AMENDMENT TO SECOND AMENDED AND RESTATED SERVICE AGREEMENT
AMENDMENT
TO SECOND AMENDED AND RESTATED SERVICE AGREEMENT
This
Amendment to Second Amended and Restated Service Agreement (this “Amendment”) is
made and entered into effective January 1, 2008 (the “Effective Date”) by and
among XXXXXXX XXXXXXXX ENERGY,
INC., a Delaware corporation (the “Company”), and XXXXXXX X. XXXXXXXX, XX., XXXXXXX
XXXXXXXX RANCH HOLDINGS, INC., a Delaware corporation, CLAYDESTA L.P, a Texas limited
partnership, THE XXXXXXXX
CHILDREN’S PARTNERSHIP, LTD, a Texas limited partnership (as successor in
interest to Xxxxxxx Xxxxxxxx Partnership, Ltd., a Texas limited partnership) and
CWPLCO, INC., a Delaware
corporation (collectively, the “Xxxxxxxx Entities”).
A. The
Company and the Xxxxxxxx Entities (and their predecessors and certain
affiliates) entered into that certain Second Amended and Restated Service
Agreement, dated as of March 1, 2005 (the “Service Agreement”) pursuant to which
certain services have been furnished and will continue to be furnished between
the parties.
B. Pursuant
to the Service Agreement, the Xxxxxxxx Entities have provided certain tax
services to the Company. Since the acquisition by the Company of
Southwest Royalties, Inc. in 2004, an increasing portion of the time and
resources of the tax department of the Xxxxxxxx Entities has been dedicated to
providing these tax services to the Company pursuant to the Service
Agreement. The Xxxxxxxx Entities and the Company believe that the
personnel and other resources dedicated to providing tax services to the Company
and comparable services to the Xxxxxxxx Entities can be more effectively managed
if all personnel involved in providing such services were employed by the
Company.
C. The
parties desire to amend the Service Agreement to reflect that from and after the
Effective Date personnel of the tax department of the Xxxxxxxx Entities that
previously provided tax services to the Company shall be employees of the
Company and that the Company shall provide to the Xxxxxxxx Entities certain tax
services that previously were performed by personnel of the tax department of
the Xxxxxxxx Entities.
NOW,
THEREFORE, in consideration of the mutual promises, covenants and agreements set
forth herein and in the Service Agreement, the receipt and sufficiency of which
are hereby acknowledged, and subject to the terms and conditions hereof, the
parties hereto agree as follows:
1. Amendment of Article
I. Article I of the Service Agreement is hereby amended to
read in its entirety as follows:
ARTICLE
I
TAX
SERVICES
The Company agrees to provide to the
Xxxxxxxx Entities “Tax Services” (as that term is defined in this Article I)
commencing on January 1, 2008 pursuant to the following terms and
conditions:
Austin 1048717v.3
1.01 Services to be
Provided. For purposes of this Article I, “Tax Services” shall
mean:
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a.
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the
preparation of federal and state income and franchise tax returns and
reports for the Xxxxxxxx Entities and their respective shareholders,
partners and affiliates;
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b.
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the
provision of advice requested by the Xxxxxxxx Entities for tax planning;
and
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c.
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the
provision of such other services related to (a) or (b) above as the
Xxxxxxxx Entities shall request, and which the Company has the capability
to perform.
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1.02 Compensation.
a. Personnel. The
Xxxxxxxx Entities shall pay the Company for the use of the Company’s personnel
involved in rendering Tax Services at the Company’s actual cost based on the
salary and benefits received by the persons providing such services assuming a
2,000 hour work year per person, which amounts shall be billed to the Xxxxxxxx
Entities on a per hour basis.
b. General and Administrative
Expenses. The Xxxxxxxx Entities shall reimburse the Company
for a proportionate part of the Company’s general and administrative expenses
(office rent, equipment, supplies and other similar items) based on the amount
of personnel expenses charged to the Xxxxxxxx Entities each month compared to
the total personnel expenses of the Company associated with the provision of Tax
Services to the Xxxxxxxx Entities and comparable services to the
Company.
c. Incidental
Expenses. The Xxxxxxxx Entities shall reimburse the Company at
the Company’s actual cost for all reasonable expenses incurred by the Company
incident to providing Tax Services, including, without limitation, telephone,
postage, reproduction and other similar expenses.
d. Date of
Payment. The Company shall xxxx the Xxxxxxxx Entities
quarterly for such expenses and reimbursements as the Company may be due
pursuant to the provisions of this Section 1.02. The Xxxxxxxx
Entities agrees to pay to the Company any invoiced amount not later than
forty-five (45) days from the date of invoice.
1.03 Company
Personnel. Tax Services shall be provided by Company
personnel. The Company shall not be required to engage the services
of any third party to provide Tax Services to the Xxxxxxxx
Entities. Any person employed by the Company who is engaged in
providing Tax Services to the Xxxxxxxx Entities may report to and accept
direction from directors and duly authorized officers, employees and other
constituents of the Xxxxxxxx Entities, during the course of providing such Tax
Services to the Xxxxxxxx Entities subject, in all respects, to the exercise of
his or her professional responsibilities.
Austin 1048717v.3
1.04 Term. The
arrangements contemplated by this Article I shall begin on the Effective Date
and shall continue until terminated by either the Company or the Xxxxxxxx
Entities by providing ninety (90) days advance written notice of termination to
the Xxxxxxxx Entities or the Company, as applicable.
2. Amendment of Article
X. Article X of the Service Agreement is amended to add
Section 10.05 which shall read in its entirety as follows:
10.05 Disclosure of Tax and Legal
Advice.
a. No Waiver of
Privilege. The parties intend that neither the Company or the
Xxxxxxxx Entities nor their respective employees, agents and representatives
shall take any action under this Agreement that might constitute a waiver of the
attorney-client privilege, attorney work product, or tax practitioner privilege
under applicable state and federal law with respect to any tax or legal advice
received by any party to this Agreement without the express prior written
consent of the party to whom the legal or tax advice was rendered.
b. Prohibition of Disclosure of
Tax and Legal Advice. Notwithstanding any other provision of
this Agreement, except as reasonably necessary to comply with applicable
securities laws, to file tax returns, or otherwise comply with applicable law,
the Company and the Xxxxxxxx Entities and their respective employees, agents and
representatives may not disclose, permit the disclosure of, release, disseminate
or transfer, whether orally or by any other means, to any and all persons,
without limitation of any kind, any legal or tax advice provided to the Company
or any of the Xxxxxxxx Entities and received by them as a result of this
Agreement, including to any party to this Agreement or their respective
employees, agents and representatives who is not the party to whom the legal or
tax advice was rendered. The parties do not intend for this Section
to prohibit communication between the employees, agents, and representatives of
one or more of the parties to this Agreement concerning the administration or
implementation of this Agreement.
3. Amendment of Article
XII. Section 12.03.b of Article XII is amended to read in its
entirety as follows:
Except as
and to the extent provided in Section 1.03, relating to Tax Services, and
Section 2.03, relating to Legal Services, the employees, agents and independent
contractors of the Company are employees, agents and independent contractors of
the Company for all purposes, and under no circumstances will be deemed to be
employees, agents or independent contractors of the Xxxxxxxx
Entities.
The
employees, agents and independent contractors of the Xxxxxxxx Entities are
employees, agents and independent contractors of the Xxxxxxxx Entities for all
purposes, and under no circumstances will be deemed to be employees, agents or
independent contractors of the Company. The Company will have no
supervision or control over any such Xxxxxxxx Entities’ employees, agents and
independent contractors and any complaint or requested change in procedure made
by the Company will be transmitted by the Company to the Xxxxxxxx
Entities. Except as and to the extent expressly provided in Section
1.03, relating to Tax Services, and
Austin 1048717v.3
Section
2.03, relating to Legal Services, the Xxxxxxxx Entities will have no supervision
or control over any such Company employees, agents and independent contractors
and any complaint or requested change in procedure made by the Xxxxxxxx Entities
will be transmitted by the Xxxxxxxx Entities to the Company.
4. Amendment of Attachment
A. Attachment A to the Service Agreement is amended to read in
its entirety as set forth in the Annex to this Amendment.
5. Continuing
Effectiveness. Except as expressly modified here by, the
Service Agreement, as amended by this Amendment, shall remain in full force and
effect.
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment
to be effective as of the Effective Date hereof.
THE
COMPANY:
Xxxxxxx
Xxxxxxxx Energy, Inc.
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Date:
March 11, 2009
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By: /s/ L.
XXXX XXXXXX
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L.
Xxxx Xxxxxx, Executive Vice President
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THE
XXXXXXXX ENTITIES:
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XXXXXXX
X. XXXXXXXX, XX.
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XXXXXXX
XXXXXXXX RANCH HOLDINGS, INC.
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CLAYDESTA,
L.P.
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CWPLCO,
INC.
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Date:
March 11, 2009
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By: /s/
XXXXXXX X. XXXXXXXX, XX.
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Xxxxxxx
X. Xxxxxxxx, Xx.,
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individually
and in the following capacities:
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President
of Xxxxxxx Xxxxxxxx Ranch Holdings,
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Inc.;
Manager of Claydesta Operating, L.L.C.,
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general
partner of Claydesta L.P.; President of
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CWPLCO,
Inc.
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Date:
March 11, 2009
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THE
XXXXXXXX CHILDREN’S PARTNERSHIP, LTD., a Texas limited
partnership
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By:
LPL/Xxxxxxxx XX, LLC, its general partner
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By: /s/ L. XXXX
XXXXXX
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L.
Xxxx Xxxxxx, Sole Member
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Austin 1048717v.3
Annex
Attachment
A
Hunting
Lease
Austin 1048717v.3
HUNTING
LEASE
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Date:
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August
31, 2008
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Landlord:
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Xxxxxxx
Xxxxxxxx Ranch Co.
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Landlord’s
Address:
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0
Xxxxx Xxxxx, Xxxxx 0000
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Xxxxxxx,
Xxxxx 00000
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Tenant:
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Xxxxxxx
Xxxxxxxx Energy, Inc.
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Tenant’s
Address:
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0
Xxxxx Xxxxx, Xxxxx 0000
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Xxxxxxx,
Xxxxx 00000
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Premises:
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SURFACE
ONLY of the High Lonesome Ranch, situated in Xxxx Xxxxx County, Texas, as
described in Exhibit A
(“Land”).
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The
Premises do not include livestock, crops, or Excluded Improvements located
on the Land. Tenant will not be permitted to use the Excluded
Improvements.
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Excluded
Improvements:
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Any
structure, improvement, or equipment situated on the Land and constructed
or installed by any person other than Tenant, except for the
following:
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Camp
Tents
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Restroom
Facilities
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Base
Rent:
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$90,862
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Term
(months):
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Twelve
months (12)
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Commencement
Date:
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September
1, 2008
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Termination
Date:
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August
31, 2009
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Permitted
Use:
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Solely
for hunting of the following game: deer, quail,
turkey
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Definitions:
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“Injury”
means (a) damage to or impairment or loss of property or its use or (b)
harm to or death of a person.
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“Landlord”
means Landlord and its agents, employees, invitees, licensees, or
visitors.
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“Rent”
means Base Rent plus any other amounts of money payable by Tenant to
Landlord.
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Austin 1048717v.3
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“Tenant”
means Tenant and its agents, contractors, employees, invitees, licensees,
or visitors.
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Clauses
and Covenants
A. Tenant
agrees to –
1. Lease
the Premises for the entire Term beginning on the Commencement Date and ending
on the Termination Date.
2. Accept
the Premises in their present condition “AS IS”, the Premises being suitable for
the Permitted Use.
3. Obey
all laws, ordinances, orders, rules, and regulations enacted or promulgated by
any governmental authority relating to (a) the Permitted Use; (b) Tenant’s
activities while on the Premises; (c) any existing structure, improvement, or
equipment that Tenant is permitted to utilize pursuant to this lease; or (d) any
structure, improvement, or equipment erected or installed by Tenant on the
Premises in accordance with this lease, including times and manner for hunting
and removing game (and keeping of any applicable records), handling and
discharging firearms, operating motor vehicles, and consuming alcoholic
beverages.
4. Pay,
in advance, Base Rent to Landlord at Landlord’s Address.
5. Allow
Landlord to enter the Premises to inspect the Premises and show the Premises to
prospective purchasers or tenants.
6. Operate
vehicles on the Land in a manner that will not damage existing roads, trails, or
vegetation.
7. Keep
all gates on the Land closed and locked.
8. Enter
and exit the Premises only at those places designated by Landlord.
Austin 1048717v.3
9. Repair
or replace any damage caused by Tenant to the Land, crops, livestock, or
Excluded Improvements.
10. Vacate
the Premises on the last day of the Term.
11. Properly
supervise all persons present on the Premises at the invitation or request of
Tenant.
12. Indemnify,
Defend, and Hold Landlord harmless from any Injury (and any resulting or related
claim, action, loss, liability, or reasonable expense, including attorney’s fees
and other fees and court and other costs) arising from or related to Tenant’s
use of the Premises. The
indemnity contained in this paragraph will survive the end of the
Term, and will apply even if an Injury is caused in whole or in part by the
ordinary negligence or strict liability of Landlord but will not apply to the
extent an Injury is caused by the gross negligence or willful misconduct of
Landlord.
B. Tenant
agrees not to—
1. Use
the Premises for any purpose other than the Permitted Use.
2. Create
or allow a nuisance or permit any waste or injury to the Premises or the crops
or livestock thereon.
3. Change
Landlord’s lock system.
4. Alter
the Premises, including clearing new roads or trails, digging ponds or tanks,
moving or erecting any fences, or locating on the Premises any type of
manufactured housing or mobile home.
5. Allow
a lien to be placed on the Premises.
Austin 1048717v.3
6. Assign
this lease or sublease any portion of the Premises without Landlord’s written
consent.
C. Landlord agrees to lease to
Tenant the Premises for the entire Term beginning on the Commencement Date and
ending on the Termination Date.
D. Landlord
agrees not to –
1. Allow
any use of the Premises inconsistent with Tenant’s Permitted Use as long as
Tenant is not in default.
E. Landlord and Tenant agree to the
following:
1. Alterations. Any
physical additions or improvements to the Premises made by Tenant will become
the property of Landlord. Landlord may require that Tenant, at
termination of this lease and at Tenant’s expense, remove any physical additions
and improvements, repair any alterations, and restore the Premises to the
condition existing at the Commencement Date, normal wear excepted.
2. Abatement. Tenant’s
covenant to pay Rent and Landlord’s covenants are independent. Except
as otherwise provided, Tenant will not be entitled to an abatement or refund of
Rent for any reason.
3. Release of
Claims. Tenant releases Landlord from all claims or
liabilities for any Injury to Tenant while present on the Premises or to
Tenant’s property located on the Premises. The
release in this paragraph will apply even if the damage or loss is caused in
whole or in part by the ordinary negligence or strict liability of Landlord but
will not apply to the extent the damage or loss is caused by the gross
negligence or willful misconduct of Landlord.
4. Condemnation/Substantial or Partial
Taking.
Austin 1048717v.3
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a. If the
Premises cannot be used for the Permitted Use because of condemnation or
purchase in lieu of condemnation, this lease will
terminate.
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b. If
there is a condemnation or purchase in lieu of condemnation and this lease
is not terminated, the Rent payable during the unexpired portion of the
Term will be adjusted as may be fair and
reasonable.
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c. Tenant
will have no claim to the condemnation award or proceeds in lieu of
condemnation.
5. Default by
Landlord/Events. A default by Landlord is the failure to comply
with any provision of this lease that is not cured within thirty days after
written notice.
6. Default by Landlord/Tenant’s
Remedies. Tenant’s remedies for Landlord’s default are to xxx for
damages and terminate this lease.
7. Default by
Tenant/Events. Defaults by Tenant are (a) failing to pay timely
Rent; (b) abandoning or vacating a substantial portion of the Premises; and (c)
failing to comply within ten (10) days after written notice with any provision
of this lease other than the defaults set forth in (a) and (b)
above.
8. Default by Tenant/Landlord’s
Remedies. Landlord’s remedies for Tenant’s default are to (a)
enter and take possession of the Premises, after which Landlord may relet the
premises on behalf of Tenant and receive the Rent directly by reason of the
reletting, and Tenant agrees to reimburse Landlord for any expenditures made in
order to relet; (b) enter the premises and perform Tenant’s obligations; and (c)
terminate this lease by written notice and xxx for damages. Landlord
may enter and take possession of the Premises by self-help, by picking or
changing locks if necessary, and may lock out Tenant or any other person who may
be hunting on the Premises, until the default is cured, without being liable for
damages.
Austin 1048717v.3
9. Default/Waiver/Mitigation.
It is not a waiver of default if the nondefaulting party fails to declare
immediately an event of default or delays in taking any
action. Pursuit of any remedies set forth in this lease does not
preclude pursuit of other remedies in this lease or provided by
law. Landlord and Tenant have a duty to mitigate
damages.
10. Holdover. If
Tenant does not vacate the Premises following termination of this lease, Tenant
will become a tenant at will and must vacate the Premises on receipt of notice
from Landlord. No holding over by Tenant, whether with or without the
consent of Landlord, will extend the Term.
11. Alternative Dispute
Resolution. Landlord and Tenant agree to mediate in good faith
before filing a suit for damages.
12. Attorney’s Fees. If
either party retains an attorney to enforce this lease, the party prevailing in
litigation is entitled to recover reasonable attorney’s fees and other fees and
court and other costs.
13. Venue. Exclusive
venue is in the county in which the premises are located.
14. Entire
Agreement. This lease, together with the attached exhibits and
riders, is the entire agreement of the parties, and there are no oral
representations, warranties, agreements, or promises pertaining to this lease or
to any expressly mentioned exhibits and riders not incorporated in writing in
this lease.
15. Amendment of Lease.
This lease may be amended only by an instrument in writing signed by Landlord
and Tenant.
16. Limitation of
Warranties. There
are no implied warranties of merchantability, of fitness for a particular
purpose, or of any other kind arising out of this lease, and there are no
warranties that extend beyond those expressly states in this lease.
Austin 1048717v.3
17. Notices. Any notice
required or permitted under this lease must be in writing. Any notice
required by this lease will be deemed to be delivered (whether actually received
or not) when deposited with the United States Postal Service, postage prepaid,
certified mail, return receipt requested, and addressed to the intended
recipient at the address shown in this lease. Notice may also be given by
regular mail, personal delivery, courier delivery, facsimile transmission, or
other commercially reasonable means and will be effective when actually
received. Any address for notice may be changed by written notice
delivered as provided herein.
18. Mineral Interests. This
lease is subordinate to any present or future oil, gas, or other mineral
exploration agreements and leases relating to the Land. Landlord will
not be liable to Tenant for any damages for actions attributable to those
agreements and will receive all consideration paid therefore.
19. Landlord’s Use.
Landlord, both for Landlord and for third parties, retains the right to enter on
and use the Land for grazing, farming, erecting telecommunications towers or
antennas, and other uses that do not materially interfere with the Permitted
Use.
20. Identity. Landlord
reserves the right to verify the identity of all persons on the
Premises.
Austin 1048717v.3
LANDLORD: XXXXXXX
XXXXXXXX RANCH CO.
By:___________________________
Name: L. Xxxx
Xxxxxx
Title: Vice
President
TENANT: XXXXXXX
XXXXXXXX ENERGY, INC.
By:___________________________
Name: L. Xxxx
Xxxxxx
Title: Executive Vice
President
Austin 1048717v.3
EXHIBIT
A
HIGH
LONESOME RANCH
(Description
of Leased Premises)
