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HomeMy WebLinkAboutResolution - 2012-R0104 - Oil And Gas Lease Agreement - Four Sevens Exploration Co. LTD - 03_06_2012I Resolution No. 2012-RO104 March 6, 2012 Item No. 5.13 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock is hereby authorized and directed to execute for and on behalf of the City of Lubbock, an Oil and Gas Lease Agreement for mineral interest on the landfill property, by and between the City of Lubbock and Four Sevens Exploration Co., LTD., and related documents. Said Agreement is attached hereto and incorporated in this resolution as if fully set forth herein and shall be included in the minutes of the City Council. .Passed by the City Council on I ATTEST: Rebe a rarza City Secretary APPROVED AS TO CO Scott Snider, Assistant City Manager Community Services AS TO FORM: Weaver,` Assistant City Attorney March 6, 2012 100r�__ TOM MARTIN, MAYOR vw:ccdocs/RES.Agnnt-Four Sevens Exploration -landfill February 14, 2012 Resolution No. 2012-RO104 Producers 88 (4-89) Paid Up Special With 640 Acres Pooling Provision TEXAS STANDARD FORM PAID UP OIL AND GAS LEASE THIS LEASE AGREEMENT is made as ofthe6 the y of March .20 12, between The City of Lubbock. Texas. a Municipal Corporation, as Lessor (whether one or more) whose address is P.O. Box 15100 Lubbock. Texas. 79350 and Four Sevens Exploration Co.. Ltd., as Lessee, whose address is 777 Taylor St. Fort Worth. TX. 76102, Suite 1090, All printed portions of this lease were prepared by the party hereinabove named as Lessee, but all other provisions (including the completion of blank spaces) were prepared jointly by Lessor and Lessee. 1. In consideration of a cash bonus in hand paid and the covenants herein contained, Lessor hereby grants, leases and Icts exclusively to Lessee the following described land, hercinafler called leased premises: 630.44 acres more or less, being all of Section 1, Block C-K, G.0 & S.F. Ry. Co. Survey, Abstract No. 617, Cert. No. 2233, Lubbock County, Texas, being more particularly described by metes and bounds in that certain Warranty Deed date May 2, 1997 from William D. Young, Jr., Trustee to The City of Lubbock, recorded as Volume 5466, Page 315, Deed Records, Lubbock County, Texas. 607.10 acres more or less, being all of Section 1, Block P, E.L. & R.R. Ry. Co. Survey, Abstract No. 335, land script No.1211, Lubbock County, Texas, and being further described by meta and bounds in that certain Warranty Deed dated May 2, 1997 from Edmond A. Anderson et al, to the City of Lubbock, recorded as Volume, 5495, Page 137, Deed Records, Lubbock County, Texas. in the county of Lubbock, State ofTexas, containing 1,237.54 gross acres, more or less (including any interests therein which Lessor may hereafter acquire by reversion, prescription or otherwise), for the purpose of exploring for, developing, producing and marketing oil and gas, along with all hydrocarbon and nonhydrocarbon substances produced in association therewith. The term "gas" as used herein includes helium carbon dioxide and other commercial gases, as well as hydrocarbon gases. In addition to the abovedescribed leased premises, this lease also covers accretions and any small strips or parcels of land now or hcrcafler owned by Lessor which arc contiguous or adjacent to the above -described leased premises, and, in consideration of the aforementioned cash bonus, Lessor agrees to execute at Lessee's request any additional or supplemental instruments for a more complete or accurate description of the land so covered. For the purpose ofdetermining the amount of any shut-in royalties hereunder, the number of gross acres above specified shall be deemed correct, whether actually more or less. 2. This lease, which is a "paid -up" lease requiring no rentals, shall be in force for a primary term of Three (3) years from the date hereof, and for as long thereafter as oil or gas or other substances covered hereby are produced in paying quantities from the leased premises or from lands pooled therewith or this lease is otherwise maintained in effect pursuant to the provisions hereof. 3. Royalties on oil, gas and other substances produced and saved hereunder shall be paid by Lessee to Lessor as follows: (a) For oil and other liquid hydrocarbons separated at Lessees separator facilities, the royalty shall be twenty-two and one-half percent (22.5%) ofsuch production, to be delivered at Lessees option to Lessor at the wellhead or en Lessor's credit at the oil purchaser's transportation facilities, provided that Lessee shall have the continuing right to purchase such production at the wellhead market price then prevailing in the same field (or if there is no such price then prevailing in the same field, then in the nearest field in which there is such a prevailing price) for production ofsimilar grade and gravity; (b) for gas (including casinghead gas) and all other substances covered hereby, the royalty shall be twenty-two and one-halfpereent (22.5%) of the proceeds realized by Lessee from the sale thereof, less a proportionate part of ad valorem taxes and production severance, or other excise taxes and the costs incurred by Lessee in delivering, processing or otherwise marketing such gas or other substances, provided that Lessee shall have the continuing right to purchase such production at the prevailing wellhead market price paid for production of similar quality in the same field (or if there is no such price then prevailing in the same field, then in the nearest field in which there is such a prevailing price) pursuant to comparable purchase contracts entered into on the same or nearest preceding date as the date on which Lessee commences its purchases hereunder; and (c) if at the end of the primary tam or any time thereafter one or more wells on the leased prca dses or lands pooled therewith are capable of producing oil or gas or other substances covered hereby in paying quantities, but such well or wells are either shut in or production therefrom is not being sold by Lessee, such well or wells shall nevertheless be deemed to be producing in paying quantities for the purpose of maintaining this lease. If for a period of 90 consecutive days such well or wells are shut in or production therefrom is not being sold by Lessee, then Lessee shall pay shut-in royalty of one dollar per acre then covered by this lease, such payment to be made to Lessor or to Lessor's credit in the depository designated below, on or before the end ofsaid 90-day period and thereafter on or before each anniversary of the end of said 90-day period while the well or wells are shut in or production therefrom is not being sold by Lessee; provided that if this lease is otherwise being maintained by operations, or if production is being sold by Lessee from another well or wells on the leased premises or lands pooled therewith, no shut-in royalty shall be due until the end of the 90-day period next following cessation of such operations or production. Lessee's failure to properly pay shut-in royalty shall render Lessee liable for the amount due, but shall not operate to terminate this lease. 4. All shut-in royalty payments under this lease shall be paid or tendered direct to Lessor at above address. All payments may be made by check and such payments to Lessor deposited in die U.S. Mails in a stamped envelope addressed to the Lessor at the last address known to Lessee shall constitute proper payment. 5. If Lessee drills a well which is incapable of producing in paying quantities (hereinafter called "dry hole") on the leased premises or lands pooled therewith, or if all production (whether or not in paying quantities) permanently ceases from any cause, including a revision of unit boundaries pursuant to the provisions of Pnmgraph 6 or the action of any govemrnerual authority, then in the event this lease is not otherwise being maintained in force it shall nevertheless remain in force if Lessee commences operations for reworking an existing well or for drilling an additional well or for otherwise obtaining or restoring production on the leased premises or lands pooled therewith within 90 days after completion of operations on such dry hole or within 90 days after such cessation of all production. If at the end of the primary term, or at any time thereafter, this lease is not otherwise being maintained in force but Lessee is then engaged in drilling, reworking or any other operations reasonably calculated to obtain or restore production therefrom. this lease shall remain in force so long as any one or more of such operations are prosecuted with no cessation of more than 90 consecutive days, and if any such operations result in the production of oil or gas or other substances covered hereby, as long thereafter as there is production in paying quantities from the leased premises or lands pooled therewith. After completion of a well capable of producing in paying quantities hereunder, Lessee shall drill such additional wells on die leased premises or lands pooled therewith as a reasonably prudent operator would drill under the same or similar circumstances to (a) develop the leased premises as to formations then capable of producing in paying quantities on the leased premises or lands pooled therewith, or (b) to protect the leased premises from uncompensated drainage by any well or wells located on other lands not pooled therewith. There shall be no covenant to drill exploratory wells or any additional wells except as expressly provided herein. 6. Lessee shall have the right but not the obligation to pool all or any par of the leased premises or interest therein with any other lands or interests, as to any or all depths or zones, and as to any or all substances covered by this least, either before or after the commencement of production, whenever Lessee deems it necessary or proper to do so in order to prudently develop or operate the leased premises, whether or not similar pooling authority exists with respect to such other lands or interests. The unit formed by such pooling for an oil well which is not a horizontal completion shall not exceed 80 acres plus a maximum acreage tolerance of 10%, and for a gas well or a horizontal oil completion shall not exceed 640 acres plus a maximum acreage tolerance of 10%; provided that a larger unit may be formed for an oil well or gas well or horizontal completion to conform to any well spacing or density pattern that may be prescribed or permitted by any governmental authority having jurisdiction to do so. For the purpose of the foregoing, the terms "oil well" and "gas well" shall have the meanings prescribed by applicable law or the appropriate government authority, or, ifno definition is so prescribed, "oil well" means a well with an initial gas -oil ratio of less than 100,000 cubic feet per barrel, and "gas well" means a well with an initial gas -oil ratio of I G0,000 cubic feet or more per barrel, based on a 24-hour production test conducted under normal producing conditions using standard lease separator facilities or equivalent testing equipment; and the term "horizontal completion" means a well in which there is a horizontal component in the gross completion reservoir or interval after the vertical component. In exercising its pooling rights hereunder, Lessee shall file of record a written declaration describing the unit and stating the effective date of pooling. Production, drilling or reworking operations anywhere on a unit which includes all or any part of the leased premises shall be treated as if it were production, drilling or reworking operations on the leased premises, except that the production of which Lessor's royalty is calculated shall be that proportion ofthe total unit production which the net acreage covered by this lease and included in the unit burs to the total gross acreage in the unit, but only to the extent such proportion of unit production is sold by Lessee. Pooling in one or more instances shall not cxaust Lessee's pooling rights hereunder, and Lessee shall have the recurring right but not the obligation to revise any unit forted hereunder by expansion or contraction or both, either before or after commencement of production, in order to conform to the well spacing or density pattern prescribed or permitted by the governmental authority having jurisdiction, or to conform to any productive acreage determination trade by such governmental authority. In making such a revision, Lessee shall file of record a written declaration describing the revised unit and staling the effective date of revision. To the extent that any portion of the leasod premises is included in or excluded from the unit by virtue of such revision, the proportion of unit production on which royalties are payable hereunder shall thereafter be adjusted accordingly. In the absence of production in paying quantities from a unit, or upon permanent cessation thereof. Lessee may terminate the unit by filing of record a written declaration describing the unit and stating the date of termination. Pooling hereunder shall not constitute a cross -conveyance of interests. 7. If Lessor owns less than the full mineral estate in all or any part of the leased premises, the royalties and shut-in royalties payable hereunder for any well on any part of the leased premises or lands pooled therewith shall be reduced to the proportion that Lessor's interest in such part of the leased premises bears to the full mineral estate in such par of the leased premises. 8. The interest of either Lessor or Lessee hereunder may be assigned, devised or otherwise transferral in whole or in part, by area and/or by depth or zone, and the rights and obligations of the parties hereunder shall extend to their respective heirs, devisees, executors, administrators, successors and assigns. No change in Lessors ownership shall have the effect of reducing the rights or enlarging the obligations of Lessee hereunder, and no change in ownership shall be binding on Lessee until 60 days after Lessee has been furnished the original or certified or duly authenticated copies of the documents establishing such change of ownership to the satisfaction of Lessee or until Lessor has satisfied the notification requirements contained in Lessee's usual form ofdivision order. In the event of the death ofany person entitled to shut-in royalties hereunder, Lessee may pay or tender such shut-in royalties to the credit of decedent or decedent's estate in the depository designated above. If at any time two or more persons are entitled to shut-in royalties hereunder, Lessee may pay or tender such shut-in royalties to such persons or to their credit in the depository, either jointly or separately in proportion to the interest which each owns. If Lessee transfers its interest hereunder in whole or in part Lessee shall be relieved of all obligations thereafter arising with respect to the transferred interest, and failure of the transferee to satisfy such obligations with respect to the transferred interest shall not affect the rights of Lessee with respect to any interest not so transferred. If Lessee transfers a full or undivided interest in all or any portion of the area covered by this lease, the obligation to pay or tender shut-in royalties hereunder shall be divided between Lessee and the transferee in proportion to the net acreage interest in this lease then held by each. 9. Lessee may, at anytime and from time to time, deliver to Lessor or file of record a written release of this lease as to a full or undivided interest in all or any portion of the area covered by this lease or any depths or zones thereunder, and shall thereupon be relieved of all obligations thereafter arising with respect to the interest so released. If Lessee releases all or an undivided interest in less than all of the area covered hereby, Lessee's obligation to pay or tender shut-in royalties shall be proportionately reduced in accordance with the net acreage interest retained hereunder. 10. In exploring for, developing, producing and marketing oil, gas and other substances covered hereby on the leased premises or lands pooled or unitized therewith, in primary and/or enhanced recovery, Lessee shall have the right of ingress and egress along with the right to conduct such operations on the leased premises as may be reasonably necessary for such purposes, including but not limited to geophysical operations, the drilling of wells, and the construction and use of roads, canals, pipelines, tanks, water wells, disposal wells, injection wells, pits, electric and telephone lines, power stations, and other facilities deemed necessary by Lessee to discover, produce, store, treat and/or transport production. Lessee may use in such operations, free of cost, any oil, gas, water and/or other substances produced on the leased premises, except water from Lessor's wells or ponds without Lessor's consent, which cannot be unreasonably withheld. In exploring, developing, producing or marketing from the leased premises or lands pooled therewith, the ancillary rights granted herein shall apply (a) to the entire leased premises described in Paragraph I above, notwithstanding any partial release or other partial termination of this lease; and (b) to any other lands in which Lessor now or hereafter has authority to grant such rights in the vicinity of the leased premises or lands pooled therewith. When requested by Lessor in writing, Lessee shall bury its pipelines below ordinary plow depth on cultivated lands. No well shall be located less than 200 feet from any house or barn now on the leased premises or other lands used by Lessee hereunder, without Lessors consent, and Lessee shall pay for damage caused by its operations to buildings and other improvements now on the leased premises or such other lands, and to commercial timber and growing crops thereon. Lessee shall have the right at any time to remove its fixtures, equipment and materials, including well casing, from the leased premises or such other lands during the trnn of this lease or within a reasonable time thereafter. 11. Lessees obligations under this lease, whether express or implied, shall be subject to all applicable laws, rules, regulations and orders of any governmental authority having jurisdiction including restrictions on the drilling and production of wells, When drilling, reworking, production or other operations are prevented or delayed by such laws, rules, regulations or orders, Ignieni, . 1,r se assaments, or by fire, flood, adverse weather conditions, war, sabotage, rebellion, insurrection, riot, strike or labor disputes, or bjietabilily�e V yeami;1M: this lease shall not terminate because of such prevention or delay, and at Lessees option, the period of such prevention or delay shall be added to the term hereof. Lessee shall not be liable for breach of any express or implied covenants of this lease when drilling, production or other operations are so prevented, delayed or interrupted. 12. No litigation shall be initiated by Lessor with respect to any breach or default by Lessee hereunder, for a period of at least 90 days after Lessor has given Lessee written notice fully describing the breach or default, and then only if Lessee fails to remedy the breach or default, within such period. In the event the matter is litigated and there is a final judicial detennination that a breach or default has occurred, this lease shall not be forfeited or cancelled in whole or in part unless Lessee is given a reasonable time after said judicial determination to remedy the breach or default and Lessee fails to do so. 13. Lessor hereby warrants and agrees to defend title conveyed to Lessee hereunder, and agrees that Lessee at Lessee's option may pay and discharge any taxes, mortgages or liens existing, levied or assessed on or against the leased premises. If Lessee exercises such option, Lessee shall be subrogated to the rights of the party to whom payment is made and, in addition to its other rights, may reimburse itself out of any royalties or shut-in royalties otherwise payable to Lessor hereunder. In the event Lessee is made aware of any claim inconsistent with Lessors title, Lessee may suspend the payment of royalties and shut-in royalties hereunder, without interest, until Lessee has been furnished satisfactory evidence that such claim has been resolved. SEE ADDENDUM ATTACHED HERETO AND MADE A PART HEREOF FOR ADDITIONAL TERMS AND PROVISIONS IN WITNESS WHEREOF, this lease is executed to be effective as of the date first written above, but upon execution shall be binding on the signatory and the signatory's heirs, devisees, executors, administrators, successors and assigns, whether or not this lease has been executed by all parties hereinabove named as Lessor. Lessor: The City of Lubbock. Texas. aaMMunicip�al Corporation TOM MARTIN Title - Mayor CORPORATE ACKNOWLEDGMENT STATE OF TEXAS ) )SS COUNTY OF LUBBOCK ) The regoing instrument was acknowledged before me this G day of 2012, by 2fp,M T.(WAAn tNZLAAb e (Office) of The City of Lubbock, Texas, a Municipal Corporation, on behalf of the corporation. Seal ELISASANCHEZ Notary Public, State of Texas Mary public, State of Texas My C wfllsslon E)*Oms 11-07.2015 Resolution No. 2012—RO103 NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVERS LICENSE NUMBER. MEMORANDUM OF OIL AND GAS LEASE THE STATE OF TEXAS KNOW ALL MEN BY THESE PRESENTS: COUNTY OF LUBBOCK § That the undersigned, The City of Lubbock, Texas, a Municipal Corporation, whose address is PO Box 15100, Lubbock, TX 79350, (herein collectively called "Lessor", whether one or more) has executed and delivered to Four Sevens Exploration Co., Ltd., herein called "Lessee", whose address is 777 Taylor St., Suite 1090, Fort worth, Texas, 76102, an Oil and Gas Lease dated March 6, 2012 , and covering minerals in 1,237.54 gross acres of land, whether more or less (+-) as situated in Lubbock County, Texas, and being more described in the following: 630.44 acres more or less, being all of Section 1, Block C-K, G.0 & S.F. Ry. Co. Survey, Abstract No. 617, Cert. No. 2/233, Lubbock County, Texas, being more particularly described by metes and bounds in that certain Warranty Deed date May 2, 1997 firom William D. Young, Jr., Trustee to The City of Lubbock, recorded as Volume 5466, Page 315, Deed Records, Lubbock County, Texas. 607.10 acres more or less, being all of Section 1, Block P, E.L. & R.R. Ry. Co. Survey, Abstract No. 335, land script No.1211, Lubbock County, Texas, and being further described by metes and bounds in that certain Warranty Deed dated May 2, 1997 from Edmond A. Anderson et al, to the City of Lubbock, recorded as Volume, 5495, Page 137, Deed Records, Lubbock County, Texas. Whereas said Oil and Gas Lease provided for a "'Primary Term" of 3 years effective on the date first written above. Duplicate copies of said lease are in the possession of Lessor's and Lessee where the same may be examined by any person having a lawful right or legitimate interest therein. Now therefore, for the consideration set forth in said lease, Lessor does hereby grant, lease and let unto Lessee all of the rights as specified therein, to the above described properties. This "Memorandum of Lease" shall be binding on all parties, their heirs, successors and Assigns. LESSOR: The City of Lubbock, Texas, a Municipal Corporation By: 5:; -i OM MARTIN Title: Mayor CORPORATE ACKNOWLEDGMENT STATE OF TEXAS ) )SS COUNTY OF LUBBOCK 11 �..{� The foregoing instrument was acknowledged before me thus � day ofKnk, 2011, by 3r9>M ma k�y" snamuc (Office) of The City of Lubbock, Texas, Municipal Corporation, on behalf of the corporation. Seal: EUSA SMCHEZ Notary Public, State of Texas Notary Pubic, State of Texas ply fypnl jsew E)Oies 147.2015 Resolution No. 2012-R0103 Exhibit A ADDENDUM ATTACHED TO AND MADE A PART OF THAT CERTAIN OIL AND GAS LEASE DATED March 6, 2012 1. Minerals Covered. Oil and Gas Only: This lease covers only "oil and gas" which term, as used herein means "only oil, gas and other related hydrocarbons, including sulfur produced as a by-product of oil and or gas" and does not cover or include any other minerals, including but not limited to coal, lignite or uranium. All other said minerals are excluded and are reserved to Lessor. 2. Royalty. The royalty share for all oil and gas tinder this Lease shall be 25%. Lessor's royalty shall never bear or be chargeable with, either directly or indirectly, any part of the costs or expenses of production, gathering, dehydration, compression, transportation, manufacturing, processing, treating, marketing, or depreciation of any plant or other facility or facilities or equipment for processing or treating of the oil or gas produced from the Leased Premises or any other costs of a similar nature. Gas shall be priced at the point of sale to a third party and not at the well unless an arms length sale to a third party occurs at that point. Upon written request and reasonable notice by Lessor, Lessee shall snake available to Lessor or Lessor's authorized representative for inspection and examination the books and accounts, receipts, well records, and all contracts and other records pertaining to the production, transportation, sale and marketing of the oil and gas produced on the Leased Premises which relate to or have bearing on, in any manner, the royalty to be received by Lessor hereunder. Any inspection or examination shall be done at Lessee's principal place of business during normal working hours. Any use of oil or gas produced from operations on or under the Leased Premises shall be included in calculating revenue and payment of royalties from the well production. Notwithstanding any other provision in this section, Lessee may reduce Lessor's royalty to not less than 22.5% upon providing Lessor satisfactory evidence that, in order to secure an off premise well site from which to produce oil or gas from the Leased Premises, Lessee was obligated to grant an overriding royalty interest in oil or gas produced from the Leased Premises to the surface owner at said off premise well site. In that event, and only in that event, Lessor's royalty may be reduced by the amount of said overriding royalty interest, but in no event shall such reduction exceed a 2.5% royalty interest. Lessor and Lessee acknowledge that "pad sites" using current technology often host more than one well head. Therefore, Lessee agrees to make best efforts to secure an off premise well site without the grant of an overriding royalty interest. In the event such efforts are not successful, and only in that event, Lessee may reduce the Lessor's royalty from the well in question to not less than 22.5% utilizing the calculation set out in this paragraph. Page I 3. Primary Term Extension. Notwithstanding any provision herein to the contrary, in order the Primary Term to be extended by Lessee, Lessee shall pay Lessor the amount of $350 per acre per year for such an extension. Lessee may opt to extend the Primary Term for two (2) one-year periods. 4. Shut-in Royalty. While there is a gas well on this Lease or on lands pooled with the Land capable of producing in paying quantities, but gas is not being sold, at the end of the Primary Term or any time thereafter, Lessee shall pay or tender in advance an annual shut-in royalty of $20,000 for each well from which gas is not being sold. Payment with respect to a well will be due within 60 days after the well is shut-in and shall be proportionately reduced to Lessor's percentage of acreage in the pooled unit. While shut-in royalty payments are timely and properly paid, this Lease will be held as a producing lease. 5. Continuous Development. (a) If, at the expiration of the Primary Term, oil or gas is not being produced from the Leased Premises, but Lessee has commenced the drilling of a well on the Leased Premises, the Lease will not tenninate but will remain in effect for so long thereafter as operation are carried out with due diligence with no cessation of more than 60 days, and if the operations result in the production of oil or gas, the Lease shall remain in force as otherwise provided herein. For the purposes of this Lease, the tern "operations" means operations for any of the following: drilling, testing, completing, reworking, recompleting, deepening, plugging back, or repairing of a well in search for production of oil or gas. (b) If this Lease is maintained beyond the expiration of the Primary Term by production or otherwise, it will remain in force as to all acreage and depths as long as there is no lapse of more than 150 days between the completion of one well and the commencement of the actual drilling of another well. The commencement of actual drilling means the penetration of the surface with a drilling rig capable of drilling to the anticipated total depth of the well. After a well is commenced, drilling operations must continue in a good and workmanlike manner in a good faith effort to reach the anticipated total depth with no cessation of operations for more than 60 consecutive days. A well will be deemed to have been completed on the date of the release of the drilling rig from the drill site and any completion operations cease. The permitted time between wells shall be cumulative so that if a well is commenced prior to the date it is required to be conunenced, the number of days prior to the date on which the well should have been commenced shall be added to the time permitted for the next well. (c) If at any time the maximum time for the commencement of the actual drilling of a well expires without the commencement of the well, or upon the expiration of the Primary Term if the Lease is not maintained by continuous drilling or any other provision contained herein, this Lease will terminate except as to the Retained Tract (defined below) surrounding any well that is then producing in paying quantities or deemed to be producing in paying quantities by virtue of payment of shut-in royalties, and as to each Retained Tract, the Lease will then terminate as to all depths 100 feet below the stratigraphic equivalent of the base of the deepest producing formation on the Retained Tract. The Lease will be treated as a separate lease with respect to each Retained Tract and will continue so long as production in paying quantities continued from Page 2 the Retained Tract or the Lease is otherwise maintained. If production from a Retained Tract ceases from any cause, this Lease will terminate as to that tract unless Lessee commences operations for drilling or reworking on the tract within 60 days after the cessation of production or this Lease is maintained by other provisions, in which case the Lease as to that Retained Tract will continue in force as long as the operations are prosecuted with no cessation of more than 60 consecutive days, and if they result in production, so long thereafter as there is production from the Retained Tract. (d) As used in the Lease, the term "horizontal well" means a well that meets the definition of a "horizontal drain hole well' under Statewide Rule 86 of the Railroad Commission of Texas, and a "vertical well' is a well that is not a horizontal well. The land assigned to a well for the purposes of this section is referred to as a "Retained Tract." Once Lessee concludes its continuous drilling operations hereunder, each Retained Tract must include sufficient wells drilled to hold the Retained Tract and the parties agree that the acreage earned by drilling a well may not exceed the minimum size required to obtain a drilling permit under the well density rules adopted by the Railroad Commission of Texas for the field, or if there are no field rules that apply, the Retained Tract shall be limited to the smallest size required to obtain a drilling permit under the statewide well density rules of the Railroad Coirumission of Texas. A Retained Tract for a vertical well may not exceed 40 acres. If field rules are established later that permit obtaining a drilling permit with less acreage, a Retained Tract for a vertical well may not exceed the minimum size permitted. A Retained Tract for a horizontal well may include the minimum acreage specified above for a vertical well plus the additional acreage listed in the tables in Rule 86 and must comply with the requirements of Rule 86 for a minimum permitted well density. Each Retained Tract shall be designated in a shape that maximizes the number of possible Retained Tracts on the Leased Premises. (e) Within 60 days after the last to occur of the expiration of the Primary Term or the continuous drilling program, Lessee must file in the county records and furnish to Lessor a document designating each Retained Tract by metes and bounds description prepared by a professional surveyor, specifying the retained depths thereunder, and releasing all other depths and acreage. A gas well that becomes an oil well will hold only the acreage permitted for an oil well, and Lessee must file a redesignation of the Retained Tract (containing metes and bounds description prepared by a professional surveyor and specifying the retained depths thereunder) in the Real Property Records of the county were the Land is located. If Lessee fails to file timely a document required by this paragraph after Lessor has provided thirty (30) days prior written notices, then Lessor may do so, and the filing will bind Lessee. (f) Lessee shall drill as many horizontal wells from each drill site as is reasonably practicable in accordance with good oilfield practices and taking into account all geological and geophysical information know to Lessee. Each drill site should each be located in such a manner as to facilitate the drilling of as many wells a possible from such drill site in order to minimize the number of drill sites on lands pooled herewith. 6. Vertical Pugh Clause. Sixty (60) days after completion of a well, this lease shall expire to all depths below the stratigraphic equivalent of 100 feet below the base of the deepest producing formation, provided however, if Lessee is then engaged in drilling Page 3 operations on the Leased Premises or on acreage pooled therewith, this lease shall remain in full force and effect as to all depths so long as no more than one hundred fifty (150) days elapse between the completion or abandonment of one well and the commencement of operations for the drilling of another well. 7. Horizontal Pugh Clause. Notwithstand rig any provision herein to the contrary, upon the expiration of the primary term of this lease or upon the expiration of sixty (60) days following the completion of the last well drilled on the leased premises or acreage pooled therewith (whether completed as a well capable of production in paying quantities or as a dry hole), whichever is the later date, this lease shall terminate as to any Iand not included in a pooled unit, proration unit or other unit from which any well, located thereon at pooled therewith, is producing or may be capable of producing in paying quantities, or upon which drilling, reworking or other operations calculated to restore production are being pursued as herein provided. After the expiration of the primary tern of this lease, if production on any pooled, proration or other unit permanently ceases from any cause either voluntary or involuntary (and if this lease is not otherwise being maintained), this lease shall terminate as to such unit unless Lessee within (60) days thereafter commences reworking operations or the actual drilling of a new well thereon. In such event, this lease will continue in effect as to such unit so long as such drilling or reworking is prosecuted with no cessation of such operations for more than (60) consecutive days until production is restored. 8. Notwithstanding any provision to the contrary in this Lease, or Addendum, this Lease is entered into with the knowledge of the Parties that the current surface use of the Leased Premises is for a TCEQ-pennitted municipal landfill. The Parties agree that Lessee shall make no operations on the Leased Premises without the consent of the TCEQ. Lessee accepts this risk, and enters into this Lease with the express knowledge that its activities on the Leased Premises may be curtailed by the TCEQ. 9. This Lease Agreement is entered into subject to that certain agricultural lease agreement between the City of Lubbock and Ronnie Hamilton dated 13 November 1997 and any and all extensions thereto. The Hamilton Lease Agreement is attached hereto as Exhibit `B". 10. No Surface Drilling Use Clause. It is hereby agreed and understood that there shall be no drilling activities on the surface of the Leased Premises without the prior written permission from the surface owner of the applicable portion of the Leased Premises. Notwithstanding the foregoing, this waiver of surface shall not be construed as a waiver of the rights of Lessee to utilize the subsurface of the Leased Premises under this Lease, and Lessee shall have the right to exploit, explore for, develop and produce oil, gas and other covered minerals under this Lease from wells from surface locations off the Leased Premises, including but not limited to, directional or horizontal drilling activity which comes under the surface of the Leased Premises. This drilling surface waiver does not apply to any surface rights associated with instruments other than this Lease. 11. No Warranty of Title. This Lease is made and entered into without any express or implied warranty of title by, or recourse upon, Lessor(s) whatsoever, not even for the return of the consideration paid heretofore or hereunder. Page 4 12. Addendum Prevails. It is understood and agreed by all parties hereto that the provisions of this Addendum supersede any provisions to the contrary in the printed lease hereof. 13. Offset Wells. For purposes of this Lease, an "offsetting well" is a well that is producing oil or gas from adjacent or nearby land and is in reasonable probability draining the Leased Premises. If an offsetting well is completed, Lessee must, within 120 days after the date of first sales from the offsetting well, commence operations for the drilling of an offset well on the Lease Premises and must diligently pursue those operations to the horizon in which the offsetting well is producing, or at the option of Lessee: (i) execute and deliver to Lessor a release in recordable form of the acreage nearest to the offsetting well; or (ii) pay Lessor a monthly royalty equal to the royalty that would be payable under this Lease if the production from the offsetting well had come from the Leased Premises. In the event acreage is released pursuant to (i) above, the release will cover a tract of a size and shape that will permit the drilling of a well to the producing formation and the creation of a proration unit surrounding the well in compliance with the field rules for the field in which the offsetting well is located, but if there are no fields rules, in compliance with the statewide rules of the Railroad Commission of Texas. A well producing with perforations within 330 feet of the Leased Premises will be conclusively presumed to be draining the Land. 14. No Warranties. Lessor makes no warranty of any kind with respect to, and has no obligation to defend, title to the Land. If Lessor owns an interest in the Land less than the entire fee simple estate, then the royalties payable hereunder will be reduced proportionately. 15. Attorney's Fees. In the event that Lessor is required to employ legal counsel for the enforcement of any provision of this Lease and prevails, Lessor will be entitled to recover from Lessee reasonable attorney's fees and expenses, including but not limited to expect witness fees, incurred by Lessor. 16. Insurance. At all times while this Lease is in force, Lessee shall acquire and maintain insurance covering all of its activities and operations hereunder, including any work performed on its behalf by contractors, subcontractors, and others, naming Lessor as an additional insured. The policies shall include coverage for comprehensive general liability, for bodily injury and property damage, blowout and loss of well coverage, and coverage for any damage to the environment, including coverage for the cost of clean up and surface remediation. The coverage shall be in the minimum amount of $3,000,000. Lessee shall furnish a certificate from the issuing insurance company or companies evidencing the coverage. 17. Indemnity. LESSEE, ITS SUCCESSORS AND ASSIGNS WILL PROTECT, DEFEND, INDEMNIFY, REIMBURSE, AND HOLD HARMLESS, THE LESSOR, ITS EMPLOYEES, SURFACE TENANTS, AGENTS, SUCCESSORS, ASSIGNS, HEIRS, DEVISEES, AND PERSONAL REPRESENTATIVES (COLLECTIVELY "LESSOR INDEMNITEES") FROM AND AGAINST ALL ATTORNEYS' FEES, CAUSES OF ACTION, CLAIMS, COSTS, COURT COSTS, DAMAGES, DEMANDS, EXPENSES, EXPERT FEES, JUDGMENTS, PENALTIES, AND SUITS OF EVERY KIND OR CHARACTER (COLLECTIVELY "CLAIMS"), AND Page 5 WHETHER IN CONTRACT, IN TORT OR EXISTING AT COMMON LAW, OR BY VIRTUE OF ANY STATUTE, REGULATION OR ORDINANCE, ARISING OUT OF ANY ACT WHICH MAY HEREINAFTER TRANSPIRE FROM ANY ACTIVITY EXPRESSLY OR IMPLIEDLY AUTHORIZED OR REQUIRED BY THIS AGREEMENT WHETHER PERFORMED BY THE LESSEE OR THOSE HAVING A CONTRACTUAL RELATIONSHIP WITH LESSEE EXCEPT TO THE EXTENT THAT SUCH CLAIMS RESULT FROM LESSOR INDEMNITEES' NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. FOR PURPOSES OF THE INDEMNITY PROVISIONS HEREOF, ANY ACTS OR OMISSIONS OF LESSEE, OR BY EMPLOYEES, AGENTS, ASSIGNEES, SUCCESSORS, GUESTS, INVITEES, CONTRACTORS, OR SUBCONTRACTORS OF LESSEE OR ACTIONS OF ANY OTHER PERSONS FOR OR ON BEHALF OF LESSEE (WHETHER OR NOT THEY ARE NEGLIGENT, INTENTIONAL, WILLFUL, OR UNLAWFUL), SHALL BE STRICTLY ATTRIBUTABLE TO LESSEE AND AS SUCH SHALL FALL WITHIN THE SCOPE OF LESSEES OBLIGATION IN THIS SUBPARAGRAPH TO INDEMNIFY LESSOR. THE INDEMNITY OBLIGATIONS OF THIS PARAGRAPH SHALL APPLY TO ANY ATTORNEYS' FEES, COURT COSTS OR OTHER EXPENSES LESSOR INCURS IN THE SUCESSFUL DEFENSE OF ANY ACTION OR CLAIM BROUGHT AGAINST LESSOR WHICH ARISES FROM OR RELATES TO THE ACTIVITY OF LESSEE EXPRESSLY OR IMPLIEDLY AUTHORIZED OR REQUIRED BY THIS AGREEMENT. 18. Compliance with Environmental Laws and Regulations. Lessee, its successors and assigns, by its acceptance of this Lease, hereby agrees to comply with all applicable laws, rules and regulations and hereby assumes full responsibility for, and agrees to indemnify, defend and hold harmless, Lessor from and against any loss, liability, claim, fine, expense cost (including attorneys fees and expenses) and cause of action caused by or arising out of the violation (or defense of the alleged violation) of any federal, state or local laws, rules or regulations applicable to any waste material, drilling matter fluid or any hazardous substances released or caused to be released by Lessee or Lessee's agents, or independent contractors, or any other operations on the Leased Premises hereunder into the atmosphere or into or upon the land or any water course or body of water, including ground water, or subsurface water. Further, Lessee covenants and agrees to accept total and sole responsibility for the preservation of all animal and plant life existing under the protection of the Endangered Species Act; and to comply with all governmental laws and edicts relating to any other and all environmental cares and concerns. Lessee further acknowledges and agrees that, as between Lessor and Lessee, it is also solely liable for violations of environmental laws, rulings and edicts by contractors, crews, service companies, transportation companies, and any other company or individual who travels or works on, over or across the Leased Premises while engaged in pursuits that are, in any way, connected with the Lessee's exploration for oil and gas. Additionally, upon receiving any notice regarding any environmental, pollution or contamination problem or violation of any law, rule or regulation, Lessee will forward a copy to Lessor by certified mail within thirty (30) days. This provision and its indemnities shall survive the termination of this Lease, and shall enure to the successors, heirs and assigns of Lessor and Lessee. Page 6 Lessee agrees to pay the cost of water quality testing, as follows: (1) an initial baseline water quality test to be conducted no more than 60 days before Lessee conunences actual drilling and (2) re -testing I year following completion of the first well, and (3) repeat testing every three years thereafter, as long as this lease remains in effect. Said testing shall be conducted at each mutually agreeable water wells on, the Leased Premises. The testing shall be done by a qualified professional water testing firm selected jointly by the Lessee and Lessor. Testing will include, but not be limited to, testing for gas, minerals, metals, volatile organic compounds (VOC's), and semi -volatile organic compounds (SVOC's). 19. Miscellaneous Provisions. (a) In the event this Lease tenninates for any reason as to all or any part of the Land, Lessee shall, within 60 days thereafter, deliver to Lessor a recordable release covering all of the Land or that portion of the Land as to which this Lease terminated. (b) Nothing in this Lease negates any implied covenants imposed upon Lessee under applicable law. (c) Lessee will conduct all operations hereunder in compliance with the rules of the Railroad Commission of Texas and federal and state environmental laws and regulations and municipal ordinances. Upon written request of Lessor, Lessee shall furnish to Lessor copies of applications to drill, daily drilling reports, well tests, completion reports, plugging records, and production reports. Lessee will divulge to Lessor's Representative correct information as requested in writing by Lessor as to each well, the production therefrom, and such non-proprietary technical information as Lessee may acquire; however, Lessor and Lessor's Representative must keep all such information confidential and may not divulge same to any third party. Lessor's Representative has the right to be present when wells or tanks are gauged and production metered and upon written request has the right to examine all run tickets and to have full information as to production and runs and to received copies of all run tickets. (d) The tern "production" means production in paying quantities. Lessee's obligations to pay money under this Lease are to be performed in Lubbock County, Texas. Paragraph headings are used in this Lease for convenience only and are not to be considered in the interpretation or construction of this Lease. The execution or ratification by Lessor of any division order, gas contract, or any other documents will not alter any provision of this Lease unless the intent to do so is expressly stated in the document. Under no circumstances may Lessee, its agents, employees, or contractors bring firearms or dogs or other animals on the Leased Premises or hunt or fish on the Leased Premises. Upon Lessor's written request, Lessee agrees to furnish to Lessor a copy of each title opinion or report obtained by Lessee that covers all or any part of the Leased Premises together with a copy of each title curative document obtained by Lessee. (e) Any compressors used in connection with this Lease or the Leased Premises herewith shall be equipped with the latest technology in noise suppression and muffling devices. Every five years if requested by Lessor, Lessee shall be required to install quieter compressors if such are available for sale and distribution. Page 7 (f) Upon Lessor's written request and reasonable notice, Lessor shall have the right to inspect, during normal business hours, all records of Lessee relating to this Lease, operations conducted on the Leased Premises, the sale and marketing of production from the Leased Premises, and the payment of royalties, including the right to audit Lessee's books insofar as they relate to the foregoing. All such information is confidential and shall not be further disclosed by Lessor or Lessor's Representative without Lessee's prior written consent. (g) Lessor may not own all of the minerals underlying the Land. Lessee agrees that it will not drill, conduct operations or participate in drilling or operations on the Land or Leased Premises which are not in compliance with the terms and requirements of this Lease by claiming authority under the lease or leases covering the outstanding interest. (h) Choice of Law. This agreement will be construed under the laws of the State of Texas, without regard to choice -of -law rules of any jurisdiction. Venue is in Lubbock County, Texas. (i) Lessee, for itself and its successors and assigns, hereby waives any right of eminent domain possessed by Lessee or any Affiliate of Lessee to acquire any right of way or easement for the transportation of gas, oil or any other substance. 0) Groundwater Protection. Any oil or gas wells drilled by Lessee shall be drilled in compliance with the surface casing requirements imposed by the State of Texas for groundwater protection and Lessee shall install such surface casing in the required manner in order to insure the protection of all water bearing formations in and under the Land. Further, Lessee agrees to conduct water quality testing on any water wells available on lands pooled with the Land, as follows: (1) an initial baseline water quality test to be conducted no more than 60 days before Lessee commences actual drilling for the first well from Lessee's drillsite located on lands to be pooled with the Land, and (2) re -testing 1 year following completion of the first well, and (3) repeat testing every three years thereafter, as long as this Lease remains in effect. The testing shall be done by a qualified professional water testing firm and will include, but not be limited to, testing for gas, minerals, metals, volatile organic compounds (VOC's), and semi- volatile organic compounds (SVOCs). (k) Visual Appearance. Lessee shall maintain any drillsites within 1,000 feet of the Land in a neat and orderly fashion. For safety and appearance, Lessee shall construct and install fencing around each drillsite and related facilities in a visually appealing manner, in an effort to maintain the continuity of the surrounding area, and shall maintain the fences in a good state of repair. Upon conclusion of Lessee's drilling and completion operations, Lessee shall restore that portion of the drillsite not being utilized by Lessee for producing operations as nearly as is reasonably practicable to its original state. In addition, Lessee shall maintain the drillsite in a manner whereby it shall be free of noxious vegetation and debris resulting from Lessee's operations. Upon lease expiration, Lessee shall remove all of Lessee's equipment and restore the surface of the ground on the drillsite as nearly as is reasonably practicable to its original state. (1) Mud Pits. Lessee shall locate no mud pits on the Land. Page 8 (m) Remedial Action. Any remedial action or activities required of Lessee under this Lease shall be addressed and the remedial work commenced within the earlier of twenty (20) days or a reasonable amount of time under the circumstances, dependent on the nature of the remedial work, and must be diligently pursued until fully performed. (n) Environmental Safeguards. Lessee shall employ such measures as will reduce the impact of its operations upon improvements, vegetation and habitat on the Leased Premises. Lessee shall use reasonable care and safeguards in conducting its operations to prevent contamination or pollution from any waste, pollutant, or contaminant to any environmental medium, including soil, surface waters, groundwater, sediments, surface or subsurface strata, ambient air, or any other environmental medium in, on, or under the Leased Premises. Lessee shall promptly remediate any condition which is hazardous to humans or wildlife resulting from Lessee's operations. (o) Visual Appearance. Lessee shall not permit the disposal of trash, storage of used equipment or other such materials on the well site and shall maintain the well site in a neat and orderly fashion. Lessee shall construct or improve necessary lease roads as all weather roads and shall maintain such roads in a good state of condition and repair in order to prevent excess dust and erosion and maintain the continuity of the surrounding environment. For safety and appearance, Lessee shall install appropriate fences around each well and related facilities in a visually appealing manner in an effort to maintain the continuity of the surrounding area, and shall maintain the fences in a good state of repair. Upon conclusion of Lessee's drilling and completion operations, Lessee shall restore that portion of the well site not being utilized by Lessee for producing operations as nearly as is reasonably practicable to its original state. In addition, Lessee shall maintain the well site in a manner whereby it shall be free of noxious vegetation and debris resulting from Lessee's operations. Upon lease expiration, Lessee shall remove all of Lessee's equipment and restore the surface of the ground as nearly as is reasonably practicable to its original state. (p) Noise Abatement and Safety. Lessee shall utilize modern equipment with appropriate safeguards in its drilling, completion and producing operations. Whenever possible, Lessee shall install sound barriers and utilize hospital grade mufflers on compressors to reduce noise levels and emissions while conducting its operations. (q) Seismic Operations. Lessee shall pay for all damages incurred to the Land which result from its seismic operations. Other than seismic operations as provided herein, by execution and delivery of this Lease, Lessee does not otherwise obtain the right to conduct exploration, excavation or drilling operations from or upon the surface of any portion of the Land. (r) Local Ordinances. In conducting its operations hereunder, Lessee shall comply with all present and future ordinances, rule or regulations imposed by the City of Lubbock or other governmental agency. For purposes of this Lease, the Leased Premises shall be deemed to be wholly inside the corporate boundaries of the City of Lubbock, and Lessee agrees to comply with City of Lubbock Ordinances Article 8.07 for the entirety of the Leased Premises. Page 9 (s) This Lease does not carry with it the right for Lessee to use ground water, fresh, brackish or otherwise, or surface water, from the Leased Premises. The parties are in discussions regarding the sale by Lessor to Lessee of certain municipal water treatment plant discharge water for use Lessee's operations. Regardless of the outcome of those negotiations, this Lease carries with it no express or implied right to utilize surface water or ground water from the Leased Premises and any indication to the contrary is hereby expressly revoked. (t) Counterpart Language. This Lease may be executed in counterparts. Executed on the date first written above. ATTEST: Rebe ca Garza, City Secretary APPROVED AS TO CONTENT: 011 ' � 1 APPROVED AS TOFORM: Lessor: THE CITY OF LUBBOCK, TEXAS, A MUNICIPAL CORPORATION Tom Martin, Mayor Page 10 Lessee: FOUR SEVENS EXPLORATION CO., LTD. 1y: Brad unningham Title: Partner STATE OF TEXAS § COUNTY OF LUBBOCK § V This instrument was acknowledged before me on the day of Marcy\ , 2012, by Tom Martin, Mayor, The City of Lubbock, Texas, a Municipal Corporation- EUSA SANCHEZ Notary Pu*, State 01 TGXU Connrimbn Expires 11-07.2015 STATE OF TEXAS § COUNTY OF rfQ0-A-`i-" § Notary Public, State of Texaso This instrument was acknowledged before me on the J day of F-z'- . 4zft'e 2012, by Brad Cunningham, Partner, Four Sevens Exploration Co., Ltd. -- _ FnA,+Put1l,S1s���exas NoIa�y Public, State f exas yll rb M {./WIIIIH&ft E*� August 2, 2015 Page 11 Resolution No. 03 iNO. 5698 Item 021 November 13, 1997 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Agricultural Lease Agreement by and between the City of Lubbock and Ronnie Hamilton, and all related documents. Said Agreement is attached hereto and iacoTomted in this Resolution as if fully set forth herein and shall be included in the minutes of the Council. Passed by the City Council this 13th day of November 199'7. ATTEST: 11J&W11 KaT Dam -ell, City Secretary APPROVED AS TO CONTENT: Ra Bury, -o - ay yent APPROVED AS TO FORM: may W.1W? EXHIBIT Resolution No. 2012-RO103 RESOLUTION NO. 5698 Item 921 November 13, 1997 AGRICULTURAL LEASE AGREEMENT Preamble -Persons and Premises This lease agreement is made and entered into this I I tb day of Cl 9 19 by and between CITY OF LUBBOCK, a Texas Home Rule Municipal Corporation, referred to in this lease as Lessor, and RONNIE HAMILTON, 4 k r referred to in this lease as Lessee to occupy and use for agricultural purposes and for no W i other purposes the real property described in Exhibit "A" to this Agreement. Lessor leases to Lessee, and Lessee leases from Lessor, the premises, referred to in this lease as "r the leased premises. c) 1.- Term os 1. The primary term of this lease shall commence on the date of execution hereof, and lease shall expire on December 31, 1998, unless terminated earlier as provided in this lease. Lessee is granted an option to extend the term of this lease for five (5) successive one (1) year terms taken upon identical terms and conditions of this lease. The option shall be exercised by providing written notice of Lessee's intention to exercise the applicable option period, delivered to Lessor as provided in Paragraph 30 herein, within sixty (60) days of the expiration of the primary term or option period, whichever is applicable. Rent 2. During the term of this lease, Lessee shall plant and farm crops on all suitable land located on the farm. Lessee agrees to deliver to Lessor, as rent, one-fourth (1/4) of all proceeds of sale of all crops produced on the farm. Lessee shall deliver Lessor's production share within 30 days after the crop is marketed and the proceeds are received. The proceeds shall be delivered to Lessor at City of Lubbock, P. 0. Box 2000, Lubbock, Texas 79457, Attention Property Manager or at such other place or places as Lessor may from time to time designate by written notice served on Lessee. Records 3. Lessee agrees to maintain records on all agricultural and financial matters relating to the farm. Lessee shall specifically maintain records on the location and amount of land planted, date planted and acre yields of crops. Lessor's authorized representatives shall have the right to inspect these records at all reasonable times. Lessee's Buttes In Operating Farm 4. In addition to the agreements covered by the foregoing sections of this lease, Lessee further agrees to: (a) farm the leased premises in a good and farmerlike manner, (b) maintain the leased premises in a neat and orderly manner-, (d) pay 3/4 all bills for insecticides, fertilizer ginning, hauling or other materials necessary for the growth or harvest of cotton produced on the leased premises. The Lessor will pay 1/4 of such costs; (e) pay 3/4 of the cost of crop insurance. The Lessor will pay 1/4 of such expense. (f) prevent noxious weeds from going to seed on the leased prenuses and control or destroy such weeds in an environrnentally safe and legal manner. The Lessor pay A of such noxious weed herbicide expense; (g) make all required reports to applicable governmental agencies; (h) refrain from placing the leased premises in any crop control or subsidy program without the prior written approval of Lessor, and; (i) keep the leased premises free and clear of any liens, claims and encumbrances of Lessee's creditors, with the exception of any security interest taken by a creditor for part of the Lessee's crop. Utilities 5. Lessee must pay promptly as they become due all charges accrued by him for the furnishing of electricity, or other public utilities, if any, to the leased premises during the term of this lease. Lessor shall pay all charges for electricity or other utilities accrued as a result of his use of the property. Improvements 6. Lessee may not make any alterations, additions or improvements to the farm without the prior written consent of Lessor. Consent for nonstructural alterations which do not effect the figure use of the property for landfill purposes shall not be unreasonably withheld. All alterations, additions, or improvements made by Lessee shall become the property of Lessor at the termination of this lease; however, at Lessor's election, Lessee shall promptly remove all alterations, additions; and improvements, and any other property placed on the farm by Lessee, and Lessee shall repair any damage caused by such removal Use of Leased Premises 7. The leased premises shall be used solely and exclusively for farming and agricultural purposes, and shall be occupied only by Lessee. The leased premises shall be used for no other purpose without the written consent of Lessor. 8. Lessee will not permit any use of the remises, or permit any act, including the keeping of anything, in or about the premises, which directly or indirectly, will violate any Iaw, ordinance, or regulation. 9. Lessee shall comply with all laws, ordinances, and governmental regulations, and with any direction of any public officer, pursuant to law, which imposes any duty on Lessee with respect to the leased premises or the occupation of the leased premises. LEASE AGREEMENT PAGE 2 Water 10. It is understood and agreed by Lessor and Lessee that Lessor shall retain the right to produce and take water from the premises, including water from presently existing or new irrigation wells for use in the development and operation of a landfill upon the premises or other land owned by Lessor. Inspection by Lessor 11. Lessee shall permit Lessor and Lessor's agents to enter the leased premises at all reasonable times for the purpose of inspecting the same. Right of Entry 12. Lessor reserves the right to enter the leased premises at all reasonable hours (and if, in the opinion of Lessor, an emergency exists requiring immediate action, at any time) to make replacements, repairs, and restorations and to carry out any work or activities in connection with the improvement, safety, protection, or preservation of the leased premises. Condition of Premises 13. Lessee has made an independent examination of the premises and accepts the same as being clean and in good condition and repair. Further, Lessee acknowledges that Lessor has made no representations or statements concerning quality of the leased premises, or present or future value of any anticipated income or profit to be derived from the leased premises. Lessee shall, throughout the term of this lease, keep the leased premises in clean and good condition and shall surrender the same at termination in as good a condition as received. Lessee shall comply at all times with all applicable laws, statutes, rules and regulations, state, and federal, and local ordinances, ("the applicable lavej, and shall be solely responsible for and shall bear all costs of any and all rernediation efforts and costs regarding any spills or other disposal of contaminants including but not limited to fuel, oil, hydrocarbons, or other hazardous substances (as defined in CERCLA, 42 U.S.C. §9601 et. seq., as now defined or as it maybe amended,) and compliance with "the applicable law" including but not limited to all environmental laws or regulations, and agrees to indemnify Lessor from any damages or any liabilities connected with or relaxed to the noncompliance with the applicable law and/or the spill or clean up of any fuel, oil, hydrocarbons or other hazardous substance (as is or may be defined in CERCLA, 42 U.S.C. §9601 et. seq.) arising on or after the effective date of this Agreement, and/or caused by the use, operation, maintenance or occupation of the leased premises by Lessee. Lessee shall not be responsible nor will Lessee be required to indemnify Lessor for any of the above as described in paragraph 13, if such was caused in whole or in part by Lessor. Alteration of Premises 14. Lessee shall make no alterations without Lessor's prior written consent, which Lessor may condition in any manner, or may refuse, in accordance with its sole determination, which shall be conclusive. All such alterations which may be ap raved by Lessor shall be at the sole expense of Lessee, and Lessee agrees to hold Lessor harmless from all liabilities in any way connected with them. LEASE AGREEMENT PAGE 3 Responsibility 15. Lessor shall not be liable, and Lessee waives all claims, for injury to or death of persons or damage to or loss of property sustained by Lessee or Lessee's Invitees or guests resulting from the leased premises or any part of it or any of its equipment or appurtenances being out of repair, or resulting directly or indirectly from any act or neglect of any tenant or occupant of the leased premises or of any other person, or from any other cause whatsoever except the gross negligence of Lessor. Lessee shall be responsible for all damages caused by his negligence or by the negligence of his family, invitees or guests. End of Term 16. On the expiration or other termination of the term of this lease, Lessee shall quit and surrender to Lessor the leased premises in as good, and as clean, order and condition as such were in at the commencement of the term, and, to the extent required by Lessor, all improvements and alterations made by Lessee shall be removed and the leased premises restored to their condition at the commencement of the term. In the event that, in order to comply with these obligations of Lessee, any repairs, restoration; or cleaning shall be required, they shall be paid for by Lessee. Lessee's obligation under this paragraph shall survive the expiration or other termination of the term of this lease. Termination for Public Purpose 17. It is understood by Lessor and Lessee that the property the subject of this lease shall in the future be used by the Lessor for landfill purposes. It is understood and agreed by Lessee that as portions of the property are required by the Lessor for the construction of cells for the deposit of solid waste that Lessee shall surrender such property for Lessors use. Lessor agrees that Lessee may then continue to use the rgmaining property for farming purposes until such time as it is required for landfill purposes. -The determination as to when any given portion of the property is required for landfill purposes shall be made by Lessor in its sole discretion. In no event shall lessor be liable to Lessee for any damages, other than crop damages, for conver6ned g the property twill give landfill uses nor for any manner of trespass. Lessor wgive Lessee advanc notice when to area being farmed by Lessee will be needed for construction. If Lessee is notified after April 20, of a lease year and will not be able to harvest the crops on the acreage notified by Lessor for additional landfill purposes, crop damages in the form of a monetary amount will be paid to Lessor for the acreage damaged. Crop damages will be determined by the City's Right -of -Way agent based on'the amount of crops harvested on the balance of the tract and the average prices per pound received by Lessee for such balance of the crops harvested. In the event Lessor needs part of the leased property for landfill purposes the Lessor will give Lessee sixty (60) days written notice. The Lessor shall have the right to take such property before paying for the crop dam a es. In the event Lessee shall fail or refuse to remove his property from the portion of thelandfill then being required for landfill purposes, Lessor shall have the right to enter upon the lease premises and remove any such property. Holding Over 18. If Lessee remains in possession of the leased premises after the expiration or other termination of this lease, then, Lessee shall be deemed a tenant of the leased premises from year to year and subject to all of the terms and provisions of this lease. LEASE AGREEMENT PAGE 4 Indemnity 19. Lessee agrees to indemnify and hold Lessor harmless against any and all claims, demands, damages, costs, and expenses, including reasonable attorneys' fees, arising from conduct or management of Lessee's business or Lessee's use of the farm, or any negligent act or ontission by Lessee, or Lessee's agents, servants, employees, contractors, guests, or invitee on or about the farm. If any action or proceeding is brought against Lessor arising from any of these circumstances, Lessee further agrees to defend the action or proceeding with legal counsel acceptable to Lessor, Remedies 20. All rights and remedies of Lessor enumerated in this lease shall be cumulative, and. none shall exclude any other right or remedy allowed by law or provided for in any other section of this lease. No Partnership 21. This lease shall not give rise to a partnership between the parties. Neither party shall have the authority to bind the other without the other parry's written consent. Insolvency, Default, Other Groundr; Right to Terminate 22. If Lessee defaults in the payment of rent or in the prompt and W performance of any provision of this lease, or if the leasehold interest of Lessee be levied on or attached by process of law, or if Lessee makes an assignment of the benefit of creditors, other than a security interest for the purpose of financing Lessees' operations, or if a receiver is appointed for any property of Lessee, or if Lessee abandons the premises, then, and in any such event, Lessor may, if it so elects, but not otherwise, with or without notice, either forthwith terminate this lease or, without terminating this lease, forthwith terminate Lessee's right to possession of the leased premises. Repossession of Premises . 23. On any termination of this lease, or on any termination of Lessee's right to possession without termination of the lease, Lessor may enter and repossess the leased premises, and remove any and all property from the premises, without being deemed guilty of trespass, eviction, forcible 'entry, or. detainer. Abandoned Property 24. Any and all property of Lessee which may be left in the leased premises after the termination of this lease or Lessee's right of possession for any reason may be handled, removed, or otherwise disposed of by Lessor at the risk and expense of Lessee, and Lessor shall in no event be responsible for any property left in the leased premises by Lessee. Lessee shall pay to Lessor, on demand, all expenses incurred in such disposition, including a reasonable charge for storage, but Lessor shall be under no obligatioa to provide storage, and Lessee expressly consents to the sale; removal, discard, or any other disposition of the property by Lessor. Reimbursement of Lessor's Expenses 25. Lessee shall pay on demand all of Lessor's expenses, including attorneys fees, incurred in enforcing Lessee's obligations under this lease. LEASE AGREEMENT PAGE 5 No Waiver 26. A waiver by Lessor of any default or breach of any term, condition, or covenant of this lease by Lessee shall not be deemed to be a waiver of any other breach by Lessee of the same or any other term, condition, or covenant contained in this lease. Interest 27. All amounts (other than rent) owed by Lessee to Lessor under this lease shall be paid within ten days from the date Lessor renders statements of account to Lessee and shall bear interest at the rate of twelve percent per annum after that date until paid. Assignment and Subletting by Lessee 28. Lessee shall not have the right without the prior written consent of Lessor to assign this lease, and any interest in it, and to sublet the leased premises, or any part of the premises, or any right or privilege pertinent to the leased premises. Assignment by Lessor 29. Lessor is expressly given the right to assign any or all of its interest under the terms of this lease. MISCELLANEOUS Notices and Addresses 30. All notices provided to be given under this agreement shall be given by certified mail or registered mail, addressed to the proper party, at the following addresses: Lessor Lessee City of Lubbock Ronnie Hamilton Box 2000 RR 2 Box 173 Lubbock, Texas 79457 Abernathy, Texas 79211-9029 Parties Bound 33. This agreement shall be binding upon and inure to the benefit of the parties to the agreement and their respective heirs, executors, administrators, legal representatives, successors, and assigns where permitted by this agreement. Texas Law to Apply 34. This agreement shall be construed under and in accordance with the laws of the State of Texas, and all obligations of the parties created under this agreement are performable in Lubbock County, Texas. LEASE AGREEMENT PAGE 6 Legal Construction 35. In case any one or more of the provisions contained in this agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shad not affect any other provision, and this agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained in this lease. Prior Agreements Superseded 36. This agreement constitutes the sole and only agreement between the parties to this lease and supersedes any prior understandings or written or oral agreements between the parties respecting the subject matter of this lease. Amendment 37. No amendment, modification, or alteration of the terms of this lease shall be binding unless the same be in writing, dated subsequent to the date of this lease, and duly executed by the parties to this lease. Rights and Remedies Cumulative 38. The rights and remedies provided by this lease agreement are cumulative, and the use of any one right or remedy by either party shall not preclude or waive that party's right to use any or all other remedies. These rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance, or otherwise. Time of Essence 39. Time is of the essence in this agreement. Contingency 40. This Lease Agreement shall only become is full force and effect if and when the Lessor acquires the property described is Exhibit'W'. LEASE AGREEMENT PAGE 7 IN WITNESS OF THIS AGREEMENT, the undersigned Lessor and Lessee execute this agreement as of the day and year first above written. LESSEE: LESSOR: BY B TN, k"lu, "A H, 1A 11ZarV'Darne-lL'C-Ry' Wy-- APPROVED AS TOCONTENT: Lam✓ Ed Bucy, Ri t-of- ay gent APPROVED AS TO FORM: e • e , Trial Attorney STATE OF TEXAS § ACKNOWLEDGMENT COUNTY OF LUBBOCK This inatrument was acknowledged before me by RONNIE HAMILTON on this Z .3 day of Q d , 1997. CLu� Notary Pub ic, State of Texas My Commission Expires: / -A / 6 - 9 e DAVY Y. 900HER w t�ii 6�ir ta>Ws ------------ LEASE AGREEMENT PAGE 9 STATE OF TEXAS ACKNOWLEDGMENT COUNTY OF LUBBOCK This instrument was acknowledged before me by WINDY SITTON, Mayor, City of Lubbock, on this )8-0+ day of rJwe n,=oe , 1997. mm,M� Notary Public, State of Texas Fft so ?o1�4r ►o.o�•ol dD jb-othcr# 1l mWcxi.doe October 2l, 1997 LEASE AGREEMENT PAGE 9 E)(R IS IT #,/� iI wiLUN lVIVI 33q CO., 1K. 3330 • 70'!11 @JIM, SOTS? 301 wooca 11W 71413 Is" 112•4731 MU 13, 1190 y=M WM o1 407.16 oam of last, vase "7.1• bsial as aesrpiod as Uw from&, se"Las 1, al"k to N. L. a lr 16 sells pa. forrey, aNtssst 339, Castitlaats No. 1211, 1-13149, ubbooa Corsty, ftwm 1 seamm at a 1/30 Lear yips, foosd is tss asatss3:las of O.N. 252/ ad too costaslbw of a diet camty seat 11aet tog tho ooetpattasal Nonb"st cosmos of maid Seabee 10 Bloat O, and the Sostbrest vosass et Ssatioa i, s3,oeh CN, Said 1/20'isaa pips sas a lesas ll "A Csstral umbatt value of N 7318478.011f o.S. Svcasy Iast ad 2 + 923797.6416 O.S. larvei yeetl ' sm'S swth 18034, 459 mass, alaap twsvm a" tss South a.4 m q - u0sal lima of saat.ies 1, sloop C=, at so. a test pass a 1/2' cabac witk ay, set is Uw Salt list!-of+Soy Liao of P.N. 2S3S amd eostlau fos a total distaace of 4lf7.20 fast to a 119 ices pipe, load for the aoctheast ocaapatimal cosies of maid Sectias 1, Slaat !1 In 1 Soatl 91055920' Hest, aloe* trs'asm, at. 5337.40 toot yese a 1130 -saw with ay, sot is !tie nosrti ""t-of-aty of as oasemu* emki svMr ash oostimss fog a total distasos of $213.16 test is a W lore pips, forts foe tie osssSatlasal ioatioast oossss of sestids 1, Block ps Niece Nowt 110338410 SMst, at 5000.3= feet pass a fare/ 1/20 "am with ear 04 ooRUme for a total distanos of s03s.22 oast to a 1/2' sober with map, set is tis owMwUmo of s.s. 3521 for the aoospatioasl Sorthwat aorsss of balsas 1, slack s1 IJM - 1 IM m- 0490 13047•140 fast, 41009 UW asatarlLae of aaLd O.M. Me, a "Sum* of $283.46 feet, to ue O1,aaa of befiamisf, cmun2p 01.10 awes, sbasla0s, 41ataa0sa, and coordloatss are bawA to yip iftl Oaaes Plans Co0rdlaat. tratm, Issas NOW" Central feae, U.S. fsrtar teat Oates, borate combined WA !actor - 0.999798073. • loam SURVOW R jwakn IA= - 2 - Je,11• Save And Except The Following Tract: Beginning At The Occupational Northwest Comer Of Said Section 1, Block P; Thence East 750-Feet To A Point; Thence South 1,750-Feet To A Point; Thence West 620-Feet To A Point; Thence South 1,050-Feet To A Point; Thence West 130-Feet To A Point For The Southwest Comer Of The Tract; Thence North 2,800-Feet To The Point Of Beginning.