Exhibit 10.4.12
LEASE AGREEMENT
THIS AGREEMENT, made and entered into as of the 17 day of March,
1964, by and between XXXXX X. XXXXXX, a widow hereinafter called "Lessor"
(whether one or more) and STANDARD OIL COMPANY OF CALIFORNIA, a corporation ,
hereinafter called "Lessee,"
W I T N E S S E T H
1. Lessor, for and in consideration of the sum of $10 in hand
paid, and of the royalties herein provided and of the covenants and agreements
hereinafter contained, hereby grants, demises, leases and lets unto Lessee, the
land hereinafter described with the sole and exclusive right to Lessee to drill
for, produce, extract, take and remove therefrom water, brine, steam, steam
power, minerals (other than oil), salts, chemicals, gases (other than gas
associated with oil), and other products produced or extracted by Lessee from
any thereof. Each of the foregoing is hereinafter sometimes termed "a lease
product" and all thereof are sometimes termed "the lease products." For the same
consideration Lessee is hereby granted the right to store, utilize, process,
convert, and otherwise use such lease products upon said land and to sell the
same or any part thereof off said land during the term hereof, with the right of
entry thereon at all times for said purposes, and to construct, use, maintain,
erect, repair and replace thereon, and to remove therefrom all roads, pipelines,
ditches and lanes, telephone and telegraph lines, utility installations, power
lines, poles, tanks, evaporation or settling basins, extraction or processing
plants, machinery, equipment, buildings, electric power plants, and equipment
for generation and transmission of steam power, and electric power, and for the
handling, treatment or storage of lease products, and all structures and
facilities relating thereto, which Lessee may desire to erect, construct or
install in carrying on Lessee's business and operations on or from said land and
other lands in the vicinity of said land; and Lessee shall have the further
right to erect, maintain, operate and remove a plant or plants, structures and
facilities, with all necessary appurtenances for the conversion of steam to
electric power, and for the extraction of lease products from steam, brine or
water produced from said land, and other lands in the vicinity of said land,
including all rights necessary or convenient thereto, together with rights of
way for passage over, upon and across and ingress and egress to and from said
land for any or all of the above mentioned purposes. Lessee shall also have the
right to dispose of waste brine and other waste products in a well or xxxxx
drilled or converted for that purpose on the leased land or on other land in the
vicinity, and the right to inject water, brine, steam and gases in a well or
xxxxx on said land or such other land for the purpose of maintaining or
restoring pressure in the productive zones beneath said land or other land in
the vicinity thereof. The said land included in this lease is situated in the
County of Imperial, State of California, and is described as follows, to wit:
Tract Xx. 00 Xxxxxxxx 00 Xxxxx, Xxxxx 00 Xxxx, X.X.X. containing
80 acres of land more or less.
This lease shall cover all the interest in said land now owned or hereafter
acquired by Lessor, even though greater than the undivided interest (if any)
described above. For the purpose of calculating any payments based on acreage,
Lessee, at Lessee's option, may act as if said land and its constituent parcels
contain the acreage above stated, whether they actually contain more or less.
2. Subject to the other provisions herein contained, this lease
shall remain in force for a period of twenty (20) years from the date hereof,
called the "primary term," and thereafter so long as lease products, or any one
or more of them, is produced from, or Lessee is engaged in drilling, extraction,
processing or reworking operations on said land hereunder or on land pooled or
unitized with said land, as provided in Section 19 hereof, (said land, together
with such pooled or unitized land, being hereinafter sometimes called "the unit
area").
3. Lessee shall pay to Lessor, on or before the last day of each
calendar month, the royalties accrued and payable for the preceding calendar
month, and in making such payments Lessee shall furnish to Lessor statements
setting forth the basis for computation of such royalty.
As royalty and rental, Lessee shall pay to Lessor 10% of the value at the well
of all lease products produced, saved and sold. As used herein, the term "value
at the well" shall mean the actual price received by Lessee for the sale of
lease products at the well. If such products are not sold by Lessee at the well
but are sold at a plant or plants on or in the vicinity of said land, then the
value at the well shall be determined by deducting from the actual price
received by Lessee for the sale of such lease products all costs and expenses
incurred by Lessee in transporting, manufacturing, processing and otherwise
handling such lease products prior to the actual sale thereof. If lease products
are not sold by Lessee at the well or at such a plant but are otherwise used by
Lessee in its chemical operations or disposed of for value, then the value of
such lease products at the well shall be determined by deducting from the price
thereof at the nearest point where the same or similar products are sold in
substantial quantities, the cost of transporting, manufacturing, processing and
otherwise handling such lease products prior to sale thereof. Lessee shall
meter, gauge or otherwise determine the volume and quality of all lease products
commingled and such metering or gauging shall furnish the basis for computing
Lessor's royalties hereunder. Lessee may use, free of royalty, steam, steam
power, electric power, and water developed from said land by Lessee, for all
operations hereunder, and Lessee shall not be required to account to Lessor for,
or pay royalty on any lease product or products reasonably lost or consumed in
operations hereunder.
4. Lessee agrees to commence drilling, extraction or processing
operations on said land or on the unit area within the period of thirty (30)
years from the date hereof and to prosecute such operations with reasonable
diligence until lease products or any thereof shall have been found, extracted
and processed in quantities deemed paying quantities by Lessee, or until further
operations would, in the judgment of Lessee, be unprofitable or impracticable,
or Lessee may at any time within said primary term terminate this lease and
surrender said land provided that, commencing with the 17th day of March, l965,
if Lessee has not theretofore commenced any such operations on said land or on
the unit area or terminated this lease, Lessee shall pay or tender to Lessor
annually, in advance, as rental, the sum of Eight-hundred and no/100 DOLLARS
($800.00) (each of such annual periods being hereinafter referred to as "rental
period") until operations are commenced on said land or lands which have been
pooled or unitized therewith, pursuant to paragraph 19 hereof, or this lease
terminated as herein provided; it being understood that in the event of the
surrender or termination of this lease as to any portion or portions of the land
covered thereby, said rental shall be reduced proportionately as provided in
paragraph 16 hereof. The consideration expressed in paragraph 1 hereof covers
all rental to the date last above mentioned. If Lessee shall elect not to
commence operations on said land or on the unit area during the primary term, as
above provided, this lease shall terminate.
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It is expressly understood and agreed by the parties hereto:
a. That if within 10 years from the date hereof Lessee has
not completed one or more xxxxx or a processing plant on
the unit area or on said land, capable of producing or
processing lease products or any thereof in quantities and
quality deemed paying quantities by Lessee, then Lessor
may, at his option, terminate this lease; and
b. That if within 15 years from the date hereof Lessee has
not made or arranged for a sale or sales of lease products
or any thereof, produced from or allocated to said land,
then Lessor may, at his option, terminate this lease.
5. If at any time or times after the primary term or within three
(3) months before expiration of the primary term, all operations and all
production hereunder on said land or on the unit area shall cease for any cause
other than those for which specific provision is made herein, this lease shall
not terminate if Lessee shall commence or resume drilling, processing,
extraction or reworking operations or production within three (3) months after
such cessation.
6. Lessee shall be obligated to produce only such quantity or
quantities of lease products as it may be able to market at the well or xxxxx,
plant or plants. It is recognized that the market demand for lease products may
vary from time to time and during such periods as there is no market at the
xxxxx or plant for any lease product or products, Lessee's obligation to
produce, process and extract such lease product or products shall be suspended.
Subject to the foregoing and except as herein otherwise provided, it is agreed
that the Lessee shall drill such xxxxx and operate each completed well with
reasonable diligence and in accordance with good operating practice so long as
such xxxxx shall produce lease products in paying quantities while this lease is
in force as to the portion of said land on which such well or xxxxx are
situated; but in conformity with any reasonable conservation program affecting
the drilling of xxxxx or the production of lease products from said land, which
the Lessee may either voluntarily or by order of any authorized governmental
agency adopt, subscribe to or be subject to.
7. The possession by Lessee of said land shall be sole and
exclusive excepting only that Lessor reserves the right to occupy and use or to
lease the surface of said land for agricultural, horticultural or other surface
uses, except those granted to Lessee hereunder, which uses shall be carried on
by Lessor subject to, and with no interference with, the rights or operations of
Lessee hereunder. No well shall be drilled closer than 100 feet to any residence
or barn now on said land without written consent of Lessor. Lessee shall pay for
damages caused by Lessee's operations to houses, barns, growing crops, fences
and irrigation systems. Lessee shall have the right to drill such xxxxx on said
land as Lessee may deem desirable for the purposes hereof and Lessee shall
utilize or use only so much of said land as is necessary or reasonably
convenient for Lessee's operations hereunder and shall interfere as little as
reasonably necessary with the use and occupancy of said land by Lessor. No
default of Lessee hereunder with respect to any well, or portion of this lease,
shall impair Lessee's rights with respect to any other well or portion of this
lease.
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8. The rights of Lessor and Lessee hereunder may be assigned in
whole or in part. No present or future division of Lessor's ownership as to
different portions or parcels of said land shall operate to enlarge the
obligations or diminish the rights of Lessee, and Lessee's operations may be
conducted without regard to any such division. If all or any part of this lease
is assigned, no leasehold owner shall be liable for any act or omission of any
other leasehold owner, and failure by one to pay rental shall not affect the
rights of others--rental being apportionable in proportion to acreage.
9. The obligations of Lessee hereunder shall be suspended (but
without impairment of Lessor's rights under (a) and (b) of paragraph 4 hereof)
while Lessee is prevented or hindered from complying therewith in part or in
whole, by strikes, lockouts, labor distrubances, acts of God, unavoidable
accidents, laws, rules, regulations or orders of any Federal, state, municipal
or other governmental agency, acts of war or conditions arising out of or
attributable to war, shortage of necessary material, equipment or labor, or
restrictions in, or limitations upon the use thereof, inability to secure or
absence of a market for the sale of lease products which can be produced or
recovered in commercial quantities from said land, delays in transportation, and
also matters beyond the control of Lessee, whether similar to the matters herein
specifically enumerated or not. This lease shall remain in full force and effect
during any suspension of Lessee's obligations under any provisions of this
paragraph, and for a reasonable time thereafter, provided that after the removal
of the cause or causes preventing or hindering the performance of such
obligation, Lessee, subject to the other provisions of this Lease, diligently
commences or resumes the performance of such obligation. Notwithstanding
anything to the contrary herein provided, if any of Lessee's obligations
hereunder conflict with or violate the provisions of any reasonable conservation
program or plan of orderly development, whether now or hereafter adopted, to
which Lessee may voluntarily subscribe, or of any conservation program or plan
which is now or may hereafter be prescribed by any order of any governmental
agency, Lessee shall not be obligated to perform such obligation.
10. If Lessee shall fail to pay any installment of royalty or
rental when due and if such default shall continue for a period of 15 days after
receipt by Lessee of written notice thereof from Lessor to Lessee, then at the
option of Lessor, this lease shall terminate as to the portion or portions
thereof as to which Lessee is in default; provided, however, that if there be a
bona fide dispute as to the amount due and all undisputed amounts are paid, said
15-day period shall be extended until 5 days after such dispute is settled by
final court decree, arbitration or agreement.
If lessee shall be in default in the performance of any obligations under this
Lease, other than the payment of rentals or royalties, and if, for a period of
90 days after written notice is given to Lessee by Lessor of such default,
Lessee shall fail to commence and thereafter diligently and in good faith
prosecute action to remedy such default, Lessor may terminate this Lease.
11. Lessee shall pay all taxes that may be levied against the
improvements, plant, machinery and personal property owned by Lessee and located
upon any part of said land.
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12. Lessee shall also pay Lessee's share of any and all taxes
assessed during the term of this lease upon any products of Lessee's operations
hereunder, together with Lessee's share of all severance, production and license
taxes or other taxes or assessments levied or assessed on account of the
production of lease products or any thereof on or from said land, or on or from
such portion of said land as Lessee may be holding under this lease on the date
of such tax lien.
13. Lessor agrees to pay Lessor's share of any and all taxes
assessed upon any products of Lessee's operations hereunder, together with
Lessor's share of all severance, production and license taxes or other taxes or
assessments levied or assessed on account of the production of lease products
from said land and to pay all, other taxes assessed against said land, whether
the same are assessed to Lessor or Lessee or otherwise, and Lessee is hereby
authorized to pay all such taxes and assessments on behalf of Lessor and to
deduct the amount so paid from any royalties or moneys due Lessor hereunder.
"Lessee's share" and "Lessor's share", as used above refers to Lessee's and
Lessor's respective proportionate parts of the gross proceeds from the sale of
any and all lease products produced, saved and sold from said land by Lessee or
allocated to said land under the terms of any unit or pooling plan during the
preceding calendar year.
14. All royalties, rentals and other payments payable in money
hereunder shall be paid to Lessor by Lessee mailing or delivering a check
therefor to Lessor at 000 - Xxxxxxxxxx Xxxxx, Xx Xxxxxx, Xxxxxxxxxx, or Lessee
may, at its option, pay any or all royalties, rentals and other payments payable
in money hereunder by mailing or delivering a check therefor to Bank of America
at El Centro, California its successors and assigns, herein designated by Lessor
as depositary, hereby granting to said depositary full power and authority on
behalf of Lessor and on behalf of the heirs, executors, administrators,
successors and assigns of Lessor, and each of them, to collect and receipt for
all sums of money due and payable from Lessee to Lessor hereunder, and to settle
all accounts and accounting of rentals, royalties and other payments payable in
money hereunder. No change in the ownership of the land or minerals covered by
this lease and no assignment of rentals or royalties shall be binding upon
Lessee or the depositary until both Lessee and the depositary have been
furnished with written evidence thereof satisfactory to them. Said depositary
above named shall continue to act as such until the owners and holders of at
least two-thirds of Lessor's estate hereunder shall in writing designate a
different depositary and notify Lessee in writing at X.X. Xxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx, 00000, of the name and address of such new depositary.
The payment of any and all rentals, royalties and other payments hereunder by
Lessee to the depositary designated herein or to any other depositary hereafter
designated by Lessor, as aforesaid, shall be a full acquittance and discharge of
Lessee of and from any and all liability to Lessor, and to the heirs, executors,
administrators, successors and assigns of Lessor, and each of them, for any part
of such rentals, royalties or other payments, and Lessee will not be responsible
at any time for the disposition or disbursement by any such depositary of all or
any part of any moneys received by it hereunder.
15. It is agreed that if Lessor owns a less interest in the sole
and exclusive rights herein granted Lessee, than the entire and undivided fee
simple estate therein, then any royalties, rentals and other payments herein
provided for shall be paid Lessor only in the proportion which Lessor's interest
bears to the whole and undivided fee. In the event Lessee's estate hereunder
shall fail, for a cause other than Lessee's default hereunder, in regard to any
portion of said land or any interest therein, such failure shall not affect or
invalidate Lessee's estate hereunder in
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regard to the remaining portions of said lands or the remaining interests
therein and this lease shall nevertheless continue in full force and effect with
respect to said remaining portions of said land or remaining interests therein,
and Lessee shall not be accountable to Lessor for any payment theretofore made
with respect to said portion of said land or such interest in regard to which
Lessee's estate hereunder has failed. If and whenever it shall be necessary so
to do in order to protect Lessee's interest under this lease, Lessee may at its
option pay and discharge at any time any mortgage or other lien now or hereafter
attaching to said land or any part thereof and in such event lessee shall be
subrogated to all of the rights of the owner or holder of such mortgage or other
lien and Lessee may in addition thereto, at its option, apply to the discharge
of any such mortgage or other lien, or to the reimbursement to lessee for any
amount so paid by it, any rentals, royalties or other sums accruing or payable
hereunder, to the owner of the lands to which such mortgage or other lien
attaches.
16. Lessee may at any time or times surrender this lease as to all
or any portion of said land and be relieved of all obligations thereafter
accruing as to the acreage surrendered, and thereafter the rental shall be
reduced in the same proportion that the acreage covered hereby is reduced. In
the event this lease shall be surrendered under the provisions of this
paragraph, or assigned as hereinabove provided as to any portion or portions of
said land, Lessee shall have such rights of way or easements hereunder, over,
upon and across the land as to which this lease is so surrendered or assigned as
shall be necessary or convenient for Lessee' s operations on the land retained
by it and other lands in the vicinity thereof. Upon any surrender or assignment
of this lease as to all or any portion of said land, Lessee shall be relieved of
all further obligations hereunder with respect to the lands so surrendered or
assigned. Any such surrender shall become effective upon delivery to Lessor, or
to the depositary bank herein designated, or the deposit in the United States
mail, postage prepaid, of a duly executed duplicate of an instrument of
surrender properly addressed to Lessor or to such depositary bank. Within a
reasonable time thereafter, Lessee shall record the original of such instrument
of surrender.
17. Lessee shall have the right at any time and from time to time
during the continuance hereof and within a reasonable time after the surrender
or any termination of this lease, to remove from said land all equipment,
machinery, installations, and any other property or improvements belonging to or
furnished by Lessee or Lessee's permitees.
18. All labor to be performed and material to be furnished in the
operations of Lessee hereunder shall be at the cost and expense of Lessee, and
Lessor shall not be chargeable with nor liable for any part thereof. Lessee
shall protect said land from liens arising from Lessee's operations thereon.
19. (a) Lessee is given the sole right and option by written
declaration of pooling at any time or from time to time, within twenty (20)
years from the date hereof, to combine, pool or unitize in whole or in part as
to any stratum or strata all or any part of said lands with other lands not
subject to this lease so as to create one or more reasonably compact operating
units for any operating or producing purpose. Such written declaration of
pooling shall describe the pooled lands and shall become effective when recorded
in the Office of the County Recorder in the county where the land is situated.
Lessee shall give written notice of such pooling to those Lessors whose lands
are so pooled. Lessors agree that with respect to all lease products obtained
from any lands included within any such operating unit, whether or not from
lands covered by
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this lease, there shall be allocated to and deemed to have been produced from
the lands covered by this lease and included in such operating unit, only that
proportion of the entire production from such operating unit that the amount of
acreage within the lands herein leased and included in such operating unit bears
to the total acreage of all of the land in such operating unit, and royalty
payable under this lease with respect to leased land included in such operating
unit shall be computed only on that portion of such production so allocated to
such leased lands. The entire acreage so pooled or unitized shall be treated as
if it were covered by one lease and the drilling of a well or performance of any
other obligations in any part of such operating unit, whether or not on land
subject to this lease, shall fulfill Lessee's drilling and other obligations
under this lease to the same extent as if such well were drilled and other
obligations performed on land subject to this lease. No offset obligation shall
accrue under this lease as a result of any well drilled within any such
operating unit. Lessee may, at its sole option, at any time when there is no
production in such operating unit of lease products in quantities deemed paying
by Lessee terminate such operating unit by a written declaration thereof, in the
same manner in which it was created.
(b) Lessee is hereby granted the right at any time or times within
the period hereinafter provided to unitize this lease and the lands covered
hereby, in whole or in part or as to any stratum or strata, with other lands and
leases and to increase or decrease the size of any such unit. Any change in the
amount of Lessor's royalties resulting from unitization of this lease or from
any increase or decrease in the size of any such unit shall not be retroactive.
In the event of any such unitization, this lease, unless sooner terminated by
Lessee, shall continue in effect for so long as any of the lands hereby leased
remain subject to such unit. The drilling and producing operations conducted on
any of the unitized lands shall constitute full compliance with the drilling and
producing obligations of Lessee hereunder and Lessor shall be entitled to the
royalties in this lease provided, on the fractional part only, if any, of the
unit production allocated to this lease in accordance with the provisions of
said unit. The method of allocation of production from lands subject to said
unit shall be set forth therein and may be based upon the surface acreage or the
estimated volumetric content of recoverable lease products, or any weighing of
either or both thereof, of lands within such unit or within the estimated
productive limits of such unit, or such allocation may be made upon any other
basis approved by State or Federal authorities having jurisdiction thereof. The
provisions of this paragraph authorizing the establishment and enlargement or
contraction of such unit and change of the ratio of participation thereunder
shall not extend beyond the period of twenty (20) years from the date of this
lease; provided, however, that if such unit is established before the expiration
of said twenty-year period, such unit may continue in effect beyond said
twenty-year period. Any such unit may be established, enlarged, or diminished,
and, in the absence of production therefrom, may be dissolved by Lessee's filing
for record an instrument so declaring. A copy of such instrument shall be
delivered to Lessor or to the depositary.
20. Whenever used herein, the expression "drilling operations"
shall mean, for all purposes hereof, any work or actual operations undertaken or
commenced for the purpose of drilling of a well, including without limiting the
generality hereof, the preparation of the ground therefor, the building of roads
and other facilities therefor, the construction of a xxxxxxx and other necessary
structures for the drilling of a well followed by the actual operation of
drilling in the ground. Any such work or operations preliminary to the drilling
in the ground may be
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undertaken in any order Lessee shall see fit. All such work and operations shall
be prosecuted with reasonable diligence.
21. This agreement may be executed in any number of counterparts
with the same force and effect as if all parties signed the same document.
22. This lease shall be binding upon all who execute it, whether
or not they are named in the granting clause hereof and whether or not all
parties named in the granting clause execute this lease. All the provisions of
this lease shall inure to the benefit of and be binding upon the heirs,
executors, administrators, successors and assigns of Lessor and Lessee.
IN WITNESS WHEREOF, the parties hereto have executed this agreement.
STANDARD OIL COMPANY OF AMERICA
By: /s/ Indecipherable
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Contract Agent
By: /s/ Indecipherable /s/ Xxxxx X. Xxxxxx
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Assistant Secretary XXXXX X. XXXXXX
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LESSEE LESSOR
Witness to the above signature(s) /s/ Xxxxxxx X. Xxxxx
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