Fill and Sign the Carbon Use and Storage Sample Forms and Master Index

Page 1 of 7 SUBSURFACE UNDERGROUND CARBON DIOXIDE STORAGE LEASEAND AGREEMENT (With Landowner; Long Form) This Subsurface Underground Carbon Dioxide Storage Lease and Agreement (the “Storage Agreement” or “Agreement”) is entered into effective _____ (the “Effective Date”), between _____ (the “Lessor”), whose address is _____, and _____, its successors and assigns, whose address is _____, (the “Lessee”). 1. Grant of Lease: Lessor, for and in consideration of the payments provided below and other valuable consideration, the receipt and sufficiency of which is acknowledged, lea ses to Lessee, and Lessee leases from Lessor, the exclusive right, on the terms and conditions of this Agreement, to inject and store carbon dioxide in and withdraw and remove carbon dioxide from the zones or formations underlying the surface of the lands described in Exhibit “A” (the “Property”). The zones and formations are referred to as the “Storage Reservoir.” Lessee is a lso granted all rights incident to the injection, storage, withdrawal, and removal, includi ng without limitation the following: a. The right to use the Storage Reservoir as an Underground Carbon Dioxide Storage and Sequestration Reservoir, to use, produce, or sell any carbon dioxide, gas, or other hydrocarbons within the Storage Reservoir, and to store, sequester and remove carbon dioxide in the Storage Reservoir and retain possession and ownership of all carbon dioxide so stored, as personal property, 2. Rent and Signing Bonus: On execution and delivery of this Agreement by Lessor to Lessee, Lessee shall pay to Lessor a signing bonus in the amount of $_____. 3. Term: This Storage Agreement shall continue for a term of _____ years from and after the Effective Date, and so long as the Storage Reservoir is used for underground storage of carbon dioxide or the removal or injection of carbon dioxide with no continuous period of non- use of two (2) consecutive years. The term “non-use” as used in this paragraph shall mean both no injection of carbon dioxide into and/or no withdrawal of carbon dioxide from the Storage Reservoir. Non-use shall not be deemed to have occurred if there was either injection of carbon dioxide into or withdrawal of carbon dioxide from the Storage Reservoir within the relevant period. Nothing in this paragraph or Storage Agreement shall obligate or require Lessee to use or continue to use the Storage Reservoir. Lessee shall notify Lessor in writing of the existe nce of any continuous period of non-use of two (2) or more consecutive years. Lessee shall be entitled to extend this Storage Agreement for a further _____ year term on the same terms and conditions set forth in this Agreement except that there shal l be no further option to extend, by delivering written notice of its intent to extend to Lessor not sooner than one (1) year and not later than three (3) months prior to expiration of the initial _____ year te rm. If Lessee sends written notice of intent to extend to Lessor, Lessee and Lessor shall me et and endeavor in good faith to negotiate a new fair market rental for the extended term within a period of thirty (30) days following Lessor’s receipt of Lessee’s notice of intent to extend. If Lesse e and Lessor do not meet or cannot agree upon a fair market rental for the extended term within Page 2 of 7 that thirty (30) day period, the fair market rental shall be established by arbitration in the manner set forth in paragraph 19 below. 4. Limits on Use of Surface: Lessee shall have no right to enter on the surface of the Property or within _____ feet below the surface of the Property. 5. Lessee Indemnity and Restoration: a. Lessee shall defend, indemnify and hold harmless Lessor, any of its officers, employees, governing body members, and agents from and against any and all claims, demands, losses, damages, liabilities, fines, charges, penalties, administrative and judicial proceedings and orders, judgments, remedial actions of any kind, and all costs and expenses incurred, including without limitation, reasonable attorneys’ fees and costs of defense arising, directly or indi rectly, in whole or in part, out of Lessee’s activities or facilities or improvements inst alled by the Lessee, for any reason whatever and without limitation, except to the extent arising from or caused by the intentional or willful misconduct or sole negligence of the Lessor, its offi cers, employees, and agents. b. Cleanup. Lessee agrees to be responsible for any cleanup, in accordance with any applicable local, state or federal laws, rules or regulations, of the Property resulting from spills by Lessee or the introduction of substances by Lessee which are defined as of the date of t his Agreement in the Resource Conservation and Recovery Act as “Hazardous Waste” in or on the Property during the construction, operation, and maintenance of the carbon dioxide storage project. Lessee shall also be responsible for cleanup, in accordance with any applic able local, state or federal laws, rules or regulations, of the Property resulting from spills by Lessee, or the introduction of substances by Lessee defined by future legislation as Hazardous Waste. c. Lessee agrees to sample and test the groundwater from any groundwater well utilized by Lessor on the Property prior to Lessee’s drilling of the initial injection or withdrawal well for its carbon dioxide storage project. Lessee shall be given access to Lessor’s groundwater well or wells for the purpose of collecting an appropriate sample and will have such sampl e tested for methane, ethane, and ethene in accordance with EPA Method RSK SOP-175 and for chloride, manganese, sulfate, and conductance (the “Protocol”) by a qualified independent testing lab, as selected from time to time in writing by Lessee, (the “Lab” ), all at Lessee’s sole cost and expense. The Lab shall be instructed to mail the results of such baseline testing in duplicate to both Lessor and Lessee. Lessee shall, additionally, perform sampling and t esting, in accordance with the Protocol and through the Lab, within thirty (30) days after completion of the drilling of each injection or storage well for any well utilized by Lessor within a di stance of one thousand (1,000) feet of Lessee’s proposed injection or storage well, at Lessee’s sole cost and expense, with the results of such testing to be mailed in duplicate to both Lessor and Lessee. Lessee will provide to Lessor groundwater test kits, and Lessor shall be entitled, not more often than once every six months, to sample and have tested, in accordance with the above Protocol and by Lab, any groundwater well utilized by Lessor on the Property, at Lessee’s expense, wit h the results of the test being mailed in duplicate by the Lab directly to L essor and Lessee. Should the results of any testing show the presence of contaminants above the baseline level a s established by Lessee’s initial sampling and testing, Lessee shall be entitled to access to the Page 3 of 7 affected groundwater well for the purpose of having additional sampling and testing performed by the Lab. 6. Insurance: a. Prior to the commencement of carbon dioxide storage operations and thereafter so long as this Storage Agreement is in effect, Lessee shall place in effect and maintain Commercial General Liability insurance with a combined single limit of _____ Dollars ($_____) for eac h occurrence covering the Project Parcels as defined in paragraph 6.g. An umbrella li ability policy or policies may be used to obtain the total limit. All insurance companies issui ng the required insurance shall have a Best’s rating of _____ or better. Lessor shall be included as an addi tional insured on the policies of insurance of Lessee and shall be provided with a certificate of insurance providing for thirty (30) days prior notice of any modification or termination of the insurance. b. In the event the Commercial General Liability insurance described in paragraph 6.a. ceases to be available in whole or in part, or for any other reason at the option of Lessee, Lessee may elect to substitute all or part of the insurance coverage specified in paragraph 6.a. with an irrevocable letter of credit drawn on a national bank, or the cash equivale nt in a blocked account deposited in a national bank. The combination of insurance, letter of credit and/or cash deposit shall total _____ Dollars ($_____) for the Project Parcels, defined in 6.g. below. Any letter of credit, provided pursuant to this paragraph 6.b. shall be subject to the further provisions of paragraph 6.e. below. Any cash deposit provided pursuant to this paragraph 6.b. shall be subject to the further provisions of paragraph 6.f. below. c. Prior to the commencement of carbon dioxide storage operations and thereafter so long as this Storage Agreement is in effect, Lessee shall place in effect and maintain Environmental Impairment Liability insurance, including first party cleanup and third pa rty liabilities with a limit of liability of _____ Dollars ($_____) for each occurrence cove ring the Project Parcels, defined in 6.g. below. An umbrella liability policy or policies may be used to obtain the total limit. The foregoing Environmental Impairment Liability insuranc e shall be maintained in effect for an additional term of one (1) year following termination of thi s Storage Agreement. All insurance companies issuing the required insurance shall have a Best’s rat ing of _____ or better. Lessor shall be a named insured on the policies of insurance of Lessee and shall be provided with a certificate of insurance providing for thirty (30) days prior notice of any modification or termination of the insurance. d. In the event that the Environmental Impairment Liability insurance described in paragraph 6.c. ceases to be available in whole or in part, or for any other reason at t he option of Lessee, Lessee may elect to substitute all or part of the insurance coverage spe cified in paragraph 6.c. with an irrevocable letter of credit drawn on a national bank, or the cash equivale nt in a blocked account deposited in a national bank. The combination of insurance, letter of c redit, and/or cash deposit shall total _____ Dollars ($_____) for the Project Parcels, defined in 6.g. below. Any letter of credit provided pursuant to this paragraph 6.d. shall be subject to the furt her provisions of paragraph 6.3. below. Any cash deposit provided pursuant to this paragraph 6.d shall be subject to the further provisions of paragraph 6.f. below. Page 4 of 7 e. If a letter of credit is provided pursuant to paragraph 6.a. or 6.d., this paragraph 6.e. shall apply. A certified copy of the original letter of credit shall be provided to Lessor. The applicable letter of credit may be presented if the Lessor has a claim tha t is covered by the risks and in the amounts described in paragraphs 6.a. or 6.d. (the “Covered Risk”). The letter of cre dit shall be documentary in form and shall require Lessor to present one of the following documents: (1) A consent for payment executed by Lessee; (2) An arbitration award indicating that the Lessor is entitled to compensation for a Covered Risk, if any dispute is arbitrated by agreement of the Lessor and Lessee; or, (3) A judgment indicating that the Lessor is entitled to compensation for a Covered Risk. f. If a cash deposit in a blocked account is provided pursuant to paragraph 6.a. or 6.d., this paragraph 6.f. shall apply. A withdrawal from the blocked account shall require the signature of Lessor, on the one hand, and Lessee, on the other hand. Lessee shall provide Lessor any documents needed by Lessor to obtain and perfect an interest in the cash deposit a ccount since it is the express intent of the Lessor and the Lessee that the cash de posit account will be held for the benefit of Lessor in the event that Lessor is entitled to compensation for a Covered Risk. Lessor shall be entitled to proceeds from the cash deposit account if Lessor satisfi es one of the following conditions: (1) A consent for payment is executed by Lessee; (2) An arbitration award indicating that the Lessor is entitled to compensation for a Covered Risk, if any dispute is arbitrated by agreement of the Lessor and Lessee; or, (3) A judgment indicating that the Lessor is entitled to compensation for a Covered Risk. g. As used in this paragraph 6., “Project Parcels” means all of the parcels over which easements are obtained for Lessee’s carbon dioxide storage facility connecting to the carbon dioxide storage facility, and all related facilities which are a part of the _____ storage project, including underground carbon dioxide storage leases. 7. Ad Valorem Taxes: If, and to the extent that ad valorem real property taxes assessed against the Property (including without limitation any taxes assessed against the mi nerals or base carbon dioxide value) are increased as a result of Lessee’s use of the Property, Lessee shal l be responsible for their payment. Lessee shall be responsible for payment of any personal property taxes assessed against the personal property of Lessee installed under the terms of thi s Agreement, which shall be billed separately from any taxes assessed against the real property of Lessor. Page 5 of 7 8. Payments: All payment provided for in this Agreement, following the initial payment referred to, may be made by check mailed directly to Lessor(s) at the addresses set out in paragraph 16. If at any time there be as many as four (4) parties entitled to any payments from Le ssee under the terms of this Agreement, Lessee may withhold payment until all those partie s designate, in writing to Lessee, a common agent to receive all payments due. 9. Proportionate Reduction: If the Lessor owns a less interest than the entire and undivided fee simple estate in the Storage Reservoir, the various payments referred to i n this Storage Agreement shall be proportionately reduced. 10. Release: Lessee, at its option, may at any time quitclaim and surrender all of the Property and Storage Reservoir, or any portion of it, in which event this Storage Agreement shal l be at an end as to that portion of the Property and Storage Reservoir surrendered and quitclaimed, and Lessee shall be relieved of all obligations under this Agreement except the obligations then accrued, including an obligation on the part of Lessee to fully restore the Property to its condition prior to commencement of carbon dioxide storage activities by Lessee. 11. Force Majeure: Performance of the covenants and conditions imposed on Lessee in this Agreement shall be excused while, and to the extent that, Lessee is hindered in or pre vented from compliance in whole or in part, by war, riots, strikes, walkouts, action of the elements, laws, rules, and regulations of any federal, state, municipal or other governmental agency or a ny other cause beyond the control of the Lessee, whether similar or dissimilar to those specific ally enumerated, without regard to whether the cause exists at the date of this Agreement or later arises; provided, however, that Lessee shall provide written notice to Lessor of any clai m of suspension or excuse of Lessee’s obligations under this paragraph, specifying with particularity the act, event, or condition giving rise to the claim of suspension or excuse and specifying the date on which the act, event, or condition arose. 12. Warranty of Title: Lessor hereby warrants and agrees to defend the title to the Property and Storage Reservoir and should Lessor later acquire any additional rights, title, or i nterests in or to the Storage Reservoir or Property, it shall be subject to the provisions of this Agreement to the same extent as if owned by Lessor at the date of this Agreement. Lessor agrees that Lessee shall have the right at any time to redeem for the Lessor, by payment, any deed of t rust, mortgage, taxes, or other liens on this Property, in the event of default of payment by the Le ssor, and shall be subrogated to the rights of the holder; and, Lessor agrees that any payments ma de by the Lessee shall be deducted from any amounts of money which may become due the Lessor under the terms of this Storage Agreement. 13. Commingling: To the extent Lessor owns any rights, title, or interests in and to the minerals underlying the Property, Lessor expressly consents to commingling of stored carbon dioxide with any minerals which may exist within the Storage Reservoir. 14. Default: Should Lessor claim that a default has been made by Lessee in the payment of any sum due to Lessor under the terms of this Agreement, or in the performance of any other Page 6 of 7 term or condition of this Agreement, Lessor shall provide written notice of that occurrence to Lessee. If the claimed default is not contested or cured by Lessee within a peri od of thirty (30) days following Lessee’s receipt of Lessor’s written notice, or, if the default is not cura ble within the 30-day period, if Lessee has not either contested or commenced the cure of the default within the 30-day period and diligently prosecutes the cure to completion, Lessor may declare thi s Lease and Agreement terminated and may pursue any and all remedies availabl e at law or in equity. 15. Binding Effect: This Storage Agreement shall extend to and be binding on the heirs, assigns, executors, administrators, personal representatives, and successors of the Lessor and Lessee. Either of them may assign, transfer, and convey, either in whole or in part, i ts ownership or interest in the land, rights, privileges, and Property covered by this Storage Agreeme nt; but no change in ownership of the Property shall be binding on the Lessee until the instrument conveying title shall have been properly recorded in the Official County Records and a certified copy shall have been furnished to the Lessee. 16. Notices: Any notices or requests required or permitted by this Agreement shall be deemed sufficient as to delivery if given in writing, deposited in the United State s mails, registered, return receipt requested, addressed to the other party as follows: Lessor: Lessee: 17. Compliance: Lessee shall comply with any and all terms and conditions (including without limitation any mitigation measures) set forth in any Certificate of Public Convenience and Necessity issued by the _____ Public Utilities Commission for operation of the Storage Reservoir as a carbon dioxide storage facility. Lessee shall not be considered to not be in compliance with any such term or condition unless found not to be in compliance by final action of that body or a court with proper jurisdiction, and shall be afforded a period of thirty (30) days to commence and thereafter diligently prosecute actions to remedy the non-complianc e prior to being in default under this Agreement. 18. Drilling: Drilling through the zones and horizons comprising the Storage Reservoir could adversely affect the integrity of the carbon dioxide storage reservoir in the Property t o be utilized by Lessee in its storage and any withdrawal operations. In consideration of the foregoing, Lessor, to the extent Lessor may be a mineral owner, agrees not to drill through or into or grant others the right to drill through or into the zones and horizons comprising the Storage Reservoir, without Lessee’s prior written consent. Lessee will not withhold its conse nt unless the proposed operations could potentially damage or drain the Storage Reservoir and any proposed lease or agreement does not contain protective measures and indemnifications that in Lessee’s reasonable judgment protect Lessee from damage or loss. Should a dispute arise as t o the reasonableness of any withholding of consent to drill by Lessee, such dispute shall be resolved by arbitration in the manner set forth in paragraph 19. Page 7 of 7 19. Arbitration: Any disputes between the parties to the Agreement as to the interpretation or enforcement of any of its terms or provisions shall be resolved by arbitration before a panel of three arbitrators, with each party appointing one arbitrator and the two arbitrators so appoint ed appointing a third arbitrator. The decision of any two arbitrators shall be binding on the part ies. Each party shall bear the fees and costs of its appointed arbitrator. The fees a nd costs of the third arbitrator and the attorneys fees of the party prevailing in the arbitration shall be determined and ordered paid by the losing party to the prevailing party in the arbitration award. Exc ept as otherwise expressly provided in this Agreement, the arbitration shall be conducted in accorda nce with the commercial arbitration rules of the American Arbitration Association. 20. Governing Law: This Agreement, its validity, construction and all rights under it shall be governed by the laws of the State of _____ with venue in _____ County. Date: Lessee Date: Lessor (Acknowledgments) [Exhibit A: Description of Property subject to and covered by the Agreement]