Except as otherwise agreed in writing Lessee agrees to the following terms and conditions which form an integral part of the Rental Contract.

Delivery of the Equipment-The Equipment shall be delivered FOB point of shipment. All risk of loss shall pass to Lessee upon delivery of the Equipment by Heritage to the carrier, regardless of whether the freight or insurance for the Equipment while in transit is prepaid by Heritage. The Lessee shall pay all freight charges and insurance costs. If any of these costs are prepaid by Heritage, Lessee shall pay to Heritage the cost plus 30%. The Lessee shall be responsible for any damage to the Equipment while in transit and Lessee's sole recourse for damage to Equipment in transit shall be against the carrier. Heritage is not responsible for insuring the Equipment while in transit. Lessee shall insure the Equipment while in transit in accordance with the insurance requirements set forth herein(see "Insurance").

Title To The Equipment-Title to the Equipment shall remain with Heritage at all times and the Lessee shall have no right, title, or interest therein. The Lessee will, at its expense, protect and defend Heritage' title to the Equipment and will keep the Equipment free and clear from any claims, liens, and encumbrances of Lessee's creditors and other persons.

Return Of The Equipment-Heritage has the right to demand the return of the Equipment at any time and the Lessee agrees to return the Equipment promptly upon demand by Heritage.

Warranty-Heritage warrants that the Equipment will be in good operating condition when delivered to the carrier for delivery to the Lessee. Heritage, not being the manufacturer of the Equipment, hereby expressly makes no warranty or representation, express or implied, of merchantability or fitness for any particular purpose or otherwise, including, but not limited to: the fitness for use, design, or condition of the Equipment; the quality or capacity of the Equipment; the workmanship of the Equipment; that the Equipment will satisfy the requirements of any law, rule, specification, or contract pertaining thereto; and any guarantee or warranty against patent infringement or latent defects. All such risks are borne by Lessee. Heritage is not responsible or liable for any direct, indirect, incidental, or consequential damage to, or losses resulting from, the installation, operation, or use of the Equipment.


Control Of The Equipment-The Lessee agrees to maintain absolute control and possession of the Equipment at all times until the Equipment is returned to Heritage and shall not cause the Equipment to be moved outside the Territory. The Lessee shall cause the Equipment to be handled by competent, trained personnel only, and shall comply with all applicable safety procedures. The Lessee agrees that operation of the equipment may be hazardous and waives all claims of liability against Heritage for any personal or physical damage that may occur during operation of the Equipment. Neither Heritage, nor its Officers, employees, or agents, shall be liable in any manner to the Lessee, its employees, agents, or anyone else, for any injury or damage whatsoever resulting from the Equipment or the use of the Equipment, nor for the result, or lack of result, obtained by the use of the Equipment. The Lessee shall pay all expenses of operating the equipment.

Risk Of Loss-The Lessee assumes all risk of loss, damage, theft, or destruction of the Equipment from the time the Equipment is delivered by Heritage to the carrier, through the time the Equipment is returned to the possession of Heritage. Except as provided in this section, no such loss, damage, theft, or destruction of the Equipment, in whole or in part, shall impair the obligations of the Lessee under this Rental Contract, all of which shall continue in full force and effect. In the event of any damage to the Equipment, Lessee, at Heritage' option, shall either (a) place the Equipment in good repair, condition and working order; (b) replace the Equipment with like equipment in good repair, condition and working order; or (c) pay Heritage an amount equal to all unpaid rentals due and to become due under the Rental Contract with respect to the affected Equipment, less the net amount of the recovery, if any, actually received by Heritage from insurance or otherwise for such loss, damage, or destruction.

Maintenance, Repairs, Operation, and Replacement-The Lessee shall at its expense keep and maintain the Equipment in good condition and running order, reasonable wear and tear excepted. All necessary replacement parts will be paid for by the Lessee, but shall become a part of the Equipment and shall be the property of Heritage.

If any defect occurs which impedes the proper operation of the Equipment during the Rental Period the Lessee shall report such defect to Heritage immediately. If, in the sole discretion of Heritage, the defect has occurred due to no fault of the Lessee, then Heritage may agree to a hiatus in the rent, during which time the equipment will be repaired and rent charges will not be applied. Such a hiatus will begin on the day that Heritage is notified of the defect and makes a determination that the defect has occurred due to no fault of the Lessee and shall terminate on the day that the Equipment, as repaired, is received by the Lessee. Depending on availability, Heritage may agree to supply substitute equipment, in which case the hiatus will be adjusted accordingly.

At the end of the Rental Period the Lessee shall compensate Heritage for any damage to the Equipment. The amount of such compensation shall be based on the retail value of the Equipment according to the then current Heritage price list, less any reasonable allowance as determined by Heritage in its absolute discretion.

Insurance-The Lessee shall, at its own expense, insure the Equipment at all times against all hazards requested by Heritage including, but not limited to, fire, theft, and extended coverage insurance, and such policies shall be payable to Heritage. Lessee shall also obtain insurance or cause Heritage to obtain insurance and reimburse Heritage for all costs of the insurance, plus 10%, for any damage or loss to the Equipment while the Equipment is in transit to or from Heritage' office. Lessee will deliver all policies of insurance to Heritage, and Heritage shall be entitled to receive all insurance proceeds collected under the policies. Lessee shall also, at its own expense, carry public liability insurance with respect to the Equipment and the use thereof, in such amounts and with such insurers as are reasonably satisfactory to Heritage, and such insurance policies shall also name Heritage as an insured thereunder. The proceeds of any public liability or property damage insurance shall be payable first to Heritage to the extent of its liability, if any, and the balance to the Lessee. The proceeds of any fire, theft, and extended coverage insurance with respect to the Equipment shall be payable solely to Heritage and shall be applied by Heritage toward the payment of the Lessee's obligations under this Rental Contract and any balance of the proceeds shall be the property of Heritage, provided that at Heritage' option such proceeds may be used for the repair or replacement of the affected Equipment.

Inspection And Removal Of The Equipment- Heritage or its agent may at all reasonable times enter the land and premises of the Lessee for the purpose of viewing the state and condition of the Equipment. Upon a breach of this Rental Contract by the Lessee, Heritage may enter the land or premises of the Lessee and remove and carry away therefrom the Equipment and for that purpose take all acts necessary and reasonable for such removal without being liable for any damage caused thereby and without prejudice to Heritage' rights in respect to rent or sums of money due or to become due from the Lessee under this Rental Contract.

At the expiration of this Rental Contract, the Lessee will return the Equipment to Heritage in the same operating order, repair, condition, and appearance as of the date of this Rental Contract, excepting only reasonable wear and tear and depreciation resulting from the authorized use of the Equipment. The Lessee shall pay all costs of shipping the Equipment to Heritage and insuring the Equipment while in transit at the end of this Rental Contract.

Security Interest-Lessee agrees to execute one or more financing statements or other documents as required by Heritage for the purpose of evidencing this Rental Contract and Heritage' ownership interest in the Equipment. The provisions of this paragraph shall not be deemed to alter the lease arrangement of the parties, which they intend as a true lease and not as a sale with retention by Heritage of a security interest in the Equipment. The provisions of this paragraph shall not be deemed to affect the continued vesting in Heritage of title to the Equipment during the term of this lease. Lessee shall not grant or attempt to grant any interest in the Equipment to any other party during the Rental Period. Lessee shall take no action or permit any occurrence which would adversely affect the Equipment or the security interest of Heritage under this Rental Contract.

Assignment-The Lessee shall not assign or transfer in any way any rights hereunder to any other person or corporation without the prior written consent of Heritage. In addition, the Lessee shall not sublet or make any alterations or additions or improvements to the Equipment or permit the use thereof by any person other than the Lessee or the Lessee's employees without the written consent of Heritage. Consent to any of the foregoing acts shall apply only in the given instance and a further act by the Lessee or the Lessee's assignee or sublessee shall require a further written consent. The Lessee agrees that neither this Rental Contract nor any interest herein shall be assignable or transferable by operation of law.

Taxes-Lessee shall pay, promptly when due, all taxes, including sales, use, excise, and property taxes, which may be levied with respect to this transaction or with respect to the Equipment, which accrue or are due during the term hereof. If this transaction is subject to Colorado sales taxes, such taxes shall be paid when due to Heritage in addition to any other amounts due hereunder. In the event of failure of Lessee to pay such taxes promptly when due Heritage may pay such taxes and may require Lessee to reimburse Heritage for such taxes, with interest thereon at the rate of 18% per annum, and for reasonable costs incurred in connection therewith, including attorney's fees, as additional rent hereunder.

Events Of Default-The Lessee shall be in default under this Rental Contract upon the happening of any of the following events or conditions("Events of Default"): (i) default in making any payment when due hereunder; (ii) the failure to procure or maintain insurance coverage required hereunder; (iii) the failure to perform or observe any covenant, condition or agreement contained herein; (iv) the seizure, taking or subjecting to a lien of any of the Equipment by any third party pursuant to any legal action, security interest, lien, or other encumbrance therein; (v) insolvency(however expressed or indicated), appointment of a receiver of any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceedings under any bankruptcy, organization, arrangement or insolvency or other law relating to the relief of debtors by or against the debtor; and (vi) any action or circumstance where Heritage reasonably deems itself to be insecure under the Rental Contract.

Remedies-Upon the occurrence of any Event of Default, Heritage may without notice or demand declare the Rental Contract in default and may thereafter exercise all rights accruing to Heritage under any applicable law upon a default by a Lessee, including without limitation, the right to: (i) declare all unpaid rent to be immediately due and payable; (ii) terminate the Rental Contract as to any or all items of the Equipment; (iii) take possession of the Equipment and for this purpose enter upon any premises of the Lessee and remove the Equipment, without any liability or suit, action, or other proceeding by Lessee; (iv) cause the Lessee at its expense to promptly return the equipment to Heritage; (v) use, hold, sell, lease, or otherwise dispose of the Equipment or any item thereof on the premises of the Lessee or any other location without affecting the obligations of the Lessee as provided in the Rental Contract; (vi) sell or lease the Equipment or any part thereof at public auction or by private sale or lease at such time or times and upon such terms as Heritage may determine, free and clear of any rights of the Lessee and, if notice thereof is required by law, any notice in writing of such sale or lease by Heritage to Lessee not less than 10 days prior to the date thereof shall constitute reasonable notice thereof to Lessee; (vii) proceed by appropriate action either at law or in equity to enforce performance by the Lessee of the applicable covenants of this Rental Contract or to recover damages for the breach thereof.

Miscellaneous-(a) No Event of Default shall be waived by Heritage, except in writing, and no waiver of any right under this Rental Contract shall operate as a waiver of any other or similar right or of the same right on another occasion.

(b) This Rental Contract shall be governed by the laws of the State of Colorado and all the terms used herein, unless otherwise defined, shall have the meaning set forth in the laws of the State of Colorado. In the Event of Default, this Rental Contract may be enforced in any court of competent jurisdiction in the City and County of Denver, State of Colorado, and the Lessee hereby submits to the jurisdiction of such court regardless of the Lessee's residence or where this Rental Contract may be executed.

(c) Any notice given or required to be given by this Rental Contract shall be given to the appropriate party at the address set forth in this Rental Contract or at such change of address as a party is notified of in writing, certified mail, return receipt requested, and shall be deemed effected 3 days from the date of mailing.

(d) If Heritage should take any action to enforce any of its legal rights pursuant to this Rental Contract, Heritage shall be entitled to such damages, including costs and attorney's fees, as may be incurred by Heritage. If Heritage should successfully defend any lawsuit or settle any disputed matter relating to this Rental Contract, Heritage shall be entitled to such damages, including costs and attorney's fees, as may be incurred by Heritage.

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Heritage Geophysics Inc.   625 Valley Road, Littleton, CO 80124   Tel & Fax: (303) 790-4237   Cell (720) 320-2821

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