Exhibit 10.2
SURFACE COAL LEASE
This surface lease in made and entered into this the date below by and between
X. X. Xxxxx Xx., single whose address is P. O. Xxx 000, Xxxxxx XX 00000; Xxxx
Xxxxxxxx and Xxxx X. Xxxxxxxx, her husband, whose address is 0000 Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000; Xxxxx Xxxxxx, single, whose address
is 0000 Xxxxxx Xxxx Xxx, Xxxxxx, XX 00000; Xxx Xxxxxx, widow, whose address is
000 Xxxxxx Xxxx Xxxx, Xxxxxxxxx, XX 00000; Xxxx Xxxxxx whose address is 0000
Xxxxxxxx Xx., Xxxxxxxxx, XX 00000; Xxxxxx X. Xxxxxx, single, whose address is
P. O. Xxx 00000, Xxxxxxxxx, XX 00000; Xxxxx X. Xxxxxx, Xx. and _____________
Xxxxxx, his wife whose address is 0000 Xxxxxx Xxx., Xxxxxxxx, XX 00000;
Xxxxxxx X. Xxxxxx and Xxxxxxx Xxxxxx, his wife whose address is 0000 Xxxx
Xxxxx Xxxxx, Xxxxxx, XX 00000; Xxxxxxx Xxxxxx and ___________________, her
husband, whose address is 0000 Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, XX 00000; Xxxxx
X. Xxxxxxxx and Xxxxxxx Xxxxxxxx, her husband whose address is 7562 Xxxxx
Dasheill road, Xxxxxx, Xxxxxxxx 00000; Xxxxxxxx Xxx Urban, widow, whose
address is 0000 Xxxxxxx Xxxxx, Xxx Xxxx Xxxxxx, Xx 00000-0000, hereinafter
referred to as LESSOR and Eastern Consolidated Energy, Inc., a Kentucky
Corporation whose address is 0000 Xxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000,
hereinafter referred to as LESSEE.
RECITALS
WHEREAS: LESSOR is the owner of a certain parcel of surface property located
on the waters of the Tug Fork of the Big Xxxxx River in Xxxxxx County,
Kentucky, which is described in Deed Book 64 at page 301 records of the Xxxxxx
County Court Clerk, Inez, Kentucky, and
WHEREAS: the ownership of the coal underlying said tracts has previously been
severed from the surface ownership and title to said coal is presently held by
the "Xxxx Xxxxxxx Heirs", and
WHEREAS: LESSEE has acquired from the "Xxxx Xxxxxxx Heirs" coal operating
leases, hereinafter referred to as the "Coal Lease" dated February 12, 2002,
and
WHEREAS: the parties hereto desire to grant unto LESSEE certain non-exclusive
mining rights and the right to disturb and use LESSORS surface in connection
with its mining operation conducted pursuant to the "Coal Lease".
WITNESSETH: that for and in consideration of the promise to pay rentals,
royalties and wheelage fees as hereinafter set out, LESSOR hereby grants unto
LESSEE the right to enter in, upon and under said LESSORS' surface for the
purpose of exploring for, and mining and removing the coal located below
drainage and above drainage in, on and underlying the same by the modern
mining methods and the LESSORS hereby give and grant unto LESSEE the
non-exclusive right and privilege to make any and all use of the LESSORS'
surface as may be reasonably necessary in conducting deep mining operations
within the "Coal Lease" or on adjacent property, including, but not limited to
the right to drill holes and make excavations, to erect structure, to use any
stone, gravel, sand, water and other natural resources found thereon, to
deposit and dump soil, waste, spoil and overburden; to drain water onto or
from the same; to furnish electrical power and communication systems thereto;
to establish all types of transportation facilities thereon and thereto; to
transport coal, machinery, equipment, supplies, electrical power and
personnel, and to provide ventilation, drainage, communication and
transportation to and from other lands through, over and under the same; to
maintain and repair all of such facilities placed thereon, and to remove all
coal mined therefrom. Lessors expressly retain and reserve the right, as long
as it does not unreasonably interfere with the rights herein granted, to use
(and to lease or convey to others) the land included within the LESSORS
surface for activities in connection with the mining and removal of all coal
located above or below LESSEES seams leased from the "Xxxx Xxxxxxx Heirs"
within LESSORS surface or upon adjacent or nearby lands.
TO HAVE AND TO HOLD the hereinabove described rights and privileges for and
during the term and any extension of the "Coal Lease".
TERM AND CONDITIONS
1. Limitation of Term: This lease shall run concurrently with the term of
the "Coal Lease" but, in no event, shall this grant extend more than one
hundred and twenty (120) days after mining has ceased, and all required
reclamation and restoration work has been completed by LESSEE and LESSEES'
reclamation bond has been released by the applicable governmental authorities.
Upon termination, LESSEE shall remove all buildings, equipment, ponds, scales,
tipples and other items placed upon LESSOR'S surface by LESSEE unless LESSOR
expressly agrees in writing to allow LESSOR to abandon said items.
2. Limitation of Use: Wheelage of "Foreign Coal"; LESSEE shall pay to
LESSOR the sum of Fifteen Cents ($00.15) per net ton of two thousand (2,000)
pounds for each ton of foreign clean coal with LESSEE shall bring upon the
herein leased surface, for the purpose of "reshipping". Foreign coal is
defined as that coal which does not reach the herein leased surface through
LESSEES' drift mouth.
3. Royalty and Wheelage Fees: LESSEE shall pay unto LESSOR, as rent for the
rights granted herein, the following royalty and wheelage fees:
(a) A royalty equal to Fifteen Cents ($00.15) per net ton of two thousand
(2,000) pounds of clean coal mined and removed through LESSEES' drift mouth
and
(a)[1] LESSEE shall pay a royalty of Fifteen Cents ($00.15) per net ton of
two thousand (2,000) pounds of clean coal which is mined above drainage on
LESSORS surface.
(b) All royalty and wheelage fees shall be paid on or before the 25th day of
the month following the calendar month in which the activity giving rise to
such obligation (i.e., mining or hauling) occurred.
4. Minimum Rentals: The parties agree that LESSEE shall pay unto LESSOR an
annual minimum rental fee of Six Thousand Dollars ($6,000.00), payable monthly
in installment payments of Five Hundred Dollars ($500.00). Minimum rental
payments shall commence on March 25, 2002 and shall be payable monthly on the
twenty fifth (25th) day of each month thereafter.
If Lessee shall not mine or produce from the Leased Premises in any lease year
as much coal as will, at the tonnage royalty payable during such year, produce
a sum equal to the annual minimum rental and renewal payment, then and in that
event LESSEE shall have the right and privilege, in any of the succeeding
lease years, of mining free of tonnage royalty such amount of coal over and
above the amount required to yield the annual minimum rental payment for such
year or years as will, at the tonnage royalty rate set forth above, be equal
to such "deficiency"; provided, however, no coal shall be mined in any year
free of tonnage royalty or on account of the "deficiency" in any preceding
year until the LESSEE shall have mined during the then current year an amount
of coal, which, at the applicable tonnage rental rate, shall be equal to the
annual minimum royalty for said current year. No payments, by way of tonnage
royalty in excess of the annual minimum royalty in any one year shall be
credited against any "deficiency" in any subsequent year.
5. Reclamation and Restoration: Following such time as its mining operations
shall permanently cease, LESSEE shall reclaim and restore the LESSORS surface
to the full extent which may then be required by any applicable local, state
or federal regulations or law, and in a manner satisfactory to LESSORS, heir
heirs or assigns.
6. Indemnification: Lessee agrees to indemnify Lessor from and against any
and all liabilities, claims, debts, demands, expenses and causes of action
relating to injuries to, or death of, persons and damage to, or destruction of
property, real, personal and mixed, asserted, claimed or alleged by:
1. any person, firm, corporation or other business organization,
2. any officer, employee, xxxxxxx, servant or agent of Lessee,
3. any contractor or subcontractor of Lessee, or any officer, xxxxxxx,
servant or agent of any such contractor or subcontractor,
4. any contractor or subcontractor of Lessor or by any officer, employee,
xxxxxxx, servant or agent of any such contractor or subcontractor, and
5. any employee, agent or servant of Lessor, arising from Lessee's operation
and activities under this Lease, including the use of any part of the Premises
in connection with Lessee's mining and removal of coal and the exercise of its
rights hereunder, to the extent the same results from, is caused by, or is
alleged to have resulted from or have been caused by, directly or otherwise,
of:
(a) Lessee, its employees, workmen, servants, or agents; and
(b) Lessee's contractors and subcontractors and their respective employee's
workmen, servants or agents. Lessee shall acquire and maintain comprehensive
public and automobile liability insurance policies.
LESSEE shall, during the course of its operations on the LESSORS surface,
preserve or replace any permanent fences and shall give prior notice to LESSOR
of the direction of it's operations to allow LESSOR to remove all standing
timber or structures within twenty (20) days after receipt of notice, LESSEE
shall be free to proceed with its operations without liability for timber or
structures lost or damaged.
5. Taxes: LESSEE covenants and agrees to pay when due, all taxes, levies or
other assessments made upon or against any and all improvements, personal
property, machinery and equipment placed upon LESSORS surface by LESSEE and in
the event operations hereunder by the LESSEE result in the imposition of any
additional real property (ad valorem) taxes on LESSORS surface, to reimburse
LESSORS promptly upon receipt of appropriate statement therefor.
6. Default and Termination: Upon failure of LESSEE to pay any royalty,
rental or wheelage fee when due or if LESSEE shall be in default or breach of
any term or condition of this Lease, LESSOR shall have the right to terminate
this Lease by giving written notice of such termination to LESSEE, providing
that such late payment is not made or such default or breach is not cured
within ten (10) days after such notice is given. At the expiration or
termination of this Lease, LESSEE shall have ninety (90) days to remove from
LESSORS surface any and all equipment, machinery, building and other
structures placed thereon by LESSEE. Any property not so removed by LESSEE
within the time provided shall become the property of LESSOR at their
election.
7. Notice and Payments: The giving of any notice to or the making of any
demand on the LESSEE under the provisions herein shall be sufficient if made
in writing addressed to LESSEE at: 0000 Xxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000
or such other address as LESSEE may hereafter, in writing, designate, and
mailed certified, return receipt requested, Unites States mail. The giving of
any notice to or the making of any demand on LESSOR under the provisions
herein shall be sufficient if made in writing, addressed as shown on the list
attached as Exhibit A, or such other persons or addresses as LESSORS may
hereafter in writing designate, and mailed certified, return receipt
requested, United States Mail.
8. Inspection & Accounting: LESSEE agrees to keep accurate and correct
books of account and records showing all coal mined and all coal processed,
marketed and shipped from the premises, together with the correct weights
thereof, to which books and records LESSOR, or its duly authorized agents,
shall at all reasonable times, have convenient access for the purpose of
examination and for verification, and LESSOR, for like purposes, is hereby
authorized by LESSEE to demand and require, of any railroad or other carrier
transporting the product of said premises, an inspection of the books and
records of said carrier showing the detailed weight and quantity of all such
products shipped by LESSEE and all pertinent information relating thereto.
Said carrier, and its agents, are hereby expressly authorized and requested by
LESSEE to show to LESSOR, or its duly authorized agent, all such records when
requested and to furnish all such information upon request.
9. Previous Lease: It is agreed that this surface has previously been leased
NON-EXCLUSIVELY to Tug Valley Land Development, LLC of P. O. Xxx 0000,
Xxxxxxx, XX 00000 on or about the 20th day of February 1999. It is agreed
that the term of that agreement was congruent with a mineral lease dated
February 19, 1999 which has been deemed "Expired" by the Lessor's therein.
It is agreed that LESSEE herein takes this surface agreement at his own risk
BUT LESSOR herein does, by this agreement, extend unto LESSEE all rights
retained by LESSOR in that agreement which state:
"Lessors expressly retain and reserve the right, as long at it does not
unreasonably interfere with the rights herein granted, to use (and to lease or
convey to others) the land included within the Lessors surface for activities
in connection with the mining and removal of all coal located above or below
Lessees' seams leased from the "Xxxx Xxxxxxx Heirs" within Lessors Surface or
upon adjacent or nearby lands."
10. Lease Execution: This lease may be exeucted in several counterparts and
each such instrument shall be deemed to be an original document if executed by
one or more Lessor and by Lessee.
Witness our hand this the 12th day of August, 2002
Eastern Consolidated Energy Inc.
/s/Xxxxx Xxxx
Xxxxx Xxxx, Its Leasing Agent
LESSORS:
/s/ X.X. Xxxxx
/s/ Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxx, Xx.
/s/ Xxxxxxx Xxxxxx
/s/ Xxx Xxxxxx
/s/ Xxxx Xxxxxxxx
/s/ Xxxx Xxxxxx
/s/ Xxxxx Xxxxxx
/s/ Xxxxxxxx Xxx Urban
/s/ Xxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxx
(All signatures notarized)
