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Ordinance No. 4,14450425 —I1 ORDINANCE NO. 4144 AN ORDINANCE ACCEPTING THE BID OF TRACE OIL AND GAS COMPANY FOR AN OIL AND GAS LEASE; AUTHORIZING AND DIRECTING THE MAYOR AND THE CITY CLERK OF THE CITY OF BAYTOWN TO EXECUTE AND ATTEST TO SUCH OIL AND GAS LEASE AGREEMENT; AND PROVIDING FOR THE EFFECTIVE DATE HEREOF. WHEREAS, the City Council of the City of Baytown did authorize the Purchasing Department for the City of Baytown to advertise for bids for an oil and gas lease to be received April 19, 1985; and WHEREAS, notice to bidders as to the time and place, when and where the contract would be let was published pursuant to the provisions of Section 74 of the Charter of the City of Baytown; and WHEREAS, all bids were opened and publicly read at City Hall at 2:00 p.m., Friday, April 19, 1985, as per published notice to bidders; NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That the City Council of the City of Baytown hereby accepts the bid of Trace Oil and Gas Company for an oil and gas lease. Section 2: That the City Council of the City of Baytown, Texas, hereby approves an oil and gas lease agreement with Trace Oil and Gas Company and authorizes the Mayor and City Clerk of the City of Baytown to execute and attest to the said agreement, a copy of said agreement is attached hereto, marked Exhibit "A," and made a part hereof for all intents an purposes. Section 3: This ordinance shall take effect immediately from and after its passage by the City Council of the City of Baytown. INTRODUCED, READ, and PASSED by the affirmative vote of the City Council of the City of Baytown, this the 25th day of April, 1985. UT O, Mayor ATTEST: EILEE6R.ZNM�L , City lie Cl - - -r r �l OIL AND GAS LEASE THE STATE OF TEXAS COUNTY OF HARRIS City This Oil and Gas Lease made this day of , 1985, between THE CITY OF BAYTOWN, TEXAS, acting herein through its duly authorized representatives, whose address is P. G. Box 424, Baytown TX 77520, as Lessor, and as Lessee, whose address is W I T N E S S E T H: 1. Estate Granted. Lessor, in consideration of TEN DOLLARS ($10.00) and other good and valuable consideration in hand paid, of the royalties herein provided, and of the covenants and agreements hereinafter contained on the part of the Lessee to be kept and performed, hereby GRANTS, LEASES and LETS exclusively unto said Lessee, its successors and assigns, for the sole and only purpose of investigating, exploring, prospecting, drilling and operating for, develop- ing, producing, removing and marketing oil and gas (for the purposes of this lease, references to "oil and gas" shall include oil, gas, casinghead gas and the by- products there- of, and such other hydrocarbon substances and sulphur as are produced with, incidental to and as a part of the production of oil or gas only, any other minerals being specifically excluded from this lease) , to produce, save, take care of, treat, "store and transport and own said products, the lands in Harris County, Texas, described in Exhibit "A" which is attached hereto and made a part hereof for all purposes, which lands are sometimes referred to herein as the "leased premises ". For the purpose of calculating certain payments hereinafter provided for, said land is estimated to comprise 29.84203 acres, whether it actually comprises more or less. 2. Primarx Term. Subject to the other terms and provisions herein contained, this lease shall be for a term of two (2) years from this date (called "primary term "), and as long thereafter as oil or gas is produced in paying City quantities from the leased premises or so long as this lease may be continued in force and effect under the other terms and provisions hereof. 3. Royalties. As used in this paragraph 3, the "royalty share" means twenty percent (20 %). Lessor reser- ves, and Lessee covenants and agrees for Lessee, its heirs, successors and assigns: A. To deliver to Lessor, or at Lessor's option to deliver to the credit of Lessor to the pipeline to which Lessee may connect its wells the royalty share of all oil (which term shall include all condensate and other liquid hydrocarbons which are or can be extracted or removed from oil or gas by any extraction methods provided for herein) produced and saved by Lessee from said land, or from time to time, at the option of Lessee, to purchase such oil and to pay Lessor therefor the highest posted market price pre- vailing in the field where produced on the day of purchase, the royalty share in either case to bear no part of the cost of treating oil to render it marketable pipeline oil. Lessor's royalty share will bear no cost of any kind other than production taxes, if any. B. To pay Lessor on gas and casinghead gas, or other gaseous substance, produced from said land, and sold or used off the premises '(and not processed as hereinafter provided), the royalty share of the market value at the well of the gas so sold or used. If such gas shall be processed in an extraction, absorption or similar plant for the extraction of liquid hydrocarbons, Lessee shall pay to Lessor the royalty share of the market value of all gasoline and other products extracted from such gas or casinghead gas together with the royalty share of the market value of the residue gas. For purposes hereof, the term "market value" shall mean the price being paid for Lessee's share of the gas at the time such gas is produced by a gas pipeline purchaser which is unaffiliated by ownership or common control with the Lessee. Unless Lessor or Lessor's repre- sentative consent to any such gas purchase contract, which has in fact been arrived at through good faith, arm's - length negotiations, then Lessor shall be deemed to have elected to take the royalty share of gas in kind for the term of such 2651:LG37 - 2 - City contract. Should Lessor elect to take its royalty gas in kind, then Lessor and Lessee agree that the royalty share of such gas shall be delivered to Lessor at a single point on Lessee's gathering line on the leased premises designated by Lessor. Lessor shall install and maintain, at its sole cost and expense, the necessary pipelines, connections, valves, meters and other facilities for the delivery of said royalty gas to Lessor, at the designated delivery point. Lessor shall assume full responsibility for handling and using said royalty gas from said delivery point. C. To deliver to Lessor, or at Lessor's option, to sell for Lessor's account and account to Lessor for, the royalty share of such other mineral substances or the market value thereof, as may be produced incidental to and as a part of or mixed with oil, gas and other gaseous or liquid hydrocarbons. The royalties retained by Lessor shall be free and clear of any and all costs and charges whatsoever, including but not limited to, costs of development, production, dehydration, compression and transportation and other similar and related costs and transportation surcharges. All gross production, windfall profits and sever- ance taxes assessed against the royalties retained by Lessor shall be paid by Lessor. All other taxes, except ad valorem taxes assessed against Lessor's retained royalty, if any, shall be paid by Lessee. 4. Shut -in Gas Royalties. while there is a gas well on the leased premises capable of producing gas in paying quantities, from which gas is not being produced or sold, Lessee may pay to Lessor, as royalty, on or before ninety (90) days after the date on which (1) such well is shut -in or (2) this lease ceases to be otherwise maintained as provided herein, whichever is the later date, and thereafter at annual intervals on or before the anniversary of the date the first payment is made, the amount of shut -in royalty hereinafter provided for, and, if such payment is made or tendered, it shall be considered that for the full ensuing year gas is being produced from such well in paying quan- tities, and the intermittent production of gas during such 2651:LG37 - 3 - CC itV year shall not render necessary any new or additional payment of shut -in gas well royalty, but Lessee shall account to Lessor for the royalty on any such gas actually produced and sold or used off the premises in accordance with the provisions of Paragraph 3. For the purposes of this lease, the term "gas well" shall mean any well so classified by the Railroad Commission of Texas. The amount of shut -in royalty payable shall be the sum of One Hundred Dollars ($100.00) per net acre for the first shut -in year rind One Thousand Dollars ($1000.00) per net acre for each subsequent shut -in year. Notwithstanding the payment of such shut --in gas well royalty, Lessee shall be and remain (a) under the continuing obligation to use all reasonable efforts to find a suitable market for said gas, and to commence or resume marketing same when a suitable market is available, and (b) under the obligation to continuously develop the lands then subject to this lease and to drill such wells thereon as may be necessary to protect the same from drainage by wells on adjoining or nearby land. 5. Partial Releases. Lessee may at any time or times execute and deliver or place of record a release or releases covering any portion or portions of the above described premises and thereby surrender this lease as to such portion or portions and be relieved of all obligations except prior obligations and obligations for surface damages as to the acreage surrendered, and thereafter any payments dependent on the number of acres then subject to this lease shall be reduced in proportion that the acreage covered hereby is reduced by said release or releases. 6. Operations Conducted After Expiration of Term. If at the expiration of the primary term oil or gas is not being produced in paying quantities from the lands covered by this lease or lands pooled therewith, but Lessee is then engaged in operations for drilling or completing any well thereon, this lease shall, nevertheless, remain in force so long as Lessee conducts such operations and, if production of oil or gas in paying quantities is obtained, then this lease shall remain in force so long as such production continues in paying quantities in accordance with the terms 2651:LG37 - 4 - City hereof. Provided further, if any production of oil or gas in paying quantities has been obtained in any well drilled by Lessee, and such production should cease from -any cause, this lease shall not terminate if Lessee commences addition- al drilling or reworking operations within ninety (90) days following such cessation and thereafter diligently prose- cutes drilling or reworking operations upon said land with no cessation of more than ninety (90) consecutive days, and if such activity results in the production of oil or gas in paying quantities, then this lease shall continue in force for the duration of such production in accordance with the terms hereof. "Operations for drilling" or "drilling operations" shall mean the actual process of drilling a well in search of oil and /or gas with adequate tools. 7. Use of Surface Restricted; Surface Damages and Restoration. (a) Except as expressly provided herein, without Lessor's written consent, no surface operations shall be conducted upon the leased premises. If Lessor grants such consent, or if Lessor elects to require Lessee to drill an offset well to protect the leased premises from drainage in accordance with the provisions of Paragraph 17 hereof, the following provisions shall govern Lessee's use of the surface: (1) Lessee agrees to hold, save and protect Lessor safe and harmless of and from any and all claims that may arise directly or indirectly from its operations on the leased premises, including, but not limited to claims for personal injury or death, property damage or loss, fires, blowouts, leaks, spills, pollutants, contamination and explosions and other causes. Lessee agrees to keep and maintain in force adequate casualty, liability and property damage insurance against all risk and all hazards with coverage in the amounts specified in Exhibit "B" attached hereto, and to name Lessor as an additional insured thereon and to provide written proof of such coverage at Lessor's request. (2) Lessee shall pay to Lessor reasonable compen- sation for all damages caused by its operations to the surface, roads, trees, landscaping, fences, sidewalks, subsurface fresh water strata, drive- ways, buildings, playground equipment, utility interruptions, parklands, drainage watersheds, shrubbery, parking areas, curbs and gutters or any other property or improvement of Lessor. a. In the event Lessee uses any of Lessor's roadways, parking areas, bridges or improve- ments for access to any drillsite, whether such drillsite is located on the lease 20'51:LG37 - 5 - The advanced service damage payment called for herein shall be computed by multiplying the total number of square feet in the drillsite and access roads times .22556B5. City premises or otherwise, then and in such event, Lessee shall, prior to such use, post a bond in an amount to be set and established by the Lessor and which bond shall be issued and signed by a corporate surety approved by Lessor to indemnify and protect Lessor from any damage of any kind to or destruction of any of Lessor's paved roadway, parking are curb or gutter, bridges, or drainage or utility facilities. The bond amount shall be adequate to insure repair of any such dam- ages, but shall not exceed that required by Section 9 of Ordinance No. 671 of the Code of Ordinances of the City of Baytown as it may from time to time be amended. b. In addition to and not in substitution of the damages provided for herein, and as additional consideration for this lease, Lessee agrees to pay to Lessor the sum of $10,000.00 per surface acre for each acre used by Lessee for its operations hereunder. Prior to the commencement of each drilling operation, Lessee shall cause the drillsite, including access roads, to be surveyed and a plat thereof made, and furnish the survey plat to Lessor a minimum of ten (10) days prior to the commencement of such operations. Payment of said sum by Lessee's check shall be made contemporaneously with the delivery of the survey plat. (3) Lessee agrees that it shall permit Lessor, its agents, attorneys and representatives (at their own risk) access to the drillsites to inspect the facilities and insure compliance herewith and with the terms of this lease and of the Code of Ordinances of the City of Baytown as it is now or may hereafter be constituted. (4) During operations (whether drilling, com- pletion or workover) and thereafter, Lessee shall: a. Fully abide in all respects with the Code of Ordinances of the City of Baytown as it is now or may hereafter be constituted. b. Operate and power any well by electric motors and lubricate and insulate in a manner to reduce and maintain any noise to a reason- able standard. C. Take necessary steps to keep dust to a minimum. d. Restrict all agents, contractors, employ- ees and representatives to the immediate area of the drillsite and advise all of such employees to park and congregate in such restricted area. e. Keep the drillsite and immediate area free of trash and debris. 2651:LG37 - 6 -- City f. Confine the drillsite to the smallest possible area. g. Restore the surface to a clean and even condition, remove all boards and building materials, scrap or waste products and /or chemicals, oil, drilling mud, cement or other materials, to provide a suitable, nontoxic and non- hazardous condition, including removal and replacement of the surface if necessary. h. Employ portable tanks rather than pits for the retention or storage of drilling fluids, salt water, chemicals and the like. i. prevent the overflow or spillage of oil, salt water or chemicals on to the surface of the premises so that vegetation can grow. j. Take steps in restoring the surface to provide for adequate drainage. k. Take such steps as may be necessary to prevent salt water, waste materials, chemi- cals, acid or oil from running or flowing on or across the premises or into creeks, gullies, ditches or ravines that flow across or on the premises, whether by overflow or watershed caused by rain. 1. Use best efforts to prevent agents, contractors, representatives or employees from carrying firearms, alcohol or drugs onto the premises. M. Pay a penalty of $250.00 per day for each day in which cleanup and restoration work called for herein is not completed within thirty (30) days after the workover or completion rig is released. n. Flare no gas except for such limited periods of time as reasonably necessary for testing purposes. o. Keep all areas free of trash and debris and keep trash barrels, if any, emptied and of neat appearance. P. Confine workover operations to the hours of 6 :00 a.m, to 7 :00 p.m. (except for emer- gencies). q. Maintain the locations and wells in a sightly manner with clean stone, gravel or shell, fences and appropriate landscaping. r. Prevent at all times damage to or de- struction of any decorative or hardwood trees or outside the drillsite. 2651:LG37 - 7 - City (b) Nothing in this section shall prevent Lessee from drilling to or through the subsurface of the leased premises by directional techniques. 8. Removal of Property. Except as provided herein, Lessee shall have the right at any time during or within ninety (90) days after the expiration of this lease to remove all property and fixtures placed by Lessee on said land, excluding the right to draw and remove all casing unless specifically authorized in writing by Lessor. Lessee will bury all pipe lines at least 36 inches below the surface, and no well shall be drilled within two hundred (200) feet of any building now on said land without Lessor's consent. 9. Assi nabilit . The rights of either party here- under may be assigned, transferred or farmed out in whole or in part. No change or division in ownership of the land, rentals or royalties, however accomplished, shall operate to enlarge the obligations or diminish the rights of Lessee, and no change or division in such ownership shall be binding on Lessee until thirty (30) days after Lessee shall have been furnished by certified United States Mail at Lessee's principal place of business with a certified copy of the recorded instrument or instruments evidencing same. Except as provided in the next sentence to the contrary, the rights of the Lessee hereunder may not.be assigned in whole or in part without the express written consent of the Lessor hereunder, which consent shall not be unreasonably withheld. Lessee shall have the right to make assignments to its working interest partners without the prior written consent of the Lessor so long as only Lessee is the operator of the wells. Such assignment shall not be effective unless the assignee or assignees thereunder first agree in writing to be bound by the terms and provisions of this lease. In the event this lease shall be owned in whole or in part or in undivided interests by more than four persons or entities, all persons or entities owning working interests hereby agree and designate the registered agent of Lessee as their registered agent for service of process and as their attor- ney -in -fact for the purposes of executing any release of this oil and Gas Lease. In the event of assignment hereof 2651:LG37 - 8 - City in whole or in part, liability for breach of any obligation hereunder shall rest upon the Lessee hereunder as well as any assignees of said lease jointly and severally; provid- ed, however, that Lessee or any assignee of Lessee who is not an owner of a working interest in said lease at the time of such breach shall no longer be liable to Lessor for any such breach if Lessor shall have consented in writing to such assignment. Lessor shall have the right to assure itself of the financial responsibility of any proposed Assignee (except as provided in the second sentence of this Paragraph) and Lessor may require any such proposed Assignee to furnish a bond or other security to ensure its perfor- mance hereunder. 10. Covenant to Reasonably Develop. After the discov- ery of oil or gas in paying quantities on said premises, Lessee shall develop the leased premises as would a rea- sonably prudent operator under the same or similar circumstances. 11. Force Majeure. All express or implied covenants of this lease shall be subject to all Federal and State laws, Executive Orders, Rules or Regulations, and this lease shall not be terminated in whole or in part, nor Lessee held liable in damages for failure to comply therewith, if compliance is prevented by, or failure is the result of, any such valid Law, Order, Rule or Regulation, or if prevented by an Act of God or of the public enemy. If oil or gas is discovered but production or further operations are prevented by any of the causes enumerated in this Paragraph 12, this lease shall be con- sidered producing and shall continue in full force and effect until Lessee is permitted to produce the oil or gas, and as long thereafter as oil or gas actually is produced in paying quantities as herein provided. Lessee agrees to use its best efforts to cure the cause of any delay so as to commence or recommence operations or production as soon as practicable and to promptly inform Lessor as to causes of delay and efforts to cure same. 12. No Warranty of Title. Lessor believes that it is the owner of the mineral estate covered by this lease, but 2651:LG37 - 9 - City it makes no warranty of title to the Lessee. Lessee agrees to give to Lessor a copy of its title opinion as to the ownership of the mineral estate covered by this lease. it is agreed, however, that if Lessor owns or controls a mineral interest in the leased premises less than the entire fee simple estate, then the royalties and other monies to be paid to Lessor shall be reduced proportionately. 13. Notices. Any and all notices, reports or infor- mation required or permitted to be given hereunder shall be deemed to have been delivered and received when delivered in person to the party directed, or five (5) days after being deposited in the United States mail, postage prepaid, certified with return receipt requested, addressed to Lessor or Lessee at their respective addresses stated above. The parties may change their respective addresses for receiving notices hereunder by giving notice of such change in the manner above provided. 14. Use of Eater. Lessee shall have free use of water from said land, except water from Lessor's wells, reser- voirs, and tanks for drilling operations hereunder. Lessee shall not drill or operate water wells or take water in such way as to injure the water wells of Lessor or interfere with or restrict the supply of water to Lessor. Lessee shall not use fresh or potable water for secondary recovery or waterflood operations. In drilling oil or gas wells, Lessee shall advise Lessor of any fresh water bearing formations encountered and shall upon request furnish Lessor any and all logs made by Lessee from the surface of the ground to the bottom of the surface casing. Upon abandonment of any well drilled for oil or gas, Lessee shall offer to turn it over to Lessor, with the hole in suitable condition to be completed as a water well in a fresh water formation. Lessor shall have thirty (30) days after. receipt of such offer in which to elect to take over such well, unless a drilling rig is on location, in which case the period shall be shortened to twenty -four (24) hours. It is understood if Lessor takes over the well and pipe, Lessor will assume all future responsibility for the well above the plugs which shall be set by Lessee at all depths below the deepest fresh water sand. 2651:LG37 - 10 - city 15. Pooling and Unitization. Lessee is hereby granted the right to pool or unitize, as to any one or more forma- tions, the land covered by this lease or any part thereof with any other land, lease, leases, mineral estates or parts thereof for the production of oil, gas and other minerals and their respective constituent products. Units pooled for oil hereunder shall not exceed forty (40) acres each in area and gas units shall not exceed three hundred twenty (320) acres each in area, each plus a tolerance of ten percent (10 %), provided that if any federal or state law, executive order, rule or regulation shall prescribe a spacing pattern for the development of the field or allocate a producing allowable on acreage per well, then any such units may embrace as much additional acreage as may be so prescribed or as may be used in such allocation or allowable. Lessee shall file written unit designations in the county in which the premises are located. Such units may be designated either before or after the completion of wells, and Lessee may reduce, enlarge, reform, modify or dissolve such units at any time prior to the discovery of oil or gas on the pooled acreage, or after discovery of oil or gas at any time subsequent to the cessation of production thereof by filing a written declaration to such effect in the same county. A unit shall be effective on the date set forth in said declaration or if said declaration provides no effective date, then it shall be effective upon filing of the declara- tion. Drilling operations'on or production from any part of the pooled acreage shall be treated as if such drilling operations were upon or such production was from the land described in this lease whether or not the well or wells are located on the leased premises. The entire lease acreage shall be treated for all purposes, except the payment of royalties on production from the pooled unit, as if it were included in such unit. In lieu of the royalties herein provided, Lessor shall receive on production from a unit so pooled only such portion of the royalty stipulated herein as the amount of Lessor's acreage placed in the unit or Les- sor's royalty interest therein on an acreage basis bears to the total acreage pooled in the particular unit involved. Formation of one or more units shall not exhaust Lessee's right to form additional units, and any subsequently formed units need not conform in size, shape, area or stratum with other units. 2651:LG37 - 11 - City Notwithstanding any provisions hereof to the contrary, if a part of the leased premises is included within a pool or proration unit, drilling operations or production from the unitized premises shall maintain this lease only as to that portion of the leased premises within such pool or unit, regardless of whether such unit is located totally within the acreage covered by this lease or not. As to that portion of the leased premises not included in a unit after expiration of the primary term this lease may be maintained only by production or by operation of other provisions herein which pertain to reworking opera- tions, drilling operations or additional drilling operations. Within sixty (60) days after the expiration of the primary term, Lessee agrees to release in recordable form all acreage not held by production in paying quantities or by operations as elsewhere herein provided. Except with Lessor's written consent no pooling is permitted if the well is located on the leased premises. Land covered by this lease shall contribute at least fifty percent (50 %) of any unit created hereunder. 16. Compliance With Regulatory Authorities. The Lessee agrees that it is bound by the rules of both the Texas Railroad Commission and the City of Baytown as they may apply. 17. Offset Obligation. Should a well producing oil and /or gas in paying quantities be completed within 200 feet of the leased premises, or at any distance from the leased premises which is capable of draining oil or gas from the leased premises, and should such production continue for at least nine (9) months, Lessor may, at its sole discretion, elect to require Lessee to drill an offset well on the leased premises to prevent or minimize drainage of oil or gas from the leased premises. The location of such offset well shall be designated by Lessor, but must be as close as possible to the point on the premises nearest the well to be offset which is reasonably suitable for drilling purposes. If Lessor elects not to require the drilling of an offset well, Lessee will have no liability to Lessor for drainage of oil or gas from the premises. The obligation to drill offset well shall not apply where (i) the well to be offset 2651:LG37 - 12 - city is separated from the leased premises by a well, producing from the same horizon, from which Lessor is receiving royal- ties or (ii) there is already on the leased premises a well within 200 feet of the outside boundary thereof which is producing from the same horizon. In the event Lessee shall fail to timely commence operations for the drilling of any required offset well, then and in such event, Lessee shall promptly file of record in the Official Public Records of Real property of Harris County a full release of this lease except as to those areas which are included within units created under the provisions hereof on which there is production or operations, and except for two acres around each well located on the leased premises which is not pooled with other land. 18. Lessor's Representative. Lessor hereby designates the City Manager of the City of Baytown as its agent for purposes of receiving all notices provided for herein. Wherever in this lease consent, authorization or approval of the Lessor is required or permitted, such consent, authori- zation or approval may be granted by the City Manager. The City Manager, may, at his discretion, refer any such matter to the City Council for such consent, authorization or approval. EXECUTED as of the date first above written. ATTEST: City Clerk LESSOR THE CITY OF BAYTOWN, TEXAS By: Name: Title: LESSEE By: Name: Title: 2651:LG37 - 13 - City THE STATE OF TEXAS § COUNTY OF HARRIS § This instrument was acknowledged before me on the day of 1985 by , the of the CITY OF BAYTOWN, TEXAS, a municipal corporation. Notary Public in and for the State of Texas Printed Name of Notary and Expiration Date of Commission THE STATE OF TEXAS § COUNTY OF HARRIS This instrument was acknowledged before me on the day of 1985 by , the of , a Texas corporation, on behalf of said corporation, Notary Public in and for the State of Texas Printed Name of Notary and Expiration Date of Commission 2651:LG37 - 14 - City EXHIBIT "A" A tract of land containing 29.84203 acres, more or less, and being a part of a 31.836 acre tract of land out of said League conveyed by McKinnon Land Company to John M. Kilgore at al by deed dated May 20, 1948, recorded in Volume 1771 at Page 136 of the Deed Records of Harris County, Texas, more particularly described as follows: BEGINNING at an iron pipe situated North 34 deg. 29 min. 36 sec. East a distance of 211.69 feet from the Southwest corner of said 31.836 acre tract, described in the aforesaid deed recorded in Volume 1771 a Page 136 of the Deed Records of Harris County, Texas; THENCE North 81 deg. 29 min. 40 sec. East 365.50 feet to a 1" iron pipe for corner; THENCE North 34 deg. 29 min. 36 sec. East a distance of 201.31 feet to a point for corner, a 1" iron pipe; THENCE North 55 deg. 30 min. 24 sec. West a distance of 267.31 feet to a 1" iron pipe for corner; THENCE North 34 deg. 29 min. 36 sec. East a distance of 263.50 feet to a 1" iron rod for corner in the Southeast right of way line of Market Street Road 100 ft. right of way; THENCE North 60 deg. 09 min. 41 sec. East along the Southeast right of way line of Market Street Road, a distance of 797.41 feet to a point for corner in the South right of way line of Hous ton-North shore Rail- road right of way; THENCE South 69 deg. 49 min. East along the South right of way line of Hous ton-North shore Railroad a distance of 164.33 feet to a 3/4" iron pipe for corner; THENCE South 34 deg. 08 min. 56 sec. East a distance of 855.14 feet to an old grate bar for corner; THENCE South 55 deg. 30 min. 24 sec. West 1002.48 feet to a 1" iron pipe for corner in the North right of_way line of West Main Street, 60 ft. right of way; THENCE along the North right of way line of West Main Street, North 77 deg. 59 min. West 260.64 feet; North 80 deg. 30 min. West 359.50 feet; North 80 deg. 50 min. West 130.32 feet; North 82 deg. 25 min. 39 sec. West 288.35 feet to an iron pipe for corner; THENCE North 34 deg. 29 min. 36 sec. East 211.69 feet to the Place of Beginning; and containing 29.84203 acres of land, more or less. 21651 :LG37 - 15 - C LtY EXHIBIT "B" rriCTI V Arirp Lessee shall obtain and at all times while operations are being carried on hereunder maintain in effect insurance policies as to the following risks: (a) Workmen's Compensation and Employer's Liabil- ity Insurance to fully comply with the laws of the State of Texas and to cover all employees working on the leased premises or leases or in connection therewith. (b) General Liability (Bodily Injury) Insurance with limits of not less than $500,000 for each occurrence; and General Liability (Property Damage) Insurance with limits of $100,000 for each occurrence. (c) Automobile Public Liability Insurance cover- ing all automotive equipment used hereunder with limits of not less than $250,000 for Bodily Injury for each person and $500,000 Bodily Injury for each occurrence and $100,000 for Property Damage. (d) Excess Liability (Umbrella Coverage) of not less than $10,000,000. (e) OEE /Well Control of not less than $5,000,000. 2651 :LG37 - 16 -