Exhibit 10.5
LEASE
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(Holden No.25)
THIS LEASE, Made as of January 31, 1994, between POCAHONTAS LAND
CORPORATION, a corporation of Virginia, Lessor, and ARK LAND COMPANY, a
corporation of Delaware, Lessee;
W I T N E S S E T H:
- - - - - - - - - -
IN consideration of the sum of Ten Dollars ($10.00) cash, receipt of which
is acknowledged, and the performance and observance of the terms and provisions
hereinafter set forth to be performed and observed by Lessee, and reserving as
rent the royalties, rentals and all other payments hereinafter provided for,
Lessor hereby leases to Lessee, for the period of ten (10) years from the date
hereof through January 30, 2004, subject to early termination as hereinafter
provided or to extension for additional ten (10) year periods until all the coal
which can be economically mined and removed has been mined and removed and the
reclamation thereof has been finally approved by the state and/or federal agency
or agencies which now have or shall hereafter have jurisdiction or control of
such mining operations, and all the bonds therefor have been fully released, all
as hereinafter provided in ARTICLE XX hereof, the sole and exclusive right of
mining and removing, by any method of mining, various seams of coal upon and
within certain parcels or areas of land containing in the aggregate 8,364.18
acres, more or less, being more fully described as follows:
Situated partly in Island Creek Magisterial District of Xxxxx County, West
Virginia, on the waters of Right Fork, Xxxxxxx, Cow and Pine Creeks of Island
Creek; partly in Xxx Magisterial District of Xxxxx County, West Virginia, on the
waters of Rockhouse Fork, South Branch, Spring and Big South Branches of same,
and Middle Fork of Elk Creek; and partly in Magnolia Magisterial District of
said Xxxxx County, West Virginia, on the waters of Pigeon Creek and Grant,
Little Laurel and Oldfield Branches of same.
Said 8,364.18 acres, more or less, are more fully shown on colored map
attached hereunto and made a part hereof and marked in the lower right-hand
corner thereof: "Pocahontas Land Corporation, Bluefield, West Virginia,
Xx. 0000-X, Xxx. 00, 0000, X.X.X."
Said 8,364.18 acres, more or less, are made up of different tracts or
parcels of land in which Pocahontas Land Corporation owns various seams of coal
and which for convenience of designation are as follows (areas given being by
estimation only and are not to be construed as a warranty of acreage):
TABLE OF AREA
In Island Creek Magisterial District of Xxxxx County, West Virginia
Tract or Parcel Area in Acres
out of which area is taken (Coal Only)
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Pt. united Xxxxxxx Xx. Xx. 000 - Xxxxxxx Xxxxxxxxxx 230.00
Pt. United Xxxxxxx Xx. No. 321 - Xxxxx Xxxxx, et al 164.24
Pt. United Xxxxxxx Xx. No. 322 - Xxxxx Xxxxx, et al 69.80
Pt. United Xxxxxxx Xx. No. 381 - Xxxxx X. Xxxxxxx 16.66
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Total - Island Creek Magisterial District 480.70
TABLE OF AREA
In Xxx Magisterial District of Xxxxx County, West Virginia
Tract or Parcel Area in Acres
out of which area is taken (Coal Only)
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Pt. United Xxxxxxx Xx. No. 32 - Xxxxxx X. Xxxxxx 1,980.17
Pt. United Xxxxxxx Xx. No. 35 - Xxxxxx X. Xxxxxx 32.50
Pt. United Xxxxxxx Xx. No. 89 - Xxxxxxx Xxxxxxxxxx 361.56
Pt. United Xxxxxxx Xx. Xx. 00-0 - Xxxxxxx Xxxxxxxxxx 20.00
Pt. United Xxxxxxx Xx. Xx. 00-0 - Xxxxxxx Xxxxxxxxxx 47.00
Pt. United Xxxxxxx Xx. No. 93 - Xxxxxxx Xxxxxxxxxx 273.50
Pt. United Xxxxxxx Xx. Xx. 000 - Xxxxxxx Xxxxxxxxxx 151.00
Pt. United Xxxxxxx Xx. Xx. 000 - Xxxxxxx Xxxxxxxxxx 1,775.56
Pt. United Xxxxxxx Xx. No. 179 - X. X. Xxxxxxxxx 133.36
Pt. United Xxxxxxx Xx. No. 190 - X. X. Xxxxxxxxx 26.96
Pt. United Xxxxxxx Xx. No. 191 - X. X. Xxxxxxxxx 15.57
Pt. United Xxxxxxx Xx. No. 207 - Xxxxxxx X. Xxxxxxxx, et al 79.75
Pt. United Xxxxxxx Xx. No. 284 - Island Creek Min. Co. 84.90
Pt. United Xxxxxxx Xx. No. 322 - Xxxxx Xxxxx, et al 13.98
Pt. United Xxxxxxx Xx. Nos. 347 & 348 - Red Jacket Coal Co. 792.35
Pt. United Xxxxxxx Xx. Xx. 00 - Xxxxxx Xxxxx
(Xxxx xx Xxxx Xx. 00X) 220.33
Pt. United Xxxxxxx Xx. Xx. 00 - Xxxxxx X. Xxxxxx
(Xxxx xx Xxxx Xx. 00X) 139.32
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Pt. United Xxxxxxx Xx. No. 20 - Xxxxxx X. Xxxxxx 27.55
(Area of Mine No. 14B)
Pt. United Xxxxxxx Xx. No. 21 - Xxxxxx X. Xxxxxx 74.58
(Area of Mine No. 14B) -----
Total - Xxx Magisterial District 6,249.94
TABLE OF AREA
In Magnolia Magisterial District of Xxxxx County, West Virginia
Tract or Parcel Area in Acres
out of which area is taken (Coal Only)
-------------------------- ---------
Pt. United Xxxxxxx Xx. No. 31 - Island Creek Min. Co. - Xxxxx Xxxxxx 96.00
Pt. United Xxxxxxx Xx. Xx. 00 - Xxxxxx Xxxxx Xxx. Xx. - Xx. 4 48.29
Pt. United Xxxxxxx Xx. No. 32 - Xxxxxx X. Xxxxxx 904.58
Pt. United Xxxxxxx Xx. No. 37 - Xxxxxx Xxxxx 140.89
Pt. United Xxxxxxx Xx. No. 41 - R. T. W. Duke 119.78
Pt. United Xxxxxxx Xx. No. 42-a - Xxxxxx X. Xxxxxx 50.00
Pt. United Xxxxxxx Xx. No. 42-b - Xxxxxx X. Xxxxxx 42.00
Pt. United Xxxxxxx Xx. No. 359 - Island Creek Min. Co. 232.00
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Total - Magnolia Magisterial District 1,633.54
RECAPITULATION
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Xxxxx County - Island Creek Magisterial District 480.70
Xxxxx County - Xxx Magisterial District 6,249.94
Xxxxx County - Magnolia Magisterial District 1,633.54
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Total area to be included in lease 8,364.18
Said 8,364.18 acres, more or less, are further made up of areas in which
various seams of coal are conveyed as follows:
Area No. 1: All seams of coal, except the Lower Cedar Grove Seam, in the
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5,572.43 acres, more or less, which are shown in unbordered yellow color at Area
No. 1 on said attached whiteprint map.
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Area No. 2: All seams of coal, except the Upper Cedar Grove Seam and Lower
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Cedar Grove Seam in the 820.60 acres, more or less, shown in yellow color with
orange border as Area No. 2 on said attached whiteprint map.
Area No. 3: All seams of coal, except the Xxxxxxx Seam and the Lower Cedar
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Grove Seam, in the 957.00 acres, more or less, shown in yellow color with
magenta border as Area No. 3 on said attached whiteprint map.
Area No. 4: All seams of coal in the 504.37 acres, more or less, shown in
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yellow color with blue border as Area No. 4 on said attached whiteprint map.
Area No. 5: All seams of coal, except the Lower Cedar Grove Seam, in the
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461.78 acres, more or less, shown in yellow color with green border as Area
No. 5 on said attached whiteprint map.
Area No. 6: The Coalburg Seam of coal and seams of coal above the Coalburg
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Seam in 48.00 acres, more or less, shown in yellow color with xxxxx border as
Area No. 6 on said attached whiteprint map.
THE RIGHTS HEREIN LEASED are limited to such as Lessor possesses and has
the lawful right to lease and to such as Lessor owns under the deeds covering
said properties or said coal and appurtenant rights, and it is agreed that
Lessor does not warrant its title to the leased properties or any portion
thereof. However, upon the assertion of an adverse claim to any portion of the
leased properties, Lessor shall render all assistance possible to Lessee in
defense against such adverse claim. It is further agreed that, if a court decree
(after exhaustion of appeals) or by agreement of the parties hereto it is
determined that the adverse claim is valid and such adverse claim is of such
nature that Lessor does not have sufficient title to such portion of said leased
properties to permit Lessee's mining of the coal therein, then, to the extent
the Lessee has paid royalties to Lessor on coal mined in such portion, such
royalties shall be refunded to Lessee.
EXCEPTING AND RESERVING, HOWEVER, from this lease, and to the Lessor all
seams of coal other than those herein leased and the entire ownership of the
properties herein described, and all of the oil, gas and other minerals and
mineral substances, timber, and other products of every kind and description
therein and thereon, together with the right to mine, remove and take away the
entire amount and body thereof, for all purposes other than those for which this
lease is made; PROVIDED, HOWEVER, that exercise of the ownership and rights so
excepted and reserved shall not unreasonably interfere with the requirements,
convenience and safety of operations of Lessee.
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Lessee agrees to conduct all operations hereunder in compliance in all
material respects with all applicable laws of the State of West Virginia and the
United States of America now existing or hereafter enacted, and all rules and
regulations promulgated thereunder.
IT IS UNDERSTOOD, however, that the properties included in this lease are
in an area committed to the mining and removal of coal and other minerals and
that coal mining operations and other enterprises have been and are now being
conducted by a lessee or lessees of Lessor in, upon and under the surface of the
properties above described and in the general vicinity thereof. It is the
intention hereof that said properties are hereby leased to Lessee, AS IS, IN
THEIR PRESENT CONDITION and subject to the rights of others as hereinabove set
forth.
THIS LEASE is subject to the following terms and provisions which Lessee
covenants with Lessor to perform and observe, viz:
ARTICLE I
COVENANT TO DEVELOP: PERMITTING
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Section 1.1. Development. Lessee shall at all times diligently and
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energetically open, develop and maintain operations within the leased properties
in order that so long as Lessee can mine the leased coat at a reasonable profit
its capacity for mining, preparing and shipping coal shall be sufficient to meet
the demands and requirements of the market to the extent that the same can
reasonably be done hereunder; and in the event of any suspension of operation
expected to exceed thirty (30) days, Lessee shall report promptly in writing to
Lessor any suspension of operations, reasons therefor and expected duration
thereof.
Section 1.2. Permitting. Lessee agrees that upon execution of this lease,
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it or its permitted sublessees will promptly commence the necessary procedures
with the appropriate state and/or federal agencies having jurisdiction of such
mining operations and obtain and maintain in effect the requisite permit or
permits for the conduct of such mining operations. Lessee also agrees that it or
its permitted sublessees will continue with subsequent required permitting
procedures with said state and/or federal agencies to the end that the mining
operations contemplated under this lease can be conducted continuously, insofar
as possible under applicable laws, and the regulations promulgated thereunder,
until all the coal herein leased, which can be mined and removed by such
approved mining methods has been mined and removed. In the event this lease
shall be terminated or canceled for any reason prior to completion of operations
hereunder and Lessee shall have obtained the requisite permit or permits for the
conduct of such mining operations from such agencies, then Lessee hereby
covenants and agrees that it shall promptly, upon request of Lessor, assign
and/or otherwise
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transfer said permit or permits, pursuant to W. Va. Code 22A-3-19 et seq., to
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such other party or parties as Lessor may designate.
ARTICLE II
PRODUCTION ROYALTY
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Section 2.1. Amount of Royalty. Lessee shall pay to Lessor as rent a
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royalty of One Dollar and Seventy-five Cents ($1.75) per net ton of 2,000 pounds
of coal mined hereunder or eight percent (8%) of the average gross selling price
per net ton, as hereinafter defined, whichever is greater, for coal mined
hereunder, calculated and reported on a monthly basis.
Section 2.2. Reporting of Quantity of Coal Mined. Lessee shall, on or
-----------------------------------
before the twentieth (20th) day of each calendar month, furnish to Lessor a
written report, certified as to correctness by such agent as Lessee may
designate or such agent of a permitted sublessee having personal knowledge of
the facts, showing the quantity of coal mined hereunder during the immediately
preceding calendar month, using as a basis railroad weights of all coal shipped
by railroad and ascertaining the quantity of all other coal mined hereunder in a
manner satisfactory to the General Manager of Lessor, or such person or persons
as the General Manager shall designate (hereinafter "General Manager"); and
Lessee shall comply with any further rules and regulations for the accurate
ascertainment and report of the quantity of coal mined hereunder and the selling
price thereof that may reasonably be prescribed by said General Manager.
In the event Lessee shall mix coal produced hereunder with other coal prior
to shipment, Lessee shall comply with such reasonable rules and regulations as
the General Manager of Lessor shall from time to time prescribe for the purpose
of ascertaining with reasonable accuracy the quantity of coal produced
hereunder.
Section 2.3. Date of Payment of Royalty: Interest. On or before the
------------------------------------
twentieth (20th) day of each calendar month, Lessee shall pay Lessor for the
coal mined hereunder during the immediately preceding calendar month at the
higher rate set forth in Section 2.1 above. Lessee will pay interest to Lessor
on any royalty amounts due and not paid by the 30th day of the calendar month at
the effective prime interest rate as then charged by Xxxxxx Guaranty Trust
Company of New York and calculated daily from the date said amounts are due.
Section 2.4. Calculation of Royalty: Gross Selling Price Defined. For the
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purpose of calculating the royalty provided for above, the term "gross selling
price" as used herein shall mean the actual price paid for coal sold to a bona
fide purchaser, assuming the sale occurs, f.o.b. the initial outbound loading
point after preparation (provided that "preparation" shall not include merely
crushing or sizing of coal), if any, or, if not first transported to a
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preparation facility, the actual price paid for the coal, assuming the sale
occurs, f.o.b. the outbound loading point on the leasehold, less any sales tax
imposed thereon, but without deduction for selling commissions to affiliated
companies, advertising, credit losses, or other expenses, but with deduction for
discounts or allowances actually allowed to arms-length wholesalers; provided,
however, that if Lessor gives notice to Lessee in writing that, in Lessor's
reasonable judgment, a particular purchaser is not a bona fide purchaser, Lessor
may elect to substitute for the gross selling price paid by that purchaser the
prevailing market price of such coal as reasonably determined by Lessor and
based upon recent sales by Lessee and others of coal of comparable quality to
bona fide purchasers; provided further, that for any coal consumed on or off the
leased premises without sale by Lessee the gross selling price for the purpose
of computing the royalty shall be the prevailing market price, as determined
above, of such coal at the time of shipment from the leased premises or, if used
on the leased premises, at the time of use.
The term "bona fide purchaser" as used herein shall mean a purchaser who
pays valuable consideration in good faith without intending to take unfair
advantage of any third parties, including Lessor, but in no case shall that
phrase include persons or parties affiliated with Lessee, either directly or
through any joint ownership.
Section 2.5. Unmined or Lost Coal. Tonnage royalty which may be owed by
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Lessee for coal in place left unmined or rendered unmineable or that may be lost
or destroyed on the leased properties as provided in Section 7.1 hereof shall be
based on the prevailing market price, as determined above, of such coal, if
properly sized and cleaned, at the time when such coal should have been mined or
at the time when such coal is lost or destroyed, as may be appropriate under the
terms of this lease.
ARTICLE III
ADVANCE MINIMUM ANNUAL RENTAL
-----------------------------
Section 3.1. Amount and Payment: Interest: Lessee shall pay to Lessor, as
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advance minimum annual rental on account of coal mined or to be mined hereunder,
the sum of One Million Two Hundred Thousand Dollars ($1,200,000.00) for calendar
year 1994, payable in equal quarterly installments of Three Hundred Thousand
Dollars ($300,000.00), provided that minimum annual rental for 1994 shall be
prorated from the date of this lease. For calendar year 1995 and each calendar
year thereafter under this lease and extensions thereof, the advance minimum
annual rental shall be One Million Two Hundred Thousand Dollars ($1,200,000.00).
Payment of advance minimum annual rental shall be made quarterly on or before
January 1st, April 1st, July 1st and October 1st of each calendar year, except
that advance minimum annual rental for the first quarter of 1994 shall be paid
upon execution of this lease.
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Lessee will pay interest to Lessor on the amount of any advance minimum
annual rental due and not paid within ten (10) days after the date such rental
is due at the effective prime interest rate as. then charged by Xxxxxx Guaranty
Trust Company of New York and calculated daily from the date said amount is due.
Section 3.2. Recoupment. Each payment of advance minimum annual rental
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hereunder shall be applied as a credit, until recouped, as follows: (a) first,
against production royalties payable for mining performed under this lease
during the calendar year for which such payment of minimum annual rental is
made; (b) secondly, against production royalties payable for mining performed in
that same calendar year under the lease of even date herewith to lessee from
Pocahontas Development Corporation, a Kentucky corporation, and wholly-owned
subsidiary of Lessor, pertaining to the property in Xxxxx, Xxxxxxx and Xxxxxx
Counties, Kentucky known as Xxxxxx ("Xxxxxx Reserves") and not otherwise
recoupable as a credit against royalties under the terms of that lease;
(c) thirdly, against production royalties payable for mining performed under
this lease in the two calendar years following the calendar year for which the
minimum annual rental is paid and not otherwise recoupable as a credit against
production royalties under the terms hereof or under the terms of the aforesaid
lease to Lessee of the Xxxxxx Reserves; and (d) lastly, against production
royalties payable for mining performed under the aforesaid lease to Lessee of
the Xxxxxx Reserves in the two calendar years following the calendar year for
which the minimum annual rental is paid and not otherwise recoupable as a credit
against production royalties under the terms of that lease or under the terms of
this lease. The provisions of this Section 3.2 will not be construed to permit
more than one credit for any payment of advance minimum annual rental against
any production royalties due Lessor under this lease or under the aforesaid
lease to Lessee of the Xxxxxx Reserves.
Section 3.3. Failure to Perform; Excuse. In the event of unavoidable
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interruption of or delay in its operations in any calendar year of this lease,
due to strikes, accidents, inadequate car supply, or causes of like character
not within the control of Lessee, at the end of that calendar year Lessee shall
be reimbursed that percentage of its payment of advance minimum annual rental
which is equal to the percentage of that year in which Lessee's operations are
delayed because of any such causes. However, the parties hereto recognize and
agree that the potential for depressed markets for the sale of coal or coal
products, whether such conditions are regional in nature or more widespread, and
increased production costs are business risks contemplated by operators and
miners and sellers of coal, and, therefore, neither the existence of a depressed
market for the sale of coal or coal products, nor increased or high costs of
mining coal experienced by Lessee, nor any combination thereof shall constitute
grounds for or be deemed to be interpreted as a basis for release from payment
of advance minimum annual rental under Section 3.1 hereof.
Section 3.4. Modification of Minimum Rental. Whenever, in the good faith
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opinion of the General Manager of Lessor and such agent as Lessee may designate,
the quantity of unmined coal remaining which Lessee is or has become obligated
to mine has been reduced
8
or depleted so as to justify a modification, reduction, or suspension of advance
minimum annual rental, such advance minimum annual rental may be modified,
reduced, or suspended upon the mutual agreement of the General Manager of Lessor
and such agent as Lessee may designate, and Lessee shall mine the same at the
rate of tonnage royalty provided for in ARTICLE II above.
ARTICLE IV
LESSEE'S RECORDS; INSPECTION
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4.1 Lessee shall keep books of account at its corporate headquarters or at
such other place as Lessor may approve in writing, to ascertain: the quantity of
coal mined; the quantity of coal used at the mines; the quantity of coal
shipped; and the selling prices obtained for all coal mined hereunder. Said
books shall be open at all reasonable times for inspection by Lessor or its
agents for the purpose of comparing and verifying the reports rendered by Lessee
under ARTICLE II hereof or for obtaining information as to the quantity of coal
mined, the quantity of coal used at the mines, the quantity of coal shipped and
the selling prices obtained.
4.2 Upon request, supporting documentation pertaining to said books of
account, such as coal sales contracts, purchase contracts, invoices, lessee work
papers and any other supporting documentation considered necessary to Lessor's
inspection hereunder shall be made available to Lessor in order to confirm the
information contained in the books of account described in the preceding
Section 4.1. The contents of such documentation shall be treated as confidential
information by Lessor and shall not be disclosed to any person or entity not a
party to this lease, except as provided by relevant state or federal laws.
ARTICLE V
ENVIRONMENTAL LIABILITIES
-------------------------
Section 5.1. Lessee shall be responsible for any pollution of air, lands or
water resulting from coal and coal products, slack, dirt, slate and other waste
materials deposited by it on the properties above described, or arising or
resulting from Lessee's operations hereunder, and Lessee shall indemnify and
save harmless Lessor, its officers, agents and employees, from all claims,
demands, prosecutions, fines, and judgments against Lessor, its officers, agents
or employees, by reason of any such pollution and shall pay all costs and
expenses incurred by Lessor, its officers, agents or employees, in defending any
such claims, demands and
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prosecutions. Upon request of Lessor, Lessee shall defend Lessor against any and
all such claims at Lessee's expense.
ARTICLE VI
LESSEE'S MINING OPERATIONS
--------------------------
Lessee covenants that it will use due care and diligence to protect the
properties and coal reserves included herein from waste, injury or damage and to
that end Lessee shall conduct its operations hereunder in accordance with the
terms of Sections 6.1 and 6.2 hereof.
Section 6.1. Mining Practices and Compliance with Laws. Lessee shall, in
-----------------------------------------
accordance with plans of mining and descriptions thereof approved as provided
for in Section 6.2 below, but subject to the requirements of the State of West
Virginia and federal law pertaining to the conduct of the mining of coal, mine
the coal within the leased properties in an effectual, workmanlike and proper
manner, and so that said mining shall not unreasonably interfere with the proper
exercise of the rights hereinbefore excepted and reserved to Lessor; and, Lessee
shall comply in all material respects with the laws of the State of West
Virginia and the United States of America now existing or hereafter enacted, and
all the rules and regulations promulgated thereunder, relating to the conduct of
operations for the mining of coal.
Section 6.2. Approval of Mining Plans. To protect the properties and coal
------------------------
reserves included herein from waste, injury or damage, Lessee shall mine the
coal within the leased properties in accordance with plans of mining and
reclamation and descriptions thereof which shall be submitted by Lessee to
Lessor. Such mining and reclamation shall not be initiated until such plans and
descriptions have been approved in writing by the General Manager of Lessor.
Upon Lessor's request, Lessee shall furnish Lessor: (i) a copy of Lessee's
application for the mining permit, including the reclamation plan required by
the State of West Virginia, with the maps and drawings attached thereto, and
(ii) a statement of the post mining land use which is proposed to be made of the
leased properties following reclamation obligations, for approval by said
General Manager, prior to its being filed with the governmental agencies
responsible for issuance of such mining permits. Lessor shall use due diligence
in reviewing such application and plans of mining and reclamation and
descriptions thereof, and Lessor shall not withhold notice of approval or
disapproval for an unreasonable length of time. Notwithstanding the foregoing
provisions of this Section 6.2, Lessor shall not require a higher post-mining
land use and condition than the pre-mining land use and condition, unless
otherwise agreed between Lessor and Lessee. No change in any such plans or
descriptions so approved by said General Manager shall be made without such
change being approved in advance by said General Manager, or except as required
by such regulatory agencies. Lessor agrees to consent to any reasonable post-
mining land use as requested by Lessee. To facilitate
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mining the leased properties, Lessor hereby waives its right to require Lessee
to maintain barrier pillars.
ARTICLE VII
LESSEE'S LIABILITY FOR NONCOMPLIANCE
------------------------------------
Section 7.1. If at any time Lessee shall not conduct operations as provided
in ARTICLE VI hereof and loss of coal which Lessee is obligated to mine or loss
of other coal of Lessor may thereby result, the General Manager shall give
notice to Lessee of any violations of Article VI and, in the event of a failure
of Lessee to cure such violation within ten (10) days of receipt of written
notice from Lessor specifying such violation, Lessor may seek arbitration in
accordance with the terms of this Lease. Lessee shall pay to Lessor the full
amount of royalty, at the rate provided in ARTICLE II hereof, on the tonnage of
coal determined to be lost which Lessee is obligated to mine or that may remain
unmined by reason of failure of Lessee to conduct operations as required by said
ARTICLE VI, in the same manner as if said coal had been mined and removed; and
Lessee shall compensate Lessor for the full amount of any other coal of Lessor
that is lost by reason of the failure of Lessee to conduct operations as
required by said ARTICLE VI.
ARTICLE VIII
ENGINEERING REQUIREMENTS; AUTHORITY OF GENERAL MANAGER OF
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LESSOR; SURVEY DATA; PRESERVATION OF SURVEY CONTROL
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(TRIANGULATION) STATIONS
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Section 8.1. Engineering Requirements: Authority of General Manager of
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Lessor. Lessee shall employ a competent engineer to make surveys, determine
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elevations, prepare plans and maps of the mine workings, and Lessee shall
prepare and keep up, on a scale to the approval of the General Manager of
Lessor, a map which shall be updated every three (3) months and shall show
accurately and completely, the boundaries of the lands included herein, the
locations of all railway tracks, rights-of-way, streams, roads, buildings,
structures and mine workings on or under said lands, together with elevations on
sea level datum on the mine workings, and any additional information that can be
practically obtained and that may be necessary to the safe and proper conduct of
the mining operations, or that may be reasonably requested by the General
Manager of Lessor. The size of said map shall be in accordance with standards to
be prescribed by said General Manager and a reproducible tracing of said map,
which shall be the property of Lessor, shall be sent to said General Manager on
or before the twentieth (20th) day of January, April, July and October of each
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year, properly posted in accordance herewith for the three (3) months ending on
the last day of the calendar month immediately preceding; and said General
Manager shall have the privilege of keeping said tracing a sufficient time to
obtain therefrom such information as he may desire before returning the said
tracing to Lessee for each subsequent posting; and Lessor and its agents shall
at all times have access to the maps, plans and tracings of Lessee, and may take
therefrom copies of such portions as may be desired.
Section 8.2. Survey Data: Preservation of Survey Control (Triangulation)
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Stations. Upon Lessor's request, Lessee shall furnish Lessor's General Manager
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with a copy of all information, including but not limited to, maps, survey field
books and traverse sheets, resulting from surveying performed on behalf of the
Lessee within the leased premises. Lessee shall use due care to avoid the
destruction of survey control or triangulation stations. However, if in Lessee's
operations hereunder, it becomes necessary to destroy one of said survey control
or triangulation stations, then Lessor shall be notified as soon as practicable
in advance of such destruction. If such destruction does occur without said
prior notice thereof being given to Lessor, then Lessee shall promptly reimburse
Lessor for the cost of resetting said survey control or triangulation stations.
ARTICLE IX
FAILURE TO FURNISH PLANS OR MAPS
--------------------------------
Section 9.1. If Lessee fails to furnish any plan or map as provided for in
ARTICLE VIII hereof for thirty (30) days after written demand therefor by the
General Manager of Lessor, Lessor may at its option employ a competent engineer
to make surveys and to prepare such plan or map, and Lessee shall pay to Lessor
the full amount of expenses so incurred.
ARTICLE X
PREVENTION OF FIRES; DUTIES OF LESSEE
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Section 10.1. Lessee shall use all reasonable care and precaution to
prevent the occurrence of fires in timber or forest growth on the surface
overlying the properties included herein and to cause the prompt extinguishment
of any such fires, and Lessee shall cooperate with Lessor and its other lessees
or agents in extinguishing such fires on (said surface and on) adjoining lands
that may be liable to spread to or over said surface overlying the properties
included herein. Lessee shall be responsible for all damage caused by fire to
timber or forest growth or in any other respect on the surface overlying the
properties included herein or adjoining lands that may be due to negligence of
Lessee, its employees, agents or contractors.
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ARTICLE XI
COAL FROM OTHER LANDS; LAND USE TOLL
------------------------------------
Section 11.1. In the event Lessee transports or ships coal from any property
not owned by Lessor under or through any of the leased properties, Lessee shall
pay to Lessor fifteen cents ($.15) per net ton of that coal, or, one-half of one
per cent (1/2%) of the average gross selling price per net ton of that coal, as
gross selling price is defined in Section 2.4 above, whichever is greater, as
land use toll for such transportation or shipment; provided however that Lessee
----------------
shall have the right to transport or ship, free of charge, coal mined from the
Xxxxxxx seam on properties hereafter owned, leased or controlled by Lessee, its
sublessees or affiliates (but currently owned by Xxxx and Crane Real Estate
Trust, but currently leased to a subsidiary of A. T. Xxxxxx Coal Company, as
successor to W-P Coal Company or its affiliates) adjacent to the leased
properties through portals located on the leased properties. Lessee shall report
and make payment, pursuant to the provisions of Sections 2.2 and 2.3 above, for
coal transported or shipped hereunder. The parties understand and acknowledge
that the surface ownership is currently vested in a third party and that Lessee
shall not be obligated to pay to Lessor any wheelage fees, tolls or other
charges related to the use of the surface of the leased properties in connection
with mining of this or other properties owned, leased or controlled by Lessee,
its sublessees or affiliates.
ARTICLE XII
INDEMNIFICATION
---------------
Section 12.1. Lessee shall conduct operations hereunder on its own behalf and
not as agent or employee of Lessor and there shall be no privity of contract
between Lessor and employees of Lessee. All employees, agents, contractors,
subcontractors, and materialmen of Lessee, whether on a wage or profit sharing
basis, shall be selected, hired, directed, paid, and discharged only by Lessee.
Lessee shall and hereby agrees to indemnify and save harmless Lessor, its
officers, agents, and employees, from and against any and all claims, demands,
suits, judgments, recoveries and liabilities for injury to or death of any
person or persons whomsoever and for loss of or damage to any property
whatsoever, arising or in any manner growing out of the operations or activities
of Lessee under or in connection with this lease. Lessee hereby further agrees
to indemnify and save harmless Lessor, its officers, agents and employees, from
and against any and all penalties, fines, prosecutions, statutory recoveries
(whether civil or criminal) and governmental actions which arise from or are
occasioned by the operations or activities of Lessee under or in connection with
this lease.
13
ARTICLE XIII
TAXES AND ASSESSMENTS; COAL APPRAISAL REPORTS
---------------------------------------------
Section 13.1. Taxes and Assessments. During the term of this lease and any
---------------------
extensions or renewals pursuant to ARTICLE XX hereof, Lessee shall pay and bear
and reimburse Lessor for the expense of all taxes and assessments of every kind
and character that may be levied or assessed by governmental authority against
or upon the properties included herein or Lessor's ownership thereof, including,
without limitation: (i) excise, privilege or license taxes based upon the
acreage of land owned by Lessor in the State of West Virginia, any exemption of
acreage therefrom to be prorated to the acreage included in this lease; (ii) ad
valorem taxes; and (iii) taxes levied or assessed on the coal mined hereunder,
on the privilege of mining said coal, on the improvements or other property of
Lessee in or on properties above described, on the leasehold rights of Lessee,
and on the income accruing to Lessee therefrom. Within thirty (30) days of
Lessee's receipt of a statement for such taxes and assessments, together with
copies of corresponding paid tax tickets therefor, Lessee shall repay to Lessor
the amount of any such taxes and assessments as shall be paid by Lessor.
Section 13.2. Coal Appraisal Reports. Lessee shall submit to Lessor, for its
----------------------
review, a copy of annual coal appraisal reports and returns prepared pursuant to
W. Va. Code 11-1 A, et seq., or regulations promulgated thereunder, prior to
-----------
their filing with the West Virginia State Tax Department. It is understood and
agreed that the assessments and levies arising and calculated from such reports
are based, in part, upon the annual production tonnages of Lessee, and for that
reason, Lessee shall pay to Lessor, in the manner provided in Section 13.1
hereof, an amount equal to any increase in such assessments and levies resulting
from operations upon the lands herein. Such payments shall continue and survive
any termination or cancellation of this lease until such time as said
assessments and levies have returned to inactive or non-production status.
Lessee will pay interest to Lessor on any amounts due under Section 13.1 hereof
and this Section and not paid within thirty (30) days after demand therefor has
been made at the effective prime interest rate as then charged by Xxxxxx
Guaranty Trust Company of New York and calculated daily from the date said
amounts are due. Lessor reserves the right to pay any taxes or assessments due
under this ARTICLE XIII without waiving its rights for collection thereof from
Lessee as provided in ARTICLES XXII and XXIII of this lease.
14
ARTICLE XIV
RIGHT TO ASSIGN, SUBLEASE, ETC.
-------------------------------
Section 14.1. Lessee shall have the right, without the consent of Lessor, to
assign (but under no circumstances, to mortgage) any of its estate, interest or
rights hereunder, or any part thereof, to financially responsible and reputable
third parties of Lessee's choosing; provided, however, in the event of
assignment, Lessee shall, at least fifteen (15) days in advance of any such
assignment, submit, in writing, to Lessor for Lessor's information, the name of
the proposed assignee. Lessee shall have the right to sublease (but under no
circumstances, to mortgage) any of its estate, interest or rights hereunder, or
any part thereof, to financially responsible and reputable third parties of
Lessee's choosing only upon the written consent of Lessor which consent shall
not be unreasonably withheld. Notwithstanding any such sublease or assignment,
Lessee shall continue to be obligated to pay Lessor advance minimum annual
rentals under Section 3.1 hereof; however, the same credits for Lessee against
advance minimum annual rentals, as set forth in Section 3.2 of this lease, shall
apply to coal mined and shipped pursuant to such subleases or assignments, and
Lessee shall retain all advance minimum annual rentals and wheelage royalty
amounts paid by such sublessee or assignee and all production royalty amounts
paid by such sublessee or assignee in excess of the said royalty rates provided
in Article II, as herein amended. In each such instance, the sublease or
assignment shall bind the sublessee or assignee to observe all of the Lessee's
obligations, duties and undertakings in this lease pertaining to the properties
so subleased or assigned. If the properties are so subleased or assigned by
Lessee and the sublessee or assignee expressly assumes the lease obligations of
Lessee with respect to said properties, then the Lessee shall thereafter be
relieved from its lease obligations with respect to the properties so subleased
or assigned, except, that Lessee shall remain liable to Lessor for obligations
or liabilities arising prior to the date of such sublease or assignment,
including, but not limited to: (i) Lessee's reclamation obligations under
Article XX hereof; (ii) all indemnity undertakings contained in Articles V, XII,
XVI, XVII and XX of this lease; and (iii) the provisions relating to survival of
certain obligations contained in Section 20.2, Section 22.3 and Section 28.1 of
this lease.
Section 14.2. In like manner, Lessee shall have the right, without the
consent of Lessor, to assign, or with the consent of Lessor to sublease, (but
under no circumstances, to mortgage) any of its estate, interest or rights
hereunder, or any part thereof, to any other third parties to the same effect,
upon the same terms and conditions as provided in Section 14.1, except that the
Lessee shall not be discharged from lease obligations to the Lessor, as provided
in Section 14.1, and Lessee shall remain liable to the Lessor for that
assignee's or sublessee's performance of all of the Lessee's obligations, duties
and undertakings under this lease.
15
Section 14.3. Any disagreement between Lessor and Lessee as to whether a
third party sublessee or assignee is financially responsible and reputable may
be submitted by either Lessor or Lessee to arbitration, as provided in Article
XXIV herein.
Section 14.4. Notwithstanding anything contained herein to the contrary,
Lessee shall have the right to assign or sublease this Lease to an affiliated
company without consent of Lessor. "Affiliated Company" shall include any direct
or indirect parent or subsidiary of Lessee, or any business entity in which the
Lessee, its direct or indirect parent or subsidiary owns or controls fifty
percent (50%) of the capital stock or other ownership interest.
ARTICLE XV
WORKERS' COMPENSATION; LESSEE'S DUTIES
--------------------------------------
Section 15.1. Lessee shall subscribe to and operate under the provisions of
the West Virginia Workers' Compensation Act, or qualify as a self-insurer in
accordance with applicable law and make all necessary payments thereto, and such
coverage shall also include drivers of any trucks which may be hired, rented or
leased, and upon request furnish to Lessor certificate of such compliance,
together with paid premium receipts.
If at any time the subscription to said Workers' Compensation Act shall cease
to be in force and effect, then Lessee shall suspend, and Lessor may stop, all
operations of Lessee hereunder until such subscription shall be reinstated.
ARTICLE XVI
BLACK LUNG BENEFITS; INDEMNIFICATION; EVIDENCE OF
-------------------------------------------------
FINANCIAL RESPONSIBILITY
------------------------
Section 16.1. Lessee hereby guarantees and agrees to indemnify and save
harmless Lessor, its officers, agents and employees, from the payment of or any
liability for benefits which may be required under the Black Lung Benefits Act
(30 U.S.C. 901, et seq.) and under any laws or regulations of the State of West
Virginia, arising from any mining operations hereunder, and Lessee agrees that
during the primary period and renewals, if any, of this lease, it will furnish
annually to Lessor evidence of financial responsibility for such black lung
benefits under applicable federal and state laws, as well as regulations issued
thereunder. Such evidence of financial responsibility shall consist of the
following:
16
(a) in the event the Workers' Compensation law of the state (State) in which
the leased property is located has been included in the list published by the
Secretary of Labor of the United States of America under the Black Lung
Benefits Act (30 U.S.C. 901, et seq.), such evidence shall consist of a
certification from the officers administering the Workers' Compensation
program for the State certifying as to Lessee's black lung benefits coverage
under those Workers' Compensation laws;
(b) in the event the Workers' Compensation laws of the State are not included
in the list published by the Secretary of Labor of the United States of
America under the Black Lung Benefits Act (30 U.S.C. 901, et seq.), Lessee
shall either:
(1) qualify as a self-insurer in accordance with regulations prescribed
by said Secretary of Labor, or
(2) insure and keep insured, with any stock company or mutual company or
association, or any other person or fund, including any State fund, which is
authorized under the laws of the State to insure Workers' compensation, all
black lung benefits payable under applicable federal and state statutes and
regulations issued thereunder, and furnish a satisfactory certificate to
Lessor evidencing such insurance coverage.
ARTICLE XVII
WAGES AND BENEFITS; INDEMNIFICATION AND BOND
--------------------------------------------
Section 17.1. Lessee hereby guarantees and agrees to indemnify Lessor, its
officers, agents and employees, from the payment of or any liability for, or
resulting from, wages and benefits which may be due Lessee's employees or
contractors, and, to that end, Lessee shall, at Lessor's sole discretion, prior
to or at any time after commencing operations hereunder, obtain a surety bond,
the amount of which shall be calculated pursuant to X.Xx. Code 21-5-14 et seq.,
----------
irrespective of the length of time Lessee had been doing business in this State,
securing Lessor from payment of or any liability for, or resulting from, said
wages and benefits.
ARTICLE XVIII
INSURANCE; CESSATION OF OPERATIONS
----------------------------------
Section 18.1. Amount of Insurance. As a condition precedent to the
-------------------
commencement of operations hereunder, Lessee shall arrange for the maintenance
of public liability insurance
17
with a good solvent casualty insurance company or companies satisfactory to
Lessor, which insurance shall indemnify said Lessor against legal liability for
loss by reason of personal injury, death and property damage or loss sustained
as a result, or by reason, of the operations hereunder, with a minimum combined
single limit of $4,000,000.00 for bodily injury, death and property damage and
Lessee shall, upon request of Lessor, furnish to Lessor certificates of such
insurance, together with paid premium receipts. This coverage shall also include
any trucks or other equipment hired, rented or leased in operations hereunder.
It is understood and agreed, however, that the minimum limits of coverage set
forth above are not intended and will in no manner limit the recoveries of
Lessor under the indemnity provisions of ARTICLES V, XII, XVI and XVII above of
this lease.
Section 18.2. Cessation or Suspension of Operations. If at any time any of
-------------------------------------
these insurance coverages shall cease to be in force and effect, then, upon
written demand of Lessor, Lessee shall suspend all operations hereunder until
such insurance coverages shall be reinstated.
ARTICLE XIX
LESSOR'S RIGHT TO INSPECT MINING OPERATIONS
-------------------------------------------
Section 19.1. Lessor, and the Lessor's employees, agents and engineers, shall
at all times have the right and privilege of entering the works and mines of
Lessee in or upon the properties included herein to inspect, examine, survey or
measure the same or any part thereof for the purpose of verifying the reports of
Lessee as to the amounts of coal mined or removed, or for any other lawful
purpose, and for these purposes to use freely the means of access to said works
and mines, without hindrance or molestation.
ARTICLE XX
OBLIGATION TO MINE; EXTENSION;
------------------------------
DUTY TO RECLAIM; TERMINATION
----------------------------
Section 20.1. Obligation to Mine: Extension. Lessee shall mine and remove all
-----------------------------
of the coal which can be mined and removed hereunder by modern mining methods
and if, at the expiration of the original period hereof, Lessee has not mined
and removed all of the coal which it is or may become obligated to mine, then
this lease shall be extended for such additional ten (10) year periods as may be
necessary, upon the same terms and provisions, but subject to the full payment
of all royalties, rentals and other payments due hereunder,
18
until all of said coal which can be economically mined and removed by approved
mining methods has been mined and removed from the leased properties; and
whenever during said original period or any extension thereof, as herein
provided, Lessee shall have mined and removed all of said coal by such approved
mining methods and shall have paid all royalties, rentals and other payments due
or accrued hereunder then Lessee's obligation to mine coal and make payment of
minimum annual rental hereunder shall terminate.
Section 20.2. Duty to Reclaim: Payment of Amounts Due: Termination. In the
----------------------------------------------------
event the lease herein shall not be extended at the end of the original period
hereof or any extended period thereof, or all of said coal has been mined and
removed, then this lease shall continue to be extended for additional one (1)
year periods, at a nominal rental mutually agreeable to Lessor and Lessee, until
all the reclamation of the lands disturbed by mining operations under this lease
has been completed and finally approved by the state and/or federal agency or
agencies having jurisdiction of such mining operations and all the bonds for
such reclamation have been fully released by such agency or agencies. Upon such
release of all of said bonds this lease shall terminate, without, however,
releasing Lessee from any obligations or liabilities arising prior to said
termination. Further, in the event Lessee has not made payment of all royalties,
rentals and other payments due hereunder at the end of the original period
hereof or any renewal or extended period thereof, then Lessor, at its option,
may extend the term of this lease until all of such payments have been made.
ARTICLE XXI
TERMINATION OF LEASE
--------------------
Section 21.1. Termination by Lessee. After Lessee's satisfaction of all
---------------------
mining and reclamation obligations contained in ARTICLE XX hereof, Lessee may
give Lessor thirty (30) days' notice of its intention to terminate this lease,
and, if Lessor shall determine that Lessee has fully performed its obligations
under this lease, Lessee's obligations hereunder shall be deemed terminated
effective on such thirtieth (30th) day, without, however, releasing Lessee from
any obligations or liabilities arising prior to said termination of obligations.
Upon termination of this lease, any advance minimum annual rental paid for the
calendar year in which the termination occurs which has not been credited
against production royalties shall be refunded to Lessee, and Lessee shall not
be liable for any further advance minimum annual rentals.
Section 21.2. Removal of Property Following Termination or Expiration. Upon
-------------------------------------------------------
termination or expiration of this lease, Lessee shall have 180 days in which to
remove from the properties leased hereby all Lessee's equipment, buildings and
other improvements and personal property, and any of the same not so removed
shall, at Lessor's option, either
19
become the property of Lessor without charge therefor or be disposed of by
Lessor at Lessee's cost and expense.
ARTICLE XXII
DEFAULT
-------
Section 22.1. Default: Cancellation by Lessor. If any one or more of the
-------------------------------
following events (herein sometimes called Events of Default) shall occur:
(a) If default shall be made in the due and punctual payment of any rent,
royalty or any part thereof, when and as the same may become due and payable,
or in the payment of taxes and insurance premiums or any other amounts to be
borne by Lessee hereunder, or in the furnishing of receipts and certificates
of payment therefor when due, or in the furnishing of any of the books,
records or reports by Lessee to be furnished under this lease, and such
default shall continue for thirty (30) days after notice by Lessor to Lessee;
or,
(b) If default shall be made by Lessee in the performance of or
compliance with any of the covenants, agreements, terms or conditions
contained in this lease, other than those referred to in the foregoing
subsection (a) of this Section 22.1, and such default shall continue for a
period of sixty (60) days after written notice thereof from Lessor to Lessee,
and Lessee shall not within such period commence with due diligence the
curing of such default, or if Lessee shall, within such period, commence with
due diligence to cure such default and thereafter shall fail or neglect to
prosecute and complete with due diligence and dispatch the curing of such
default; or,
(c) If Lessee shall file a voluntary petition in bankruptcy or shall be
adjudicated bankrupt or insolvent, or shall file any petition or answer
seeking or acquiescing in any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief for itself under any
present or future federal, state or other statute, law or regulation, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver, or liquidator of Lessee or of all or any substantial part of the
property leased hereby or of any or all the rents, revenues, issues,
earnings, profits, or income thereof, or shall make any general assignment
for the benefit of creditors, or shall admit in writing its inability to pay
its debts generally as they become due;
then and in any such event, Lessor at any time thereafter while such default or
condition is continuing, may give written notice to Lessee specifying the
occurrence giving rise to such Event of Default, or Events of Default, and
stating that the lease shall terminate on the date specified in such notice,
which shall be at least ten (10) days after the giving of such notice.
20
Upon the date specified in such notice, this lease and the estate and interest
hereby demised shall terminate and all rights of Lessee under this lease shall
cease.
Section 22.2. Repossession, etc., by Lessor. Lessee expressly waives any
-----------------------------
right to prior notice or any process of law other than the issuance of the
warrant of distraint, and Lessee further expressly waives any right to hearing
prior to the levy of such warrant and sale thereunder and at any time after such
termination of this lease, Lessor, without further notice, may enter and re-
enter the premises for all proper purposes and repossess itself by all legal
means, including summary proceedings, of its prior and former estate and may
remove Lessee and all persons claiming through Lessee from the property leased
hereby.
Section 22.3. Survival of Lessee's Obligations: Damages. No termination of
-----------------------------------------
this lease or repossession of the property leased hereby, by force, summary
proceedings, ejectment or otherwise, shall relieve Lessee of its liability and
obligations under this lease, and such liability and obligations, including,
without limitation, the indemnity commitments contained in ARTICLES V, XII, XVI
and XVII above of this lease, shall survive termination or any repossession. In
the event of any such termination or repossession, Lessee shall pay to Lessor
the advance minimum annual rentals, production royalties and other charges
required to be paid by Lessee up to the time of such termination or
repossession.
Section 22.4. No Waiver. etc. by Lessor. No failure by Lessor to insist upon
-------------------------
the strict performance of any covenant, agreement, term or condition of this
lease or to exercise any right, power or remedy consequent upon a breach
thereof, and no acceptance of full or partial performance or payment of
royalties during the continuance of any such breach, shall constitute a waiver
of or consent to any such breach or of such covenant, agreement, term or
condition. No waiver of any breach shall affect or alter this lease, but each
and every covenant, agreement, term and condition of this lease shall continue
in full force and effect with respect to any other then existing or subsequent
breach thereof.
Section 22.5. Injunction Against Breach. In the event of any breach or
-------------------------
threatened breach by Lessee of any of the covenants, agreements, terms or
conditions of this lease, Lessor shall have the right to invoke any rights,
powers and remedies allowed at law, in equity or by statute or otherwise,
whether or not specifically provided in this lease.
Section 22.6. Lessor's Remedies Cumulative, etc. Each right, power and remedy
---------------------------------
of Lessor provided for in this lease shall be cumulative and concurrent and
shall be in addition to every other right, power or remedy provided for in this
lease or now or hereafter existing at law or in equity, by statute or otherwise,
and the exercise or beginning of the exercise by Lessor of any one or more of
the rights, powers or remedies provided for in this lease or now or hereafter
existing at law or in equity, by statute or otherwise shall not preclude the
simultaneous or later exercise by Lessor of any or all other rights, powers or
remedies provided for in this lease, or by statute or otherwise.
21
ARTICLE XXIII
CONDEMNATION
------------
Section 23.1. If the coal herein leased, or any portion thereof, shall be
taken in, or in any manner affected by, condemnation for any public or quasi-
public use under any statute or by right of eminent domain, or by private
purchase in lieu of condemnation, by a public body vested with the power of
eminent domain, then, and in each and every such event, Lessor shall be free to
conduct all negotiations for compensation or damages, including without
limitation, participation in viewer's proceedings and the institution of
litigation concerning such taking, with the understanding that in the case of
each and every condemnation or taking Lessor shall notify Lessee of same, and
Lessor and Lessee shall be paid out of any such award or compensation in damages
as follows:
(a) If the award for the coal in any such condemnation or taking shall exceed
the amount of royalty that would have been due Lessor had the coal been then
mined, based upon recent sales by Lessee or, if no such sales exist, based upon
recent sales by others of coal of comparable quality, all of such award which is
in excess of said royalty amount shall be the property of and be paid to Lessee
and the balance of the award shall be the property of and be retained by Lessor;
or,
(b) If such award for the coal shall be equal to or less than said royalty
amount, then all of such award shall be the property of and be retained by
Lessor.
(c) Any specific award for Lessee's buildings, structures or improvements
shall be paid to Lessee and any award for surface lands, or interests therein or
any other buildings, structure or improvements thereon, shall be the property of
Lessor.
Lessee shall cooperate with Lessor in all matters hereunder, including
joining in any litigation or settlement if Lessor determines such to be
necessary; provided, that any such condemnation or taking shall not otherwise
affect Lessee's duties and obligations under this lease, except as provided
herein.
In the event that such condemnation or taking materially affects or impairs
the ability of Lessee to conduct mining operations in accordance with its
approved mining plans, Lessee shall have the right to terminate this Lease,
subject to the right of Lessee to reenter the premises to conduct all
reclamation required by law.
22
ARTICLE XXIV
ARBITRATION
-----------
Section 24.1. If there should arise any matters in dispute hereunder on which
Lessor and Lessee cannot finally agree, such matter or matters shall be referred
to a board of arbitrators consisting of three (3) disinterested, competent
persons, one selected by Lessor and one by Lessee, as hereinafter provided, and
the two thus selected shall select the third, who shall have the power of an
umpire and be known as umpire-arbitrator. The decision and award of such
arbitrators, or any two of them, or, in case of disagreement among all the
arbitrators, of the umpire-arbitrator, shall be conclusive and binding upon
Lessor and Lessee and promptly complied with.
The party desiring arbitration shall give written notice to the other party,
definitively stating the point or points in dispute and naming the person
selected as arbitrator; and it shall be the duty of the other party, within
fifteen (15) days after receiving such notice, to name an arbitrator, and these
two shall select the umpire-arbitrator; and in event the party notified does not
name an arbitrator within said period of fifteen (15) days, the party serving
such notice may select a second arbitrator and the two thus selected shall
select the umpire-arbitrator.
In the event of failure of the two arbitrators, selected as aforesaid, within
thirty (30) days from receipt by both of them of notice of their selection, to
agree upon the umpire-arbitrator, then they shall jointly notify, in writing,
the parties of their failure to agree upon such umpire-arbitrator. The parties
shall then, within fifteen (15) days from the date of such notification, jointly
select the umpire-arbitrator. In the event the parties are unable to so select
the umpire-arbitrator within said fifteen (15) day period, they shall then
jointly select the names of three (3) potential umpire-arbitrators. None of
these three (3) potential umpirearbitrators shall represent, or have any
affiliation with either party. Once the list of said three (3) potential umpire-
arbitrators has been prepared, each party shall then strike the name of one (1)
potential umpire-arbitrator from said list. The person remaining on such list
after the parties have stricken a name from said list shall be the umpire-
arbitrator. Further, in the event the parties fail to select such umpire-
arbitrator as aforesaid, either of the parties may apply to the American
Arbitration Association (AAA) for the appointment of an umpire-arbitrator
pursuant to the rules and procedures of the AAA for the appointment of neutral
arbitrators, as revised. The individual then designated will act as such umpire-
arbitrator hereunder.
The umpire-arbitrator thus chosen shall give to Lessor and Lessee written
notice as to the time and place of hearing, which hearing shall be not less than
ten (10) nor more than twenty (20) days after his selection, and, at the time
and place appointed he shall proceed with the
23
hearing unless, for some good cause of which the arbitrators shall be the judge,
it shall be postponed until some later date within a reasonable time. Both
Lessor and Lessee shall have full opportunity to be heard, orally and in
writing, on any question thus submitted. In arriving at a decision and award,
the arbitrators shall be bound by any relevant state and federal law applicable
to the substantive issue or issues so submitted for arbitration, and they shall
make such decision and award in writing, and deliver a copy to both Lessor and
Lessee. The arbitration award shall specify by whom the costs of arbitration
shall be borne and paid and the amount of such costs, including reasonable
compensation for the arbitrators.
ARTICLE XXV
CONTROLLING LAW
---------------
Section 25.1. In all coal mining operations and other activities conducted
hereunder Lessee shall comply with all the laws of the United States of America
and the State of West Virginia now or hereafter enacted, and all rules and
regulations promulgated thereunder by any governmental agency, relating to such
coal mining operations or other activities. Any disputes as to the meaning and
application of any of the provisions of this lease shall be determined under the
laws of the State of West Virginia.
ARTICLE XXVI
NOTICE
------
Section 26.1. The giving of any notice to, or the making of any demand on,
Lessee shall be sufficient if in writing, addressed to Lessee and mailed via
certified mail, providing for receipt, to Lessee at X.X. Xxx 0000, Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000; and likewise the giving of any notice to, or the making
of any demand on, Lessor shall be sufficient if in writing, addressed to Lessor
and similarly mailed via certified mail, providing for receipt, to Lessor at
X.X. Xxx 0000, Xxxxxxxxx, Xxxx Xxxxxxxx 00000; and ten (10) days shall be
considered a reasonable notice or demand period except where a longer notice
period is herein prescribed.
24
ARTICLE XXVII
HEADINGS
--------
Section 27.1. The headings of the ARTICLES in this lease are for convenience
only and shall not be used to construe or interpret the scope or intent of this
lease or in any way affect the same.
ARTICLE XXVIII
SURVIVAL
--------
Section 28.1. No termination or cancellation of this lease shall relieve
either of the parties hereto from any obligations or liabilities incurred by it
under this lease as of the time of such termination or cancellation.
ARTICLE XXIX
SEVERABILITY
------------
Section 29.1. If any term or provision of this lease is held to be illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity or legality of any of the other terms or provisions of this
lease.
ARTICLE XXX
TERMS BINDING UPON SUCCESSORS AND ASSIGNS
-----------------------------------------
Section 30.1. All of the terms and provisions hereof to be performed and
observed by the respective parties hereto shall be binding upon and shall inure
to the benefit of their respective successors, and assigns.
25
WITNESS the following signatures and seals as of the date first above written.
Executed in two (2) counterparts.
POCAHONTAS LAND CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name:
Title: President
Attest:
/s/ Xxxxxx X. Xxxxxxxx
Assistant Corporate Secretary
ARK LAND COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
Attest:
Secretary
00
XXXXX XX XXXX XXXXXXXX )
) To-wit:
COUNTY OF KANAWHA )
I, Xxxxx Xxxxxxx Xxxx, a Notary Public of said County, do certify that
Xxxxxx X. Xxxxxx, President, who signed the writing above, dated as of January
31, 1994, for said Pocahontas Development Corporation, has this day in my said
County, before me, acknowledged the said writing to be the act and deed of said
Corporation.
Given under my hand and official seal this 31 day of January, 1994.
-- -------
[NOTARY SEAL APPEARS HERE] /s/ Xxxxx Xxxxxxx Xxxx
-----------------------------------
Notary Public
My commission expires: July 10, 2001 .
-------------------
STATE OF WEST VIRGINIA )
-----------------
) To-wit:
COUNTY OF KANAWHA )
----------------
I, Xxxxx Xxxxxxx Xxxx, a Notary Public of said County, do certify that
------------------
Xxxxxxx X. Xxxxxxxxxx, its Vice President, who signed the writing above, dated
--------------------- --------------
as of January 31, 1994, for said Ark Land Company, has this day in my said
County, before me, acknowledged the said writing to be the act and deed of said
Corporation.
Given under my hand and official seal this 31 day of January, 1994.
-- -------
[NOTARY SEAL APPEARS HERE] /s/ Xxxxx Xxxxxxx Xxxx
-----------------------------------
Notary Public
My commission expires: July 10, 2001 .
------------------
This instrument prepared by Xxxxxxx X. Xxxxx, Attorney at Law, Xxxxxxxxx, Xxxx
Xxxxxxxx 00000-0000.
27
Amendment to Lease
(Holden No. 25)
This Amendment to Lease is made and effective this 2nd day of October,
1995, by and between Pocahontas Land Corporation ("Lessor"), a Virginia
corporation and Ark Land Company ("Lessee"), a Delaware corporation.
WITNESSETH:
WHEREAS, by Lease dated January 31, 1994, as amended, ("the Lease"), Lessor
leased to Lessee, the sole and exclusive right of mining and removing various
seams of coal upon and within certain parcels or areas of land containing in the
aggregate 8,364.18 acres, more or less, located in Xxxxx and Xxxxx Counties,
West Virginia; and
WHEREAS, Lessor and Lessee desire to amend the Lease in accordance with the
following terms and conditions.
NOW, THEREFORE, the parties agree as follows:
1. The first paragraph of Section 3.1. entitled "Amount and Payment:
-------------------
Interest:" is hereby deleted in its entirety and replaced with the following:
---------
Section 3.1. Amount and Payment: Interest. Lessee shall pay to Lessor,
----------------------------
as advance minimum annual rental on account of coal mined or to be mined
hereunder, the sum of One Million Two Hundred Thousand Dollars
($1,200,000.00) for calendar years 1994 and 1995, payable in equal
quarterly installments of Three Hundred Thousand Dollars ($300,000.00),
provided that minimum annual rental for 1994 shall be prorated from the
date of this lease. For calendar year 1996 and each calendar year
thereafter under this lease and extensions thereof, the advance minimum
annual rental shall be Two Million Four Hundred Thousand Dollars
($2,400,000.00). The advance minimum annual rental for the first quarter of
1994 shall be paid upon execution of this lease. Thereafter, payments of
advance minimum annual rental shall be made in equal quarterly installments
on or before January 1st, April 1st, July 1st and October 1st of each
calendar year, provided, however, that if Lessee previously in the current
calendar year shall have mined sufficient tonnages at the then current
royalty rate to yield production royalty payments to Lessor which equal or
exceed the total of the advance minimum rental installments for that
calendar year which have been paid and are due at the time of such payment,
no such quarterly installment of advance minimum rental shall be made.
2. Section 3.2. entitled "Recoupment." is hereby deleted in its entirety
----------
and replaced with the following:
Section 3.2 Recoupment. Each payment of advance minimum annual rental
----------
hereunder shall be applied as a credit, until recouped, as follows: (a)
first, against production royalties payable for mining performed under this
lease during the calendar year for which such payment of minimum annual
rental is made; (b) secondly, against production royalties payable for
mining performed under this lease in the two calendar years following the
calendar year for which the minimum annual rental is paid and not otherwise
recoupable as a credit against production royalties under the terms hereof.
The provisions of this Section 3.2 will not be construed to permit more
than one credit for any payment of advance minimum annual rental against
any production royalties due Lessor under this lease.
3. All other terms and conditions of the Lease shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed this amendment on the
day and year first above written.
Pocahontas Land Corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: President
-----------------------------
Ark Land Company
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Title: President
-----------------------------
2
THIS PARTIAL RELEASE AND SURRENDER OF LEASE, made as of February 1,
1996, between ARK LAND COMPANY ("Ark"), a Delaware corporation, and POCAHONTAS
LAND CORPORATION ("Pocahontas"), a Virginia a corporation;
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS:
1. By Lease made as of January 31, 1994, as amended (hereinafter
called "Original Lease"), Pocahontas leased to Ark for a period of ten (10)
years from January 31, 1994, through January 30, 2004, subject to renewal or
termination as therein provided, the sole and exclusive right of mining and
removing, by any method of mining, various seams of coal upon and within certain
parcels of land containing in the aggregate 8,364.18 acres, more or less,
situated in Xxxxx and Xxxxx Counties, West Virginia, as therein described,
subject to exceptions and reservations and upon terms and provisions therein
contained;
2. By Amendment to Lease dated October 2, 1995, between Pocahontas
and Ark, the parties thereto amended the Original Lease with regard to the
amount and payment of advance minimum annual rentals and recoupment thereof,
upon terms and conditions therein contained; and
3. Pocahontas and Ark have determined and agreed that it is to their
mutual benefit that Ark release and surrender to Pocahontas under the terms set
forth herein all of Ark's rights under Original Lease, as amended, in and to the
Xxxxxxx Seam of coal within a certain parcel of land containing 4,423.46 acres,
more or less, as hereinafter described.
TABLE OF AREA
In Xxx Magisterial District of Xxxxx County, West Virginia
Tract or Parcel Total Acres
out of which area is taken (Coal Only)
-------------------------- ---------
Pt. United Xxxxxxx Xx. No. 32 - Xxxxxx X. Xxxxxx 1,979.87
Pt. United Xxxxxxx Xx. No. 35 - Xxxxxx X. Xxxxxx 32.50
Pt. United Xxxxxxx Xx. Xx. 00 - Xxxxxxx Xxxxxxxxxx 63.99
Pt. United Xxxxxxx Xx. No. 102 - Xxxxxxx Xxxxxxxxxx 140.98
Pt. United Xxxxxxx Xx. Xx. 000 - Xxxxxxx Xxxxxxxxxx 545.62
Pt. United Xxxxxxx Xx. No. 190 - X. X. Xxxxxxxxx 26.96
-----
Total - Xxx Magisterial District 2,789.92
TABLE OF AREA
In Magnolia Magisterial District of Xxxxx County, West Virginia
Tract or Parcel Total Acres
out of which area is taken (Coal Only)
-------------------------- ---------
Pt. United Xxxxxxx Xx. No. 31-a - Island Creek Min. Co. -
Xxxxx Xxxxxx 96.00
Pt. United Xxxxxxx Xx. No. 31-b - Island Creek Min. Co. -
Tr. 4 48.29
Pt. United Xxxxxxx Xx. No. 32 - Xxxxxx X. Xxxxxx 904.58
Pt. United Xxxxxxx Xx. No. 37 - Xxxxxx Xxxxx 140.89
Pt. United Xxxxxxx Xx. No. 41 - X. X. X Xxxx 119.78
Pt. United Xxxxxxx Xx. No. 42-a - Xxxxxx X. Xxxxxx 50.00
Pt. United Xxxxxxx Xx. No. 42-b - Xxxxxx X. Xxxxxx 42.00
Pt. United Xxxxxxx Xx. No. 359 - Island Creek Min. Co. 232.00
------
Total - Magnolia Magisterial District 1,633.54
RECAPITULATION
--------------
Xxxxx County - Xxx Magisterial District 2,789.92
Xxxxx County - Magnolia Magisterial District 1,633.54
--------
Total area included in partial release and surrender
of lease 4,423.46
3
WITNESS the signatures and seals as of the date first above written.
ARK LAND COMPANY
By
/s/ Xxxxxx X. XxXxxxx
------------------------------
Its President
POCAHONTAS LAND CORPORATION
By
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
President
STATE OF MISSOURI )
) To wit:
COUNTY OF ST. LOUIS )
I, Xxxxxxxx X. Xxxxxx, a Notary Public of said County, do certify that
Xxxxxx X. XxXxxxx, its President, who signed the writing above, dated as of
February 1, 1996, for said Ark Land Company, has this day in my said County,
before me, acknowledged the said writing to be the act and deed of said
Corporation.
Given under my hand and official seal this 13 day of February, 1996.
/s/ Xxxxxxxx X. Xxxxxx
--------------------------------
Notary Public
My commission expires: June 7, 1997.
0
XXXXX XX XXXX XXXXXXXX )
) To-wit:
COUNTY OF XXXXXX )
I, Xxxxx X. Xxxxx, a Notary Public of said County, do certify that
Xxxxxx X. Xxxxx, President, who signed the writing above, dated as of February
1, 1996, for said Pocahontas Land Corporation, has this day in my said County,
before me, acknowledged the said writing to be the act and deed of said
Corporation.
Given under my hand and official seal this 14th day of February 1996.
[SEAL OF NOTARY PUBLIC APPEARS HERE] /s/ Xxxxx X. Xxxxx
--------------------------------
Notary Public
My commission expires: August 16, 1998.
This instrument was prepared by Xxxxxx X. Xxxxxxx, Attorney at Law,
Xxxxxxxxx, Xxxx Xxxxxxxx 00000.
C: \Inst\Ark-EnMt. Rel
5
AMENDMENT TO LEASE
------------------
(Holden No. 25)
THIS AMENDMENT TO LEASE (the "Amendment") is made and effective this 21st
day of October, 1996 (the "Effective Date"), by and between POCAHONTAS LAND
CORPORATION ("Lessor"), a Virginia corporation, and ARK LAND COMPANY ("Lessee"),
a Delaware corporation;
W I T N E S E T H:
- - - - - - - - -
WHEREAS:
1. By Lease dated January 31, 1994 (the "Lease"), Lessor leased to
Lessee, the sole and exclusive right of mining and removing various seams of
coal upon and within certain parcels or areas of land containing in the
aggregate 8,364.18 acres, more or less, situated in Xxxxx and Xxxxx Counties,
West Virginia;
2. By Amendment to Lease dated October 2, 1995, the minimum annual rental
and recoupment provisions of the Lease were modified and amended;
3. Pursuant to Section 3.4 of the Lease, the General Manager of Lessor
and Lessee may agree to modify, reduce or suspend the advance minimum annual
rental whenever, in the good faith opinion of the General Manager of Lessor and
Lessee, the quantity of unmined coal remaining which Lessee is or has become
obligated to mine has been reduced or depleted so as to justify such
modification, reduction or suspension; and
4. The General Manager of Lessor and Lessee have agreed to reduce the
minimum annual and otherwise modify the Lease all as provided herein.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants in the Lease and herein, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
FIRST: The minimum annual rental provided for in Section 3.1 of the Lease
-----
for calendar year 1997 shall be reduced to One Million Eight Hundred Thousand
Dollars ($1,800,000.00), payable as follows:
Due Date Quarterly Payment
-------- -----------------
On or before January 1, 1997 $600,000.00
On or before April 1, 1997 $600,000.00
On or before July 1, 1997 $300,000.00
On or before October 1, 1997 $300,000.00
SECOND: The minimum annual rental provided for in Section 3.1 of the Lease
for calendar year 1998 shall be reduced to Seven Hundred Thousand Dollars
($700,000.00), payable as follows:
Due Date Quarterly Payment
-------- -----------------
On or before January 1, 1998 $200,000.00
On or before April 1, 1998 $200,000.00
On or before July 1, 1998 $200,000.00
On or before October 1, 1998 $100,000.00
THIRD: The minimum annual rental provided for in Section 3.1 of the Lease
-----
for calendar year 1999 and the remaining term of the Lease shall be reduced to
One Hundred Thousand Dollars ($100,000.00), payable on or before January 1st of
each calendar year.
FOURTH: Commencing January 1, 1999, each payment of advance minimum annual
------
rental hereunder shall be applied as a credit, until recouped, as follows: (a)
first, against production royalties under Section 2.1 and land use tolls under
Section 11.1 payable for mining performed under the Lease during the calendar
year for which such payment of minimum annual rental is made and the following
calendar year; and (b) secondly, during any subsequent year in
which the Lessee shall pay in royalties and/or land use tolls in excess of
$200,000.00, said excess amount shall be recoupable against any prior unrecouped
balance of minimum annual rentals paid under said Lease.
FIFTH: Except as expressly provided in this Amendment, all other terms
-----
and conditions of the Lease shall remain in full force and effect.
WITNESS the following signatures and seals as of the date first above
written. Executed in two (2) counterparts.
POCAHONTAS LAND CORPORATION
By
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
President
ARK LAND COMPANY
By
/s/ Xxxxxx X. XxXxxxx
----------------------------------
Its President
-------------------------------
0
XXXXX XX XXXX XXXXXXXX )
) To-wit:
COUNTY OF XXXXXX )
I, Xxxxx X. Xxxxx, a Notary Public of said County, do certify
that Xxxxxx X. Xxxxx, President, who signed the writing above, dated as of
October 21, 1996, for said Pocahontas Land Corporation, has this day in my said
County, before me, acknowledged the said writing to be the act and deed of said
Corporation.
Given under my hand and official seal this 25th day of
October, 1996.
/s/ Xxxxx X. Xxxxx
[SEAL APPEARS HERE] -------------------------
Notary Public
My commission expires: August 16, 1998.
STATE OF MISSOURI )
) To-wit:
COUNTY OF ST. LOUIS )
I, Xxxxxxxx X. Xxxxxx, a Notary Public of said County, do certify
that Xxxxxx X. XxXxxxx, its President, who signed the writing above, dated as of
October 21, 1996, for said Ark Land Company, has this day in my said County,
before me, acknowledged the said writing to be the act and deed of said
Corporation.
Given under my hand and official seal this 21 day of Oct., 1996.
/s/ Xxxxxxxx X. Xxxxxx
--------------------------
Notary Public
My commission expires: June 6, 1997.
This instrument was prepared by Xxxxxxx X. Xxxxx, Attorney at
Law, Xxxxxxxxx, Xxxx Xxxxxxxx 00000.
c:\inst\Ark-PLC.H25
4
