FRESH WATER FACILITIES AND ACCESS AGREEMENT EAST RANCHES
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) THE TYPE OF INFORMATION THAT THE COMPANY TREATS AS PRIVATE OR CONFIDENTIAL.
Exhibit 10.12
FRESH WATER FACILITIES AND ACCESS AGREEMENT
EAST RANCHES
This FRESH WATER FACILITIES AND ACCESS AGREEMENT (this “Agreement”) is made and entered into as of May 10, 2024 (the “Effective Date”) by and between DBR Land LLC, a Delaware limited liability company (“Company”), and WaterBridge Stateline LLC, a Delaware limited liability company (“Operator”). Company and Operator are sometimes referred to herein each individually as a “Party” and collectively as the “Parties”. Capitalized terms used herein that are not defined in the other provisions of this Agreement have the respective meanings set forth in Article I.
RECITALS:
WHEREAS, Company owns or controls the Lands, and Operator owns and operates the Initial Facilities (as defined herein) on East Stateline Ranch used in the production, gathering, transportation, storage, distribution, and/or sale of Fresh Water (defined herein); and
WHEREAS, Operator desires to develop, construct, own, and operate Additional Facilities (defined herein) on the Lands pursuant to this Agreement, including Fresh Water Xxxxx (defined herein), Fresh Water Facilities (defined herein), and associated layflat lines, pipelines, ponds, pumps, risers, roads, electrical facilities, and other related infrastructure and equipment, in each case located or to be located on the Lands (collectively, the “Facilities”).
NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.1 Definitions. The following capitalized terms have the following respective meanings:
“Additional Facility” has the meaning set forth in Section 2.2(b).
“Affiliate” unless otherwise provided herein, means (a) with respect to Company, only Company and its direct and indirect subsidiaries; and (b) with respect to Operator, only NDB Midstream LLC and its direct and indirect subsidiaries (excluding Company and its direct and indirect subsidiaries); and the term “Affiliated” shall have a correlative meaning.
“Agreement” has the meaning set forth in the preamble.
“Barrel” means forty-two (42) U.S. gallons.
“Commercially Reasonable Terms” has the meaning set forth in Section 2.1(d).
“Company” has the meaning set forth in the preamble.
“Company Default” has the meaning set forth in Section 5.1.
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“Confidential Information” means: (a) all information, materials and data provided by one Party or any of its Affiliates (the “Disclosing Party”) to the other Party or any of its Affiliates (the “Receiving Party”) under this Agreement or in connection with performance under this Agreement; and (b) the terms of this Agreement or any other Transaction Document. Confidential Information does not include (i) information that was in or comes into the lawful possession of the Receiving Party without confidentiality restrictions at the time of acquiring such information; (ii) information that is or becomes public knowledge without the fault of the Receiving Party; (iii) information that is or becomes available to the Receiving Party on an unrestricted basis from a source having a right to make such disclosure; or (iv) information that is developed by the Receiving Party independent of Confidential Information received hereunder.
“Dagger Draw Ranch” means the fee and leasehold surface interests and related real property rights in Eddy County, New Mexico as further described on Exhibit A-3 attached hereto.
“Disclosure Recipients” means, with respect to any Receiving Party, such Party’s Affiliates, directors, officers, employees, representatives, agents, investors, lenders, accountants, attorneys or other financial or professional advisors, in each case that receive Confidential Information of the Disclosing Party.
“Due Date” has the meaning set forth in Section 2.7(b).
“Easement” has the meaning set forth in Section 2.3(a).
“East Stateline Ranch” means the fee surface interests and related real property rights in Loving and Winkler County, Texas and Lea County, New Mexico, as further described on Exhibit A-1 attached hereto.
“Environmental Laws” means any applicable Law that pertains to (a) pollution or pollution control, (b) the protection of the environment (including natural resources and threatened or endangered species) or relating to public or worker health or safety, or (c) the management, transportation, or disposal of Hazardous Materials and the remediation of contamination in connection with the operations under any Lease or Easement, including the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., the Solid Waste Disposal Act (as amended by the Resource Conservation and Recovery Act), 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Federal Safe Drinking Water Act, 42 U.S.C. §§ 300f-300, the Federal Air Pollution Control Act, 42 U.S.C. § 7401 et seq., the Oil Pollution Act, 33 U.S.C. § 2701 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Endangered Species Act, 16 U.S.C. § 1531 et seq., the Clean Air Act, 42 U.S.C. §§ 7401 et seq., Clean Water Act, 33 U.S.C. §§ 1251 et seq., Rivers and Harbors Act, 33 U.S.C. §§ 401 and 40, National Environmental Policy Act, 42 U.S.C. §§ 4321 et seq., Fish & Wildlife Coordination Act, 16 U.S.C. §§ 661 et seq., Resource Conservation & Recovery Act, 42 U.S.C. §§ 6901 et seq., each as amended, and the regulations and orders promulgated by a Governmental Authority thereunder.
“Event of Bankruptcy” means, with respect to any Party, any of the following: (a) making a general assignment for the benefit of creditors; (b) filing a voluntary petition in bankruptcy; (c) filing a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any bankruptcy, insolvency or other similar law; (d) seeking, consenting to, or acquiescing in the appointment of a trustee, receiver or liquidator of such Party, or of all or any substantial part of its properties or assets under any bankruptcy, insolvency or other similar law; or (e) (i) the passage of one hundred twenty (120) days after the commencement of any involuntary proceeding against such Party, seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any bankruptcy, insolvency or other similar law, if the proceeding has not been dismissed, (ii) the passage of ninety (90) days after the appointment without its consent or acquiescence of a trustee, receiver or liquidator of such Party, or of all or any substantial part of its properties or assets, if the appointment is not vacated or stayed, or (iii) the passage of ninety (90) days after the expiration of any such stay, if the appointment is not vacated.
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“Facilities” has the meaning set forth in the Recitals. For the avoidance of doubt, “Facilities” includes the Facilities existing as of the Effective Date and any other Facilities constructed or acquired by Operator after the Effective Date, in each case that are directly or indirectly owned and/or operated by Operator or its Affiliates (or its or their respective successors or permitted assigns).
“Fee” means, collectively, the Fresh Water Fee and the Fresh Water Royalty.
“Fresh Water” means groundwater that may be produced from any subsurface water-bearing formation or aquifer that may be used in oil and gas operations or for some other beneficial purpose, but excluding Produced Water and Recycled Water.
“Fresh Water Facilities” means any facilities and equipment intended to produce, store, and/or transport Fresh Water, in each case for the purpose of making such Fresh Water available to customers for use or reuse in oil and gas drilling, exploration, and completion activities, including those certain Fresh Water Xxxxx that are included in the Initial Facilities and other subsequent Fresh Water Xxxxx, as well as all ponds, tanks, pipelines, and related infrastructure, as applicable.
“Fresh Water Fee” has the meaning set forth in Section 2.4(b)(i).
“Fresh Water Royalty” has the meaning set forth in Section 2.4(b)(ii).
“Fresh Water Well” means any well drilled and completed for the production of Fresh Water with a surface hole location within the Lands.
“Governmental Authority” means (a) any federal, state, local, municipal, tribal or other government, (b) any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, regulatory or taxing authority or other taxing power, and (c) any court or governmental tribunal.
“Hazardous Material” means any substance regulated or that may form the basis of liability under any Environmental Law, including any substance regulated as “hazardous,” “toxic,” a “pollutant,” a “contaminant,” a “waste,” or words of similar meaning and regulatory effect.
“Initial Facilities” means the Fresh Water Facilities existing on the Lands as of the Effective Date and described on Exhibit B hereto.
“Initial Term” has the meaning set forth in Section 4.1.
“Invoice” has the meaning set forth in Section 2.7(a).
“Lands” means, collectively, East Stateline Ranch, Northeast Ranch, Dagger Draw Ranch and any other fee or leasehold surface interests acquired by Company or its Affiliates following the Effective Date and added to this Agreement pursuant to Section 2.1(f).
“Law” means any applicable statute, law (including common law and Environmental Laws), rule, regulation, requirement, ordinance, order, code, ruling, writ, injunction, decree, or other official act of or by any Governmental Authority.
“Lease” has the meaning set forth in Section 2.3(a).
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“Legacy Agreements” has the meaning set forth in Section 2.8.
“Memorandum” has the meaning set forth in Section 8.16.
“Meters” has the meaning set forth in Section 2.6.
“Minimum Fresh Water Royalty” has the meaning set forth in Section 2.4(b)(ii).
“Northeast Ranch” means the fee and leasehold surface interests and related real property rights in Andrews County, Texas and Lea County, New Mexico as further described on Exhibit A-2 attached hereto.
“On-Ranch Water” means Fresh Water for use in oil and gas drilling, exploration, and completion activities on East Stateline Ranch, whether such Fresh Water is produced on or off of East Stateline Ranch.
“Operator” has the meaning set forth in the preamble.
“Operator Default” has the meaning set forth in Section 5.3.
“Opex Credit” has the meaning set forth in Section 2.4(b)(ii).
“Other Lands” means other lands owned or leased by Company or its applicable Affiliate during the Term for which Operator or its applicable Affiliate has the right to transport Fresh Water and for which Company or its applicable Affiliate receives a fee, including pursuant to that certain Water Facility and Access Agreement North Ranch dated October 15, 2021 among Operator, Company and Delaware Basin Ranches Inc. and excluding, for the avoidance of doubt, the Lands.
“Overdue Rate” means the lesser of 1% per month and the maximum rate permitted by Law.
“Party” and “Parties” have the meanings set forth in the preamble.
“Person” means an individual, a partnership (general, limited or limited liability), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other entity or organization, or a Governmental Authority.
“Produced Water” means any produced water, flowback water, brine water, saltwater, associated incidental hydrocarbons, trace amounts of oil industry chemicals or various trace solids, and any other water borne liquid substances generated as waste in connection with drilling for and producing hydrocarbons, but excluding Fresh Water and Recycled Water.
“Project Limitation” has the meaning set forth in Section 2.2(c).
“Project Proposal” has the meaning set forth in Section 2.2(b).
“Qualified Operator” means, with respect to any Person, that such Person, together with its Affiliates, has the requisite experience and capabilities to manage and operate the acquired assets and business of Operator as reasonably determined by Company; provided that a Person will be deemed to be a Qualified Midstream Operator if (a) a majority of the individual members of the executive management team (including Senior Vice Presidents and above) operating the business of Operator as of immediately prior to the consummation of the applicable transaction (including pursuant to any services or similar agreement) will continue to operate the assets acquired from Operator immediately following the
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consummation of the applicable transaction (including pursuant to any services or similar agreement) or (b) such Person (1) is a water services provider and a material part of such Person’s current operations involve operating assets that are similar to those of Operator, (2) has never filed a voluntary bankruptcy proceeding or been declared bankrupt involuntarily, and (3) has not been denied or prohibited by any Governmental Authority from holding any material permits, licenses or approvals necessary to operate such Person’s water assets, in each case, as a result of the quality of such Person’s past operations or such Person’s prior failures to materially comply with material permits, licenses or approvals, or otherwise had any such material permits, licenses or approvals rescinded or revoked by any Governmental Authority due to a material violation thereof.
“Qualifying Opportunity” has the meaning set forth in Section 2.2(d).
“Recycled Water” means Produced Water that is treated or blended using Recycling Facilities and sold and provided to customers for use or reuse in oil and gas drilling, exploration, and completion operations, it being agreed that Recycled Water that is used in drilling or completions operations for oil and gas xxxxx shall cease to be Recycled Water hereunder and shall be deemed to be Produced Water if and when subsequently produced from such xxxxx. For the avoidance of doubt, Recycled Water does not include untreated Produced Water that is delivered to or redelivered from a disposal facility.
“Recycling Facilities” means any facilities and equipment intended to transport, store and/or treat Produced Water (and/or blend Produced Water with Fresh Water) for the purpose of making such Produced Water or blended water available to customers for use or reuse in oil and gas drilling, exploration, and completion operations, including ponds, pipelines, aeration and/or chemical treating facilities and related infrastructure, as applicable, but excluding any facilities and equipment intended to transport, store, process, treat, separate, evaporate and/or dispose of Produced Water, in each case, for the ultimate disposal thereof, including all disposal xxxxx, evaporation facilities, ponds, pipelines and related infrastructure, as applicable.
“Renewal Term” has the meaning set forth in Section 4.1.
“Representing Party” has the meaning set forth in Section 3.1.
“Surface Damages” means the surface damages and corresponding rates described on Schedule 2.4; provided that such rates may be escalated in accordance with Section 2.4.
“Term” has the meaning set forth in Section 4.1.
“Third Party” means any Person that is not a Party or an Affiliate of a Party to this Agreement.
“Transaction Documents” means this Agreement, together with any Lease and any Easement delivered pursuant to this Agreement, in each case that is executed and delivered by the Parties in accordance with this Agreement.
1.2 Construction. Unless the context otherwise requires: a term has the meaning assigned to it; “or” is not exclusive; words in the singular include the plural, and words in the plural include the singular; provisions apply to successive events and transactions; the words “herein,” “hereof” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; all references herein to Articles, Sections, paragraphs, subparagraphs and clauses shall be deemed to be references to Articles, Sections, paragraphs, subparagraphs and clauses of this Agreement unless the context shall otherwise require; the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; references to “$” or “dollars” shall mean United States dollars; unless otherwise expressly provided herein, any
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agreement, instrument or statute defined or referred to herein or in any agreement, instrument or statute that is referred to herein means such agreement, instrument or statute as from time to time amended, restated, waived or otherwise modified or supplemented, including (i) in the case of agreements or instruments and references to all attachments thereto and instruments incorporated therein, by waiver or consent, and (ii) in the case of statutes, by succession of comparable successor statutes.
ARTICLE II
FACILITIES; LEASES AND EASEMENTS
Section 2.1 Grant of Rights.
a. Exclusive Rights on East Stateline Ranch. Subject to the terms and conditions set forth in this Agreement (including Section 2.1(d)) and the Transaction Documents, Company hereby grants to Operator the exclusive right to: (i) own, operate, and maintain the Initial Facilities on East Stateline Ranch; (ii) construct, develop, own, operate and maintain Fresh Water Xxxxx and other Facilities on East Stateline Ranch; (iii) market and sell Fresh Water produced from East Stateline Ranch to Third Parties for use in oil and gas drilling, exploration, and completion activities on or off East Stateline Ranch; and (iv) transport, market and sell Fresh Water for use in oil and gas drilling, exploration, and completion activities on East Stateline Ranch.
b. Non-Exclusive Right to Develop Facilities on the Lands. Subject to the terms and conditions set forth in this Agreement and the Transaction Documents, and in addition to and without limiting the exclusive rights set forth in Section 2.1(a), Company hereby grants to Operator the non-exclusive right to: (i) acquire, construct, develop, install, integrate, own, operate, upgrade, and maintain Facilities developed by Operator on the Lands and (ii) market and utilize all such Facilities to produce, gather, transport, store, distribute, and/or sell Fresh Water, and conduct such other activities as are mutually agreed to by the Parties, as applicable, in each case pursuant to such Leases and Easements as are mutually agreed to by the Parties in accordance with Section 2.3. Notwithstanding the foregoing or anything to the contrary herein, as between Company and Operator, Operator shall have the exclusive use of all Facilities constructed, developed, owned, operated and maintained in accordance with the terms and conditions of the applicable Lease or Easement.
c. Non-Exclusive Access Right. Subject to the terms and conditions set forth in this Agreement and payment of the applicable Surface Damages, Company hereby grants to Operator the non-exclusive right to use the existing roads located on the Lands, at no additional cost except for the obligation to maintain pursuant to the next succeeding sentence, in connection with the construction, development, operation, maintenance, relocation, and/or removal of the Facilities. Operator shall (i) comply with any reasonable rules and regulations of Company provided in writing to Operator in connection with the exercise of such access rights and (ii) maintain all existing roads utilized by Operator in reasonably good repair; provided that to the extent maintenance of such existing road is required and responsibility for damages cannot be definitively determined, responsibility for such maintenance shall be apportioned appropriately between Operator and such other operators or persons that utilize such road, based upon their proportionate use of such road as determined by Company in its reasonable discretion. To the extent Operator desires to construct new roads to access the Facilities following the Effective Date, Operator shall submit a Project Proposal for such new road in accordance with the terms and conditions of Section 2.2, and if such new road is approved and constructed, such new road(s) shall be subject to the above requirements.
d. Release from Exclusivity. Operator’s exclusive rights set forth in Section 2.1(a) with respect to the production, sale and transportation of On-Ranch Water shall not apply to the production, sale and transportation of any volume of On-Ranch Water that Operator cannot, or elects not to, supply on Commercially Reasonable Terms, and any such volume of On-Ranch Water shall automatically be released
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from such exclusivity in any such event. With respect to any such volume of On-Ranch Water released from exclusivity pursuant to the prior sentence, Company or its Affiliates may permit or consent to (in each case, including the granting of reasonable associated incremental surface rights) the affected volumes of On-Ranch Water being produced from and/or transported across East Stateline Ranch for use by any Third Party in oil and gas drilling, exploration, and completion activities on East Stateline Ranch; [***]. For the avoidance of doubt, the rejection by a Third Party of an offer by Operator to supply any volume of On-Ranch Water on Commercially Reasonable Terms shall not release such volume from Operator’s exclusive rights in Section 2.1(a). [***]. Company shall (i) promptly notify Operator in writing of any such agreements with Third Parties and (ii) require such Third Party to accurately meter such On-Ranch Water volumes. For the further avoidance of doubt, no release of Operator’s exclusivity rights with respect to the production, sale and transportation of On-Ranch Water shall affect Operator’s exclusive right to produce Fresh Water on East Stateline Ranch for use in oil and gas drilling, exploration, and completion activities that are located off of East Stateline Ranch. Terms offered or proposed by Operator shall be deemed to be “Commercially Reasonable Terms” if they are commercially reasonable rates and terms at the time (taking into account then-prevailing market rates and terms for the production, sale, and transportation of Fresh Water on East Stateline Ranch, available supply of, and demand for, Fresh Water in the relevant area, and all other relevant factors, including transportation expenses, construction expenses for additional Facilities and drilling and completion expenses for additional Fresh Water Xxxxx, royalties, throughput fees and surface damages payable to Company or its Affiliates and Third Parties, if any).
e. Third Party Operations. During the Term, other than as expressly permitted by Section 2.1(d), Company shall: (i) not amend any existing agreement, enter into any new agreement, grant any right, or otherwise permit any Person (other than Operator) to develop, construct and/or operate Fresh Water Xxxxx or other Facilities on East Stateline Ranch; (ii) to the extent any agreement exists as of the Effective Date that either grants a Third Party the right to produce, gather, transport, store, distribute, and/or sell On-Ranch Water or prevents the production, transportation and/or sale of On-Ranch Water by Operator, give timely notice to terminate any such agreement prior to commencement of any “evergreen” or “renewal” term; and (iii) to the extent any agreement exists as of the Effective Date that either grants a Third Party the right to produce, gather, transport, store, distribute, and/or sell On-Ranch Water or prevents the production, transportation and/or sale of On-Ranch Water by Operator, exercise any option or right it has under such agreement to terminate the same without additional cost to Company (other than any cost for which Operator agrees to reimburse Company), it being understood that Company shall exercise any such option or right at the earliest possible time. For the avoidance of doubt, nothing in this Agreement shall prevent Company from granting any other Person the right to permit, drill, and operate Fresh Water Xxxxx or other Fresh Water facilities on the Lands other than East Stateline Ranch. The Parties agree that the covenant and agreement in this Section 2.1(e): (1) is a covenant attached to, concerning, and running with the Lands and binding on the Parties’ successors and permitted assigns; (2) benefits, burdens and otherwise affects the Lands in place, even as the same remain undisturbed; and (3) are being made contemporaneously with the grant of property rights from Company to Operator pursuant to this Agreement, with the grant, delivery, and performance of such property rights being a material inducement to the Parties’ entry into this Agreement, without which the Parties would not have entered into this Agreement.
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f. Additional Lands. Company and Operator agree that all fee or leasehold surface interests located in the area of mutual interest described on Exhibit C that are acquired by Company or any of its Affiliates after the Effective Date shall automatically become part of and subject to the terms and conditions of this Agreement and be included as part of the Lands hereunder. Company shall promptly notify Operator of such acquisition and deliver to Operator a map and legal description of the acquired interests. The Parties shall execute and file a Memorandum or amendment thereto pursuant to Section 8.16 with respect to such newly acquired interests.
g. Reservations. Notwithstanding anything herein to the contrary, (i) the rights granted to Operator under this Agreement are subject to the terms of all existing oil, gas and mineral leases and all existing easements, rights-of-way, surface use agreements and other agreements or interests covering or affecting the Lands, in each case, that are filed of public record or disclosed to Operator in writing as of the Effective Date, and (ii) Company may amend such existing agreements, and enter into agreements with and grant rights to any other Persons without Operator’s prior written consent, except to the extent the same are in contravention of Operator’s rights under Section 2.1(a), (b), (c), (d) or (e) or unreasonably interfere, as reasonably determined by Operator, with then-existing Facilities or any other rights set forth in this Agreement.
Section 2.2 Operator Facilities and Project Proposals.
a. Initial Facilities. As of the Effective Date, Company hereby acknowledges, accepts and consents to each of the Initial Facilities identified on Exhibit B. The Parties hereby agree to promptly enter into Leases and Easements with respect to each of the Initial Facilities.
b. Additional Facilities. From time to time during the Term, Operator may propose that additional Facilities be constructed, owned, and operated by Operator on the Lands, including (i) additional layflat lines, pipelines, ponds, tanks, roads, electrical facilities, and other related infrastructure and equipment reasonably necessary or convenient in connection with the operation of the Initial Facilities and (ii) Fresh Water Xxxxx and other Facilities (each, an “Additional Facility” and each such proposal, a “Project Proposal”). Each Project Proposal shall be submitted to Company in writing and include (x) a reasonably detailed description of the proposed Additional Facilities, (y) the portions of the Lands on which the Additional Facilities are proposed to be located, including a survey of such lands prepared by Operator and (z) such other information related to such Additional Facilities that is reasonably requested by Company. Subject to Section 2.2(c), Company shall accept and consent in writing (email being sufficient) to each Project Proposal for an Additional Facility described in clause (i) or (ii) above within fifteen (15) days from the date of receipt of the Project Proposal. Subject to Section 2.2(c), if Company does not timely accept and consent to a Project Proposal, Company shall be deemed to have accepted and consented to such Project Proposal. Operator shall promptly notify Company in writing (email being sufficient) of any expected material changes, alterations or amendments to the applicable Additional Facilities throughout the course of the development of such Additional Facilities; provided that, for the avoidance of doubt, any material change to the location, scope or purpose of an Additional Facility shall require the prior written consent of Company, which consent shall not be unreasonably withheld, conditioned or delayed.
c. Project Limitations. If Company determines in good faith that a Project Proposal conflicts with any then-existing use or business operations conducted by Company or Third Parties on the Lands, including then-existing oil and gas operations, Produced Water and/or Recycled Water operations (each, a “Project Limitation”), Company shall notify Operator in writing of such determination and the basis therefor within fifteen (15) days from the date of receipt of the Project Proposal, and the Parties shall negotiate in good faith for not less than thirty (30) days to amend the Project Proposal. If the Parties are unable to mutually agree on a revised Project Proposal within such thirty (30)-day period, then Operator shall not pursue such Additional Facility. For the avoidance of doubt, if Company does not provide written notice of any objection to a Project Proposal that is subject to a Project Limitation within fifteen (15) days from the date of receipt of the Project Proposal, Company shall be deemed to have accepted and consented to such Project Proposal for all purposes to the extent that Company is not expressly prohibited from doing so by a valid existing instrument to which Company is a party.
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d. Qualifying Opportunity. Upon Company’s acceptance and consent to, or deemed consent to, a Project Proposal in accordance with this Section 2.2, the applicable Additional Facility shall be deemed a “Qualifying Opportunity.”
e. Cooperation. During the Term, Company shall cooperate as reasonably requested by Operator to identify mutually acceptable locations on the Lands for Additional Facilities and associated infrastructure that would not be subject to a Project Limitation, including allowing Operator to permit and stake potential Additional Facility locations on the Lands.
Section 2.3 Leases and Easements.
a. For each of the Initial Facilities, Company and Operator shall use commercially reasonable efforts to promptly execute and deliver, as applicable, such (i) surface use agreements substantially in the form of Schedule I hereto (each, a “Lease”) and/or (ii) easements substantially in the form of Schedule II hereto (each, an “Easement”), which shall cover the applicable portion(s) of the Lands, in each case, as are necessary or convenient in connection with such Initial Facilities, with such modifications to each such Lease and/or Easement forms as may be necessary to incorporate the specific terms of the applicable Initial Facility.
b. For each Qualifying Opportunity, Company and Operator or their applicable Affiliates shall, within thirty (30) days of Company’s acceptance (or deemed acceptance) of any Qualifying Opportunity, execute and deliver, as applicable, such Leases and/or Easements covering the applicable portion(s) of the Lands, in each case, as are necessary or convenient in connection with such Qualifying Opportunity, with such modifications to each such Lease and/or Easement forms as may be necessary to incorporate the specific terms of the applicable Qualifying Opportunity.
Section 2.4 Surface Damages; Fees.
a. Operator shall pay to Company the applicable Surface Damages for the applicable Facilities constructed and/or utilized by Operator pursuant to this Agreement. For the avoidance of doubt, Operator shall not owe any Surface Damages with respect to the Initial Facilities as the same exist on the Effective Date, but shall owe any applicable Surface Damages with respect to the Initial Facilities to the extent the same arise after the Effective Date. Not later than December 31 of each year, Company shall determine, in its reasonable discretion and with reference to market-based surface damages in the approximate vicinity of the applicable Facilities, the applicable Surface Damages for all Leases and Easements that are executed in the immediately succeeding calendar year, and shall provide not to Operator thereof along with reasonable supporting documentation; provided that if Company or its applicable Affiliate has received surface damages from one or more Third Parties in the approximate vicinity of the applicable Facilities within the prior twelve (12) months, the adjusted Surface Damages shall not exceed the highest surface damages paid to Company or its applicable Affiliate by a Third Party in the approximate vicinity of the applicable Facilities within the prior twelve (12) months. If Company does not make this determination and provide notice and the required documentation to Operator thereof in accordance with this Section 2.4(a), the then-current Surface Damages shall continue in effect. Other than any Surface Damages as determined in accordance with this Section 2.4(a) and the fees set forth in Section 2.4(b), Operator will not be obligated to pay any royalties, throughputs, or other fees with respect to Operator’s use of or access to the Lands in accordance with this Agreement.
b. Fees. Operator shall pay to Company (without duplication) the following fees:
i. [***] for each Barrel of Fresh Water that is either (A) produced from a Fresh Water Well and sold by Operator or (B) transported across the Lands by Operator, or its designee, using any Facilities located on the Lands, in either case, for use in oil and gas operations on the Lands (“Fresh Water Fee”); and
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ii. [***] of the gross proceeds Operator receives for each Barrel of Fresh Water that Operator produces from a Fresh Water Well and sells to Third Parties for use in oil and gas operations located off of the Lands (“Fresh Water Royalty”), net of [***] per Barrel for Operator’s operating expenses for the production, lifting, and storage of Fresh Water (“Opex Credit”), plus any additional transportation costs actually incurred by Operator to transport such Fresh Water to such Third Party’s location (if applicable); provided that in no event shall the Fresh Water Royalty be less than [***] per Barrel of Fresh Water (“Minimum Fresh Water Royalty”).
c. Notwithstanding anything to the contrary herein, with respect to any Fresh Water volumes that are transported across or enter the Lands more than once, Operator shall incur the applicable Fee set forth in Section 2.4(b) with respect to the first instance that such volumes enter the Lands, and shall not incur an additional Fee with respect to subsequent crossings for such volumes.
d. Notwithstanding anything to the contrary herein, with respect to any Fresh Water volumes that are transported across or enter the Lands and subsequently enter or cross Other Lands, Operator shall incur the applicable fee with respect to the first instance that such volumes enter the Lands or Other Lands, as applicable, and shall not incur an additional fee with respect to subsequent crossings of the Lands or Other Lands, as applicable, for such volumes.
Section 2.5 Escalation. Beginning on [***], and annually on January 1 of each subsequent calendar year, the Fresh Water Fee, Minimum Fresh Water Royalty, and Opex Credit shall automatically increase by the lesser of (i) [***] and (ii) the amount of any upward percentage change between January 1 and December 31 of the immediately preceding year, in the Consumer Price Index for All Urban Consumers or its most comparable successor, as published by the Department of Labor or its most comparable successor.
Section 2.6 Meters. Operator, at its sole cost, risk, and expense, shall provide, operate and maintain properly calibrated flow meters (the “Meters”) at each (i) Fresh Water Well owned by Operator on the Lands, and (ii) any other necessary locations on the Facilities, all to the extent necessary to calculate the amounts owed by Operator pursuant to Section 2.4 and in compliance with all Laws.
Section 2.7 Payment.
a. No later than the thirtieth (30th) day following the end of each month during the Term: Operator shall deliver to Company an invoice (“Invoice”) setting forth (a) the Fresh Water volumes for which the Operator owes a payment to Company pursuant to Section 2.4(b) for such subject month, expressed in Barrels and calculated as provided for in Section 2.4(b)(i)-(ii), as applicable, and (b) payments owed by Operator for any Surface Damages (to the extent not previously paid), in each case, as set forth in the applicable Lease or Easement for the subject month.
b. Operator shall pay in full any undisputed amounts due as reflected on the applicable Invoice by check or ACH transfer to Company’s designated bank account on or prior to the date that is sixty (60) days following the end of the month with respect to which such amounts are owed (the “Due Date”). If any undisputed amount due hereunder remains unpaid for sixty (60) days after the Due Date for such statement, interest on such amounts will accrue at the Overdue Rate from the Due Date through and including the date the owing Party actually makes payment.
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c. In the event Company disputes in good faith all or any portion of an Invoice, then the undisputed portion, if any, shall be due and payable in accordance with Section 2.7(b). In the event that the dispute is resolved in favor of Company, then Operator shall promptly pay the disputed amount plus interest at the Overdue Rate from the date the disputed payment was originally due pursuant to Section 2.7(b) through, and including, the date paid.
d. Audit. At any time on no less than thirty (30) days’ notice (but no more frequently than once in any twelve (12)-month period), either Party may, at the sole cost and expense of the requesting Party, conduct an audit of the other Party’s accounts, invoices and other documents related to the Lands and operations pursuant to this Agreement, including records of Fresh Water volumes produced, stored, or transported on the Lands. Such examination shall use electronic records or, solely to the extent original documents are required, take place in the office location where such books and records are kept in the normal course of business; provided that no examination may unreasonably interfere in the ongoing job responsibilities of the personnel of any Party. In the event the Parties mutually determine there was an Operator overpayment, Operator shall be due credit by Company for the amount of such overpayment on the next succeeding statement following such determination. In the event the Parties mutually determine there was an Operator underpayment, such amount shall be immediately due and payable, and Operator shall pay Company within thirty (30) days of such determination.
Section 2.8 Legacy Agreements. Operator may in the future acquire from a Third Party additional easements, leases or other agreements burdening and/or covering the Lands between Company (or its applicable Affiliate) and such Third Party, subject in each case to Section 2.1(c) and 2.1(e) (all such agreements, collectively, the “Legacy Agreements”). The Parties agree (a) that the Legacy Agreements as of the Effective Date are as set forth on Exhibit D hereto and (b) that either Party may update Exhibit D from time-to-time without the requirement of a formal amendment pursuant to Section 8.3 in order to reflect any additional Legacy Agreements acquired by Operator following the Effective Date. Notwithstanding anything to the contrary in this Agreement, no provision of this Agreement shall be construed so as to negate, modify or affect in any way the provisions of the Legacy Agreements. In the event of any inconsistency between this Agreement and any Legacy Agreement, or with respect to any matter that is addressed in this Agreement and any Legacy Agreement, the terms, provisions and intent of the applicable Legacy Agreement shall govern and control. Notwithstanding anything to the contrary set forth in Section 2.4(b), in no event shall Operator be required to pay a Fee or any other fee under this Agreement for any Barrel of Fresh Water that is transported by Operator onto or off of the Lands pursuant to a Legacy Agreement acquired by Operator from a Third Party except for the fee(s) provided by such Legacy Agreement.
Section 2.9 Waiver of Rights. Notwithstanding anything herein to the contrary and subject to the opportunity to cure provided herein, Operator shall not have any rights under this Article II with respect to a particular Qualifying Opportunity if, at the time of execution of a Lease or Easement for such Qualifying Opportunity, as applicable, (i) the applicable representations and warranties of Operator in Article III are not true and correct in all material respects or (ii) if there exists an uncured Operator Default.
Section 2.10 Taxes. During the Term of this Agreement, Company shall be responsible for paying all ad valorem taxes assessed on the Lands. Operator shall pay any personal property taxes assessed specifically against the Facilities during the Term.
Section 2.11. Water Purchases from Operator.
a. Upon request by Company, from time to time during the Term, Company may, but shall have no obligation to, purchase from Operator Fresh Water in such volumes and at such locations as designated by Operator. Operator shall have no obligation to supply any such Fresh Water volumes, and if and to the extent that Operator agrees to supply any such Fresh Water Volumes, all such Fresh Water volume shall be supplied by Operator on a fully interruptible basis from Operator’s then-existing Facilities and without warranty of any kind. Operator shall have no obligation to incur any out-of-pocket costs or
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expenses (other than lifting costs and associated operating expenses) with respect to any Fresh Water volumes supplied by Operator under this Section 2.11(a), except for such expenses as are reimbursed by Company. If requested by Operator, Company shall execute and deliver Operator’s then-current form of Fresh Water purchase agreement with respect to any Fresh Water volumes supplied by Operator under this Section 2.11(a). Any Fresh Water volumes purchased by Company under this Section 2.11(a) shall be used solely for uses other than in connection with oil and gas drilling, exploration and completion operations.
b. Company shall pay to Operator an amount equal to [***] for each Barrel of Fresh Water supplied by Operator pursuant to Section 2.11(a). The payment terms set forth in any applicable Fresh Water purchase agreement with respect to such Fresh Water volumes shall apply or, if no such agreement is executed, the payment terms set forth in Section 2.7 shall apply with respect to such amounts, mutatis mutandis. For the avoidance of doubt, Operator shall not owe any Fee or other payment to Company with respect to any Fresh Water supplied by Operator pursuant to Section 2.11(a).
ARTICLE III
REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS
Section 3.1 Reciprocal Representations and Warranties. Each Party (such Party, the “Representing Party”) represents and warrants to the other Party that, as of the Effective Date and as of the execution of each Lease and Easement:
a. Organization. The Representing Party is duly organized, validly existing and in good standing under the Laws of the State of its formation and is qualified to do business and is in good standing in the State of Texas and State of New Mexico.
b. Authority; Binding Effect. The Representing Party has all requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to carry out the transactions contemplated hereby and thereby. The Representing Party has taken (or caused to be taken) all acts required to be taken by it to authorize the execution, delivery and performance by the Representing Party of this Agreement and the other Transaction Documents. This Agreement has been duly executed and delivered by the Representing Party and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, moratorium, reorganization or similar Laws affecting the rights of creditors generally and by principles of equity, whether considered in a proceeding at Law or in equity.
c. Non-Contravention. The execution, delivery and performance of this Agreement by the Representing Party does not and will not (i) conflict with, or result in, any violation of or constitute a breach or default (with notice or lapse of time, or both) under (A) any provision of its organizational documents, or (B) any Law, court order, agreement, instrument or license applicable to the Representing Party, or (ii) require the submission of any notice, report, consent or other filing with or from any Governmental Authority or other Person, other than such consents that are customarily obtained after the transfer of instruments similar to the Lease or Easement, as applicable.
d. Bankruptcy; Solvency. There are no bankruptcy, reorganization or receivership proceedings pending, or, to the Representing Party’s actual knowledge, threatened against the Representing Party or an Affiliate of the Representing Party. The Representing Party is not insolvent and will not be rendered insolvent by any of the transactions contemplated by this Agreement.
Section 3.2 Company Representations and Warranties Regarding Ownership of the Lands and Fresh Water. Except as set forth in any disclosure schedule delivered to Operator by Company prior to or in connection with the execution and delivery of this Agreement, Company represents and warrants to Operator that Company has good and defensible title to the Lands and the Fresh Water produced
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hereunder, and there are no Persons other than Company and its grazing lessees in possession of that portion of the Lands on which the Initial Facilities are located. The quality of any Fresh Water produced hereunder shall be “as is” upon withdrawal from the applicable Fresh Water Well. Company does not make any representation or warranty regarding the quality of the Fresh Water, including whether the Fresh Water is fit for any particular purpose. EXCEPT AS MAY BE EXPRESSLY PROVIDED IN THIS AGREEMENT, COMPANY MAKES NO WARRANTIES OF ANY TYPE, EXPRESS OR IMPLIED, REGARDING THE FRESH WATER AND DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PURPOSE.
Section 3.3 Reporting Requirements. With respect to all (i) Facilities and (ii) Qualifying Opportunities, Operator shall furnish Company upon Company’s request with reasonable access to the following data and reports within the applicable time frames set forth below, to the extent related to the applicable Facilities located on the Lands and owned or operated by Operator:
a. Reasonably promptly following receipt thereof, copies of all material correspondence received by Operator from any Governmental Authority, along with any material correspondence (including any reports) sent by Operator to any Governmental Authority;
b. Reasonably promptly following receipt thereof, copies of all written notices regarding material violations or potential material violations of Laws;
c. Reasonably promptly following the receipt thereof, copies of all claims, demands, or actions or threatened claims, demands or actions, in each case, which are of a material nature;
d. Reasonably promptly following receipt or preparation by Operator, copies of all surveys, including in a digitally recorded format if such exists; and e. Daily drilling reports, in Excel format if available, which shall be provided within thirty (30) days after the end of each calendar month.
ARTICLE IV
TERM AND TERMINATION
Section 4.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue until December 31, 2034 (the “Initial Term”), except as otherwise provided in this Section 4.1. Following the Initial Term, this Agreement shall automatically renew for successive one-year terms (each, a “Renewal Term” and collectively with the Initial Term, the “Term”) until the Agreement is terminated by either Party by providing at least one hundred and eighty (180) days’ written notice prior to the expiration of the Initial Term or any Renewal Term, as applicable. The Parties may mutually agree in writing to terminate this Agreement at any time with respect to all or any portion of the Lands, in which case, Section 4.2 below shall apply only to such terminated Lands. No Party may terminate this Agreement except as provided in this Article IV and Article V. Notwithstanding anything to the contrary herein, with respect to the East Stateline Ranch, the Term shall commence on the Effective Date and shall continue for so long as Operator (or its successors or permitted assigns) operates Facilities on East Stateline Ranch in accordance with the terms and conditions of the applicable Leases and Easements.
Section 4.2 Effect of Termination. In the event this Agreement is terminated in accordance with Section 4.1, the Parties shall have no further rights or obligations hereunder; provided that (a) no such termination shall relieve any Party of any liabilities or obligations that accrued prior to the date of such termination, (b) the termination of this Agreement shall not affect any Legacy Agreement or any Lease or Easement executed and delivered prior to the date of such termination, and (c) the provisions of this Section 4.2, Section 1.2, Section 2.4, Section 2.5, Section 2.6, Section 2.7, Section 3.3, Article V, Article VI, Article VII, and Article VIII, together with the definitions in Section 1.1 used in such Sections and Articles shall survive the termination of this Agreement.
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ARTICLE V
EVENTS OF DEFAULT
Section 5.1 Company Default. Company shall be in default of this Agreement (each, a “Company Default”): (a) upon an Event of Bankruptcy with respect to Company or (b) if Company is in material breach of any of its obligations under this Agreement, and Company fails to cure such breach within thirty (30) days (or ten (10) days for an obligation to pay any undisputed sums of money owed) following delivery to Company of a notice from Operator stating with reasonable particularity the nature and extent of such material breach or if a remedy cannot be effected within such initial thirty (30)-day period, an additional reasonable period no longer than ninety (90) days, provided that Company has commenced pursuit of a remedy within the initial thirty (30)-day period and diligently pursues such remedy to completion.
Section 5.2 Operator Remedies Against Company Default. If a Company Default occurs and is uncured and continuing after the cure periods set forth in Section 5.1(b), and without prejudice to any of Operator’s other rights under this Agreement or any other Transaction Document, then during the period in which Company Default is continuing, Operator shall have the right to take one or more of the following actions: (a) suspend performance under this Agreement and/or the other applicable Transaction Document, provided that this shall not affect any rights or obligations under any Legacy Agreement, or any Lease or Easement executed and delivered prior to the date of such suspension; (b) pursue specific performance of this Agreement and/or the other applicable Transaction Documents; or (c) pursue any and all other rights and remedies available at law or in equity subject however to the limitations in this Agreement.
Section 5.3 Operator Default. Operator shall be in default of this Agreement (each, an “Operator Default”): (a) upon an Event of Bankruptcy with respect to Operator or (b) if Operator is in material breach of any of its obligations under this Agreement, and Operator fails to cure such breach within thirty (30) days (or ten (10) days for an obligation to pay any undisputed sums of money owed) following delivery to Operator of a written notice from Company stating with reasonable particularity the nature and extent of such material breach, or if a remedy cannot be effected within such initial thirty (30) day period, an additional reasonable period no longer than ninety (90) days, provided that Operator has commenced remedy within the initial thirty (30)-day period and diligently pursues such remedy to completion.
Section 5.4 Company Remedies Against Operator Default. If an Operator Default occurs and is uncured and continuing after the cure periods provided in Section 5.3(b), and without prejudice to any of Company’s other rights under this Agreement or any other Transaction Document, then during the period in which the Operator Default is continuing, Company shall have the right to take one or more of the following actions: (a) suspend performance under this Agreement and/or the other applicable Transaction Document, provided that this shall not affect any rights or obligations under any Legacy Agreement, or any Lease or Easement executed and delivered prior to the date of such suspension; (b) pursue specific performance of this Agreement and/or the other applicable Transaction Documents; or (c) pursue any and all other rights and remedies available at law or in equity subject however to the limitations in this Agreement.
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ARTICLE VI
NOTICES
Section 6.1 Notices. All notices and communications required or permitted under this Agreement shall be in writing and addressed as indicated below, and any communication or delivery hereunder shall be deemed to have been duly delivered upon the earliest of: (a) actual receipt by the Party to be notified; (b) three (3) business days after deposit with the U.S. Postal Service, certified mail, postage prepaid, return receipt requested; (c) if by email transmission, upon read receipt confirmation by the recipient (with the receiving Party being obligated to respond affirmatively to any read receipt requests delivered by the other Party); or (d) by Federal Express overnight delivery (or other reputable overnight delivery service), two (2) days after deposited with such service. Addresses for all such notices and communication shall be as follows:
| To Operator: | WaterBridge Stateline LLC | |
| 0000 Xxx Xxxxxx, Xxxxx 0000 | ||
| Houston, Texas 77056 | ||
| Attn: General Counsel | ||
| Telephone: [***] | ||
| E-mail: [***] | ||
| To Company: | DBR Land LLC | |
| 0000 Xxx Xxxxxx, Xxxxx 0000 | ||
| Houston, Texas 77056 | ||
| Attn: General Counsel | ||
| Telephone: [***] | ||
| E-mail: [***] | ||
Any Party may, upon written notice to the other Party, change the address and Person to whom such communications are to be directed.
Section 6.2 Reporting. With respect to any notices, communications and information required to be delivered pursuant to Section 3.3, such notices, communications and information shall be sufficient in all respects if given in accordance with Section 6.1 or if such notice is delivered by email to the address specified for a Person in Section 6.1.
ARTICLE VII
CONFIDENTIALITY
Section 7.1 Non-Disclosure. Each Receiving Party shall keep confidential and shall not disclose, or permit any of its Disclosure Recipients to disclose, any Confidential Information of the Disclosing Party except as required or reasonably necessary (a) to enforce this Agreement or any other Transaction Document, (b) by Law, (c) to its accountants, auditors, advisors, and/or attorneys that are subject to a professional or other obligation of confidentiality with respect to any such disclosed Confidential Information, or (d) to a potential purchaser or financing source in connection with any potential or actual sale of a Party or its applicable Affiliate (or an interest therein), any potential or actual sale or lease of any of such Party’s assets subject to this Agreement or any other Transaction Document or any bona fide equity or debt financing transaction, provided that any such recipient is subject to a professional or other obligation of confidentiality with respect to any such disclosed Confidential Information.
Section 7.2 Required Disclosures. In the event that any Receiving Party or any of its Disclosure Recipients is required by any Law to disclose Confidential Information to any Governmental Authority, unless otherwise agreed to by the Disclosing Party, prior to such disclosure, such Receiving Party (or its Disclosure Recipients) shall promptly notify the Disclosing Party (to the extent not prohibited by Law from giving notice) in writing of such anticipated disclosure, which notification shall include the nature of the requirement of Law and the extent of the required disclosure and such Receiving Party (or its Disclosure Recipients) shall reasonably cooperate with the Disclosing Party to preserve the confidentiality
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of such information consistent with Law (including reasonably withholding disclosure of such Confidential Information until such time as it has been finally determined that such disclosure is required under Law). Each Receiving Party shall cause any of its Disclosure Recipients to which it discloses any Confidential Information to hold such information confidential to the same extent as would be required if such Disclosure Recipients were a Party, and no Receiving Party or Disclosure Recipient may use any Confidential Information it receives for any purpose not contemplated by this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Applicable Law; Venue. THIS AGREEMENT, ALL OTHER TRANSACTION DOCUMENTS, AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES AGREE THAT THE APPROPRIATE, EXCLUSIVE AND CONVENIENT FORUM FOR ANY DISPUTES BETWEEN THE PARTIES ARISING OUT OF OR RELATED TO THIS AGREEMENT, ALL OTHER TRANSACTION DOCUMENTS, AND THE RELATIONSHIP OF THE PARTIES HEREUNDER SHALL BE IN ANY STATE OR FEDERAL COURT IN MIDLAND COUNTY, TEXAS, AND EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS SOLELY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT, ALL OTHER TRANSACTION DOCUMENTS, OR THE RELATIONSHIP OF THE PARTIES HEREUNDER. THE PARTIES FURTHER AGREE THAT THE PARTIES SHALL NOT BRING SUIT WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATED TO THIS AGREEMENT, ALL OTHER TRANSACTION DOCUMENTS, OR THE RELATIONSHIP OF THE PARTIES HEREUNDER IN ANY COURT OR JURISDICTION OTHER THAN THE ABOVE SPECIFIED COURTS.
Section 8.2 Jury Waiver. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ALL OTHER TRANSACTION DOCUMENTS, AND/OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER HEREOF OR THEREOF AND THE RELATIONSHIP OF THE PARTIES HEREUNDER. EACH PARTY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND ALL OTHER TRANSACTION DOCUMENTS. IN THE EVENT OF LITIGATION, THIS SECTION 8.2 MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.
Section 8.3 Amendments. Except as otherwise provided herein, no supplement, amendment, alteration, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the Parties.
Section 8.4 Assignment. Neither Party may assign any of its rights or obligations under this Agreement or any portion thereof without the prior written consent of the other Party, which consent may be withheld in the non-assigning Party’s sole discretion; provided that such restriction shall not apply to assignments to Affiliates so long as such assignment to an Affiliate includes the assignment of all of the assigning Party’s rights and obligations under this Agreement; provided further that in the case of Company, (a) Company may assign its obligations and its rights hereunder to any purchaser or assignee of any portion of the Lands solely to the extent relating to the purchased or assigned portion of the Lands, (b)
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Company may assign all or any portion of its rights to payment hereunder without consent of the Operator and (c) Operator may assign its obligations and its rights hereunder to any purchaser or assignee of all or substantially all of its assets subject to this Agreement so long as Operator demonstrates that such purchaser or assignee is a Qualified Operator. Notwithstanding anything to the contrary herein, (x) Operator may assign its right to install, operate and maintain temporary surface pipelines to transport Fresh Water on the Lands to its customers or contractors for Fresh Water, but no such assignment shall relieve Operator of its obligations under this Agreement or any associated Lease or Easement and (y) Operator may assign Leases for Fresh Water Xxxxx, subject to the terms and conditions of the applicable Lease and the payment obligations set forth in this Agreement. Notwithstanding the foregoing or anything to the contrary herein, any assignment not made in accordance with the provisions of this Section 8.4 shall be null and void ab initio.
Section 8.5 Waiver. Except as otherwise provided for in this Agreement, a waiver of any of the provisions of this Agreement shall not be deemed or shall not constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver, unless otherwise expressly provided.
Section 8.6 Relationship of the Parties. This Agreement is not intended to create, and shall not be construed to create, an association for profit, a trust, a joint venture, a mining partnership or other relationship of partnership, or entity of any kind between the Parties.
Section 8.7 Severability. If any provisions of this Agreement, in whole or in part, are held invalid as a matter of Law, it is the Parties’ intent that such holding not affect the other portions of this Agreement, and that such portions that are not invalid be given effect without the invalid portion.
Section 8.8 Counterpart Execution. This Agreement may be executed in counterparts, each of which shall be deemed an original, and both of which taken together shall constitute one agreement. Delivery of an executed counterpart signature page by PDF is as effective as executing and delivering this Agreement in the presence of the other Party to this Agreement.
Section 8.9 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer upon anyone, other than the Parties and their respective successors and permitted assigns, any rights or remedies under or by reason of this Agreement or to constitute any Person as a third party beneficiary of this Agreement.
Section 8.10 Time of Essence. Time is of the essence with respect to the performance by each Party of its obligations under this Agreement.
Section 8.11 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of each of the Parties and their respective Affiliates and each of their respective successors and permitted assigns.
Section 8.12 Attorney’s Fees. SHOULD EITHER PARTY BE REQUIRED TO RESORT TO EMPLOYMENT OF ATTORNEYS TO ENFORCE THIS AGREEMENT, OR ANY OF ITS RIGHTS UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS, THE SUBSTANTIALLY PREVAILING PARTY SHALL BE ENTITLED TO REIMBURSEMENT FROM THE OTHER PARTY FOR THE SUBSTANTIALLY PREVAILING PARTY’S ATTORNEYS’ FEES.
Section 8.13 Limitation on Damages. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, REMOTE OR SPECULATIVE DAMAGES, OR INDIRECT DAMAGES
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FOR LOST PROFITS OR LOSS OF USE OR BUSINESS OPPORTUNITY (IN ALL CASES EXCEPT TO THE EXTENT CONSTITUTING DAMAGES PAID OR PAYABLE TO AN UNAFFILIATED THIRD PARTY), ARISING UNDER, IN CONNECTION WITH OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY, ON BEHALF OF ITSELF AND ITS AFFILIATES, DOES HEREBY WAIVE ANY RIGHT TO RECOVER ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, REMOTE OR SPECULATIVE DAMAGES, OR INDIRECT DAMAGES FOR LOST PROFITS OR LOSS OF USE OR BUSINESS OPPORTUNITY (IN ALL CASES EXCEPT TO THE EXTENT CONSTITUTING DAMAGES PAID OR PAYABLE TO AN UNAFFILIATED THIRD PARTY), ARISING UNDER, IN CONNECTION WITH OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.14 Entire Agreement. This Agreement, the other Transaction Documents, and the exhibits and schedules attached hereto and thereto constitute the entire agreement between the Parties with respect to the transactions contemplated hereunder, and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties with respect to the transactions contemplated hereunder. Notwithstanding anything herein to the contrary, nothing herein shall be deemed to amend or supersede that certain Water Facility and Access Agreement North Ranch dated October 15, 2021 among Operator, Company and Delaware Basin Ranches Inc. or that certain Produced Water Facilities and Access Agreement North Ranch dated as of the Effective Date between Operator and Company.
Section 8.15 Covenant Running with the Lands. This Agreement, and the rights granted hereunder and obligations contained herein, shall be covenants running with the Lands and shall be binding upon and inure to the benefit of each of the Parties and their respective successors and permitted assigns. Any sale, conveyance, grant, transfer, assignment or other disposition of all or any portion of the Lands or the Facilities, as applicable, shall be made expressly subject to this Agreement, and this Agreement or the applicable portion hereof shall be assumed by the purchaser or assignee, and both this Agreement and the Lands, or the Facilities, as applicable, shall otherwise be sold or assigned in accordance with Section 8.4.
Section 8.16 Recording Memorandum. Contemporaneously with their execution and delivery of this Agreement, the Parties shall execute a recording memorandum that is substantially identical in form and substance to that attached hereto as Exhibit E (the “Memorandum”). Operator may file such Memorandum in the real property records of, as applicable, Andrews, Loving, and Xxxxxxx Counties, Texas, and Eddy and Lea Counties, New Mexico, in each applicable case for purposes of conferring constructive public notice of this Agreement. Notwithstanding the foregoing, except as may be required by applicable Law or as mutually agreed in writing by the Parties, neither Party shall file of record in any county or other public records this Agreement, a copy thereof, or any portion thereof (other than the Memorandum). In the event of any conflict between recitations contained in the Memorandum and the provisions contained in this Agreement, the provisions of this Agreement shall control. The execution and recording of the Memorandum shall not limit, increase, or in any manner affect any of the terms of this Agreement, or any rights, interests, or obligations of the Parties.
Section 8.17 Conspicuousness. THE PARTIES AGREE THAT ANY PROVISION OF THIS AGREEMENT THAT IS SET FORTH IN THE STYLE OF THIS SECTION 8.17 IS CONSPICUOUS.
[Remainder of page intentionally left blank; signature page follows.]
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This Agreement has been executed and delivered by the Parties effective as of the Effective Date.
| COMPANY: | ||
| DBR LAND LLC | ||
| By: | /s/ Xxxxxx X. Xxxxx | |
| Name: | Xxxxxx X. Xxxxx | |
| Title: | Co-CEO and CFO | |
| OPERATOR: | ||
| WATERBRIDGE STATELINE LLC | ||
| By: | /s/ Xxxxxx X. Xxxxx | |
| Name: | Xxxxxx X. Xxxxx | |
| Title: | Co-CEO and CFO | |
Signature Page – Fresh Water Facilities and Access Agreement (East Ranches)
Schedule 2.4
Surface Damages
[Omitted]
Exhibit A-1
East Stateline Ranch
[Omitted]
Exhibit A-2
Northeast Ranch
[Omitted]
Exhibit A-3
Dagger Draw Ranch
[Omitted]
Exhibit B
Initial Facilities
[Omitted]
Exhibit C
Additional Lands Area of Mutual Interest
[Omitted]
Exhibit D
Legacy Agreements
[Omitted]
Exhibit E
Recording Memorandum
[Omitted]
Schedule I
Form of Lease
[Omitted]
Schedule II
Form of Easement
[Omitted]
