Preventative Maintenance Agreement: Definition & Sample

A preventative maintenance agreement is a service contract designed to help businesses maintain their equipment and avoid costly repairs. These agreements can be customized to work with your budget and needs, giving you the peace of mind that comes from knowing your company won't have to deal with sudden expenses or downtime due to unplanned breakdowns.

Preventive maintenance agreements include responsibilities of all parties involved, compensation and benefits, and what happens when either party wants to terminate the agreement. Preventative maintenance agreements help ensure less costly repairs with continual preventive maintenance.

Common Sections in Preventative Maintenance Agreements

Below is a list of common sections included in Preventative Maintenance Agreements. These sections are linked to the below sample agreement for you to explore.

Preventative Maintenance Agreement Sample

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.

TURBINE DRIVEN EQUIPMENT

This Turbine Driven Equipment Maintenance Agreement (“Agreement”) is executed as of the dates set forth below but shall be effective as of September 22, 2011, by and between Green Field Energy Services, Inc. (f/k/a Green Field Energy Services, LLC) (“Company”), and Turbine Powered Technology, LLC (“Contractor”).

WHEREAS , Company operates an oil and gas service company;

WHEREAS , Company owns and/or is in the process of acquiring various pieces of trailer and skid mounted turbine driven equipment;

WHEREAS , Contractor (and/or its contractors and vendors), specializes in the design, manufacture, remanufacture, rebuilding, assembly, disassembly, maintenance, product improvement initiatives, repair development and field services for turbine engines and accessory equipment;

WHEREAS , Company is in need of expert maintenance and repair services with respect to maintaining and repairing its current and future fleet of turbine driven equipment with accessory equipment, gearboxes, hydraulic and electrical systems and components;

NOW THEREFORE , in consideration of the mutual covenants, undertakings and conditions set forth below, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Section 1.1 – Agreement . This Agreement consists of the terms and conditions set forth in the sections captioned by numbered article designations (“Articles”) and the following appendices, which are incorporated and made part this Agreement by this reference and are included in any reference to this Agreement.

Appendix A – Scope of Contractor’s Maintenance / Repair Services for Turbine Driven Equipment (operating equipment);

*** 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.

Appendix B – Compensation;

Appendix C – Warranty on Contractor’s Services / Vendor’s Warranty

If the terms and conditions of the Articles of this Agreement vary or are inconsistent with any portion of the Appendices, the terms of the Appendices shall control and be given priority, and the provisions of this Agreement shall be subject to the terms of the Appendices. This Agreement contains the entire agreement between the parties and supersedes all prior agreements, whether oral or written, between the parties with respect to the subject matter of this Agreement. Neither party will be bound by or be deemed to have made any representations, warranties, commitments or other undertakings with respect to the subject matter of this Agreement that are not contained in this Agreement.

Section 1.2 – Effective Date and Term . This Agreement will begin and is effective on September 22, 2011 and will expire on June 30, 2014. The term of this Agreement shall be automatically extended for two additional three (3) year terms (each an “Extension Term”), unless either party opts to terminate by providing written notice of such election on or before February 1, 2014 with respect to the first Extension Term or on or before February 1, 2017 with respect to the Second Extension Term.

Section 1.3 – Relationship of The Parties . Contractor has been retained by Company as an independent contractor in order to maintain, service and repair the Turbine Driven Equipment (defined below) for the Company and any accessory equipment, reduction gearboxes and accessory gearboxes. During the term of this Agreement, Contractor shall have the exclusive right to maintain, service and repair all of Company’s Turbine Driven Equipment and all related and accessory equipment, and all gearboxes and accessory gearboxes.

Section 1.4 – Representatives . Company and Contractor shall each designate a representative (“Designated Representative”) to act on its behalf in overseeing the performance of this Agreement. Company and Contractor may change their respective Designated Representatives upon written notice to the other party given as provided in this Agreement. Designated Representatives shall be the primary means for communication and all other interactions between Company and Contractor that are required under this Agreement.

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Definitions . Unless otherwise required by the context in which a defined term appears, the following terms shall have the meanings specified in this Article 2. Terms that are defined in other Articles shall have the meanings given to them in those Articles.

The term “gearboxes and accessory gearboxes” shall mean any and all reduction or accessory gearboxes, including but not limited to those gearboxes furnished to Company by Contractor and/or outside vendors such as CB Gears, and which are used in conjunction with Turbine Driven Equipment.

“Operating Manuals” means the operating data, design drawings, specifications, vendors’ manuals, warranty requirements, procedures (including those for maintenance of the Turbine Driven Equipment, gearboxes, hydraulic and electrical systems and components, and environmental and safety compliance), and similar materials with respect to the Turbine Driven Equipment.

“Turbine Driven Equipment” means any equipment (whether now owned or acquired in the future) of the Company which incorporates the use of a turbine engine, including certain accessory equipment and gearboxes. For purposes hereof “accessory equipment” means the following equipment; 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 and mechanical engine instrument package.

“Services” has the meaning set forth in Article 3.1.

Section 3.1 – Scope of Contractor’s Services—Operating Turbine Driven Equipment . Contractor shall maintain and repair all Turbine Driven Equipment, accessory equipment, and all gearboxes and accessory gearboxes for the Company, whether now owned or acquired in the future, and shall also perform any other work on the Turbine Driven Equipment as mutually agreed upon by the parties. Should the Contractor be unable to or unwilling to supply a service because it cannot reasonably do so, Company is free to procure said necessary service from third parties free from any exclusivity restrictions hereunder; provided however, that should Contractor thereafter be able and willing to supply said necessary service, Company shall procure said service from Contractor. The scope of the Contractor’s services to be provided on the Turbine Driven Equipment is more fully described on Appendix “A” attached hereto.

Section 3.2 – Standards for Performance of the Services . Contractor shall perform the Services required under this Agreement, in a prudent, reasonable, and efficient manner and in accordance with the Operating Manuals and applicable vendor warranties. Contractor shall provide all Services in compliance with all applicable laws, codes and industry standards. Contractor agrees that it is performing Services at the direction of Company and will heed Company’s instructions regarding the timing, conditions, and scope of such Services provided the same are not in conflict with the terms and provisions of this Agreement or applicable laws, codes and industry standards.

Section 3.3 – Contractor’s Personnel Standards . Contractor shall provide as reasonably necessary all labor and professional, supervisory and managerial personnel as are required to perform the Services. All individuals employed by Contractor to perform the Services shall be employees of Contractor (or its contractors), and their working hours, rates of compensation and all other matters shall be determined solely by Contractor.

Section 3.4 – Operating Records and Reports . Contractor shall develop and maintain equipment maintenance and operating logs, records, and reports that document the maintenance and repair of the Turbine Driven Equipment, Accessory Equipment and the gearboxes, all in form and substance as may be reasonably required by Company. Contractor shall maintain current revisions of drawings, specifications, lists, clarifications and other materials related to the maintenance and repair of the Turbine Driven Equipment.

Section 3.5 – No Liens or Encumbrances . Contractor shall maintain and repair the Turbine Driven Equipment free and clear of all liens and encumbrances resulting from any action of Contractor or work done at the request of Contractor, except for such liens or encumbrances that result directly from nonpayment by Company of amounts due and owing to Contractor under this Agreement.

I nformation . At Contractor’s request, Company shall provide Contractor with all vendor manuals, spare parts lists, equipment data books and drawings which are provided to Company by any vendor or contractor, which information is reasonable or necessary in order for Contractor to perform the Services hereunder. Contractor shall be entitled to rely upon such information in performance of the Services.

COMPENSATION AND PAYMENT

Section 5.1 – Payments . As compensation to Contractor for performance of the Services hereunder, Company shall pay Contractor as provided on Appendix B attached hereto.

Section 5.2 – Billing and Payment . Within 10 days following the end of each month, Contractor shall submit invoices for Services performed in the prior month. Within 30 days of the invoice date, Company shall pay the sum specified in such invoice, less (i) any amounts previously deposited with Contractor relating to such invoice, and (ii) any portion of such invoice amount that Company disputes in good faith. With respect to any disputed portion of such invoice, Company shall provide Contractor with a written statement explaining, in reasonable detail, the basis for such dispute. The parties shall attempt to resolve any such disputed portion in accordance with Article 9.

Section 5.3 – Interest . Any amount owed by Company to Contractor which remains unpaid more than 30 days after the invoice date shall begin to accrue interest at the rate of eighteen (18) percent per annum, until paid in full. In the event that Contractor places any invoice or amount owed by Company in the hands of an attorney for collection, Company shall pay Contractor’s reasonable attorney’s fees, in an amount equal to 25% of the principal balance owed, plus all court costs, arbitration costs and/or costs of collection.

This Agreement will be subject to termination prior to the expiration of the term if Contractor defaults in performing any of the terms or is otherwise in material breach of this Agreement and fails to remedy the default or cure the breach within a period of thirty (30) days (the “cure period”) after receipt of written notice describing the particulars thereof. In the event that Contractor fails to cure the default within the cure period, then Company may thereafter terminate this Agreement upon written notice to Contractor provided at least thirty (30) days before the time such termination is to take place.

This Agreement will be subject to termination prior to the expiration of the term if Company defaults in performing any of the terms or is otherwise in material breach of this Agreement and fails to remedy the default or cure the breach within a period of thirty (30) days (the “cure period”) after receipt of written notice describing the particulars thereof. In the event that Company fails to cure the default within the cure period, then Contractor may thereafter terminate this Agreement upon written notice to Company provided at least thirty (30) days before the time such termination is to take place.

The parties reserve the right at any time during the life of this Agreement to terminate this Agreement in their absolute discretion on 60 days’ notice in the event that,

(i)	another party becomes insolvent; or

(ii)	any voluntary or involuntary petition in bankruptcy or for corporate reorganization or for any similar relief is filed by or against another party and, in the case of an involuntary petition, such petition is not dismissed within 90 days after such filing; or

(iii)

a liquidation proceeding is commenced by or against another party, and, in the case of an involuntary proceeding, such proceeding is not dismissed within 90 days after commencement thereof.

Section 7.1 – “Confidential Information” means, without limitation, all non-public information including, but not limited to, ideas, trade secrets, know-how, research and development, training, software, programs, hardware configuration information, price lists, data, manuals, handbooks, sponsors, investors, business strategies and plans, marketing, sales records, drawings, specifications, designs, materials, parts lists, customer lists, consumer information, suppliers, contract terms, test criteria, vendor lists, financial information, and all other information or data of any kind or character, relating to the business of Company or Contractor, whether or not reduced to writing. However, Confidential Information shall not include any information which has been or become publicly known, is provided to a party from another person with the right to disclosure such information or is independently generated by a party without reference to any Confidential Information.

Section 7.2 – As a condition to entering into the Agreement and furnishing its Confidential Information, each Party (a “receiving Party”) hereto hereby agrees to refrain from disclosing (including but not limited to by any press release or other public dissemination) any Confidential Information (whether written, oral or in any other form and whether prepared by a disclosing Party, its advisors, or otherwise) that is disclosed to it, or to which it is allowed access, by or on behalf of the other Party (a “disclosing Party”) provided that such Confidential Information is either marked as “CONFIDENTIAL” or otherwise described and designated as “CONFIDENTIAL in writing by the disclosing Party. Notwithstanding the foregoing, Confidential Information may be disclosed to: (a) a Party’s directors, officers, employees, agents, advisors and representatives of such advisors (the persons to whom such disclosure is permissible being collectively called “Representatives”) who need to know such information; (b) third party contractors providing services relating to the subject matter of the Agreement who have been bound by confidentiality restrictions as protective as those herein; and (c) governmental authorities or others as may be required by law.

Section 7.3 – Each Party hereby agrees that any such Confidential Information made available to it will be used solely for the purpose of performing its obligations or enjoying the benefits under the Agreement. In addition, without prior written consent of the disclosing Party, the receiving Party shall not disclose the fact that the Confidential Information has been made available to it. Furthermore, Contractor acknowledges that Company may need to disclose to its customers in the ordinary course (manual revisions, schematics, reverse engineerable devices, and so forth) some of the materials created by Contractor in connection with Services provided which may contain Confidential Information and Contractor consents to such disclosure and use. Each Party agrees to be responsible for any breach of this Agreement by its Representatives.

Section 7.4 – Subject to Company’s rights to maintain and use any material to which it is entitled as a licensee of the Frac Stack Pack Technology, in the event of: (i) a termination or expiration of the Agreement or (ii) upon the disclosing Party’s request, all as may be indicated in a writing delivered by the disclosing Party to the receiving Party, then (a) the receiving Party shall promptly collect from all of its officers, directors, employees and Representatives all written materials containing, embodying or based on Confidential Information disclosed to it and destroy such materials, without retaining any copies, extracts or other reproductions in whole or in part of such written material, and (b) the receiving Party shall promptly delete from any of its computer or electronic or digital information storage devices or systems, any electronic or digital form of the Confidential Information or information derived therefrom; provided however, that a Party’s counsel may retain one copy of any such Confidential Information for evidentiary purposes.

INTELLECTUAL PROPERTY, DOCUMENTS, INFORMATION AND/OR DATA

Section 8.1– Documents, Information and/or Data . All patents, trade secrets, proprietary information and/or data, and all similar intellectual property rights (“Intellectual Property”) developed by Contractor, its employees, representatives or sub-contractors in connection with the performance of the Services under this Agreement, shall be and remain the property of Contractor. Company shall execute any and all documents reasonable or necessary in order to evidence Contractor’s ownership of such Intellectual Property. In the event that Contractor performs any of its obligations hereunder through vendors or third parties, any Intellectual Property generated in the performance of said Services for Company shall be and remain the property of Contractor. Company agrees that it shall not remove any notices or legends pertaining to protection of Contractor’s Intellectual Property from materials provided to Company by Contractor in performance of the Services.

Section 8.2 – Contractor agrees that any Intellectual Property covered by Section 8.1 above shall be covered under the grant to Company of a license under the Turbine Driven Equipment License Agreement, executed on October _, 2011.

Section 8.3 – Company shall cooperate with Contractor at Contractor’s expense in the event that Contractor desires to seek intellectual property protection and/or approval, including patent, trademark, servicemark or copyright protection, for all or any part of the Intellectual Property and Company shall execute any and all documents reasonable or necessary in order to acquire such approval.

Section 8.4 – Contractor shall have the sole right to prepare, file, prosecute and maintain patent applications or trademark applications or service mark applications or registrations of any nature or kind with respect to the Intellectual Property. All such applications and registrations shall be at Contractor’s expense.

RESOLUTION OF DISPUTES

Section 9.1– Choice of Law / Dispute Resolution. This Agreement shall be governed by and construed under and in accordance with the laws of the State of Louisiana without regard to conflicts of law principles that would require application of any other law. In the event of any dispute, claim, question, or disagreement (the “dispute”) arising from or relating to this Agreement or the breach hereof, the parties hereto shall use their best efforts to settle the dispute by normal business discussions. Should such discussions fail to resolve the dispute, any party may give the other a written notice of any remaining dispute. Upon notice by either party to the other, all disputes, claims, questions, or differences (including issues relating to the formation of this Agreement and the validity of this arbitration clause) shall be finally settled by binding arbitration administered by the American Arbitration Association (“AAA”) in accordance with the provisions of its Commercial Arbitration Rules, as well as the Federal Rules of Civil Procedure and the Federal Rules of Evidence, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

The arbitration Panel shall consist of a single arbitrator, unless otherwise agreed to by the parties. The place of arbitration shall be Lafayette, Louisiana. If the parties are not able to decide upon a neutral third party arbitrator within thirty (30) days of the request for arbitration, then the AAA shall select an arbitrator. All proceedings will be conducted in English. The parties agree to hold the entirety of the arbitration proceedings, including knowledge of the existence of any dispute or controversy, completely confidential except for such disclosures as might be required by law. This agreement to arbitrate does not limit or affect the right of either party to seek from any court having jurisdiction any interim, interlocutory, or provisional relief that is necessary to protect the rights or property of that party. Alternatively, either party may apply to the AAA pursuant to the AAA Optional Rules for Emergency Measures seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved.

Section 9.2 – Continued Performance . During the pendency of any arbitration, Contractor and Company shall continue to perform their obligations under this Agreement.