SUBLEASE AGREEMENT
THIS LEASE AGREEMENT hereinafter “AGREEMENT”) entered into as of this 7th day of August, 2008 by and between The Lost Creek Land and Mineral Company having an office at 000 Xxxxxxxx Xxxxxx, Xxxxxxx Xxxx, XX 00000, hereinafter referred to as SUBLESSOR; and, Terra Energy Resources, Inc., having an office located at 00 Xxxxxx Xxxxxxxx, Xxxxx 0X, Xxxxx, XX 00000, hereinafter referred to as SUBLESSEE.
WHEREAS, SUBLESSOR has acquired the right to mine and remove all merchantable coal on a tract of property described below by virtue of a Lease Agreement executed on August 14, 2007, and recorded in the County of Xxxxxx Kentucky on August 15, 2007 in Book 71 at Page 601 (hereinafter referred to as the “LEASE’); and
WHEREAS, SUBLESSEE wishes to enter into this AGREEMENT for the right to mine and remove the merchantable coal contained in the Hazard 10 coal seam on said property.
NOW THEREFORE, for the consideration of the sum of Ten Dollars ($10.00) cash in hand paid, receipt of which is hereby acknowledged and in further consideration of the observance by SUBLESSEE of the following covenants, conditions and terms each of which is deemed “of the essence”, SUBLESSOR hereby lease and let unto SUBLESSEE the right to mine and remove aforesaid coal from the Hazard 10 seam on the following described property located in or around the Xxxxxxxx Xxxxxx, Xxxxxx County, Kentucky.
BOUNDRY DESCRIPTION
Being tract 3, 4 & 5 of 150 Acres more or less in Xxxxxxxx Branch, off Big Valley Road in the Hyden West Quadrangle, KY recorded in Deed book 74 page(s) 159 at the Xxxxxx County, Kentucky Recorders office.
TERMS AND CONDITIONS
1. Each and every provision of the LEASE shall be honored and no actions shall be taken which will produce any breach of that LEASE.
2. The term of this AGREEMENT is for a period of Five (5) years from the date herein above first written. In the event that SUBLESSEE is mining and removing said coal from said seam at the end of the 5th year, SUBLESSEE may have an additional Five year term if requested in writing thirty (30) days prior to the end of the original five year term. SUBLESSEE shall have the right to renew this AGREEMENT every five years as long as SUBLESSEE continues to mine merchantable coal.
3. SUBLESSEE agrees to hire SUBLESSOR to mine the coal subleased to SUBLESSEE pursuant to this AGREEMENT and to pay SUBLESSOR the sum of twenty dollars ($20.00) per ton of coal sold for mining said coal.
ROYALTY
SUBLESSOR agrees to pay the 8% royalty due under the LEASE as well as $5.00 per ton of clean coal mined to the SUBLESSOR.
PAYMENT SCHEDULE
SUBLESSEE agrees to pay all of the above payments within 25 days of when it receives payment from any party that it sells the coal to. SUBLESSEE shall make such payments to Xxxxx Xxxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxxxx Xxxx, XX 00000. SUBLESSOR shall be entitled to deduct the royalties due to it and under the LEASE from any funds received by it for the coal mined hereunder and remit the balance after payment of all royalties to SUBLESSE at the address written above.
COVENANTS OF SUBLESSEE
1. SUBLESSEE agrees to pay $50,000.00 as an initial nonrefundable royalty upon execution of this AGREEMENT recoupable as against the $5.00 per ton royalty due to SUBLESSOR from SUBLESSEE.
2. SUBLESSEE covenants and represents that it has full authority to enter into this AGREEMENT and that in doing so SUBLESSEE does not violate any federal, state or other statute, regulation or ordinance nor does it violate any contractual or corporate obligations or limitations in any manner whatsoever.
NOTICE:
TO SUBLESSOR:
Xxxxx X. Xxxxxx, President
The Lost Creek Land and Mineral Company
000 Xxxxxxxx Xxxxxx, Xxxxx XXX
Xxxxxxx Xxxx, XX 00000
(000) 000-0000
(000) 000-0000 (Fax)
xxxxxxx0000@xxx.xxx
TO SUBLESSEE:
Xxxxxx X. Xxxxxxx, President
00 Xxxxxx Xxxxxxxx, Xxxxx 0X
Xxxxx, XX 00000
(000) 000-0000
xxxxxxxxxx@xxxxxxxxx.xxx
BINDING AGREEMENT: This AGREEMENT is binding upon the both parties hereto and their successors in interest, and may be modified only by a further express agreement in writing executed by both parties.
IN WITNESS WHEREOF the Presidents of the Parties, being duly authorized by their respective Boards of Directors, have hereunder executed this AGREEMENT on this 7th day of August, 2008.
THE LOST CREEK LAND AND MINERAL COMPANY, SUBLESSOR
BY: __s/Xxxxx X. Fidler________
Xxxxx X. Xxxxxx
President
BY: __s/Xxxxxx X. Monahan____
Xxxxxx X. Xxxxxxx
President
Before me, Xxxxx X. Xxxxxx, President of The Lost Creek Land and Mineral Company, personally know to me, did appear, swear and aver as to the above on this 7th day of August, 2008.
___s/Xxxxxxxx Guirales________
Notary Public, State of New Jersey
Commission Expires Dec. 27, 2012
Before me, Xxxxxx X. Xxxxxxx, President of Terra Energy Resources, Ltd., personally know to me, did appear, swear and aver as to the above on this 7th day of August, 2008.
__s/Xxxxxxxx Guirales_________
Notary Public, State of New Jersey
Commission Expires Dec. 27, 2012
This Agreement was prepared by the Lost Creek Land and Mineral Company.
_s/Xxxxx X. Fidler_____________
Xxxxx X. Xxxxxx
President