<PAGE>
EXHIBIT 10(o)
EQUIPMENT LEASE AGREEMENT
Silsbee Trading and Transportation Corp., a
Texas Corporation, hereinafter
"STTC"), with an address at P. O. Box 695,
Silsbee, Texas 77656, agrees to lease
to South Hampton Refining Co., a Texas
Corporation, (hereinafter "SHRCO"), with
an address at P. O. Box 1636, Silsbee,
Texas 77656, which agrees to lease from
STTC the Vehicles and Equipment described
in SCHEDULE "A" attached hereto. The
term of the lease shall begin on January 1,
2004 and shall continue for a period
of Five (5) years unless terminated early
as provided in the lease. Upon
expiration or termination of the Vehicle
lease, SHRCO shall return the vehicles
to STTC at its location at Highway 418 in
Hardin County, Texas, in the same
condition and appearance as when received,
ordinary wear and tear excepted. Any
holding over after the expiration of the
Vehicle lease shall be on a
month-to-month basis and subject to all the
terms of this Lease.
1. MAINTENANCE AND REPAIR. STTC
agrees, at its own cost and expense, to
provide with respect to the Vehicles leased,: (a) all
preventive
maintenance, replacement parts, and repairs to keep the Vehicles
in
good repair and operating condition; (b) oil and lubricants
necessary
for the efficient operation of the Vehicles; (c) all necessary
tires
and tubes; (d) road service due to mechanical and tire failures;
(e)
periodic exterior washing; (f)initial painting and lettering of
each
Vehicle according to SHRCO specifications at the time the Vehicle
is
placed into service, at a cost not exceeding the per-vehicle
allowance
specified in SCHEDULE "A". In the event any Vehicle shall be
disabled
for any reason, SHRCO and/or its driver shall immediately notify
STTC.
SHRCO agrees that it will not cause or permit any person other
than
STTC or persons authorized by STTC to make any repairs or
adjustments
to a Vehicle, and shall abide by its directions concerning
emergency
repairs. In the event a Vehicle is disabled due to mechanical or
tire
failure, STTC shall, within a reasonable period of time after
receipt
of notification, properly repair, or cause the repair of, the
Vehicle.
SHRCO will cause its drivers to
1
<PAGE>
report any trouble concerning the Vehicle not later than the date
of
occurrence and to check oil and coolant levels in each Vehicle on
a
daily basis to prevent damage.
2. VEHICLE LEASE SERVICE
AGREEMENT. STTC will provide for inspections,
preventive maintenance, and routine repairs in such a manner and
at
such times as to minimize the disruption of the normal use of
the
Vehicle. SHRCO will deliver the Vehicles to the repair facility
and
pick them up as needed after repairs or maintenance is completed.
Any
tow charges resulting from routine maintenance or repairs will be
paid
by STTC.
3. FUEL. Shrco shall provide
all fuel for the Vehicles and shall be
responsible for all reporting, taxes, and charges associated
therewith.
4. LICENSES, TAXES AND PERMITS.
STTC shall, at its own expense, register and
title each Vehicle, and pay for any Vehicle inspection fees, in
the
state of domicile of such Vehicle for the licensed weight. STTC
shall
also pay the Federal Highway Use Tax and all personal property
tax
applicable to such Vehicle in that domicile state. If permitted
by
law, STTC shall obtain, at SHRCO's expense, other vehicle
licenses,
registrations, or pro-rate or state reciprocity plates, as SHRCO
may
request. Any increase in these rates or fees or change in the
method
of assessment over the allowance shown in SCHEDULE "A" will be
paid
for by SHRCO. Other than as set forth above, SHRCO shall pay for
all
permits, plates, special licenses, fees, or taxes (including
any
penalties or interest) required by SHRCO's business or now or
hereafter imposed upon the operation or use of the Vehicles, or
on
this lease or on the charges accruing under this lease, including,
but
not limited to, sales or use taxes, mileage or ton mileage
taxes,
highway and bridge tolls, and any new and/or additional taxes
and
fees.
5. LEASE CHARGES. SHRCO agrees
to pay STTC the charges provided for under this
lease upon receipt of an invoice, without deduction or offset.
STTC
will invoice SHRCO on a monthly basis, including the billing of
fixed
charges in advance, and payment
2
<PAGE>
shall be made to the location designated by STTC. Unless SHRCO
shall
protest the correctness of any invoice within seven (7) days of
its
receipt, SHRCO agrees that such invoice shall be presumed to be
correct. Should SHRCO fail to pay any charges when due, SHRCO
shall
pay interest on such delinquent amounts at one and one-half
percent
(1-1/2%) per month or the maximum permissible rate allowed in
the
jurisdiction in which SHRCO's principal place of business is
located,
whichever is lower, from the date on which payment was due until
paid,
together with all expenses of collection and reasonable
attorneys'
fees. This interest charge shall not be construed as an agreement
to
accept late payments.
6. VEHICLE USE AND DRIVERS.
SHRCO shall use the Vehicle only in the normal and
ordinary course of its business and operations and in a
careful,
non-abusive manner, and not beyond its capacity and SHRCO shall
not
make any alterations to the Vehicle without STTC's prior
written
consent. Subject to the terms of this lease, from the time of
delivery
to SHRCO of any Vehicle covered by this lease, SHRCO shall have
exclusive possession, control, supervision and use of the
Vehicle
until its return to STTC. SHRCO agrees that all Vehicles shall
be
operated by safe, qualified, properly licensed drivers, who
shall
conclusively be presumed to be SHRCO's agent, servant or
employee
only, and subject to its exclusive direction and control. The
Vehicles
shall not be operated: (a) by a driver in possession of or under
the
influence of alcohol or any controlled drug, substance, or
narcotic;
(b) in a reckless or abusive manner; (c) off an improved road; (d)
on
an under inflated tire; (e) improperly loaded or loaded beyond
maximum
weight; or (f) in violation of any applicable laws, ordinances,
or
rules; and SHRCO shall protect, defend, indemnify and hold STTC
harmless from and against all fines, claims, forfeitures,
judgments,
seizures, confiscations or penalties arising out of any such
occurrence. SHRCO will be responsible for all expenses for removing
or
towing any mired or snowbound Vehicle. SHRCO agrees not to use
or
cause any Vehicle to be used for the transportation of
3
<PAGE>
hazardous materials as defined by regulations promulgated by the
Unite
States Department of Transportation, unless otherwise agreed to
in
writing by STTC, nor for any illegal purpose. SHRCO will cause
each
Vehicle to be stored in a safe location. Upon receipt of a
written
complaint from STTC specifying any reckless, careless or
abusive
handling by any driver of the Vehicle(s), SHRCO shall prohibit
the
driver so identified from operating the Vehicle(s), In the event
that
SHRCO shall fail to do so or shall be prevented from so doing by
any
agreement with anyone on the driver's behalf, SHRCO shall
reimburse
STTC in full for any loss and expense incurred by STTC as a result
of
operation or use of the Vehicle(s) by such driver; and SHRCO
shall
protect, defend, indemnify and hold STTC and its shareholders
harmless
from and against any
costs, expenses or damages arising out of the
operation of any Vehicle(s) by such driver, notwithstanding that
STTC
may be designated in this lease as responsible for extending
liability
coverage or assuming the risk of loss of, or damage to, the
Vehicle.
SHRCO authorizes STTC to investigate the driving record of each
driver
and test such driver with respect to his ability to operate the
Vehicle to which he will be assigned, without prejudice to any
right
or remedy of STTC under this lease. The drivers shall be selected
and
employed by SHRCO. STTC will have no responsibility for
compensation,
supervision or control of such drivers.
7. PHYSICAL DAMAGE TO VEHICLES.
SHRCO assumes the risk of loss of, or damage
to, the Vehicle(s) covered by this lease from any and every
cause
whatsoever, including, but not limited to, casualty, collision,
upset,
fire, theft, malicious mischief, vandalism, graffiti, glass
breakage,
and mysterious disappearance, except as otherwise provided in
this
lease. SHRCO shall, at its sole cost, procure and maintain an
automobile collision and comprehensive insurance policy
protecting
STTC against any and all loss or damage to the Vehicles covered
by
this lease, in form satisfactory to STTC, which policy shall
provide
that losses, if any, shall be payable to STTC and/or its
4
<PAGE>
assignee. The amount of coverage for each vehicle shall be the
fair
market value of each item as of this date. SHRCO shall deliver to
STTC
all policies of insurance, or evidence satisfactory to STTC of
such
coverage, prior to delivery to SHRCO of any Vehicle covered by
this
lease. Each insurer shall agree, by endorsement upon the policy
issued
by it, or by an independent document provided to STTC, that it
shall
give
STTC thirty (30) days' prior written notice of the effective
date
of any alteration or cancellation of such policy, and that such
notice
shall b
