Exhibit 10.10
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OIL, GAS AND MINERAL LEASE
AMERICAN FIRE RETARDANT CORPORATION, a Louisiana corporation, represented herein
by Xxxxxxx Xxxxx, its president, duly authorized by the attached Board of
Directors resolution, whose mailing address is 000 Xxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxx 00000 hereinafter called "Lessor" (whether one or more) grants, leases
and lets unto XXXXXXX ENERGY, INC., a Texas corporation, 0000 Xxxxxxx, Xxx. 000,
Xxxxxxx, XX 00000 hereinafter called "Lessee", the exclusive right to enter upon
and use the land hereinafter described for the exploration for, and production
of, oil, gas, sulphur and all other minerals, together with the use of the
surface of the land for all purposes incident to the exploration for and
production, ownership, possession and transportation of said minerals (either
from said land or acreage pooled therewith), and the right of ingress and egress
to and from said lands at all times for such purposes, including the right to
construct, maintain and use roads and/or canals thereon for operations hereunder
or in connection with similar operations on adjoining lands, and including the
right to remove from the land any property placed by Lessee thereon and to draw
and remove casing from xxxxx drilled by Lessee on said land; the land to which
this lease applies and which is affected hereby being situated in Lafayette
Parish, Lousiana, and described as follows, to-wit:
That certain tract of land containing 1.0 acre, more or less, situated in
Sections 54 and/or 98 and/or 97, Township 10 South, Range 5 East, Lafayette
Parish, Louisiana, known and designated as "Lot 1" on that certain plat of
survey entitled "Final Plat of Butcher Business Park, Located In Sections
98 & 54, T10S-R5E, City of Lafayette, Lafayette Parish, Louisiana," by
Domingue, Szabo, & Associates, Inc., Land Surveyors, dated March 11, 1982,
revised October 12, 1982, recorded under File No. 82-34558, Conveyance
Records of Lafayette Parish, Louisiana.
It is understood and agreed that it is the intention of Lessor herein to
lease all interest Lessor may own in and to all streets, alleys, lanes,
highways, roads, ditches, canals, coulees, public or private, adjacent to,
or traversing the lands described herein whether or not specifically
described. Furthermore, it is the specific intention of Lessor and Lessee
that this lease covers and affects lessor's interest underlying Brush Road
which adjoins the lands described above.
The royalties on oil, gas, and other minerals mentioned below in Paragraph
4 are and shall be one-fourth (1/4th) rather than one-eighth (1/8th) and
said Paragraph 4 is hereby amended so as to substitute the words and
figures "one-fourth (1/4th)" for the words and figures "one-eighth (1/8th)"
wherever same appears in said Paragraph 4.
This lease is granted subject to the provisions of the attached Exhibit
"A."
Containing 1.0 acres, more or less.
All land owned by the Lessor in the above mentioned Section or Sections or
Surveys, all property acquired by prescription and all accretion or alluvion
attaching to and forming a part of said land are included herein, whether
properly or specifically described or not.
This lease, without further evidence thereof, shall immediately attach to
and affect any and all rights, titles, and interests in the described land,
including reversionary mineral rights, hereafter acquired by or inuring to
Lessor and Lessor's successors and assigns. This lease shall be for a term of 3
(three) years from the date hereof (called "primary term") and so long
thereafter as oil, gas or some other mineral is being produced from the land, or
from land pooled therewith, or drilling operations are conducted, as hereinafter
provided for; all subject to the following conditions and agreements:
1. For the consideration hereinafter recited, this lease shall remain in
full force and effect during the primary term, without any additional payment
and without Lessee being required to conduct any operations on the land (either
before or after the discovery of minerals), except to drill such xxxxx as might
be necessary to protect the land from drainage, as hereinafter provided for.
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2. If, at the end of the primary term, any mineral is being produced from
the land, or from land pooled therewith, then Lessee's rights shall thereafter
be maintained in force and effect so long as oil, gas or some other mineral
shall be produced in paying quantities, or so long as Lessee is carrying on
operations with reasonable diligence for the production thereof from the leased
premises or land pooled therewith; or, if at the end of said primary term Lessee
is not producing minerals but is conducting or has conducted drilling operations
on the land or on land pooled therewith, the Lessee's rights shall be maintained
thereafter so long as Lessee carries on such drilling operations in the sense
that not more than ninety (90) days shall elapse between the cessation of work
on one well and the commencement of reworking operations or operations for the
drilling of another, and upon the discovery of oil, gas or some other mineral in
paying quantities, Lessee's rights shall be maintained without the drilling of
additional xxxxx within the time specified, but so long as Lessee carries on
operations with diligence for the production of oil, gas or some other mineral.
If, after the primary term and after the discovery of oil, gas or other minerals
in paying quantities, the production thereof should cease from any cause, this
lease shall terminate unless the Lessee resumes or restores such production, or
commences additional drilling, reworking or mining operations within (90) days
thereafter and continues such operations with diligence without more than (90)
days elapsing between the cessation of work on one well and the commencement of
reworking operations or operations for drilling of another until such production
is restored. Lessee shall not be required to produce more than one mineral in
discovered to exist under the lands, the production of any one mineral in paying
quantities and with reasonable diligence being sufficient to maintain all of
Lessee's rights. Lessee is hereby given the right of power without any further
approval from Lessor to pool or combine the acreage, royalty, or mineral
interest covered by this lease, or any portion thereof, with other land, lease,
or leases; royalty and mineral interests in the immediate vicinity thereof,
when, in Lessee's judgement, it is necessary or advisable to do so in order to
properly develop and operate said premises so as to promote the conservation of
oil, gas and other minerals in and under and that may be produced from said
premises or to comply with the spacing or unitization order of any Regulatory
Body of the State of Louisiana or the United States having jurisdiction. The
term "Regulatory Body" shall include any governmental tribunal or group (civil
or military) issuing orders governing the drilling of xxxxx or the production of
minerals, irrespective of whether said orders are designed to promote
conservation or to conserve materials or equipment for National Defense or
similar purposes. Such pooling shall be of tracts which will form one contiguous
body of land for each unit and the unit or units so created shall not exceed
substantially forty (40) acres each, surrounding each oil well and substantially
160 acres each for gas or gas-distillated xxxxx, unless a larger spacing pattern
or larger drilling or producing units (including a field or pool unit) have been
fixed and established by an order of a Regulatory Body of the State of Louisiana
or of the United States, in which event the unit or units may be of the size
fixed by said order. Lessee shall execute and record in the conveyance records
of the Parish in which the land herein leased is situated an instrument
identifying and describing the pooled acreage; and upon such recordation, the
unit or units shall thereby become effective. In lieu of the royalties elsewhere
herein specified and subject to the provisions of paragraph 7 hereof, Lessor
shall receive from production from the unit so pooled only such portion of the
royalties stipulated herein as the amount of his acreage placed in the unit, or
his royalty interest therein, bears to the total acreage so pooled in the
particular unit involved. Drilling or reworking operations on or production of
oil, gas sulphur or other minerals from land included in such pooled unit shall
have the effect of continuing this lease in force and effect after the primary
term as to all of the land covered hereby (including any portion of said land
not included in said unit) whether or not such operations were on or such
production was from land covered hereby. Lessee shall have the right and power
to reduce and diminish the extent of any unit created under the terms of this
paragraph so as to eliminate from said unit any acreage or lease upon which
there is or may be an adverse claim; and Lessee may also re-form any unit to
conform with an order of a Regulatory Body issued after said unit was originally
established. Such revision of the unit shall be evidenced by an instrument in
writing executed by the Lessee, which shall identify and describe the lands
included in the unit as revised and shall be recorded in the conveyance records
of the Parish where the lands herein lease are situated. If Lessee during or
after the primary term should drill a well capable of producing gas or gaseous
substances in paying quantities, (or which although previously produced, Lessee
is unable to continue to produce) and should Lessee be unable to operate said
well because of lack of market or marketing facilities or governmental
restrictions, then Lessee's rights may be maintained beyond or after the primary
term without production of minerals or further drilling operations by paying
Lessor annual rentals at the rate of TWO HUNDRED & NO/100 ($200.00) DOLLARS
each, the first payment to be due (if said well should be completed or be shut
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in after the primary term) within (90) days after the completion of such well or
the cessation of production and extend Lessee's rights for one year from the
date of such completion or cessation. If such a well should be completed during
the primary term the first payment, if made by Lessee, shall be due on or before
the expiration date of the primary term herein fixed. Thereafter Lessee's rights
may be continued from year to year by making annual payments in the amount
stated on or before the anniversary date beginning with the date of completion
of said well (if completed after the primary term) or the end of the primary
term (if completed thereto) as the case may be; each of such payments to extend
Lessee's rights for one year. It is provided, however, that in no event shall
Lessee's rights be so extended by annual payments herein fixed and without
drilling operations or the production of oil, gas or some other mineral for more
than five (5) years beyond the end of the primary term hereinabove fixed. The
annual payments herein provided for may be deposited to Lessor's credit in the
St. Xxxxxx Bank and Trust Company, X.X. Xxx 000. Bank of St. Xxxxxxxxxxx,
Louisiana 70582-0199, which bank shall be and remain Lessor's agent for such
purpose regardless of any change or changes in the ownership of the land or
mineral rights therein. Should any such well be completed on a drilling unit
which includes any part of the land herein leased, the provisions hereof shall
be subject to all other agreements herein contained allowing the pooling of such
lands and the payments herein fixed shall be prorated among the mineral owners
of each tract in the unit so that such owners shall be entitled to receive only
that proportion of said payments that the area of their tract placed in the unit
bears to the total area of said unit; and such proportionate payment shall
maintain the lease in force as to all of the land affected hereby, including any
portion thereof located outside of the unit.
3. If, prior to or after the discovery of oil on the lands held hereunder,
a well producing oil in paying quantities for thirty (30) consecutive days is
brought in on adjacent lands not owned by the Lessor and not forming a pooled
unit containing a portion of the lands described herein and within 330 feet of
any line of the land held hereunder, Lessee, in order to maintain the rights
granted, shall thereafter begin and prosecute with reasonable diligence the
drilling of a well in an effort to discover oil thereby and to protect the land
held hereunder from drainage.
Lessee may, at any time prior to or after the discovery and production of
minerals on the land, execute and deliver to Lessor or place of record a release
or releases of any portion or portions of the lands and be relieved of all
requirements hereof as to the land surrendered. In the event of the forfeiture
of this lease for any cause, Lessee shall have the right to retain around each
well then producing oil, as or other minerals or being drilled or worked on the
number of acres fixed and located by the spacing or unit order of any Regulatory
Body of the State of Louisiana or of the United States under which said well is
being drilled or produced, or if said well has been or is being drilled on a
unit pooled by Lessee as provided herein, then Lessee may retain all of the
acreage comprising said pooled unit; and if no spacing order has been issued nor
any pooled unit established, then Lessee shall have the right to retain twenty
(20) acres surrounding each well then producing or being drilled or worked on,
such twenty acres as to be in as near a square form as is practicable.
4. Subject to the provisions of Paragraphs 2 and 7 hereof, the royalties to
be paid by Lessee are: (a) On oil and other liquid hydrocarbons one-eighth
(1/8th) of that produced and saved from the land and not used for fuel in
conducting operations on the property (or on acreage pooled therewith) or in
treating said oil to make it marketable; (b) one-eighth (1/8th) of the market
value of the gas sold or used by Lessee in operations not connected with the
land leased or any pooled unit containing a portion of said land; (c) one-eighth
(1/8th) of the value at the mouth of the well of casinghead gas used in
manufacturing casinghead gasoline to be computed by methods recognized in the
industry; (d) one dollar ($1.00) for each ton of 2240 pounds of sulphur, payable
when marketed; and (e) one-eighth (1/8th) of the value of all other minerals
mined and marketed. Oil royalties shall be delivered to Lessor free of expense
at Lessor's option in tanks furnished by Lessor at the well or to the Lessor's
credit in any pipe line connected therewith. In the event Lessor does not
furnish tanks for such royalty oil and no pipe line is connected with the well,
Lessee may sell Lessor's royalty oil at the best market price obtainable and pay
Lessor the price received f. o. b. the leased property, less any severence or
production tax imposed thereon.
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Lessee shall have the right to inject gas, brine, or other fluids into
sub-surface strata, and no royalties shall be due on any gas produced by Lessee
and injected into sub-surface strata through a well or xxxxx located either on
land or on a unit comprising a portion of the land.
5. The Lessee shall be responsible for all damages to timber and growing
crops of Lessor caused by Lessee's operations.
6. All provisions hereof shall extend to and bind the successors and
assigns (in whole or in part) of Lessor and Lessee; but no change in the
ownership of the land or any interest therein or change in the capacity or
status if Lessor, whether resulting from sale, inheritance or otherwise, shall
impose any additional burden on Lessee nor shall any change in ownership or in
the status or capacity of Lessor impair the effectiveness of payments made to
Lessor herein named unless the then record owner of said lease shall have been
furnished, thirty (30) days before payment is due, with certified copy of
recorded instrument or judgment evidencing such transfer, inheritance or sale or
evidence of such change in status or capacity of Lessor. The furnishing of such
evidence shall not affect the validity of payments theretofore made in advance.
7. Lessor hereby warrants and agrees to defend the title to said land and
agrees that Lessee may, at its option, discharge any tax, mortgage or other lien
upon the land and be subrogated thereto and have the right to apply to the
repayment of the Lessee any royalties accuring hereunder. If Lessor owns less
than the entire undivided interest in all or any portion of the lands or
mineral
rights relating thereto (whether such interest is herein specified or not)
royalties and other payments as to the land shall be deducted herein for the
royalties provided for.
8. In the event Lessor's title or an interest therein is claimed by others
Lessee shall have the right to withhold payment of royalties or to deposit such
royalties in the registry of the Court until final determination of Lessor's
rights.
9. If the land herein described is owned in divided or undivided portions
by more than one party, this instrument may be signed in any number of
counterparts, each of which shall be binding on the party or parties so signing
regardless of whether all of the owners join in the granting of this lease.
10. The requirements hereof shall be subject to any State and/or Federal
law or order regulating operations on the land.
11. In the event that Lessor at any time considers that operations are not
being conducted in compliance with this lease, Lessor shall notify Lessee in
writing of the facts relied upon as constituting a breach hereof, and Lessee, if
legally required to conduct operations, in order to maintain the lease in force,
shall have sixty (60) days after receipt of such notice in which to commence the
necessary operations to comply with the requirements hereof.
Lessor acknowledged to have received from Lessee the sum of TEN DOLLARS AND
OTHER VALUABLE CONSIDERATIONS ($10.00 & OVC) as full and adequate consideration
for all rights, options and privileges herein granted.
IN WITNESS WHEREOF, this instrument is executed as of October 31, 1997.
WITNESSES:
/s/ Xxxxx Xxxxxxx AMERICAN FIRE RETARDANT CORPORATION
/s/ Xxxxxxx Xxxxx
/s/ Xxxxxxx Indil -----------------------------
By: Xxxxxxx Xxxxx
TAX ID 00-0000000
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EXHIBIT "A"
Attached to and made a part of that certain Oil, Gas and Mineral Lease
dated effective October 31, 1997, by and between AMERICAN FIRE RETARDANT
CORPORATION, as Lessor, and Xxxxxxx Energy, Inc., as Lessee.
1. Notwithstanding anything to the contrary contained herein, Lessee shall
conduct no surface operations on the lands leased herein without the
express written permission of Lessor; however Lessee may recover
hydrocarbons or other minerals from the property herein leased by
directional drilling, unitization or any other method provided herein which
will maintain this lease in full force and effect.
2. In addition to the rights specifically granted herein, but as a separate
grant of rights, Lessor hereby grants unto Lessee, its successors and
assigns, a subsurface easement for use by Lessee, its successors and
assigns, in its operations on other lands. This easement shall continue in
effect from the effective date hereof and for so long thereafter as Lessee,
its successors and assigns, is utilizing the subsurface of the lands
described herein in its operations under such lands and for 120 days
thereafter. This grant may be continued in effect by Lessee, its successors
or assigns, if, during said 120 days, it recommences subsurface use of the
lands described herein; thereafter the rights granted shall continue as if
such cessation had never occurred and for as many successive 120 day
periods may occur. The rights granted herein are separate from those
granted elsewhere in this lease and may be continued in effect even if the
lease should terminate.
SIGNED FOR IDENTIFICATION
AMERICAN FIRE RETARDANT CORPORATION
/s/ Xxxxxxx Xxxxx
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Xxxxxxx X. Xxxxx
Attached to and made a part of that certain Oil, Gas and Mineral Lease
dates effective October 31, 1997, by and between AMERICAN FIRE RETARDANT
CORPORATION as Lessor, and Xxxxxxx Energy, Inc., as Lessee.
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF LAFAYETTE
BE IT KNOWN that on this 31st day of October, 1997, before me, the
undersigned authority, duly commissioned, qualified, and sworn within and for
the State and Parish aforesaid, personally came and appeared Xxxxxxx Xxxxx,
appearing in his capacity as the President of AMERICAN FIRE RETARDANT
CORPORATION, a Louisiana Corporation, formed under the laws of the State of
Louisiana, to me personally known to be the identical person whose name is
subscribed to the foregoing instrument; who declared and acknowledged to me,
Notary, in the presence of the undersigned competenet witnesses, that he
executed the same on behalf of said corporation with full authority and that the
said instrument is the free act and deed of the said corporation and was
executed for the uses, purposes, and benefits therein expressed.
/s/ Xxxxxxx X. Lassign
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NOTARY PUBLIC
Attached to and made a part of that certain Oil, Gas and Mineral Lease
dated effective October 31, 1997, by and between AMERICAN FIRE RETARDANT
CORPORATION as Lessor, and Xxxxxxx Energy, Inc., as Lessee.
RESOLUTION
BE IT RESOLVED that AMERICAN FIRE RETARDANT CORPORATION, does execute in
favor of XXXXXXX ENERGY, INC., whose address is 0000 Xxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, an oil, gas and mineral lease, dated effective October 31,
1997, covering the specific property described as follows and located in the
Parish of Lafayette, State of Louisiana;
That certain tract of land containing 1.0 acre, more or less, situated in
Sections 54 and/or 98 and/or 97, Township 10 South, Range 5 East, Lafayette
Parish, Louisiana, known and designated as "Lot 1" on that certain plat of
survey entitled "Final Plat of Butcher Business Park, Located in Sections
98 & 54, T10S-R5E, City of Lafayette, Lafayette Parish, Louisiana," by
Xxxxxxxx, Xxxxx & Associates, Inc., Land Surveyors, dated March 11, 1982,
revised October 12, 1982, recorded under File No. 82-34558, Conveyance
Records of Lafayette Parish, Louisiana.
It is understood and agreed that it is the intention of Lessor herein to
lease all interest Lessor may own in and to all streets, alleys, lanes,
highways, roads, ditches, canals, coulees, public or private, adjacent or
traversing the lands described herein whether or not specifically
described. Furthermore, it is the specific intention of Lessor and Lessee
that this lease covers and affects Lessor's interest underlying Brush Road
which adjoins the lands described above.
BE IT FURTHER RESOLVED, that Xxxxxxx Xxxxx, President of AMERICAN FIRE
RETARDANT CORPORATION, is hereby authorized, directed, and empowered to execute
said oil, gas and mineral lease dated effective October 31, 1997, to XXXXXXX
ENERGY, INC., for and on behalf of this corporation, for the consideration, and
upon such terms and conditions as he, the said Xxxxxxx Xxxxx, in his sole
discretion shall deem to be in the best interests of this corporation, and to do
all other things whatsoever necessary or requisite to be done to carry out the
purpose and intent of this resolution.
CERTIFICATE
I, Xxxxxx Xxxxxxx, Xx., Secretary of AMERICAN FIRE RETARDANT CORPORATION, do
hereby certify that the above is a true and correct copy of the minutes of the
meeting of the Board of Directors of AMERICAN FIRE RETARDANT CORPORATION held at
its domicile at Broussard, Louisiana, on this site the 31st day of October,
1997, and that a quorum was present and voting favor of this resolution.
/s/ Xxxxxx X. Xxxxxxx
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By: Xxxxxx Xxxxxxx, Xx.
