EXHIBIT 10(j)
GAS STORAGE LEASE
THIS AGREEMENT, made and entered into this 4th day of October,
1995, by and between Xxxx X. Xxxxx, Guardian of Xxxxxx Xxxxxx Xxxxx, a
minor, X.X. Xxx 0000, Xx. 000, Xxxxxxxxx, Xxxxxxxx 00000, hereinafter called
Lessor (whether one or more), and Xxxxxx X. Xxxxxx, whose address is 000
Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000 hereinafter called Lessee: WITNESSETH
THAT:
1. Lessor, for and in consideration of the sum of Ten Dollars
($10.00) in hand paid, receipt of which is hereby acknowledged, of the
rentals herein provided, and of the agreements of Lessee hereinafter set
forth, hereby grants, demises, leases and lets exclusively unto said Lessee
the lands hereinafter described for the purpose of the underground storing
of natural gas and other gaseous substances, as set forth below, together
with the right to construct, replace, inspect, repair, relocate, change the
size of and maintain pipelines, electric lines and telephone line, roadways,
equipment and structures thereon for use in connection with the underground
storage of gas; and also the exclusive right to inject air, gas, water, brine
and other fluids from any source into subsurface strata and any and all
other rights and privileges necessary, incident to, or convenient for the
economical operation of said land, alone or conjointly with neighboring
land, for storing gas, said lands being situated in Xxxx, Kentucky, and
being bounded now or formerly substantially as follow, to-wit:
On the North by lands of Ky. State Forest and X. Xxxxxxx
On the East by lands of Xxxxxx Xxxxxx Trustee
On the South by lands of Xxxxxx Xxxxxx Trustee
On the West by lands of Xxxxxx Xxxxxx Trustee and Ky. State Forest
Being the same land conveyed to Lessor by Deed dated April 14, 1987 in Deed
Book 251, page 149 from Xxxxx X. Xxxxx, et ux.
This Lease also covers and includes all land and interest in land owned or
claimed by Lessor adjacent or contiguous to the land particularly described
above, whether the same be in said county or counties or in
adjacent counties. For the purpose of calculating rental payments hereunder,
said land is estimated to contain 86 acres, whether it contains more or
--
less.
2. This Lease shall remain in force for a term of ten (10) years
from the date hereof (called "primary term") and as long thereafter as said
land is used for gas storage purposes.
3. Lessee shall have the exclusive right to use and to enter into
possession of any formation, stratum or strata underlying the lands
hereinabove described (except any formation, stratum or strata bearing
potable water or workable coal) for the storage of gas, or other gaseous
substances produced in a gaseous state, from whatever source or sources
obtained, and may for this purpose re-open and restore to operation any and
all abandoned xxxxx on the premises which may have penetrated such
formation, stratum or strata, or may drill new xxxxx thereon for the purpose
of introducing and storing any kind of gas, or other gaseous substances
produced in a gaseous state, in any such formation, stratum or strata and
recovering the same therefrom. It is understood that a well need not be
drilled on said land to permit the storage of gas or other gaseous
substances produced in a gaseous state. Lessee shall be the sole judge as to
whether gas or other gaseous substances produced in a gaseous state is
stored within the lease premises and Lessee's determination in respect
thereto shall be final and conclusive.
As full compensation for the storage rights herein granted and in lieu of
any royalty which may become due on the production or removal of stored gas
or other gaseous substances produced in a gaseous state from the lease
premises. Lessee agrees to pay Lessor on or before each anniversary date
hereof an annual rental in an amount equal to Two Dollars ($2.00) per acre
covered hereby until such time as Lessee actually utilizes the property
covered hereby in connection with underground gas storage purposes, and
beginning with the first anniversary date hereof after Lessee has commenced
utilizing the property for underground storage purposes, the annual rentals
payable to Lessor shall be increased to an amount equal to Four Dollars
($4.00) per acre. Said rental payments may be paid or tendered to Lessor by
check or draft of Lessee mailed or delivered to the Lessor at address of
Lessor indicated above, or by check or draft of Lessee mailed or delivered
to ___________________ bank at ____________________, for deposit to the
credit of Lessor. Lessee further agrees to pay Lessor as liquidated damages
for the drilling operation and maintenance of each well on the leased
premises which is utilized for the storage of gas or other gaseous
substances produced in a gaseous state, as well as for the necessary or
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useful surface rights and privileges relating thereto, for the entire term
of this agreement, the sum of $100.00 payable in one sum within three months
after each well now existing or hereafter drilled upon the lease premises is
so utilized. Lessee agrees to give Lessor written notice of the use of the
lease premises for such gas storage purposes and of the use of any well
drilled thereon for such gas storage purposes. In the event any formation,
stratum or strata utilized for storage purposes contains an economically
recoverable reserve of native gas. Lessee agrees to compensate Lessor for
royalty on such gas as provided below.
4. In the event Lessor should become entitled to any royalty under
the preceding paragraph hereof, such royalty shall be one-eighth (1/8th) of
the reasonable market value of the gas at the well, provided, further,
however, the reasonable market value shall not in any event exceed the net
amount which may be realized by Lessee from the sale of such gas, and it is
further understood that if Lessor is entitled to royalty on any such
recoverable native gas under the provisions of any oil and gas lease
covering said property, Lessee hereunder shall not be required to pay any
royalty thereon in addition to the royalty payable under any such oil and
gas lease.
5. The down cash payment is consideration for this Lease according
to its terms and shall not be allocated as rental for period. Lessee may at
any time, and from time to time, execute and deliver to Lessor or file for
record a release or releases of this Lease as to any part or all of said
land and thereby be relieved of all obligations as to the released land. If
this Lease is released as to a portion of said land, the rental computed in
accordance therewith shall thereupon be reduced in the proportion that the
acreage released bears to the acreage which was covered by this Lease
immediately prior to such release.
6. Lessee shall have the right, but not the obligation, at any time
during or after the expiration of this Lease to remove all property and
fixtures placed by Lessee on said land, including the right to draw and
remove all casing. When necessary for utilization of the surface for some
intended use by Lessor and upon request of Lessor or when deemed necessary
by Lessee for protection of the pipeline, Lessee will bury pipelines below
ordinary plow depth, and no well shall be drilled within two hundred (200)
feet of any residence or born now on said land without Lessor's consent.
7. The rights or either party hereunder may be assigned in whole or
in part, and the provisions hereof shall extend to their heirs, successors
and assigns; but no change or division in ownership of the land, rental or
royalties, however accomplished, shall operate to enlarge
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the obligation or diminish the rights of Lessee; and no change or division
in such ownership shall be binding on Lessee until forty-five (45) days
after Lessee shall have been furnished by registered United States Mail at
Lessee's principal place of business with certified copy of recorded
instrument or instruments evidencing same. In the event of assignment hereof
in whole or part, liability for breach of any obligation hereunder shall
rest exclusively upon the owner of this Lease or a portion thereof who
commits such breach. In the event of the death of any person entitled to
rental hereunder, Lessee may pay or tender such rentals to the credit of the
decease or the estate of the deceased until such time as Lessee is furnished
with proper evidence of the appointment and qualifications of an executor or
administrator of the estate, or if there be none, until Lessee is furnished
with evidence satisfactory to it as to the heirs or devisees of the deceased
and that all debts of the estate have been paid. If at any time two or more
persons be entitled to participate in rentals payable hereunder, Lessee may
pay or tender said rental jointly to such persons, or at Lessee's election,
the proportionate part of rental to which each participant is entitled may
be paid or tendered to him separately or to his separate credit in said
depository. In the event of assignment of this Lease as to a segregated
portion of said land, rental hereunder shall be apportionable as between the
several leasehold owners ratably according to the surface area of each and
default in rental payment by one shall not affect the rights of other
leasehold owners hereunder. If six or more parties become entitle to rental
hereunder, Lessee may withhold payment thereof unless and until furnished
with a recordable instrument executed by all such parties designating an
agent to receive payment for all.
8. Lessor hereby warrants and agrees to defend the title of said
land and agrees that Lessee at its options may discharge any tax, mortgage
or other lien upon said land, either in whole or in part, and if Lessee does
so, it shall be subrogated to such lien with right to enforce same and apply
rentals and royalties accruing hereunder toward satisfying same. When
required by state, federal or other law, Lessee may withhold taxes with
respect to rental, royalty and other payments hereunder and remit the
amounts withheld to the applicable taxing authority for the credit of
Lessor. Without impairment of Lessee's rights under the warranty in the
event of failure of title, if Lessor owns an interest in the oil or gas on,
in or under said land less than the entire fee simple estate, whether or not
this Lease purports to cover the whole or a fractional interest, the
royalties and rentals to be paid Lessor shall be in accordance with the
nature of the estate of which Lessor is seized. Should any one or more of
the parties named above as Lessor fail to execute this Lease, it shall
nevertheless be binding upon the party or parties executing the same.
Failure of Lessee to reduce rental paid
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hereunder shall not impair the right of Lessee to reduce any royalties which
may be payable hereunder.
9. Should Lessee be prevented from complying with any express or
implied covenant of this Lease, from utilizing the property for underground
storage purposes by reason of scarcity of or an inability to obtain or to
use equipment or material or failure or breakdown of equipment, or by
operation of force majeure, any federal or state law or any order, rule or
regulation of governmental authority, then while so prevented, Lessee's
obligation to comply with such covenant shall be suspended and this Lease
shall be extended while and so long as Lessee is prevented by any such cause
from utilizing the property for underground storage purposes and the time
while Lessee is so prevented shall not be counted against Lessee, anything
in this Lease to the contrary notwithstanding.
10. Each singular person herein shall include the plural whenever
applicable.
IN WITNESS WHEREOF, this instrument is executed on the date first
above written.
/s/ Xxxx X. Xxxxx
---------------------------------
Xxxx X. Xxxxx, Guardian of Xxxxxx
Xxxxxx Xxxxx, a Minor
APPROVED THIS 4th DAY OF
OCTOBER, 1995
/s/ Xxxxx x. [illegible]
---------------------------
Judge, Xxxx Xxxxxxxx Xxxxx
0
XXXXXXXXXXXXXXX
XXXXX XX XXXXXXXX )
)
COUNTY OF XXXX )
I, Xxxxx Xxxxx, a Notary Public in and for said County and State
aforesaid, do hereby certify that Xxxx X. Xxxxx, Guardian for Xxxxxx Xxxxxx
Xxxxx, a minor, personally known to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in
person, and acknowledged that she signed, sealed and delivered the said
instrument as her free and voluntary act for the uses and purposes therein
set forth, and desired the same to be recorded as such.
Given under my hand and ___________ Seal, this 4th day of October,
1995.
My commission expires 7-29-96 .
-----------------
/s/ Xxxxx Xxxxx
----------------------------
Notary Public
This instrument prepared by:
Xxxxxxxx X. Xxxxxxx, Xx.
000 Xxxxxxx Xxxx., X.X. Xxx 00
Xxxxxxxxx, Xxxxxxxx 00000
/s/ Xxxxxxxx X. Xxxxxxx
-----------------------
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ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
(QUITCLAIM)
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into this 10
day of November, 1995, by and between XXXXXX X. XXXXXX ("Seller"), and DELTA
NATURAL GAS COMPANY, INC., a Kentucky corporation ("Purchaser"). Capitalized
terms used herein and in the attachments hereto shall have the meanings set
forth in the Agreement (as defined below) unless otherwise stated herein.
W I T N E S S E T H:
- - - - - - - - - -
THAT WHEREAS, on March 1, 1995 Seller and Purchaser entered into an
Agreement for Purchase and Sale of Assets (the "Agreement") pursuant to
which Seller agreed to transfer, assign and convey to Purchaser and
Purchaser agreed to purchase and acquire from Seller certain of the property
and assets of Seller located in Xxxx County, Kentucky; and
WHEREAS, pursuant to the Agreement, Seller is willing to transfer
and assign to Purchaser and Purchaser is willing to acquire and accept from
Seller and assume all liabilities under those certain leases and agreements
set forth and described on Exhibit A attached hereto (collectively the
---------
"Leases"); and
WHEREAS, subject to the terms and conditions of the Agreement,
Seller desires to now transfer and assign to Purchaser the Leases, and
Purchaser desires to accept and assume same, pursuant to and in discharge of
their respective obligations set forth in the Agreement.
NOW, THEREFORE, for and in consideration of the performance and
observance of the terms and conditions contained herein and set forth in the
Agreement, the terms and conditions of which are incorporated herein by
reference, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller does hereby sell,
transfer, assign and quitclaim to Purchaser, its successors and assigns, all
of Seller's right, title and interest in and to the Leases. It is understood
and agreed that this is a quitclaim assignment of the leases described on
Exhibit A and that Seller is not warranting title to any of such leases. It
is further agreed and acknowledged that this Assignment shall be governed by
and construed in accordance with the terms and conditions of the Agreement.
Purchaser does hereby accept the transfer and assignment of the
Leases made herein and does hereby assume same and agree to pay or discharge
when
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due and perform in full all of Seller's duties and obligations under the
Leases arising on or after the date hereof.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement on this the day and year first above written.
"SELLER"
/s/ XXXXXX X. XXXXXX
-------------------------------
XXXXXX X. XXXXXX
"PURCHASER"
DELTA NATURAL GAS COMPANY, INC.,
a Kentucky corporation
BY: /s/ XXXXX X. XXXXXXXX
----------------------------
ITS: President & CEO
---------------------------
STATE OF KENTUCKY)
COUNTY OF JEFFERSON)
The foregoing Agreement was subscribed, sworn to and acknowledged
before me this 10th day of November, 1995, by Xxxxxx X. Xxxxxx.
My Commission Expires: 4-15-98
-------------------
/s/ Xxxxx X. Xxxxx
-----------------------------
NOTARY PUBLIC
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STATE OF KENTUCKY)
COUNTY OF JEFFERSON)
The foregoing Agreement was subscribed, sworn to and acknowledged
before me this 10th day of November, 1995, by Xxxx Xxxxxxxx as President of
Delta Natural Gas Company, Inc., a Kentucky corporation, for and on behalf
of the corporation.
My Commission Expires: 4-15-98
----------------------
/s/ Xxxxx X. Xxxxx
-----------------------------
NOTARY PUBLIC
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THIS INSTRUMENT PREPARED BY:
XXXXX, XXXXXX & PARK
000 X. Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
BY: /s/ J. XXX XXXXXXXXX, XX.
------------------------------
J. Xxx Xxxxxxxxx, Xx.
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EXHIBIT A
---------
Attachment to that certain Assignment and Assumption Agreement
between Xxxxxx X. Xxxxxx and Delta Natural Gas Company dated
November 10, 1995.
1. Oil and Gas Lease dated October 15, 1992 from Xxxxxxx X. Xxxxx to
Equitable Resources Exploration and recorded in Lease Book 39, Page
677 in the Xxxx County Clerk's office, as assigned in that
Amendment No. 1 and Novation to Underground Storage Lease and
Agreement (Canada Mountain Field) dated March 22, 1995 by and
between Equitable Resources Exploration, Xxxxxx X. Xxxxxx and Delta
Natural Gas Company and recorded in Lease Book 40, Page 832 in the
aforesaid Clerk's office.
2. Oil and Gas Lease dated November 19, 1992 from Xxxxx Xxxx Xxxxx,
Guardian for Xxxxxx Xxxxxx "Sweet Pea" Xxxxx, a single minor, to
Equitable Resources Exploration and recorded in Lease Book 39, 741
in the Xxxx County Clerk's office, as assigned in that Amendment
No. 1 and Novation to Underground Storage Lease and Agreement
(Canada Mountain Field) dated March 22, 1995 by and between
Equitable Resources Exploration, Xxxxxx X. Xxxxxx and Delta Natural
Gas Company and recorded in Lease Book 40, Page 832 in the
aforesaid Clerk's office.
3. Oil and Gas Lease dated January 11, 1993 from Xxxxx Xxxx Xxxxx and
Xxxx X. Xxxxx, husband and wife, to Equitable Resources Exploration
and recorded in Lease Book 39, Page 800 in the Xxxx County Clerk's
office, as assigned in that Amendment No. 1 and Novation to
Underground Storage Lease and Agreement (Canada Mountain Field)
dated March 22, 1995 by and between Equitable Resources
Exploration, Xxxxxx X. Xxxxxx and Delta Natural Gas Company and
recorded in Lease Book 40, Page 832 in the aforesaid Clerk's
office.
4. Oil and Gas Lease dated September 2, 1992 from Xxxxx Xxxxx, widow,
Xxxxxxx Xxxxx Xxxxx and Xxxxx Xxxxx to Equitable Resources
Exploration and recorded in Lease Book 39, Page 665 in the Xxxx
County Clerk's office, as assigned in that Amendment No. 1 and
Novation to Underground Storage Lease and Agreement (Canada
Mountain Field) dated March 22, 1995 by and between Equitable
Resources Exploration, Xxxxxx X. Xxxxxx and Delta Natural Gas
Company and recorded in Lease Book 40, Page 832 in the aforesaid
Clerk's office.
5. Gas Storage Lease dated October 4, 1995 from Xxxx X. Xxxxx,
Guardian of Xxxxxx Xxxxxx Xxxxx, a minor, to Xxxxxx X. Xxxxxx and
recorded in Lease Book 40, Page 799 in the Xxxx County Clerk's
office.
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