CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
Exhibit 10.4.5
THIS LEASE, made in duplicate this 1st day of August, 1976, by and
between SOUTHERN PACIFIC LAND COMPANY, a California corporation, hereinafter
called "Lessor" and XXXXXXXX PETROLEUM COMPANY, a Delaware corporation,
hereinafter called "Lessee".
W I T N E S S E T H:
1. Lessor hereby grants, leases and lets, subject to the provisions
hereof, the exclusive right to explore, prospect, drill for, produce, treat,
extract, take, process, remove and utilize all products of geothermal processes,
including, but not limited to, hot brine, hot water, hot rock, and indigenous
steam; steam and other gases; hot water and hot brines resulting from water, gas
or other fluids (whether liquid or gaseous) artificially introduced into
geothermal formations hereinafter referred to as "geothermal energy"; and any
mineral or minerals (exclusive of oil, petroleum and hydrocarbon gas) which are
found in solution or in association with or entrained in such steam, hot water
or hot brines, hereinafter referred to as "substances", and storing, taking,
removing, transporting, and disposing of same, an undivided 50 percent interest
in that certain land situated, lying and being in the County of Xxxxxxxxx, State
of Nevada, hereinafter referred to as "Leased Premises", more particularly
described on Exhibit "A" attached hereto and made a part hereof.
TOGETHER with the right to inject and reinject geothermal effluents
from operations hereunder in the leased premises and use so much of the leased
premises as may be required by Lessee for the drilling and operation of xxxxx
thereon for the purposes hereof, and to construct and maintain thereon
buildings, structures and equipment, including, but not limited to generation
and transmission of electric power, mineral processing, waste water disposal,
pipe lines, transmission lines, power lines, ponds and roads, in connection with
operations hereunder;
provided however, that Lessee agrees to use for such purpose only so much of the
leased premises as shall be reasonably necessary for Lessee's operations
thereon.
Subject to easements, leases, licenses and restrictions affecting the
leased premises. Reserving unto Lessor, its successors and assigns, the
following:
(a) The right to construct, maintain and use tracks, roads, trails,
ditches, pipe lines, communication devices, and facilities relating thereto in,
upon, over and across the leased premises, and
(b) The right to use the leased premises for all other purposes not
inconsistent with or which shall not interfere with the right of the Lessee
hereunder to use the leased premises.
(c) The exclusive right to all minerals other than those leased
hereunder, including, but not limited to, oil, petroleum, natural hydrocarbon
gas, and other hydrocarbons.
2. This lease shall be for a primary term of ten years from and after
the date first herein written and for so long thereafter, as there:
(a) shall be commercial production of said geothermal energy and
substances from the leased premises and/or
(b) drilling, re-drilling, deepening or remedial operations are being
prosecuted on a continuous basis on the leased premises.
3. Lessee agrees to pay to Lessor in advance as of the date of this
lease the sum of $*** per acre of the leased premises as rental for the first
year of this lease and to pay to Lessor in advance for the second year of the
lease on or before the 1st day of August 1977, and annually thereafter during
the remaining period this lease is in effect, on or before the same day and
month of each succeeding year, an annual advance minimum royalty at the rate of
$*** per acre for each acre then covered by this lease.
*** Confidential material redacted and filed separately with the Commission.
2
In the event Lessee uses the surface of a portion or portions of the
leased premises for the construction and operation of facilities for mineral
processing, electric or power generation or waste water disposal, ponds or
plants, exclusive of the portions of the leased premises used for the drilling
and operation of xxxxx and construction and maintenance of pipe lines,
transmission lines, roads and ditches, Lessee agrees to pay to Lessor, in
addition to the above minimum royalty, an annual advance surface rental during
the period of such use equivalent to 9 1/2 % of the current value used in the
assessment by the County in which lands are located as to the portions of the
leased premises so used, which is in effect for each year the use is made.
4. Lessee shall commence drilling a well for said geothermal energy and
substances on the leased premises within the primary term, and shall continue
the work of drilling said well with due diligence until completion, and
thereafter shall commence and drill such other xxxxx as may be required to
assure Lessee of a supply of said geothermal energy and substances or any of
them in such amounts as its requirements from the leased premises may demand,
provided that the spacing of xxxxx drilled upon the leased premises shall not be
less than the spacing of xxxxx drilled upon adjoining land, and provided further
that this lease shall terminate at the end of the tenth year from the date
hereof as to the acreage hereunder then in excess of the result of multiplying
the number of xxxxx then capable of producing said geothermal energy and
substances in paying quantities times six hundred and forty acres, and that the
locations of the portions of the leased premises which shall remain subject to
this lease shall be selected by Lessee.
Lessee shall keep each well drilled on the leased premises producing at
the rate deemed by Lessee to be most conducive to efficient operation of the
well and to maximum production of said geothermal energy and substances covered
hereby; provided, however, that if Lessee's well
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or xxxxx on land adjoining the leased premises are not produced to capacity,
then Lessee may produce from the xxxxx on the leased premises at the same ratio
that the actual production bears to potential production of Lessee's well or
xxxxx being produced on adjoining land.
In the event Lessee fails to commence drilling a well within the
primary term of this lease or the leased premises or land pooled therewith as
provided herein, this lease shall terminate except as otherwise provided.
5. A well shall be deemed completed:
(a) when formations or mechanical difficulties are encountered which,
in Lessee's judgment, render further drilling of such well unprofitable or
unsuccessful and because of such fact further drilling operations thereon are
discontinued;
(b) when a well has been drilled to a depth of at least five thousand
feet and the drilling operation is discontinued, or
(c) Lessee has ceased drilling a well and it is tested and deemed
capable of producing said geothermal energy and substances or any of them in
quantities deemed by Lessee sufficient to warrant the continuance of its
operation.
6. Lessee agrees to pay to Lessor as royalty:
(a) *** received by Lessee from the *** at the point of sale.
(b) on all other leased substances produced therefrom, *** during the
first ten years of the commercial production of said substance and ***
thereafter received by Lessee. ***, for the purpose of this lease, shall be ***
*** Confidential material redacted and filed separately with the Commission.
4
Lessor shall have the right to receive its royalty in kind.
7. Lessor does hereby lease to Lessee the exclusive right to use said
leased premises for the slant drilling of xxxxx having their surface locations
upon either the leased premises or adjoining land and having their well bores
passing through the subsurface of the leased premises, for the production of
said geothermal energy and substances, and having their production intervals
beneath land other than the leased premises or land included in any unit created
under provisions of Section 11 hereof, such xxxxx being hereinafter referred to
as "slant xxxxx", together with the exclusive right to drill core holes through
the subsurface of the leased premises to other land to obtain geological
information.
Unless sooner terminated, either in whole or in part as hereinafter
provided, the primary term of this lease of rights for slant xxxxx shall be
contemporaneous with the primary term of this lease, and for as long thereafter
as said geothermal energy and substances are produced in paying quantities from
land other than the leased premises by slant xxxxx, or Lessee in good faith
conducts slant drilling operations in the leased premises.
As payment for the slant well rights, hereby leased, Lessee agrees to
pay to Lessor, at the times and in the manner hereinafter provided, an
overriding royalty on the production from each slant well, drilled by Lessee as
follows:
(a) *** percent of the *** received by Lessee from the ***, at the
point of sale.
(b) *** percent of the *** received by Lessee on all other leased
substances produced therefrom. ***, for the purpose of this lease, shall be ***.
*** Confidential material redacted and filed separately with the Commission.
5
The advance minimum royalty paid by Lessee to Lessor, under the
provisions of Section 3 hereof, shall not be credited against any overriding
royalties from production from slant xxxxx drilled under the provisions hereof.
Lessor agrees to pay a pro rata share, which shall be in the proportion
that its overriding royalty bears to the total production from slant xxxxx
drilled under this section, of the amount of any license, severance, or
production tax levied by any governmental agency on, or measured by, the
substances produced. Lessor agrees to pay the same pro rata share of the mineral
rights taxes upon the land beneath which slant xxxxx have their producing
intervals. Lessee agrees to pay, or cause to be paid, the remainder of any and
all such taxes.
The obligation of Lessee hereunder with respect to the drilling and
operating of all slant xxxxx, and its right to suspend or delay operations
therein, shall be those provided in such leases in which Lessee has or may
acquire an interest embracing the land beneath which slant xxxxx drilled
hereunder have their producing intervals.
Lessee shall keep true and correct records of its operations conducted
in, and of the production from, slant xxxxx. Lessee shall, when requested to do
so by Lessor, furnish to Lessor a copy of the drilling log and electric log, and
of the directional survey of the bore of, each slant well drilled by Lessee
hereunder. Lessee shall furnish Lessor, with each overriding royalty payment, a
statement of the production from each slant well showing in detail the
computation of Lessor's overriding royalty. Lessee's records shall be open for
inspection by Lessor at all reasonable times.
8. Lessee shall have the right to commingle, for the purpose of
utilizing, selling or processing minerals, geothermal energy and substances
produced from the leased land, with geothermal energy and substances produced
from other land and to meter or gauge the
6
production of said geothermal energy and substances from the leased premises,
and to compute and pay royalty to Lessor on the basis of such production as so
determined. Lessee agrees to pay to Lessor on or before the last day of each and
every month the royalties accrued and payable hereunder for the preceding
calendar month, and in making such royalty payments Lessee shall deliver to
Lessor statements setting forth the basis for determination of such royalty. In
the event that the production of said geothermal energy and substances from the
leased premises or from land in the general area of the leased premises should
at any time exceed the demand therefor or the facilities for use thereof, and
Lessee elects to reduce the total volume of said geothermal energy and
substances produced or consumed, then in that event, xxxxx participating on a
commingling basis shall be reduced in a percentage amount equal to the
proportion of the whole in light of good engineering practices.
In the event all or any part of the leased premises is pooled (as
provided for in Section 11), with other land, then Lessor shall receive as
royalty on production from the pooled acreage only such portion of the royalty
as the amount of Lessor's acreage placed in the unit, bears to the total acreage
so pooled in the unit involved.
Lessee shall not be required to account to Lessor for, or to pay
royalty on said geothermal energy and substances produced by Lessee on the
leased premises which are not utilized, saved or sold, or on power generated by
Lessee and used by Lessee in Lessee's operations on or with respect to the
leased premises for or in connection with the development, processing and
production of said geothermal energy and substances.
The annual advance minimum royalty provided in Section 3 payable by
Lessee to Lessor shall be credited against the obligation of Lessee to pay the
royalties which accrue only during the annual period for which paid, but the
annual surface rental provided for in Section 3 shall not
7
be so credited. The surface rental and royalties hereinabove provided for shall
be a lien upon any and all of said geothermal energy and substances removed from
or stored upon the leased premises and upon any improvements or personal
property of Lessee upon the leased premises.
9. In the event Lessor at the time of making this lease owns a less
interest in the leased premises than one hundred per cent of the rights herein
leased to Lessee, then the rentals and royalties accruing hereunder shall be
paid to Lessor only in the same proportions which Lessor's interest bears to a
one hundred per cent interest in the leased premises. Notwithstanding the
foregoing, should Lessor hereafter acquire any additional right, title or
interest in or to the leased premises, it shall be subject to the provisions
hereof to the same extent as if owned by Lessor at the date hereof, and any
increase in payments of money hereunder necessitated thereby shall commence with
the payment next following receipt by Lessee of satisfactory evidence of
Lessor's acquisition of such additional interest.
10. In the event Lessee shall, except by Lessor, be lawfully deprived
of possessing, or rights hereunder to, the leased premises, or any portion or
portions thereof, Lessee shall notify Lessor as to the circumstances thereto;
whereupon Lessor may, at Lessor's option, either reinstall Lessee in possession
as to said rights or terminate this lease as to the leased premises, or the
portion or portions thereof, as to which Lessee is so deprived, by notice to
Lessee to that effect and the tender of the sum of One Hundred Dollars, plus the
total amount of any sums other than taxes, theretofore paid by the Lessee
hereunder, for said rights; whereupon no claims for damages whatsoever kind or
character incurred by Lessee by reason of such de-possession shall be chargeable
against Lessor.
11. Lessee is hereby given the right to combine or pool all or part of
said leased premises with land either adjoining the leased premises or in the
immediate vicinity thereof, so as to create
8
by such combining or pooling one or more operating units of contiguous acreage
for the production of said substances; provided, however, that no such unit
shall substantially exceed 2,560 acres, or the land embraced in four sections of
land according to United States survey and that the designation of such unit
shall be made of the land to be pooled not later than thirty days after the
first well drilled on the unit is placed upon production, and shall define the
area which shall constitute the pool. In the event production of said geothermal
energy and substances is obtained from any land included within any such unit,
whether or not from land covered by this lease, there shall be allocated to the
leased premises included in such unit, for the purpose of royalty determination,
only that proportion of the entire production from such unit that the acres of
the leased premises in such unit bears to the total acres in such unit, and
royalty payable under this lease with respect to leased premises included in
such unit shall be computed only on that portion of such production so allocated
to the leased premises. In the event of the failure of Lessor's or any other
owner's title as to any portion of the land included in such pooled unit, such
portion of such land shall be excluded in allocating production from such pooled
unit; provided, however, Lessee shall not be held to account for any production
allocated to any land excluded from any such pooled unit unless and until Lessee
has actual knowledge of the circumstances requiring such exclusion. For the
purpose of determining drilling obligations in such unit, the entire acreage so
pooled shall be treated as if it were covered by one lease and the drilling of a
well in any part of such unit, whether or not on land covered by this lease,
shall fulfill Lessee's drilling obligations under this lease to the same extent
as if it were drilled on the leased premises and no offset obligations shall
accrue as between the several tracts of land included within any pooled unit. As
to such unit (unless a producing well is located on such pooled unit at the time
the unit is created), Lessee agrees to commence drilling operations within one
year after it is so
9
created, but in any event within the primary term of this lease, and shall be
obligated to drill at least one well for each six hundred and forty acres in the
unit.
12. Lessee shall have the right to use such water in, on, from or
appurtenant to the leased premises as Lessee may reasonably require in
connection with Lessee's operations hereunder on the leased premises, without
payment therefor to Lessor other than such cost as Lessor may have incurred
therefor; provided that such use by Lessee shall not interfere with Lessor's
requirements with respect to the use thereof on the land subject to this lease
or Lessor's contractual commitments for the use thereof on land other than the
leased premises, and that Lessee shall obtain any necessary governmental
permission therefor and shall comply with applicable statutes, ordinances and
governmental orders and regulations with respect thereto. Applications to
governmental agencies for permission to appropriate water and geothermal energy
within and underlying the leased premises shall be made on behalf of Lessor and
shall be made for beneficial use appurtenant to Lessor's land described in
Section 1 hereof. The permission so granted shall be subject to the leasehold
interest of Lessee and all the terms, covenants and conditions under this lease.
13. If at any time during the term of this lease, a well is drilled for
said geothermal energy and substances upon land not in the ownership of Lessor,
which is adjacent to the leased premises and within 1,320 feet of the boundary
lines of a unit into which the leased premises or portions thereof may be
pooled, and said well is placed in commercial production for a period of six
months, Lessee shall commence drilling within six months thereafter on the
leased premises and within 1,320 feet from the common boundary line, an offset
well within approximately the same distance from the common boundary line as
said well on adjoining land is located, but in any event either on the leased
premises or on land with which the leased premises may be
10
pooled, and to proceed diligently to drill to completion said offset well to the
zone or horizon from which said well on the adjacent land is producing,
provided, however, that Lessee shall not be required to commence drilling said
offset well if there is already a well being drilled or there is a producing
well on the leased premises or on land with which the leased premises is pooled
within such offset distance of said well on adjoining land.
14. Lessee may, at Lessee's option, at any time surrender and quitclaim
Lessee's rights under this lease in and to all or any portion of the leased
premises and shall be released thereupon from all obligations thereafter with
respect to the land surrendered and quitclaimed.
15. Lessee's obligations hereunder, except for payment of taxes,
advance annual minimum royalty and surface rentals under Section 3, and to drill
xxxxx under Section 13, shall be suspended and the primary term of this lease
shall be extended, while Lessee is prevented from complying therewith by
strikes, lockouts, riots, action of the elements, accidents, delays in
transportation, inability to secure labor or materials in the open market, laws,
rules or regulations by any governmental agency, authority or representative
having jurisdiction, inability to secure or absence of a market for commercial
sale of substances developed on or from the leased premises, or other matters or
conditions beyond the reasonable control of Lessee, whether or not similar to
the conditions or matters in this paragraph specifically enumerated.
16. If at the expiration of the primary term or at any time or times
thereafter while this lease shall remain in force and effect, Lessee has
discovered on the leased premises geothermal energy and substances in quantities
which in Lessee's opinion, may be commercially produced, but said leased
geothermal energy and substances are not being produced, processed or marketed
because of technical or other problems or due to lack of market for such
geothermal energy and substances which is acceptable to Lessee and Lessee is not
then engaged in operations for the
11
purpose of producing, processing or marketing leased geothermal energy and
substances, Lessee may pay as a minimum royalty for the next ensuing twelve
months on or before the expiration date of the primary term hereof or within
ninety days from the suspension of all operations contemplated hereby, the sum
of one dollar per acre for each acre then covered by this lease and if such
payment is made or tendered, it will be considered that the geothermal energy
and substances covered by this lease are being produced from said premises in
paying quantities. In like manner and upon like payments annually this lease may
be extended for additional twelve month periods, provided, however, that this
lease cannot be extended beyond the primary term by reason of the royalty
payments provided in this paragraph for a longer term than five consecutive
years.
17. Upon the violation by Lessee of any of the terms, covenants or
conditions of this lease, and failure to take steps to remedy the default within
sixty days after receipt of written notice from Lessor to do so, then at the
option of Lessor, this lease shall forthwith cease and terminate, and all rights
of Lessee in and to said leased premises shall be at an end, except that Lessee
shall have the right to retain and hold under this lease any forty acre
subdivision in which a well is producing commercially or is being drilled, and
with respect to which Lessee is not in default. The waiver by Lessor of any
breach of any covenant or condition hereof shall not be a waiver of any other or
subsequent breach hereof, nor of any other covenant or condition hereof.
18. Upon surrender by Lessee of Lessee's rights hereunder in while or
in part, or upon termination of Lessee's rights hereunder, or any part hereof,
in any manner herein provided, Lessee shall peaceably surrender possession
thereof to Lessor and Lessee shall quitclaim to Lessor all right, title and
interest of Lessee in the leased premises in the condition received.
12
19. Derricks, buildings, structures, improvements, equipment,
machinery, appliances and personal property placed by Lessee upon the leased
premises shall be and remain the property of Lessee, and Lessee shall have the
obligation, at the option of the Lessor at any time prior to the expiration of
six months after the termination of this lease, to remove the same.
20. Lessee agrees to keep full records of the operations on, and
production and sales of said geothermal energy and substances from the leased
premises independently of and separate from any other property operated by
Lessee and to notify Lessor promptly of discovery of any of said geothermal
energy and substances on the leased premises, and to furnish to Lessor on or
before the last day of each month a true statement of all production and sales
of said geothermal energy and substances during the preceding month in a form
satisfactory to Lessor. All records of such production and sales shall, at all
reasonable times, be open to the inspection of Lessor's agents and
representatives.
21. Lessee will keep an accurate log and casing record showing the
progress of drilling, character of formations encountered or drilled through,
and casing in each well in which drilling shall have been done on the leased
premises, and furnish Lessor a copy thereof upon the completion of or the
abandonment of each well, and a true copy of all surface and subsurface surveys
made of each well drilled under this lease. Lessor's duly appointed agents and
representatives shall have access at all reasonable times to all of the xxxxx
and to Lessee's property in and upon said leased premises. Lessor shall make
such observations and measurements at its sole risk and expense and agrees to
indemnify and hold Lessee harmless against all claims and demands of such agents
and representatives arising as a result of such observations and measurements.
13
Lessee shall carry on Lessee's operations hereunder in a careful and
workmanlike manner, and in accordance with all laws, ordinances and governmental
orders and regulations governing the same.
22. Lessee agrees to pay before delinquency all taxes and assessments
which have been or shall be lawfully levied and assessed on the mineral rights
covered hereunder in the leased premises, and on the buildings, structures,
equipment and other personal property or improvements placed, maintained or used
by Lessee on the leased premises, and on the geothermal energy and substances
stored thereon and not belonging to Lessor. Lessee may deduct the royalty
proportion of the taxes and assessments on mineral rights covered hereunder in
the leased premises in each fiscal year, paid by Lessee, from the royalties due
and payable to Lessor for production during each successive twelve months'
period subsequent to the day and month in such fiscal year on which the first
installment of such taxes and assessments become delinquent. The above amount of
the taxes and assessments for a particular fiscal year so paid shall be
deductible only from the royalties due and payable during the twelve months'
period which immediately succeeds the date of delinquency of the first
installment in such fiscal year. Lessee agrees to pay to Lessor annually, within
fifteen days after demand, an amount equal to the working interest proportion of
the real property taxes and assessments paid by Southern Pacific Land Company or
Southern Pacific Transportation Company on the land overlying or occupied by the
leased premises (except on buildings, structures and other improvements thereon
not owned, maintained or used by Lessee) each fiscal year of the term of this
lease, prorated from the date of this lease, for the first such year and for
each fiscal year thereafter during the term of this lease. Lessee shall pay any
production or severance tax computed or based upon production of geothermal
energy and substances which may be imposed by the Federal Government, the State
14
of Nevada, or any of its political subdivisions, and Lessor shall reimburse
Lessee for the same proportion of said taxes as Lessor's shares of the taxes on
the mineral rights covered hereunder.
23. All labor performed and materials furnished for purposes of the
operations of Lessee hereunder shall be at the cost and expense of Lessee and
Lessee shall give reasonable notice to Lessor before commencement of operations
hereunder. Lessor shall not be chargeable with, or liable for, any part thereof,
and Lessee agrees to protect the leased premises against liens of every
character and to indemnify Lessor against liens of every character and to
indemnify Lessor against all liability, cost and expense incurred by Lessor due
to such liens arising from Lessee's operations thereon.
Lessee further agrees to indemnify Lessor against claims, causes of
action, and liability and for injuries to, or deaths of persons and destruction
or loss of, or damage to property arising out of the operations of Lessee
hereunder.
24. In the event any buildings or personal property of Lessor shall be
damaged, destroyed or required to be removed because of Lessee's operations on
the leased premises, Lessee shall be liable for payment of the reasonable values
thereof. In the event Lessee shall elect to locate a well site and an access
road thereto on agricultural land of Lessor's at the time under cultivation,
Lessee shall pay to Lessor the fair value of the crop destroyed. Upon the
written request of Lessor, Lessee agrees to lay below plow depth all pipe lines,
except steam-gathering and transmission lines or other hot water lines, which
Lessee constructs through cultivated fields, and to fence all sump holes or
other excavations to safeguard livestock on the land subject to this lease. Upon
completion or abandonment of any well drilled on the leased premises, or upon
the termination of this lease, Lessee shall abandon all xxxxx in accord with
applicable regulations level and fill all sump holes and excavations and shall
remove all debris
15
and shall leave the premises in a clean and sanitary condition. Lessee, in
Lessee's operations, on the leased premises shall at all times have due and
proper regard for the health, welfare and safety of Lessor and of Lessor's
tenants occupying the land subject to this lease. Any xxxxx drilled by Lessee
hereunder shall be drilled in such manner so as not to affect any existing
potable water well or water xxxxx of Lessor on the leased premises. Sufficient
casing shall be set and cemented in such xxxxx drilled by Lessee so as to seal
off and protect known potable waters developed in any such water well or water
xxxxx.
25. In the event Lessor deems it necessary to file an action to enforce
Lessor's rights hereunder, the prevailing party shall be entitled to recover
reasonable attorney's fees and court costs for the prosecution or defense of the
litigation.
26. Any notice or statement herein requested or required to be given by
one party to the other shall be in writing. Delivery of such written notice or
statement to Lessor shall be conclusively taken as sufficient if and when
deposited in the United States mail, with the postage thereon fully prepaid,
certified, addressed to Lessor at:
Southern Pacific Land Company
Southern Pacific Building
One Market Plaza - Room 200
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Payments to Lessor shall be made at the above address. Delivery of such
notice or statement to Lessee shall be conclusively taken as sufficient if and
when deposited in the United States mail, with postage thereon fully prepaid,
certified, addressed to Lessee at:
Xxxxxxxx Petroleum Company
Attn: Manager, Geothermal Operations
X.X. Xxx 000
Xxx Xxx, Xxxxxxxxxx 00000
Any party hereto may, by written notice, change their address to any
other location for the above purposes.
16
27. If Lessee is adjudicated a bankrupt, or shall make an assignment
for the benefit of creditors, or file a voluntary petition under any law having
for its purpose the adjudication of Lessee a bankrupt, or the extension of time
of payment, composition, adjustment, modification, settlement or satisfaction of
the liabilities of Lessee, or a receiver be appointed for the property of Lessee
by reason of the insolvency of Lessee, notwithstanding anything to the contrary
elsewhere in this lease, Lessor shall have the right to terminate this lease and
to take exclusive possession of the leased premises. The acceptance of rent or
other payments for the use of the leased premises shall not constitute a waiver
of Lessor's right to terminate this lease as above set forth.
28. This instrument is a lease and is not and shall not ever be held or
interpreted to be a mining partnership or partnership of any kind, or in any
sense whatsoever, the intention of the parties hereto being to establish and
create between themselves only the relationship of Lessor and Lessee in
accordance with the provisions hereof.
29. The rate of $*** per acre in Sections 3 and 16 hereof and the
obligation of Lessee to reimburse Lessor for real property taxes and assessments
equal to Lessee's working interest proportion in Section 22 hereof shall be
subject to pro-ration in the same percentage as the undivided interest of Lessee
specified in Section 1 hereof.
30. This lease shall not be assigned nor sublet, in whole or in part
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld. Subject to the above, the provisions hereof shall inure
to the benefit of, and be binding upon the successors and assigns of the parties
hereto.
31. The parties hereto agree to enter into a memorandum form of this
lease for recording purposes which shall incorporate by reference the provisions
hereof.
*** Confidential material redacted and filed separately with the Commission.
17
32. Time and specific performance are the essence of this lease.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed as of the day and year first hereinabove written.
XXXXXXXX PETROLEUM COMPANY, Lessee
By /s/ Indecipherable
------------------------------------------------
Attorney-in-Fact
SOUTHERN PACIFIC LAND COMPANY, Lessor
By /s/ Indecipherable
------------------------------------------------
Assistant General Manager, Natural Resources
Attest /s/ X.X. X'Xxxxxxx
--------------------------------------------
Assistant Secretary
18
AMENDMENT TO GEOTHERMAL LEASE
DESERT PEAK, NEVADA
THIS AGREEMENT, made and entered into this 25th day of February 1998,
by and between XXXXX X. XXXXX, XXXXXXX X. XXXXX AND XXXXX X. XXXXXXX,
hereinafter collectively referred to as "Lessor" or "Xxxxx" and WESTERN STATES
GEOTHERMAL COMPANY, a Delaware corporation, hereinafter referred to as "Lessee"
or "Western".
W I T N E S S E T H:
WHEREAS, Southern Pacific Land Company ("SPL"), predecessor in interest
to Xxxxx, as Lessor, and Xxxxxxxx Petroleum Company ("Xxxxxxxx"), predecessor in
interest to Western, as Lessor, entered into two (2) geothermal leases (the
"Leases"), the first lease dated February 14, 1974, a Memorandum of which first
lease was recorded on August 15, 1974, as Document No. 138533, in Book 72, Pages
575, et seq. and the second lease dated August 1, 1976, a Memorandum of which
second lease was recorded on September 27, 1976 as Document No. 148247 in Book
102, Pages 467, et seq., both in the Official Records of the County of
Xxxxxxxxx, State of Nevada, covering and affecting 42,433.44 acres, more or
less, situated in said County and State, whereby SPL leased to Xxxxxxxx and
Xxxxxxxx became Lessee of SPL for certain geothermal resources described in the
Leases; and
WHEREAS, by Assignment dated June 28, 1985 and recorded on December 16,
1985 as Document No. 217089 in the Official Records of the County of Xxxxxxxxx,
State of Nevada, Xxxxxxxx assigned the Leases to Western, then a wholly owned
subsidiary of Xxxxxxxx; and
WHEREAS, by Amendment and Termination agreement dated May 1, 1986, SPL
and Western consolidated the lands leased under the February 14, 1974 lease and
the August 1, 1976 lease under the provisions of the August 1, 1976 lease
(hereinafter referred to as "Said Lease"),
and terminated the February 14, 1974 lease, a copy of which Amendment and
Termination agreement was recorded on April 23, 1987 as document No. 227434 in
the Official Records of the County of Xxxxxxxxx, State of Nevada; and
WHEREAS, Xxxxxxxx and Chevron U.S.A. Inc. ("Chevron") entered into an
agreement dated as of February 7, 1986, whereby Xxxxxxxx agreed to sell to
Chevron, and Chevron agreed to purchase from Xxxxxxxx, as a single transaction,
all of the stock of Western which would constitute an assignment to Chevron of
all of Xxxxxxxx' interest in Said Lease and the Desert Peak electrical
generating facility and its associated geothermal steam production xxxxx and
plant. SPL granted its consent to the transfer of the stock of Western, and all
assets of Western, to Chevron on condition that an amendment to the Lease be
entered into to address the payment of royalties in situations not contemplated
by Xxxxxxxx and SPL when they first entered into the Leases. Said transfer
occurred on or about February 21, 1986; and
WHEREAS, Southern Pacific Land Company and Western States Geothermal
Company entered into that certain unrecorded Amendment to Geothermal Lease dated
and effective February 21, 1986 amending the method used to calculate, measure
and divide royalties owing under Said Lease, as amended; and
WHEREAS, Chevron USA Inc ("CUSA") acting through its agent Chevron
Resources Company, a division of Chevron Industries Inc. sold certain assets to
California Energy Company, Inc ("CECI") effective March 28, 1991. CUSA, owner of
all of the common stock of Western States Geothermal Company, sold its entire
interest in the shares of the common stock of Western States Geothermal Company
to CECI. CECI designated its subsidiary CE Geothermal to hold the assets of
Western States Geothermal Company; and
WHEREAS, it is the desire of the parties hereto that Said Lease, as
heretofore amended, be further amended as hereinafter set forth:
NOW, THEREFORE, for and in consideration of $12,800 and other good and
valuable consideration accruing unto the parties hereto, the receipt and
sufficiency of all of which are hereby acknowledged, Said Lease is hereby
amended as follows, to wit:
1. Specifically subject to Section 11 and subject to other Sections of
that certain Geothermal Lease dated August 1, 1976, the first paragraph of
Section 3 is hereby deleted in its entirety and the following paragraph is
hereby substituted therefore:
Lessee agrees to pay to Lessor in advance as of the
date of this lease the sum of $*** per acre of the
leased premises as rental for the first year of this
lease and to pay to Lessor in advance for the second
year of the lease on or before the first day of
August, 1977, and annually thereafter through July
31, 1998 the sum of $*** per acre of the leased
premises then subject to this lease. Commencing
August 1, 1998 and annually throughout the term of
this lease, on or before the same day and month of
each succeeding year, Lessee agrees pay to Lessor in
advance an annual rental payment at the rate of $***
per acre for each acre then covered by this lease. It
is acknowledged and agreed that the rental provided
in this paragraph shall apply only to that portion of
the leased premises not then committed to an approved
geothermal unit, as provided in said Section 11
hereof.
Lessor hereby agrees that Said Lease, as amended herein, is a valid and
subsisting Geothermal Lease and is in full force and effect.
Lessor does hereby ratify, affirm and acknowledge that Said Lease, as
amended herein, is and shall remain in full force and effect as to all its
terms, conditions and provisions.
It is further agreed by and between Lessor and Lessee, that except for
the amendments as hereinabove set forth, Said Lease, as amended, shall in all
other respects remain in full force as originally executed.
*** Confidential material redacted and filed separately with the Commission.
In the event any inconsistency exists between this Amendment and Said
Lease, the terms of this Amendment shall prevail, and any such inconsistent
terms contained herein shall be construed as superseding and amending the terms
of Said Lease. Except as expressly modified by this Amendment, Said Lease shall
be unchanged and shall remain in full force and effect.
This Amendment may be executed in any number of counterparts or on
counterpart signature pages, and all such counterparts shall together be deemed
to constitute a single Amendment. The execution of one counterpart by either
Party or any Person comprising such Party shall have the same force and effect
as if such Party or Person had signed all the other counterparts.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first hereinabove written.
LESSOR:
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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Xxxxx X. Xxxxxxx
LESSEE:
WESTERN STATES GEOTHERMAL COMPANY
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
Title: President, CalEnergy Operating Company
COUNTERPART "A"
