Lessee’s Indebtedness
which Guarantor is called upon to perform) or the defense that Lessors claim
against Guarantor hereunder has prescribed or is barred by the applicable
statute of limitations or is not within the scope of Lessee’s Indebtedness, all
defenses of the law of guaranty, indemnification and surety, including, without
limitation, substantive defenses and procedural defenses, are hereby waived and
released by Guarantor Except as provided in the preceding sentence, under no
circumstances shall the liability of Guarantor under this Agreement be
terminated either with respect to any period of time when the liability of
Lessee under the Lease continues or with respect to any circumstances as to
which the liability of Lessee has not been fully discharged by performance.
3. Guarantor’s obligations and liabilities under this Agreement shall remain in
full force and effect until such time as all of Lessee’s Indebtedness has been
paid performed and/or satisfied in full, in principal, interest, costs and
attorneys fees, or until such time as this Agreement may be cancelled or
otherwise terminated by Lessor under a written cancellation instrument in favor
of Guarantor. Guarantor understands that fluctuations might occur in the
aggregate amount of Lessee’s Indebtedness, and Guarantor agrees that reductions
in the amount of Lessee’s Indebtedness, even to zero ($0.00) dollars prior to
Lessor’s written cancellation of this Agreement, will not constitute a
termination of this Agreement Guarantor expressly agrees that the validity of
this Agreement and Guarantor’s obligations hereunder shall in no way be
terminated, affected, or impaired by reason of the assertion by Lessor against
Lessee of any of the rights and remedies reserved to Lessor under the Lease or
otherwise at law or in equity as a result of Lessee’s breach of any of its
obligations under the Lease Guarantor further covenants and agrees that this
Agreement and the full liability of Guarantor hereunder shall remain and
continue in full force and effect notwithstanding the occurrence of any one or
more of the following types of transactions (whether or not Guarantor shall have
received any notice of or consented to any such transaction): (i) any
modification or amendment of the Lease: (ii) any assignment or transfer of the
Lease by Lessor, (iii) any assignment or transfer by Lessee as permitted under
the Lease (iv) any dissolution of Lessee, or (v) the fact that Lessee may be a
party to any merger consolidation or reorganization.
4. In the event Lessee defaults under any of Lessee’s Indebtedness in favor of
Lessor, Guarantor unconditionally and absolutely agrees to pay the full then
unpaid amount of all of Lessee’s Indebtedness guaranteed hereunder. including
ELF#15
Cont. Gty.
Hibernia ELF #15 (2/98)

 

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principal, interest, costs and attorneys’ fees, and Guarantor hereby makes
himself and agrees to be fully, primarily and personally liable to Lessor for
any and all of Lessee’s Indebtedness. Such payment or payments shall be made
immediately following demand by Lessor at Lessor’s office indicated above.
Guarantor hereby waives notice of acceptance of this Agreement and of any
Indebtedness to which this Agreement applies or may apply. Guarantor further
waives presentment and demand for payment of Lessee’s Indebtedness, notice of
dishonor and of nonpayment, notice of intention to accelerate, notice of
acceleration, protest and notice of protest, collection or institution of any
suit or other action by Lessor in collection thereof, including any notice of
default in payment thereof or other notice to, or demand for payment thereof on
any party Guarantor additionally waives any and all rights and division and
discussion as provided under Louisiana law, as well as, to the degree
applicable, any similar rights as may be provided under the laws of any other
state.
5. If Guarantor should for any reason (i) advance or lend monies to Lessee for
any reason whatsoever, and/or (ii) make any payment for and on behalf of Lessee
under any of Lessee’s Indebtedness, and/or (iii) make any payment to Lessor in
total or partial satisfaction of Guarantor’s obligations and liabilities
hereunder, Guarantor hereby agrees that any and all rights that Guarantor may
have or acquire to collect or to be reimbursed by Lessee (or by any guarantor,
endorser or surety of Lessee’s Indebtedness), shall in all respects be
subordinate, inferior and junior to Lessor’s rights to collect and enforce
payment, performance and satisfaction of Lessee’s then remaining Indebtedness,
until such time as all of Lessee’s Indebtedness is fully paid and satisfied
Guarantor further agrees to refrain from attempting to collect and/or enforce
any of Guarantor’s aforesaid rights against Lessee (or any other guarantor,
surety or endorser of Lessee’s Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Lessee’s then remaining Indebtedness in
favor of Lessor is fully paid and satisfied, including principal, interest,
costs and attorneys’ fees. Guarantor agrees that Guarantor shall have no right
of subrogation, reimbursement or indemnity, whatsoever and no right of recourse
to or with respect to any assets or property of Lessee or to any collateral
securing the Indebtedness, even upon payment in full of the Indebtedness.
6. Guarantor further agrees that Lessor may, at its sole option, at any time,
and from time to time, without the consent of or notice to Guarantor, or any one
of them, or by any other party, and without impairing or releasing the
obligations of Guarantor under this Agreement (i) discharge or release any party
(including, but not limited to, Lessee or any co-lessee or any guarantor under
this Agreement) who is or may be liable to Lessor for any of Lessee’s
Indebtedness; (ii) sell, exchange, release, surrender, realize upon or otherwise
deal with, in any manner and in any order, any collateral directly or indirectly
securing repayment of any of Lessee’s Indebtedness (iii) change the manner,
place or terms of payment, or change or extend the time of payment of or renew,
as often and for such periods as Lessor may determine, or alter, any of Lessee’s
Indebtedness, (iv) settle or compromise any of Lessee’s Indebtedness
(v) subordinate and/or agree to subordinate the payment of all or any part of
Lessee’s Indebtedness or Lessor’s security rights in and/or to any collateral
directly or indirectly securing any such Indebtedness, to the payment and/or
security rights of any other present and/or future creditors of Lessee;
(vi) apply any sums paid to any of Lessee’s Indebtedness, with such payments
being applied in such priority or with such preferences as Lessor may determine
in its sole discretion, regardless of any amount of Indebtedness of Lessee
remaining outstanding; (vii) take or accept any other security or guaranty for
any or all of Lessee’s Indebtedness; and/or (viii) enter into, deliver, modify,
amend or waive compliance with, any instrument or arrangement evidencing,
securing or otherwise affecting, all or any part of Lessee’s Indebtedness,
including but not limited to any Lease.
     In addition, no course of dealing between Lessor and Lessee (or any other
guarantor, surety or endorser of Lessee’s Indebtedness), nor any failure or
delay on the part of Lessor to exercise any of Lessor’s rights and remedies
under any Lease, or any other agreement or agreements by and between Lessor and
Lessee (or any other guarantor, surety or endorser) shall have the effect of
impairing or releasing Guarantor’s obligations and liabilities to Lessor
hereunder or of waiving any of Lessor’s rights and remedies under this Agreement
or otherwise. The stated rights and remedies of Lessor under this Agreement
against Guarantor with respect to the liability of Guarantor for Lessee s
Indebtedness shall be understood as not excluding any other legal or equitable
rights and remedies of Lessor against Guarantor not expressly set forth herein,
but shall be understood as being cumulative of all other legal and equitable
rights and remedies of Lessor not expressly stated herein.
     This Agreement and Guarantor’s obligations and liabilities hereunder shall
continue to be effective, and/or shall automatically and retroactively be
reinstated if a release or discharge has occurred, as the case may be, if at any
time any payment or apt hereof to Lessor with respect to any of Lessee’s
Indebtedness is rescinded or must otherwise be restored by Lessor pursuant to
any insolvency, bankruptcy, reorganization, receivership, or any other debt
relief granted to Lessee or to any other party.
7. Guarantor agrees that, in the event Lessor, in its sole discretion, deems it
necessary to commence a collection action to enforce Guarantor’s obligations and
liabilities under this Agreement, Lessor may commence such a civil action
against Guarantor without the necessity of first (i) attempting to collect
Lessee’s Indebtedness from Lessee or from any other guarantor, surety or
endorser, (ii) attempting to exercise remedies against any collateral directly
or indirectly securing repayment of any of Lessee’s Indebtedness, or
(iii) including Lessee or any other guarantor, surety or endorser of any of
Lessee’s Indebtedness as an additional party defendant in such a collection
action against Guarantor. In the event Lessor, in its sole discretion, ever
refers this Agreement to an attorney-at-law to enforce Guarantor’s obligations
and liabilities hereunder, or to protect or preserve Lessor’s rights hereunder,
Guarantor (and each or them, on a joint, several and solidary basis) agrees to
reimburse Lessor for the reasonable fees of such an attorney Guarantor
additionally agrees that Lessor shall not be liable for failure to use diligence
in the collection of any of Lessee’s Indebtedness or any collateral security
therefor, or in creating or preserving the liability of any person liable on any
such Indebtedness, or in creating, perfecting or preserving any security for any
such Indebtedness.
8. Guarantor represents and warrants to Lessor that (i) Guarantor will receive a
direct or indirect material benefit from the transactions contemplated herein
and/or arising out of Lessee’s Indebtedness, and (ii) this Agreement, when
executed and delivered by Guarantor, will constitute a valid, legal and binding
obligation of Guarantor enforceable in accordance with its terms All actions and
consents required to be performed, obtained and/or satisfied prior to the
execution and delivery of this Agreement, in order for this Agreement to be a
valid and binding obligation of Guarantor in accordance with its terms, have
been performed, obtained and satisfied in due and strict compliance with all
applicable laws.
 Capital One Confidential/Proprietary - 2 - 

 

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9. Upon the request of Lessor, Guarantor will at any time, and from time to
time, duly execute and deliver to Lessor any and all such further instruments
and documents and supply such additional information, as may be necessary or
advisable in the opinion of Lessor, to obtain the full benefits of this
Agreement. Guarantor, at his sole cost and expense, further agrees to provide
Lessor with annual financial statements, tax returns and other financial
statements and related information at such frequencies and in such detail as
Lessor may reasonably request.
10. This Agreement is for the benefit of Lessor and for such other person or
persons as may from time to time become or be the holders of any of Lessee’s
Indebtedness and this Agreement shall be transferable. This Agreement and
Guarantor’s obligations and liabilities under this Agreement shall be binding
upon Guarantor’s successors, heirs, legatees, devisees, administrators,
executors and assigns.
11. As collateral security for the repayment of Guarantor’s obligations and
liabilities under this Agreement, Guarantor hereby grants Lessor a continuing
security interest in any and all funds or other property that Guarantor may then
have on deposit with or in the possession or control of Lessor and its
successors or assigns (with the exception of funds deposited in IRA, pension or
other tax-deferred deposit account).
12. Any notice required under this Agreement will be considered as given to
Guarantor on the day Lessor hand delivers the notice to Guarantor, or deposits
such notice in the United States mail, postage prepaid, to the address of
Guarantor stated herein, or to such other address delivered in writing to Lessor
by Guarantor. Nothing in this paragraph shall be deemed to require any notice by
Lessor to Guarantor.
13. No amendment modification, consent or waiver of any provision of this
Agreement, and no consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing signed by a duly authorized
officer of Lessor, and then shall be effective only to the specific instance and
for the specific purpose for which given. Receipt by Lessor of any monetary sum
or acceptance of any obligation of Lessee under the Lease with knowledge of the
breach of any provision of the Lease shall not be deemed a waiver of such
breach. Waiver by Lessor of any right of Lessor against Lessee under the Lease
shall not constitute a wavier against Guarantor or in any other way inure to the
benefit of Guarantor.
14. This Agreement shall be governed and construed in accordance with the laws
of the State of Louisiana, and all matters relating to this Agreement and the
covenants, duties and obligations of Guarantor under this Agreement shall be
governed by the laws of the State of Louisiana.
15. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable.
16. GUARANTOR AND LESSOR HEREBY WAIVE THE RIGHT TO A JURY TRIAL IN ANY ACTION,
PROCEEDING OR COUNTER CLAIM BROUGHT BY EITHER AGAINST THE OTHER AND AGREE THAT
VENUE FOR ANY ACTION SHALL BE LIMITED TO THE CIVIL DISTRICT COURT FOR THE PARISH
OF ORLEANS, STATE OF LOUISIANA, OR THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF LOUISIANA, AT LESSORS OPTION.
17. Guarantor agrees that in the event Lessee shall become insolvent or shall be
adjudicated bankrupt or shall file a petition for reorganization, arrangement or
other relief under any present or future provisions of the Federal Bankruptcy
Code, as amended, or if such a petition is filed by creditors of Lessee, or if
Lessee shall seek judicial readjustment of the rights of its creditors under any
present or future federal or state law, or if a receiver for all or a part of
Lessee’s property and assets is appointed by any state or federal court, no such
proceeding or action taken therein shall modify, diminish, or in any way affect
the liability of Guarantor under this Agreement, and no “rejection” and/or
“termination” of the Lease in any of the proceedings referred to in this
paragraph 17 shall be effective to release and/or terminate the continuing
liability of Guarantor to Lessor under this Agreement with respect to Lessee’s
Indebtedness unaffected by any such “rejection” and/or “termination” in such
proceedings.
18. All past due amounts owing by Guarantor to Lessor hereunder shall bear
interest, until paid, at the maximum rate of non-usurious interest allowed from
time to time by law as is now, or to the extent allowed by law, as may hereafter
be, in effect.
19. Guarantor recognizes that Lessor is relying upon this Agreement and the
undertakings of Guarantor hereunder to enter into the Lease and carry out the
transactions contemplated by the Lease, and further recognizes that the
execution and delivery of this Agreement is a material inducement to Lessor to
enter into the Lease and carry out the transactions contemplated by the Lease
Guarantor hereby acknowledges that there are no conditions to the full
effectiveness of this Agreement.
     IN WITNESS WHEREOF, Guarantor has executed this Agreement in favor of
Lessor on the day month and year first written above.

             
 
  GUARANTOR:    
 
           
 
  /s/ Michael G. Francis
 
Michael G. Francis    
 
  SSN:   xxx-xx-2806    
 
  Address:   240 Jasmine Rd
Crowley, LA 70527    

 Capital One Confidential/Proprietary  -3-