Chiron Corp Form 10-Q

OIL AND GAS LEASE

KY-Rental, Pooling (Rev. 8/99)

This Oil and Gas Lease (the “Lease”) is dated (the “Effective Date”). The parties to this Lease are , as Lessor (whether one or more), whose address is , and , as Lessee, whose address is .

1. Lease Description. In consideration of Ten Dollars ($10.00) paid by Lessee, and other good and valuable considerations, the receipt and sufficiency of which are acknowledged, and for the covenants contained in this Lease, Lessor grants, leases, and lets exclusively to Lessee the following described land (the “Land”) in the District/Township of , County, Kentucky, and bound substantially by lands now or formerly owned as follows:

On the North by:

On the East by:

On the South by:

On the West by:

being the same land acquired by Lessor in that instrument recorded in Book/Volume , page of , of the Records of the county in which the Land is located.

The Land is estimated to comprise acres, whether the tract or tracts contain more or less, which acreage figure may be relied on by Lessee in determining the amount of rentals or other payments provided for in this Lease.

2. Term of Lease. This Lease shall be in force for a primary term of years from the Effective Date, and as long thereafter as oil or gas or other substances covered by this Lease are produced in paying quantities from the lease premises or from lands pooled with the lease premises, or this Lease is maintained in force pursuant to any of its other provisions.

3. Lease Rights Granted. Lessee shall have and is granted by Lessor, during the term of this Lease, the exclusive right to enter on the Land to conduct geological, geophysical and seismic surveys and explorations, and to operate for, produce and save oil, gas, and sulfur produced in connection with oil and gas; together with the right to drill wells, recondition producing wells and re-drill and use abandoned well on the Land for all those purposes; together with rights-of-way and servitudes on, over, and through the Land for roads, pipelines, telephone, electric power lines, structures, plants, drips, tanks, stations, structures for machinery, gates, meters, regulators, tools, appliances, materials and other equipment that may be used in exploring for and producing oil, gas, and sulfur storage of gas and liquids, and all other rights and privileges necessary, incident to and convenient for the operation of the Land for production and transportation of oil, gas, and sulfur, and the injection of gas, air, water, or other fluids for the enhanced recovery and production of oil, gas, and sulfur; together with the right to use oil, gas, and water from the Land free of cost to Lessee for all such purposes, except water from Lessor’s wells or ponds; to remove, either during or after the term of this Lease, any and all property and improvements placed or located on the Land by Lessee, including the right to draw and remove casing; together with the right of ingress, egress, and regress on, over, and through the Land for any of the purposes of this Lease.

4. Delay Rental Payments. If operations for drilling are not commenced on the lease premises, or on acreage pooled with the lease premises, as provided in Section 6 below, on or before one (1) year from the Effective Date, this Lease shall terminate as to both Lessor and Lessee unless Lessee, on or before the expiration of that period, shall pay or tender to Lessor, or to the credit of Lessor in Bank, or any successor depository, the sum of Dollars ($ ), the “delay rental,” which shall extend for twelve (12) months the time within which drilling operations may be commenced.

5. Royalty Payments. The royalties reserved by Lessor, and which shall be paid by Lessee, are: (a) on oil (including but not limited to distillate and condensate) ( ) of that produced and saved from the lease premises; (b) on gas, including casinghead gas and all other gaseous or vaporous substances, produced from the Land and sold or used off the lease premises or in the manufacture of gasoline or in the extraction of sulphur or any other product, the market value at the wells of ( ) of the gas sold or used, with the market value at the wells in no event to exceed the net proceeds received by Lessee; (c) on sulphur extracted and marketed, One Dollar ($1.00) per long ton.

6. Pooling. Lessee is given and granted the right, at its option, at any time and from time to time, within the primary term or at any time during which this Lease may be extended by any of its provision, to pool, unitize, and reform, enlarge and/or reduce a unit or pool, and repool all or any part or parts of the lease premises or rights, depths, strata, or formations, with any other land in the vicinity of the Lease...

7. Warranty and Lesser Interest. Lessor warrants and agrees to defend the title to the Land, covenants that Lessee will have quiet enjoyment under this Lease, covenants that Lessee shall have the benefit of the doctrine of after-acquired title...

8. Notices. Failure to pay or an error in paying any rental or other payment due Lessor shall not constitute a ground for forfeiture of this Lease...

9. Ownership Changes. The rights of Lessor or Lessee may be assigned or transferred in whole or in part...

10. Release of Lease. Lessee, at any time, and from time to time, may surrender this Lease as to all or any part or parts of the lease premises...

11. Adverse Claims. In case of notice of or an adverse claim to the lease premises...

12. Surface Use. No well shall be drilled nearer than two hundred (200) feet of any house or barn now on the lease premises without the written consent of Lessor.

13. Storage. Lessee shall have the exclusive right to use any stratum or strata underlying the lease premises for the storage of gas or liquids...

14. Regulations and Delays. Lessee’s obligations under this Lease, whether express or implied, shall be subject to all applicable laws, rules, regulations, and orders of any governmental authority having jurisdiction...

15. Breach or Default. In the event Lessor considers that Lessee has not complied with the express or implied obligations of this Lease...

16. Dower and Homestead. Lessor expressly relinquishes dower and releases and waives all rights under and by virtue of the homestead exemption laws of the state in which the lease premises are situated insofar as the same in any way affects the purposes for which this Lease is made.

17. Title Curative. Lessor agrees to execute affidavits, ratifications, amendments, and other instruments as may be necessary to carry out the purposes of this Lease.

18. Execution. Should any one or more of the parties named as Lessor fail to execute this Lease, it shall nevertheless be binding on the party or parties who execute it...

This Lease is executed by Lessor as of the date of the acknowledgment below, but shall be effective as of the Effective Date stated above.

Individual Acknowledgment

State of

County of

The foregoing instrument was acknowledged before me this day of , , by .

Corporate Acknowledgment

State of

County of

The foregoing instrument was acknowledged before me this day of , , by of , a corporation, on behalf of the corporation.

This Lease was prepared by:

Whose address is:

After Recording Return to:

Whose address is: