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Below is a list of common sections included in Equipment Sale Agreements. These sections are linked to the below sample agreement for you to explore.
CERTAIN MATERIAL (INDICATED BY THREE ASTERISKS) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EQUIPMENT PURCHASE AGREEMENT
This Equipment Purchase Agreement (this “Agreement”) is executed on the dates set forth below, but effective as of July 8, 2011 between Hub City Industries, L.L.C. (hereinafter “ HCI ”), a Louisiana limited liability company whose mailing address for purposes hereof is 500 Dover Blvd., Suite 100, Lafayette, Louisiana 70503, and Marine Turbine Technologies, L.L.C. , (hereinafter “ MTT ”), a Louisiana limited liability company whose mailing address for purposes hereof is 298 Louisiana Road, Franklin, Louisiana 70538 (also sometimes referred to as the “parties”).
Ted Lee McIntyre, II (“McIntyre”) invented an oil field turbine stimulation pump that utilizes the split shaft turbine or free turbine to control the flow rate and fluid pressure during oilfield pumping operations (the “Invention”).
McIntyre owns or controls MTT and effective January 1, 2006, McIntyre entered into an exclusive license agreement with MTT (the “MTT License”), wherein McIntyre granted MTT an exclusive license to make, have made, use, offer for sale, and sell the Invention.
MTT utilizes turbine engines in connection with the Invention. For the purposes of this Agreement, “ TURBINE ENGINES ” means and refers to any turbine driven engine that MTT acquires and uses in conjunction with the Invention pursuant to its exclusive license under the MTT License, for use in the Well Service Business (defined herein) along with certain accessory equipment. For purposes hereof “accessory equipment” means the following equipment, either provided or assembled by MTT and which is included as part of or as an accessory to the Turbine Engines supplied by MTT under this Agreement; engine seal and gasket kits, N1 Tach generator, Kevlar blankets, brake kits, N 1 accessory drive pad, turbine charging system and batteries, intake screens, starter generator, couplings, exhaust tail pipes with ceramic insulation blanket , mechanical engine instrument package. Turbine Engines also refers to supportive maintenance manuals and the introductory training for the operation thereof, as well as any modified or improved version of such original version.
MTT currently has [***] Turbine Engines in its possession, and MTT will sell to HCI, and HCI will purchase these [***] Turbine Engines for the sum of [***] each. MTT previously sold [***] Turbine Engines to HCI for the sum of [***] each. These 35 Turbine Engines will be referred to as the Initial Turbine Engines.
Additionally, MTT will locate at least [***] additional Turbine Engines (the “Subsequent Turbine Engines”), and HCI will acquire the Subsequent Turbine Engines at the acquisition cost of the Subsequent Turbine Engines.
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Prior to the effective date of this Agreement, HCI owed certain amounts to MTT, including but not limited to invoiced and un-invoiced amounts owed for services, labor, material and equipment provided by MTT to HCI (collectively the “MTT Services”).
In further consideration for the sale of the Turbine Engines and in consideration of the rights and advantages flowing to the parties as a result thereof, HCI desires to set-off, waive, relieve and release MTT from the HCI Loans and any obligations, liabilities or debts owed by MTT to HCI prior to the effective date of this Agreement.
In addition, as a result of HCI’s execution of this Agreement, MTT desires to set-off, waive, relieve and release HCI from the MTT Services and any obligations, liabilities or debts owed by HCI to MTT prior to the effective date of this Agreement.
HCI and MTT desire to enter into an agreement, upon the terms and conditions set forth below.
In consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and adequacy of which are acknowledged, the parties agree as follows:
1. Purchase of Turbine Engines .
1.1 Initial Turbine Engines . The parties acknowledge that the first five Initial Turbine Engines were sold to and purchased by HCI in June 2011. MTT acknowledges receipt of full payment for these first [***] Initial Turbine Engines.
MTT hereby agrees to sell to HCI, and HCI hereby agrees to purchase from MTT, the next thirty Initial Turbine Engines for the sum of [***] each. The purchase price is comprised of the core turbine engine and for the accessory equipment, supplies, materials and labor for MTT to assemble the Turbine Engines and accessory equipment. HCI and MTT shall agree to a production schedule per month commencing August 1, 2011. The schedule may be amended by the parties. Upon agreement of the monthly schedule, HCI shall pay a deposit on the 1 st day of the month in the amount of [***] per Initial Turbine Engine to be produced that month in accordance with the production schedule. On the 15 th day of the month MTT shall invoice HCI for any Initial Turbine Engines then completed and HCI shall pay the balance owed, within 2 business days of invoicing. At the end of the month MTT shall invoice HCI for any Initial Turbine Engines then completed and HCI shall pay the balance owed, within 2 business days of invoicing. In the event that HCI receives high yield bond funding, HCI shall pay to MTT the full amount owed for any remaining Initial Turbine Engines.
The parties acknowledge that as additional consideration and purchase price for the Initial Turbine Engines, HCI does hereby set-off, waive, relieve and release MTT from the HCI Loans and any and all obligations, liabilities or debts, of whatever nature or kind and whether known or unknown, which were incurred, originated, existed or accrued prior to the effective date of this Agreement. HCI shall deliver to MTT, within five (5) days of the execution of this Agreement, any originally executed notes marked “satisfied”.
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
1.2 Subsequent Turbine Engines . MTT hereby agrees to locate and HCI shall acquire the Subsequent Turbine Engines beginning on the effective date of this Agreement. MTT will make available to HCI, at least [***] Subsequent Turbine Engines each month, beginning September 1, 2011. HCI will buy the Subsequent Turbine Engines as completed. Upon locating each Subsequent Turbine Engine with the accessory equipment, and subject to HCI’s approval of the acquisition of each Subsequent Turbine Engine, HCI will pay directly to the third party vendor, any deposit, progress or final payment to acquire the Subsequent Turbine Engine with accessory equipment.
1.3 HCI Rejection of Subsequent Turbine Engines . MTT shall notify HCI in writing (the “Initial Notice”) of the need for HCI’s approval of the proposed acquisition of a Subsequent Turbine Engine(s). HCI shall have five (5) business days from receipt of the Initial Notice to approve the proposed acquisition. In the event HCI desires to approve the proposed acquisition, it shall provide MTT with written notice of its approval, within five (5) business days of the receipt of the Initial Notice from MTT, in which case the acquisition of the Subsequent Turbine Engine(s) in question shall proceed as provided in the foregoing paragraph. In the event that HCI fails to respond to an Initial Notice or fails to timely respond to an Initial Notice, HCI shall be deemed to have rejected that particular proposed acquisition of Subsequent Turbine Engines, and thereafter MTT shall be free, at its own cost and expense, to acquire, sell, transfer, lease and/or alienate the same, all for its own benefit and free of any obligation or restriction under this Agreement.
2. Right to License and Purchase .
In connection with the sale of the Turbine Engines to HCI, MTT hereby grants to HCI the exclusive license and right to purchase Turbine Engines from MTT and to operate, and utilize the Turbine Engines for use in HCI’s Well Service Business, and to resell, lease, and rent the Turbine Engines to third parties. The Well Service Business use restriction shall apply to any party which acquires rights in and to any Turbine Engines by or through HCI. Any Turbine Engines previously purchased by HCI from MTT will also be subject to the terms, conditions and restrictions contained in this Agreement. For the purposes of this Agreement, Well Service Business shall mean only procedures or services performed down hole in oil and gas wells such as: pump down work, cementing services, acidizing and chemical pumping, fracturing services, gravel packing and sand control services, coiled tubing, nitrogen pumping services, wireline, turbine testing and handling, and rig work including well services and plug and abandonment.
This Agreement does not give HCI any rights of ownership in the Invention, or any patents, trademarks, or other intellectual property of MTT. If this Agreement expires by its own terms or is terminated for any reason, HCI will nonetheless have the right to continue to operate and utilize, in the Well Service Business, all Turbine Engines and other equipment already purchased from MTT, whether under this Agreement or otherwise including the right to maintain, repair and/or refurbish all such Turbine Engines, and to resell, lease, and rent the Turbine Engines to third parties provided the use is restricted to the Well Service Business.
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
HCI hereby agrees that MTT will be the exclusive supplier to HCI of Turbine Engines. MTT will provide HCI during the term of this Agreement and thereafter with parts or component parts for use with Turbine Engines on an exclusive basis.
3. Covenants of MTT .
MTT covenants as follows:
(a) Subject to the reasonable commercial availability of turbines and accessory equipment, MTT will supply HCI with two hundred Turbine Engines (the [***] Initial Turbine Engines, and the [***] Subsequent Turbine Engines).
(b) MTT will hold the exclusive license granted by McIntyre and acquired by MTT from the owner, designer and inventor. MTT will design and assemble Turbine Engines and the accessory equipment for HCI under this Agreement.
(c) MTT hereby warrants and represents that it is authorized to enter into this Agreement and to grant the rights to HCI as set forth in this Agreement.