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EXHIBIT 99.2
THIS LEASE, ("Lease" or "Agreement") Made and effective as of the 31st
day of May, 2001, by and between PENN VIRGINIA COAL COMPANY, a Virginia
corporation with an address at 0000 Xxxx-Xxxx Xxxx, X.X. Xxx 000, Xxxxxxxx, XX
00000, hereinafter referred to as "Lessor"; and PEN LAND COMPANY, a Delaware
corporation, with an address at 0000 Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, XX
00000, hereinafter referred to as "Lessee".
W I T N E S S E T H:
That for and in consideration of the premises and of the sum of Ten
Dollars, cash in hand paid by Lessee to Lessor, the receipt and sufficiency of
which is hereby acknowledged, and of the rents and royalties herein provided to
be paid, and of the mutual covenants and promises hereinafter set forth, the
parties hereto do hereby agree as follows:
1. Leased Coal; Leased Premises.
a. Subject to the exceptions, reservations, and conditions
hereinafter set out, Lessor does hereby LEASE and LET unto Lessee upon the terms
and conditions hereinafter set forth the exclusive right and privilege to mine
and take away by any current and future surface and underground mining methods
all of the coal in all seams on those tracts of land commonly referred to as the
Xxxxxx, Xxxxx and Xxxxxx & Xxxxxx tracts, consisting of approximately 27,900
acres, situate, lying and being in Xxxxx, Kanawha and Lincoln Counties, West
Virginia, (collectively, the "Leased Premises"), a general description of such
lands shown on a map attached hereto, marked "Exhibit A" and made a part hereof.
Highwall and auger mining may be conducted on the Leased Premises upon written
consent by Lessor with respect to specific mining plan proposals submitted by
Lessee, which consent may not be unreasonably withheld by Lessor. Any dispute
regarding reasonableness of Lessor's denial of approval for highwall and/or
auger mining under this paragraph 1(a) shall be resolved pursuant to the
provisions of paragraph 47 of this Lease.
NOTWITHSTANDING ANY PROVISION IN THIS LEASE OR ANY AGREEMENT
REFERRED TO HEREIN OR ATTACHED HERETO, LESSOR MAKES NO WARRANTY, EXPRESS OR
IMPLIED, WHETHER OF MERCHANTABILITY, QUALITY, QUANTITY, RECOVERABILITY, TITLE OR
OTHERWISE AS TO THE LEASED PREMISES, THE LEASED COAL OR INTERESTS THEREIN, OR
COAL RESERVES, OR MINING RIGHTS OWNED BY LESSOR, OR AS TO THE CONDITION OF THE
LEASED PREMISES OR LEASED COAL, AND LESSEE SHALL RELY UPON ITS OWN EXAMINATION
THEREOF THROUGH ENGINEERS AND OTHER REPRESENTATIVES SELECTED AND EMPLOYED SOLELY
BY LESSEE.
2. Term. The term of this Lease shall be as follows:
a. The "Primary Term" shall commence on the date hereof and continue
until the earlier of (i) ten years from the date hereof or (ii) until the
removal of all mineable
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and merchantable coal in the Leased Premises. Lessee shall have the option to
extend the Primary Term of this Lease for four (4) additional terms of five (5)
years each provided that Lessee is not then in breach hereof beyond any
applicable notice and grace periods hereunder and is either (i) actively engaged
in mining operations on the Leased Premises and/or the properties covered by the
Sublease, as hereinafter defined, or, (ii) prevented from mining at the time of
such renewal due to an event of force majeure as provided in paragraph 7(a)
hereunder, it being understood that, subject to clauses (i) and (ii) above, if
Lessee is in breach hereof beyond any applicable notice and grace periods
hereunder and there is a Permitted Mortgage then in effect, the Primary Term or
the applicable extended term (as the case may be) shall nonetheless
automatically extend (in accordance with the succeeding sentence), provided that
the Permitted Mortgagee is proceeding in accordance with the terms of paragraph
49 hereof. The option to extend the Primary Term of this Lease for the
additional periods described above shall be automatic without any notice
required from Lessee provided, however, if Lessee elects not to extend this
Lease at the end of the Primary Term or any extended term, then Lessee shall
provide, by mailing notice thereof, as hereinafter provided, to Lessor at least
sixty (60) days prior to the date of expiration of the then current term,
further provided however, that such notice not to renew must be accompanied by a
written consent thereto by the Permitted Mortgagee, as hereinafter defined in
paragraph 27(b), such consent to be required only if a Permitted Mortgage is in
effect at the time of such renewal.
b. The "Remainder Term" shall commence at the end of the Primary
Term, or any extended term, as applicable, and shall continue until Lessee shall
have fully complied with all of its reclamation, environmental and other
obligations hereunder.
Mineable and merchantable coal, as used herein, means coal that can be
mined and marketed at a reasonable profit to Lessee when reached in the normal
course of mining by the use of modern practical and efficient machinery,
facilities, methods and management.
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3. Rights; Failure of Title.
a. Lessee shall have, so long as this Lease remains in effect, all
the mining rights and privileges owned by Lessor appurtenant to the coal
existing in the Leased Premises and incident to the ownership thereof. The
Lessee shall have the exclusive right and privilege of mining, extracting,
removing, and marketing all of the mineable and merchantable coal contained on
the Leased Premises. Further, Lessor does hereby grant unto Lessee all necessary
and convenient rights for the development of the mineable and merchantable coal
including, without limitation, the right to enter in, upon, and under such lands
and erect or place thereon such buildings, machinery, plants, and other
structures, roads, tramways, airshafts, power lines, substations, drains, drain
ways; and the right to operate the same therein and thereunder to such extent as
may be necessary or convenient for the mining, extracting, removing, and
preparing of coal for marketing. The Lessor hereby consents to Lessee's use of
any surface owned by Lessor within the Leased Premises. Lessee is granted the
right of ingress, egress, and regress over and through said lands for mining
purposes all as may be necessary and in so far as Lessor has the right to grant
said privileges of the deeds or other instruments under which it holds title.
b. In the event any part of the Leased Premises is lost after final
adjudication or settlement to the holder of any outstanding superior title, the
minimum rental described in Article 6(e) hereof shall be pro rata reduced if
such loss is substantial (i.e., in excess of five percent (5%) of the remaining
recoverable reserves) and, if Lessee has mined and removed a part or all of the
coal therefrom and paid Lessor therefore on the royalty basis, Lessor agrees to
repay to Lessee the amount of royalty so paid, without interest, but Lessor
shall not be otherwise liable for any damage on account of the mining and
removing of said coal by Lessee, and Lessee shall protect and save harmless
Lessor from and indemnify Lessor for all suits, actions, damages or claims
whatsoever resulting or arising therefrom, provided however, with respect to the
potential adverse claims listed on Exhibit B, titled "Potential Adverse Claims",
attached hereto and made a part hereof, no reduction of minimum rentals shall be
made because of any reduction of recoverable reserves occasioned by or resulting
from these claims.
4. Wheelage and Processing Rights. Lessee shall pay to Lessor for the
said right to transport coal from Adverse Lands, as hereinafter defined, a
"Wheelage Fee" as hereinafter provided, and in addition to such Wheelage Fee,
Lessee shall pay to Lessor for coal from Adverse Lands that is processed on the
Leased Premises an additional "Processing Fee" as hereinafter provided, provided
however, no Wheelage Fee or Processing Fee shall be due for any month for which
the Lessee pays to Lessor production royalty on a volume of coal equal to or in
excess of 200,000 tons. For purposes of this Lease, (i) "Adverse Lands" shall
mean property not included in this Lease or that certain Sublease Agreement of
even date between Lessor and Lessee (the "Sublease"), and (ii) "Processing" or
"Processed" shall mean any coal beneficiation process which results in the
separation and disposal of rock, shale, or other waste material from the coal,
and shall not be applied to crushing and/or blending operations.
5. Exceptions and Reservations. There is excepted and reserved, from
the
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operation of this Lease, the entire ownership and control of the Leased Premises
and the coal, stone, sand, water, timber, coal and other minerals, rights and
products therein and thereon for all purposes other than those for which this
Lease is made, including without limitation the following:
a. The right to cut, prepare, use or remove all the timber on the
Leased Premises;
b. The right of searching for oil, gas, coal, coal bed methane not
released in the ordinary course of mining ("CBM") and other minerals
and products other than the coal hereby leased and removing the same
when found, the right to bore for and produce the oil and gas,
including CBM, found in the Leased Premises, the right to store and
transport, through pipelines or otherwise, such gas and oil, and gas
and oil from any other lands, the right to prospect, mine, produce,
store and transport any minerals other than the coal hereby leased
found in, on or underlying the Leased Premises and the right to store
and transport any minerals from other lands;
c. The right of draining water, transmitting electrical energy,
steam and heat, and of transporting coal or coke or other products and
minerals and goods of all other kinds from the Leased Premises or any
other land over, across or through the Leased Premises;
d. The right of using the stone, earth, water and other minerals
and products in and on the Leased Premises, of making excavations and
sinking or boring slopes, shafts, drifts, tunnels and walls, of
erecting buildings, structures, machinery and other improvements, of
constructing and maintaining ditches, transmission lines, telegraph and
telephone lines, railroads or other roads, tramways, tubing, pipelines
or other means of drainage, transmission, communications or
transportation over, upon or beneath the surface of the Leased
Premises, and of selecting and granting to others rights of way
therefor;
e. The right of granting and conveying, from time to time, any
rights of way through and over the Leased Premises, provided however,
Lessor shall consult with Lessee and shall obtain the consent of
Lessee, which consent shall not be unreasonably withheld, prior to
granting rights of way through and over any portion of the Leased
Premises which is included in any of Lessee's reclamation permits;
f. Rights of ingress and egress as may be necessary or convenient
in the proper development of the Leased Premises or other lands or in
the proper exercise of the rights hereby excepted and reserved; and
g. All outstanding rights of any person or entity under existing
leases, deeds or other instruments evidenced by recorded instruments or
visible on the ground.
Notwithstanding the terms and provisions of this paragraph 5, Lessee's
rights
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herein granted shall be the dominant estate with respect to rights granted
hereafter pursuant to this paragraph 5 and Lessor's exercise of any excepted and
reserved rights shall not unreasonably interfere with the rights herein granted
to Lessee. With regard to any rights on the Leased Premises granted to others
after the date hereof, Lessor shall require the grantee of such rights to agree
to (i) indemnify and hold harmless Lessee and Permitted Mortgagee existing at
that time with respect to acts and omissions of such grantee with respect to
grantees operations on the Leased Premises, and, (ii) where grantee shall be
conducting mining, commercial or industrial operations thereunder, (A) name
Lessee and Permitted Mortgagee as an additional insured with respect to such
grantees operations on the Leased Premises and, (B) maintain reasonable
commercial limits of insurance.
6. Payments; Abatement.
a. Lessee shall pay to Lessor for each ton of coal mined and sold
hereunder from the Leased Premises, a tonnage royalty equal to the greater of
the "Fixed Rate" or the percentage of the gross sales price (the "Percentage
Rate") each as specified below.
For coal mined by underground mining methods:
Seam Fixed Rate Percentage Rate
---- ---------- ---------------
Any $2.00 per ton 7% of Gross Sales Price
For Coal mined by surface mining methods, including highwall and/or auger mining
methods:
Seam Fixed Rate Percentage Rate
---- ---------- ---------------
Any $2.00 per ton 7.5% of Gross Sales Price
b. Except as provided in paragraph 4 hereof, Lessee also shall pay
to Lessor a Wheelage Fee on coal mined from Adverse Lands and transported on,
over or through the Leased Premises an amount equal to the greater of $0.10 or
0.25 percent of the Gross Sales Price per ton of such coal so transported.
Wheelage Fees provided for in this section shall not be recouped by Lessee.
c. Except as provided in paragraph 4 hereof, Lessee also shall pay
to Lessor, in addition to the Wheelage Fee, a Processing Fee on coal mined from
Adverse Lands and processed on the Leased Premises in an amount equal to the
greater of $0.15 or 0.50 percent of the Gross Sales Price per ton of such coal
so processed. Processing Fees provided for in this section shall not be recouped
by Lessee.
d. As used in this Lease, the following terms shall be defined as
follows. (i) The term "coal" shall include any low coal content merchantable
product that is sometimes sold and shipped under various trade names including,
but not limited to, bone, coal, fuel and middlings. (ii) The term "ton" shall
mean 2,000 pounds. (iii) The term "gross sales price" shall refer to the total
average amount receivable, F.O.B. railroad car at the Fork Creek Preparation
Plant, or F.O.B truck at the loading point on the Leased
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Premises, for each ton of coal, directly or indirectly, by Lessee or any
affiliate of Lessee in an arms length transaction. It is understood that the
gross sales price shall be determined without any deductions or offsets
whatsoever, except that Lessee may deduct any actual transportation costs
incurred for transporting coal from the Fork Creek Preparation Plant to any
other shipping point, (iv) The term "Affiliate" shall mean any person or entity
that directly or indirectly controls, is controlled by or is under common
control with Lessee. For purposes of this paragraph, a person or entity shall be
deemed to "control" another person or entity if such controlling person or
entity owns 25% of the equity of the controlled person or entity.
e. During the Primary Term, Lessee shall pay to Lessor, as a minimum
rental, payable monthly on or before the 25th day of the month following the
month for which such minimum rental is due, the following amounts: Two Hundred
Thousand Dollars ($200,000) per month commencing on the effective date of this
Lease, partial months prorated. The minimum rental shall be reduced to One
Hundred Thousand Dollars ($100,000) per month after thirty-five million tons
(35,000,000) of coal shall have been produced and sold from the Leased Premises
under this Lease, and shall be further reduced to Fifty Thousand Dollars
($50,000) per month after fifty million tons (50,000,000) of coal shall have
been produced and sold from the Leased Premises under this Lease.
f. Each month's tonnage royalty shall be credited against this
minimum rental so that no minimum rental payment shall be due for any month
where tonnage royalties equal or exceed the minimum rental. In any month where
the tonnage royalty falls short of the minimum rental, the difference between
the minimum rental paid and the tonnage royalty for that month shall be credited
to Lessee's account for subsequent months. Lessee shall then have the right to
produce and ship, without paying any tonnage royalty, such quantities of coal as
would produce, at the royalty rates prevailing at that time, a tonnage royalty
equal to that credit. In no event will Lessee pay less during any month than the
minimum monthly rental. The right of recoupment may be exercised within the 24
months immediately following the payment thereof. . However, this right of
recoupment shall be limited by the termination of this Lease, by expiration or
otherwise.
g. Payment of tonnage royalty, if any shall be due after applying
the foregoing provisions, shall be made monthly on or before the 25th day of
each calendar month with respect to coal mined and sold from the Leased Premises
during the preceding month. Each payment of royalty shall be accompanied by a
statement showing the coal mined and sold during the period for which the
payment is tendered, the unsold inventory at the beginning and end of the month,
the gross sales price per ton as defined herein, the number of tons sold at that
sales price, and the royalty due thereon. Payment of Wheelage Fees and/or
Processing Fees, if any, shall be made monthly, on or before the 25th day of
each calendar month with respect to coal transported during the preceding
calendar month. Any coal sales agent of Lessee is hereby authorized, and Lessee
shall instruct such agent, to furnish to Lessor upon Lessor's written request to
such sales agent (with a copy of such request to Lessee) any information desired
by Lessor with regard to the quantities and the gross sales price of the coal
with respect to which Lessor is to receive a payment hereunder. Lessor shall
keep and cause any other party that reviews
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Lessee's records on behalf of Lessor to keep all information disclosed to Lessor
pursuant to this paragraph 6(g) in strict confidence and shall not disclose such
information to any other party without the prior written consent of Lessee,
except as may be required by law.
h. Lessee shall pay full tonnage royalty at the rate herein
stipulated upon all mineable and merchantable coal, whether in place or mined,
which is burned, lost, destroyed, abandoned, or injured by fire or explosion
("lost coal"), when such loss is caused by negligence of Lessee, its agents or
employees or the failure of Lessee to properly mine or provide for the mining of
said coal by standard methods of mining. Lost coal shall be paid for according
to the following formula: (Lease royalty rate) X (average gross sales price) X
(recoverable tons). The lease royalty rate is provided in Article 6(a). The
average gross sales price as used in this paragraph is the average of the gross
sales prices for all coal sold during the month preceding the month of the
occurrence of lost coal during which coal was actually sold pursuant to this
Lease. Recoverable tons is defined as ninety percent (90%) of tons in place for
surface mineable coal, fifty-five percent (55%) of tons in place for underground
mineable coal, and thirty-five percent (35%) of tons in place for highwall miner
or auger mineable coal. The number of tons of lost coal in place is calculated
by multiplying four-hundredths (.04) times the square foot area of lost coal
times the clean coal thickness in feet for the lost coal. Payment for lost coal
shall be made by Lessee to Lessor within one (1) month following such loss.
i. For each month during the Remainder Term and until termination of
this Lease, Lessee shall pay to Lessor as rent the sum of $100.00 per month,
payable monthly in advance on or before the first day of each month.
j. All payments to be made hereunder by Lessee to Lessor shall be
wire transferred in immediately available funds to such account as Lessor may
from time to time designate in writing to Lessee, or in such manner as Lessor
may from time to time designate in writing. Any late payment shall bear interest
at the rate of eight percent (8%) compounded annually on all amounts not paid
when due.
7. Mining Operations
a. Lessee shall immediately upon the execution of this Lease, enter
upon the Leased Premises and begin and diligently continue to mine and remove
coal thereon in an energetic, approved, skillful and workmanlike manner,
utilizing a mine plan reviewed by Lessor, so as to recover the greatest possible
amount of mineable and merchantable coal from the Leased Premises employing
modern machinery and equipment and good mining and reclamation practices and in
accordance with the plans submitted by Lessee to Lessor pursuant to Article 8(b)
hereunder, having due regard for the value of the Leased Premises as a coal
producing property so as to avoid damage to and waste of any seams of coal,
whether granted as a part of the Leased Premises or not so granted, and to
continue mining the same with due diligence during the term of this Lease;
subject only to "force majeure" (as hereinafter defined).
If Lessee is unable, wholly or in part, by reason of force majeure
from carrying on its coal mining operations under this Lease, Lessee shall give
Lessor
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prompt written notice of the force majeure with reasonable detail concerning it.
Thereupon, the obligation of Lessee to make minimum rental payments shall be
suspended during the continuance of the force majeure, but such suspension of
minimum rental payments shall not exceed four (4) aggregate months in any
calendar year.
For the purpose of this Lease, the term "force majeure" shall mean
any act or occurrence, beyond Lessee's reasonable control and which is not
caused by the negligence or willful misconduct of Lessee, its agents or
employees that prevents the mining, processing, transportation or delivery of
coal including fire, natural flood, damage to or destruction of Lessee's mines,
improvements or machinery, riot, strikes, acts of God, serious accident,
non-approval of government or regulatory environmental permits required for
mining operations provided Lessee has done all things reasonably necessary to
secure such permits, or other cause beyond the reasonable control of the Lessee.
Lessee shall, however, upon the happening of any event of force majeure, use all
reasonable efforts to remove as promptly as possible the cause of the inability
to mine and ship coal.
x. Xxxxxx shall at all times have the right to enter the Leased
Premises and workings and mines of Lessee in order to audit, review, examine,
survey, and/or measure the same, or any part thereof, to determine that all the
terms and conditions of this Lease are fully complied with and for these
purposes to use freely the means of access to the Leased Premises and workings
thereon without hindrance, but in such manner as not unreasonably to interfere
with Lessee's operations. Lessor shall be responsible for the acts and omissions
of its agents while on the Leased Premises.
c. If Lessor finds and reports to Lessee in writing that, in the
progress of the work, any areas of merchantable and mineable coal of workable
thickness have been passed by with the result that coal has not been removed,
which, in accordance with good mining practices should have been removed, Lessee
agrees to return to such areas and remove the coal therefrom, or pay for the
coal under the lost coal provision as provided in Article 6(h). Any Leased Coal
for which royalties have been paid pursuant to the provisions of paragraph 6(h)
may thereafter be mined by Lessee during the term of this Lease. Lessee shall
report mining of any previously declared lost coal and shall pay to Lessor all
amounts specified in paragraph 6(a) hereunder, less any previously paid
royalties for such coal. Any dispute under this paragraph 7(c) shall be resolved
pursuant to the provisions of paragraph 47 of this Lease.
d. Lessee shall maintain such possession and control of the mines
operated hereunder as may be necessary to prevent trespass thereon or therein
and shall, at its own expense, do whatever is necessary to prevent such
trespass, and shall also at its own expense and in its own name (and in the name
of Lessor when specifically authorized by Lessor), initiate and conduct all
proceedings necessary to that end.
e. Lessee shall use all reasonable care and precaution to prevent
the occurrence of fires in timber or forest growth on the surface overlying the
Leased
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Premises and to prevent mine fires in the coal seams on the Leased Premises; and
to pursue the prompt extinguishment of any such fires caused by its activities.
Lessee shall also cooperate with Lessor and its other lessees in extinguishing
such fires on the Leased Premises and on adjoining lands that may be liable to
spread to or over the Leased Premises. Lessee shall be responsible for all
injuries and damages caused by fire that result from the negligent acts of
Lessee on the Leased Premises including, but not limited to, damages to timber
and property and injuries to persons on the Leased Premises and adjoining lands.
f. Lessee agrees that if, in the prosecution of its mining
operations hereunder, it encounters or leaves unmined, any part or portion of
the coal covered hereby (it being understood that such coal can only be left as
unmineable and unmerchantable with the consent of the Lessor, or after it has
been determined as a matter of fact to be unmineable and unmerchantable) and the
operations of Lessee hereunder have advanced to the point where it is no longer
practicable to mine such coal, or the coal is inaccessible to Lessee, and to the
point where such removal of such coal will not injure or damage Lessee's mine
operations, then in that event, Lessor at its election, may declare in writing
such coal so left as no longer being a part of the Leased Premises and may mine
and remove such coal or Lease the same to another for the purpose of mining and
removing the same as though it had not been included in this Lease in the first
instance; provided that such mining is done in such a manner as not to
unreasonably interfere with Lessee's mining operations under this Lease. Lessor
shall give Lessee at least ninety (90) days advance written notice of its
intention to invoke this paragraph (f), identifying the areas to be deleted from
the Leased Premises.
g. Lessee shall mine through portions of the coal seams that are
faulty or would yield unmerchantable coal, if the amount and quality of coal
lying beyond the fault appears economically justifiable. Lessee shall give to
Lessor at least 15 days prior notice in writing of its intention so to do before
removing the pillars protecting main haulways and main air courses in the Leased
Premises. Any dispute under this paragraph 7(g) shall be resolved pursuant to
the provisions of paragraph 47 of this Lease.
h. If, at any time after the tenth year of this Lease, Lessee does
not produce coal from the Leased Premises at the rate necessary to recoup the
total minimum royalty payments due for the most recent Lease year and a third
party proposes to develop any area of the Leased Coal in which (i) Lessee is not
currently operating or has not obtained or has not submitted a then current
application for a surface disturbance permit from the West Virginia Division of
Environmental Protection, or (ii) because of its location with respect to
Lessee's existing and proposed operations or other condition which, in Lessor's
reasonable opinion, makes it appear unlikely that such area will be mined by
Lessee, then Lessee, after 90 days notice of such third party's proposal, may
elect to release such area from the Lease with a commensurate reduction, on a
pro rata basis, of the then current minimum royalties hereunder, or, in the
event Lessee elects not to release such area, Lessee shall either commence and
diligently pursue Mining Operations, as hereinafter defined, in such area within
two years or Lessee shall be deemed to have irrevocably acknowledged that such
area is indeed mineable and
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merchantable and agrees to pay for such area as lost coal as defined herein if
Lessee does not mine such area prior to termination hereof. If Mining Operations
commence within such two (2) year period but the condition of the area is found
to be such that the coal is not mineable and merchantable, Lessee shall have no
obligation regarding lost coal under this Lease with respect to such area. If
Lessee elects to surrender such coal to enable a lease to such third party,
Lessee also, upon request of Lessor, promptly shall transfer to such third party
any of its permits that uniquely apply to such coal and otherwise shall grant
such permit rights as are necessary to allow such third party to develop a mine
as proposed. Lessee shall be relieved of and from any duties and obligations it
would otherwise have regarding the area or coals totally released by it pursuant
to this Article. Lessee shall be reimbursed by Lessor for reasonable documented
costs incurred in the development of any mining permit required to be
transferred as a result of this provision, except that with respect to jointly
used haulroads, reimbursement shall be limited to the subsequent maintenance
cost thereof which shall be apportioned among the users on the basis of tonnages
hauled over said jointly used roads. Any such designee shall agree to comply
with the insurance and other requirements of paragraph 5 hereunder with respect
to rights granted hereafter. For purposes of this paragraph 7(h), "Mining
Operations" shall mean any activity necessary or incidental to the actual
removal of coal in the normal course of events including core drilling,
prospecting, obtaining additional required rights, permitting, providing for
electrical power or other utilities, construction of roads, face-ups, and
providing supporting fixtures and the mining and removal of coal. Any dispute
under this paragraph 7(h) shall be resolved pursuant to the provisions of
paragraph 47 of this Agreement.
8. Surveys, Maps, and Permits.
a. Lessee shall at its expense employ a competent, registered
professional mining engineer, whose duty it shall be to plan and project in
advance the coal mining operations to be conducted on the Leased Premises in an
efficient and practicable manner, according to accepted and approved engineering
practices for the development of coal mines by the methods of mining herein
provided for.
b. The registered mining engineer shall lay out plans for
development of the mining and cause maps on a scale of six hundred (600) feet to
one (1) inch, or such other scale as Lessor may deem acceptable, to be made,
which maps shall show thereon, fully and accurately, mining plans and proposals
for mining, all improvements and surface structures to be made in conjunction
with the mining of the coal, reclamation methods after removal of said coal,
elevation of the coal seam, total coal thickness, total seam thickness, contour
above sea level, West Virginia State Plane Coordinate system, and Lessee shall,
thirty (30) days before the commencement of any mining operation, furnish a copy
of such maps and electronic files in a format acceptable to Lessor. Lessee shall
also provide to Lessor with further request therefor a copy of the most current
approved permit proposal/drainage map and subsidence control map and, upon
reasonable notice, a copy of all mine permit applications and documents shall be
available for Lessor review.
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c. Lessee agrees to give Lessor reasonable notice of its or any
contractor's intention to permit (under applicable state law) any area on or in
the Leased Premises.
d. No later than the 1st day of March and September of each year,
and as often as once every thirty days if requested by Lessor, Lessee shall
furnish Lessor maps and electronic files in a format acceptable to Lessor, which
accurately show workings and extension of Lessee's mining operations on the
Leased Premises during the six (6) month period ending December 31 and June 30,
respectively, and any other reasonable information requested by Lessor. The maps
shall be on a scale of six hundred (600) feet to one (1) inch (three sets) and
one hundred (100) feet to one (1) inch (one set) or such other scale as
requested in writing by Lessor and shall be based on tied surveys of all
workings utilizing the West Virginia State Plane Coordinate System and shall be
delivered to Lessor at its designated office.
x. Xxxxxx itself, or through its agents, shall at all times have
access to the plans, permit applications (amendments and completions), maps,
electronic files, exploration and quality data in a form acceptable to Lessor,
and tracings of Lessee and may take therefrom copies of such portions as Lessor
or its agents may desire. If Lessee fails to furnish maps or other records as
herein provided for and continues not to furnish such maps or documents for a
period of twenty (20) days after written demand by Lessor, Lessor may employ a
competent engineer to make a survey of the mining developments of Lessee as
herein provided and the expense thereof shall be paid by Lessee within 10 days
after written demand.
f. Lessee shall furnish Lessor on or before the 1st day of March of
each year and at such other times as may be fixed by law or required for tax
assessments, a statement of and maps showing the acreage of the Leased seams of
coal that were mined, abandoned, and/or lost by tax tract during the preceding
year and the estimated remaining leased reserves. Lessee shall cooperate fully
with Lessor in any effort by Lessor during a reappraisal or otherwise to reduce
or minimize any taxes, fees, levies or other assessments on all or any part of
the Leased Premises.
9. Taxes. Lessee, during the term hereof, shall promptly and properly,
in accordance with all statutes, regulations, rulings and case law, pay at the
times they become due and payable, all taxes, fees, levies, assessments,
including, but not limited to, black lung benefits and assessments, ad valorem,
excise, license, privilege or severance taxes, and any other charges whether
imposed by the United States, any State, or any political subdivision thereof,
or by any municipal corporation upon or with respect to: (1) the fee estate or
other interests of Lessor in the Leased Premises; (2) Lessee's interest in this
Lease; (3) the leasehold estate hereby created; (4) all coal mined and produced
from the Leased Premises by Lessee and the products thereof; (5) the exercise of
any right or privileges in connection with Lessee's operations hereunder; so
that Lessor shall be entirely relieved from such charges; provided, however, if
any other seam or seams of coal upon the Leased Premises shall be operated by
others, proper allowances shall be made for Lessee in settlement of the tax to
be paid by it under this Article. Lessee shall also promptly and properly, in
accordance with all
12
statutes, regulations, rulings and case law, pay at the times they become due
and payable all taxes, fees, levies, assessments, including, but not limited to,
black lung benefits and assessments, excise, license and privilege taxes, and
any other charges whether imposed by the United States, any State, or any
political subdivision thereof, or by any municipal corporation upon buildings,
structures, improvements, equipment and property of any kind used in, on or
about the Leased Premises, whether owned by Lessee or Lessor (collectively
"Taxes"). Lessee shall be required to pay the Taxes only with respect to the
periods during the term of this Lease for which the tax is assessed. If this
Lease begins or ends during a period for which a tax is assessed, then such tax
shall be pro-rated between Lessee and Lessor.
If Lessor makes any payment, either voluntarily or as required by law,
on account of any or all of the above, then the amount thereof shall be repaid
by Lessee to Lessor within ten (10) days after the date Lessor submits a written
statement to Lessee.
Notwithstanding the foregoing, it is not intended that Lessee shall
pay, or be required to pay, any so-called income, profits, excise, occupational
or privilege taxes levied or assessed upon the income of Lessor, nor is it
intended that Lessee shall pay any taxes attributable to the oil and gas estate,
nor to the timber on the Leased Premises, but, subject to such exceptions,
Lessee agrees to save and forever hold Lessor harmless from and to exonerate and
indemnify Lessor for any and all Taxes. Lessee shall provide to Lessor any
filings prepared for submission to the West Virginia State Tax Department with
respect to the Leased Coal reserves and Lessee's mining activity thereon. Lessor
agrees that Lessee shall have the right to protest any taxes that Lessee is
required to pay under this paragraph 9, provided Lessor is not adversely
affected by Lessee's actions. Any such protest shall be at the sole cost of
Lessee and Lessee shall be responsible for payment of all penalties and interest
due on such Taxes.
10. Engineering Audit.
a. Lessor, its agents, engineers or other persons on Lessor's
behalf, with their assistants, shall have the right to enter at all times the
Leased Premises and mining operations of Lessee in order to audit, examine,
select samples of coal, survey or measure the same or any part thereof, for the
purpose of ascertaining the condition of the mines, the methods practiced, as
well as the amount of coal removed, or for any other lawful purpose, and Lessor
shall have the right to place and keep an auditor or other representative upon
any tipples, docks or loading facilities at the mines of Lessee for the purpose
of checking the weights, measures, accounts and mining methods of Lessee and for
these purposes to use freely the means of access to the said mines and works
without let, hindrance, or molestation.
x. Xxxxxx, or any person acting on its behalf, shall also have the
right to enter the Leased Premises at all reasonable times to inspect for or
prevent any trespass; provided, however, that Lessor shall not be obligated to
make such
13
inspections nor will Lessor be responsible in any manner for any such trespass.
Lessee will use its best efforts to keep trespassers off of the Leased Premises,
and may limit access to the Leased Premises to authorized persons only. Lessor
shall comply with Lessee's reasonable safety and security policies regarding use
of haulroads on the Leased Premises.
x. Xxxxxx shall be responsible for the acts and omissions of its
agents and employees acting on Lessor's behalf while exercising the rights under
this paragraph 10.
11. Damages. Lessee shall conduct its mining operations so as not to
violate any rights of lateral and subjacent support or other rights belonging to
the owners of other estates on, adjacent to and near the Leased Premises. Lessee
shall notify Lessor within twenty-four (24) hours of any action instituted
against Lessee for the recovery of damages aforesaid.
12. Weights.
a. All payments for coal mined from the Leased Premises shall be
paid for by Lessee on the basis of railroad or barge weights as the case may be.
Such coal shipped by truck or conveyor or by other than rail or water
transportation, or used by Lessee for its own purposes, shall be weighed by
Lessee on accurate scales which shall be inspected and approved as accurate by a
qualified agency and payments for such coal shall be made based on such weights.
If actual weights are not immediately available, estimated weights will be
utilized and adjusted when actual weights become available.
b. To the extent reasonably possible, Lessee shall provide suitable,
accurate, tested scales and shall weigh separately before commingling all coal
mined from the Leased Premises; and Lessee shall provide a plan or method, which
is satisfactory to Lessor, whereby accurate weights, quality and gross sales
price of each can be determined. The said method or plan shall be submitted to
and approved in writing by Lessor before any such coal is commingled. At the
time of each payment hereunder, Lessee shall furnish to Lessor a report in form
approved by Lessor showing the information required above. Where scales are not
available to determine weights prior to commingling of coals, Lessee shall
propose a plan or method of determining such raw coal weights and shall submit
such plan to Lessor, which Lessor's approval therefor shall not be unreasonably
denied. Any dispute under this paragraph 12(b) shall be resolved pursuant to the
provisions of paragraph 47 of this Lease.
13. Accounting for Commingled Coal. In addition to the foregoing, if
coal from the Leased Premises is to be commingled with coal from other lands,
Lessee shall no less frequently than semi-annually calculate by cubic
measurement the coal mined during the preceding six month period in accordance
with a plan or method, which is satisfactory to Lessor, whereby accurate weights
of coal mined from the Leased Premises and accurate weights of coal mined from
other lands can be determined. Lessee shall on or before the 20th day of January
and July, and at other times as reasonably requested by Lessor,
14
during the term of this Lease, furnish to Lessor a report in form approved by
Lessor, showing separately (i) the total quantity of coal mined from the Leased
Premises and (ii) the total quantity of any coal mined from other premises and
commingled with coal mined from the Leased Premises determined in accordance
with the provisions of this paragraph. The report shall also show in what manner
the coal was shipped, the certified weights of the coal, and a record of the
representative samples for float and sink tests or other appropriate tests as
approved by Lessor with analysis of said coal made or caused to be made by
Lessee bi-weekly before the said coal is commingled. The purpose of this
paragraph 13 shall be to permit Lessee to allocate the coal shipped from the
Fork Creek Preparation Plant to coal mined from the Leased Premises and from
other sources. Any dispute under this paragraph 13 shall be resolved pursuant to
the provisions of paragraph 47 of this Lease.
14. Exploration Data. Lessee promptly shall furnish Lessor with true
and complete copies of any and all data which Lessee may obtain, by drilling or
other means, with respect to the existence, location, quantity, quality, depth,
and thickness of coal in the Leased Premises and with respect to the existence,
location, quantity, quality, depth and thickness of any oil, gas, casinghead
gas, clay or other mineral strata, in the Leased Premises.
15. Records. Lessee will keep and cause to be kept during the term
hereof and for not less than three years after the termination of the Lease
accurate records showing separately the quantities of coal with respect to which
Lessor is to receive a payment hereunder and the gross sales price of all of
each such coal. Lessor, its agents, engineers, attorneys or other persons in its
behalf shall have access at any and all reasonable times to all records
containing facts necessary for a just accounting of amounts due Lessor hereunder
and to the offices where such records are kept, for the purpose of inspecting,
auditing and making copies thereof; and, for like purposes, Lessee, to the
extent Lessee has the right and only to such extent, does hereby authorize
Lessor to request and/or require of any railroad company, barge company,
trucking company or any mode of transportation of such coal an inspection of
their books and records, showing the detailed weight and quantity of all such
coal and other products and pertinent information in relation thereto; and the
said carriers and their agents are hereby authorized and requested to show
Lessor and its agents all such records when requested, and to furnish all such
information on request. At the time of each payment of royalty, a full and
accurate statement showing the information required above and such other data as
shall be reasonably requested by Lessor shall be delivered to Lessor. Lessee
also shall furnish to Lessor, upon request, from time to time, an itemized
statement of all property and equipment being used by Lessee in its mining
operations on the demised premises, indicating therein that owned by the Lessee,
that not owned by the Lessee, and stating the liens thereon and the names of the
lien holders, if any there are. The confidentiality obligations imposed on
Lessor under paragraph 6(g) herein apply to this paragraph 15.
15
16. Permits and Reclamation.
a. In all mining and other activities undertaken by Lessee in and
upon the Leased Premises, Lessee will in all material respects comply with the
applicable laws and statutes of the United States of America and the State of
West Virginia and that State's political subdivisions which may be in effect at
the time of mining and all valid rules, regulations and orders thereunder
regulating such mining and related activities. Copies of all such permits or
other authorizations issued by any governmental authority shall be furnished to
Lessor immediately after they are received by Lessee. All such permits or other
authorizations shall be obtained by and at the expense of Lessee. Lessee shall
post, or cause to be posted, such bonds as may be required in connection with
the issuance of such permits or other authorizations. Lessee shall conduct all
mining activities in accordance with such permits or other authorizations.
Lessor shall have the right to inspect and copy at reasonable times and
intervals, all inspection reports and compliance, noncompliance and other orders
issued by any governmental authority.
b. Lessee shall pay, or shall cause to be paid, all reclamation
fees, and shall otherwise be entirely responsible for the complete performance
of reclamation obligations hereunder relating to Lessee's operations on the
Leased Premises. Lessee shall perform all reclamation work as soon as reasonably
possible after completion or cessation of the activities which establish the
need or obligation to perform reclamation or shutdown work and shall at all
times keep such work current. Lessee shall pay, or cause to be paid, all fines
which may be levied or assessed in connection with the mining operations of
Lessee by the State of West Virginia or any other governmental authority.
Notwithstanding the foregoing, Lessee may contest or appeal the levy or
assessment of any fine to the full extent permitted by law, provided Lessor has
received assurances satisfactory to it that failure to pay the fine pending the
outcome of the contest or appeal shall not adversely affect Lessor.
c.
i) At such time as Lessee shall have mined and removed all
of the mineable and merchantable coal in the Leased Coal underlying the Leased
Premises or upon termination of Lessee's right to mine, process and ship coal as
provided herein or upon termination of this Lease, at Lessor's election made
within 180 days thereof, Lessee either (a) shall fully reclaim and restore the
Leased Premises in accordance with all applicable laws, regulations and permits
or (b) shall leave the Leased Premises in such condition that mining or other
activities by another may begin immediately after termination hereof, each as
hereinafter more fully described. Lessor in its sole discretion may elect option
(a) for parts or portions of the Leased Premises and option (b) for other parts
or portions of the Leased Premises.
ii) If Lessor elects to have any part of the Leased Premises
reclaimed and restored, Lessee at its sole cost and expense shall reclaim and
restore such Leased Premises as required by applicable laws, regulations and
permits and shall initiate and diligently pursue and complete all things
necessary to terminate all permits and authorizations held by Lessee regarding
such Leased Premises.
16
iii) If Lessor elects to have Lessee leave any part of the
Leased Premises in such condition that mining or other activities by another may
begin immediately, Lessee, at its sole cost and expense, promptly upon receipt
of notice of such election, shall initiate and diligently pursue and complete
all things necessary, effective as soon as possible after such election is made,
to accommodate Lessor's election. Lessee shall do all things requested by
Lessor, if such request be made, to permit immediate mining or other activities
by another, including but not limited to the transfer or assignment to Lessor or
its designee of applicable permits subject to the replacement of all bonds
required to be posted in connection with such permits, except to the extent
Lessee is not in compliance with such permits. The parties agree that any
noncompliance by Lessee under any applicable laws or permits shall be determined
by a final inspection by the State compliance inspector(s) as close as possible
to, but prior to, the time of transfer. Once the activity, if any, which is not
in compliance, has been corrected by Lessee, such transferee shall be
responsible for all future obligations with respect to such activity.
iv) To the extent that Lessor exercises any of its rights
under paragraphs 16(c) and/or 16(d) of this Lease to require Lessee to permit a
transferee, designee, or other third party to operate on and/or assume any
permits of Lessee, then such transferee, designee, and/or third party shall be
solely responsible for all acts and omissions other than acts or omissions of
Lessee on that portion of the Leased Premises subject to such transfer and shall
indemnify, defend, and hold harmless the Lessee and the Permitted Mortgagee from
any and all such claims pertaining thereto. Lessor shall cause such transferee,
designee, or other third party to agree to comply with the insurance and other
requirements of paragraph 5 hereunder.
d. During the Remainder Term hereof, if Lessor so requests, Lessee
agrees to transfer any permit that it then holds on the Leased Premises to any
designee thereof or to permit such designee thereof to overbond any permit area
which may be necessary for any type of development or other activity as Lessor
may request. In such case, Lessee, upon completion of such permit transfer or
overbonding and permitting, shall no longer be responsible for such areas
hereunder.
17. Indemnity. Lessee does hereby indemnify, defend, and save harmless
Lessor, its parent, subsidiaries and affiliates and its and their respective
officers, directors, employees, agents, successors and assigns (collectively,
the "Indemnified Parties") from and against:
any and all claims, losses, liabilities, damages, demands,
obligations, fines, or civil penalties, regardless of when made or arising, by
and on behalf of any person,
17
firm, corporation, or governmental agency, arising from or growing out of or in
connection with Lessee's operations on or in or with respect to the Leased
Premises, specifically including without limitation, any and all claims for
personal injury, including death, and property damage and for salaries and wages
and employee or former employee medical, retirement and all other benefits, and
any claim rising from Lessee's noncompliance of any environmental or other law,
regulation or order or any permit, together with all costs, fees, and expenses
(including but not limited to court costs and reasonable attorney's fees)
connected with any of the above ("Damages").
In case any action or proceeding is brought against any of the
Indemnified Parties by reason of any such claim, etc. described above, Lessee
will at its sole cost and expense using counsel reasonably acceptable to Lessor
resist and defend such action or proceeding and satisfy any order or judgment
against any of the Indemnified Parties resulting therefrom. Notwithstanding the
foregoing, Lessor shall have the right using its own counsel at its expense to
defend such action upon written notice to Lessee.
Lessee's indemnity obligations under this Lease shall survive
termination of this Lease.
18. Workers' Compensation; Black Lung.
a. Without limiting the generality of Lessee's obligation to conduct
its operations hereunder in conformity with present and future laws of the State
of West Virginia and the United States and the valid regulations of the various
agencies of both, Lessee agrees that it will become and remain a subscriber to
the Workers' Compensation Fund of the State of West Virginia or otherwise
provide workers' compensation coverage for its employees in accordance with
applicable laws.
b.
i) Without limiting the generality of Lessee's obligations
to conduct its operations hereunder in conformity with present and future laws
of the State of West Virginia and the United States and the valid regulations of
the various agencies of both, Lessee agrees that it shall comply with all of the
terms and provisions of the Federal Coal Mine Health and Safety Act of 1969, as
amended by the Black Lung Benefits Act of 1972, the Federal Mine Safety and
Health Act of 1977, the Black Lung Benefits Act of 1977 and the Black Lung
Benefits Reform Act of 1977, as now or hereafter amended and all rules and
regulations adopted pursuant thereto ("Acts").
ii) Lessee acknowledges that, as between Lessor and Lessee
and for the purposes of this Lease, Lessee is, and shall be deemed to be, the
operator of any coal mine for the mining of coal from the Leased Coal in the
Leased Premises and of all related activities engaged in by Lessee or persons
under contract with Lessee pursuant to the terms of this Lease with respect to
any claim for black lung benefits or any other "social benefit" ("benefits") or
any other "social benefit" filed by or on account of its employees or former
employees pursuant to the Act, the Coal Industry Retiree Health Benefits Act of
1992 (the "Coal Act") or any similar or successor statute or amendment to
18
the Acts or the Coal Act. Lessee shall secure and shall require any other person
or entity who operates, controls, or supervises a coal mine on the Leased Coal
in the Leased Premises or performs services of construction, transportation or
other activities related to coal mining under the terms of this Lease, or who
otherwise may be liable for the payment of benefits, to secure the payment of
such benefits to or on account of their employees or their former employees in
accordance with all applicable laws and regulations and shall provide Lessor at
least annually and more often upon request, with appropriate certification that
each of them has provided security in compliance with all applicable laws and
regulations for the payment of such benefits. Lessee shall notify Lessor
immediately in writing of any changes or alterations in the status of any such
security.
iii) Without limiting the generality of Lessee's obligations
to comply with all other provisions of this Lease, Lessee agrees that it will
secure and guarantee the payment of all benefits required to be paid under the
Acts or the Coal Act or any similar act or successor statute or amendment to the
Acts or the Coal Act by reason of said mining, construction, transportation and
related activities pursuant to this Lease, and Lessee does hereby agree that it
will indemnify and hold Lessor harmless from any Damages which Lessor may suffer
directly or indirectly, as a result of or with respect to any claim for benefits
filed by or on account of any of Lessee's employees or former employees or
employees or former employees of others for whom Lessee may be required to
secure the payment of benefits under paragraph (ii) above.
iv) Lessee acknowledges that Lessor has reserved certain
rights and imposed certain requirements under the terms of this Lease solely for
the purpose of assuring that the coal in and on the Leased Premises is recovered
in accordance with the terms and conditions of this Lease so as to prevent waste
and protect the reserved rights of Lessor, however, such reserved rights shall
in no event cause Lessor to be or be considered an operator as defined in the
Acts with respect to Lessee's employees or the employees of others.
19. Insurance. Without limiting Lessee's under-taking to protect,
indemnify, hold harmless, and defend the Indemnified Parties as provided in this
Lease, and without limiting the generality of Lessee's obligation to conduct its
operations hereunder in conformity with present and future laws of the State of
West Virginia and the United States and valid regulations of the various
agencies of both, Lessee agrees at its own cost to procure and maintain at all
times during the term of this Lease from insurance companies (or statutory
funds) reasonably acceptable to Lessor, the insurance coverages as hereinafter
set forth:
a. Workers' Compensation and Employers Liability
i) Workers' Compensation coverage for occupational injury
and disease in accordance with requirements imposed by applicable state and
Federal laws, rules and regulations.
ii) Employers Liability coverage with limits of not less
than
19
$3,000,000 per occurrence including coverage for claims arising under W. Va.
Codess.23-4-2 ("Mandolidis" coverage).
b. Liability Insurance as is afforded under a policy of
Commercial General Liability, with endorsements or under other policies as may
be appropriate, with limits of not less than $5,000,000 (except for the
Pollution Liability Coverage required in subsection (iii), below, which shall be
in the amount of $1,000,000) combined single limits in any one occurrence, for
liability arising from injury to or death of one or more persons, and for
liability arising out of damage to or destruction of property, including loss of
use thereof and downtime, and including the following:
i) Blanket Contractual Liability
ii) Bodily Injury Liability
iii) Pollution Liability Coverage
iv) Owners and Contractors Protective Liability
v) Broad Form Property Damage Liability
vi) Explosion and Collapse Hazards
c. Auto Liability Insurance covering owned, non-owned and hired
motor vehicles which may be used in any connection with the operations
contemplated hereunder with limits of not less than $5,000,000 combined single
limits in any one occurrence, for all liability arising out of injury to or
death of one or more persons, and for all liability arising out of damage to or
destruction of property, including loss of use thereof and downtime.
d. Property Insurance in amounts equal to the full replacement cost
(or the highest insurable value if coverage for replacement cost is not
available) covering all real and personal property and fixtures now on the
Leased Premises or which the Lessee places on the Leased Premises during the
term of this Lease, against loss or damage by fire, lightening, explosion or
other hazards covered under extended coverage insurance. The proceeds of any
loss payable under such policies as above required shall be used by Lessee in
the restoration, repair, or replacement of the destroyed or damaged property to
the extent required by Lessee for the performance of its obligations under this
Lease.
e. All policies and endorsements providing the insurance required
under subparagraphs (a), (b), (c) and (d) above shall:
i) be occurrence coverage except for the (1) Pollution
Liability coverage under subparagraph (b)(iii), or (2) insurance required under
subsection (d) above;
20
ii) be endorsed to include liability assumed by Lessee under
this Lease;
iii) name the Permitted Mortgagee, Lessor and the other
Indemnified Parties as Additional Insureds;
iv) be primary to any and all other insurance of Lessor and
the Indemnified Parties with respect to any and all claims and demands which may
be made against them for bodily injury or death to Lessor's or Lessee's
employees, contractors, agents, servants, invitees and guests, and for property
damage, including damage to Lessor's or Lessee's property, caused by or alleged
to have been caused by any act omission or default, negligent or otherwise, of
Lessee by reason of the mining or other activities under this Lease;
v) provide that it applies separately to each insured
against which claim is made or suit is brought, however in no event for more
than the limit of liability of the applicable policy; and,
vi) be endorsed to provide that, except in cases where
damage or injury is the result of the sole negligence of Lessor or the
Indemnified Parties, all rights of subrogation against Lessor and the
Indemnified Parties and their insurers are expressly waived.
The limits of liability required above may be provided by a combination
of primary and excess policies as long as all requirements and coverages are
provided thereunder. The foregoing minimum requirements shall not limit Lessee's
liability to Lessor in any manner.
f. Prior to commencement of any operations under this Lease, Lessee
shall provide to Lessor acceptable evidence in the form of an original
certificate or certificates of insurance from the respective insurance companies
confirming that all coverages and policies required hereinbefore are in full
force and effect in the form required, that Lessor and the Indemnified Parties
have been included as additional insureds where required, and confirming that
Lessor will be notified in writing not less than 30 days prior to the
cancellation or non renewal of any such insurance. Upon request of Lessor,
Lessee shall provide duplicate originals of such policies to the Lessor. Lessee
shall require its contractors, subcontractors and other agents performing any
work in the Leased Coal or on or in the Leased Premises to obtain and maintain
insurance for the risks and in accordance with all the terms in this Section but
at reasonable limits designated by Lessee.
20. Liens and Encumbrances. Except for certain liens and encumbrances
that Lessor consents to in writing, Lessee shall not permit any lien or
encumbrance to accrue on the Leased Premises or any part thereof, except a lien
for ad valorem property taxes not due or payable. Should any non-permitted
encumbrance or lien on the Leased Premises or appurtenances accrue, Lessee shall
cause the same to be promptly
21
discharged and removed. If Lessee fails to discharge or remove any such lien or
encumbrance, Lessor shall have the right but not the obligation to take such
action as may be necessary to remove or satisfy the same; and Lessee shall be
obligated to reimburse Lessor for any expense, disbursements or attorney's fees
necessarily incurred in protecting the Leased Premises from such liens and
encumbrances and shall pay the same at the next succeeding payment of royalty.
Lessee, however, shall have the right to contest in the courts or otherwise the
validity of any such lien.
21. Environmental Damage. Lessee, for itself and its contractors,
subcontractors and other agents performing work hereunder, shall indemnify and
hold Lessor and the other Indemnified Parties harmless from any and all
environmental damages resulting from or connected with its and their mining and
other activities under this Lease. Without limiting the generality of Lessee's
indemnification against environmental damages, Lessee agrees that its mining
operations on the Leased Premises will be conducted in such manner as to absolve
the Indemnified Parties from liability due to pollution or discoloration of
streams fed by waters from the Leased Premises, or because of interference with
the present bed of such streams or their natural flow; and Lessee further agrees
that it will conduct all of its operations hereunder in a careful and prudent
manner and in such a way as to absolve Indemnified Parties from any liability
arising therefrom, and Lessee shall be solely responsible for treatment of any
water discharges arising out of, connected with or related to its mining or
other activities hereunder in the Leased Coal and in, on or under the Leased
Premises or adjacent lands, to the full extent required by present or future law
or regulation, which responsibility of Lessee as well as the aforesaid
indemnification shall survive termination of this Lease. The obligations of
Lessee under this Section are in addition to, not in lieu of, other sections of
this Lease regarding indemnification, insurance and Lessee's other obligations.
22. Boundary Coal. If Lessee shall acquire other coal properties which
adjoin and have common boundary with the Leased Premises, in order to avoid
unnecessary loss of coal, Lessor waives any present or future requirement of law
relating to the leaving of coal at or near boundaries, and consents to the
mining and removal of all the coal within any distance of any boundary between
the Leased Premises and other coal lands and coal leaseholds now or hereafter
owned by Lessee provided that Lessee must also obtain a similar waiver from the
owners of such other coal lands.
23. Condemnation.
a. Should any governmental agency indicate a desire to bring or
formally begin condemnation proceedings related to the Leased Coal or the Leased
Premises, Lessor and Lessee shall jointly resist and/or negotiate with the
condemnation authority.
b. In the event any part of the Leased Coal or Leased Premises is
taken by eminent domain or condemnation, Lessor shall not in any manner be
liable to Lessee for untimely termination of this Lease or the consequential
inability of Lessee or its successors to conduct mining operations at all or on
the scale anticipated by Lessee before such eminent domain or condemnation
proceedings were exercised, nor for any
22
loss or liability for any reduction in anticipated profit by Lessee resulting as
a consequence of the attempted and/or actual condemnation. The minimum royalty
required under this Lease shall be reduced on a pro-rata basis for any coal
taken by eminent domain or condemnation, provided, however, that no adjustment
be made unless the amount of coal so taken shall exceed five percent (5%) of the
remaining recoverable reserves.
c. If a part or all of the Leased Premises is taken or condemned,
each of the Lessor and Lessee shall pursue its own claim for compensation,
provided, however, Lessor and Lessee shall cooperate in their efforts to
maximize each party's compensation award.
24. Substances Mixed With Coal. Lessee covenants and agrees that it
will not mine from the Leased Premises any substances mixed with the coal,
except to the extent such necessarily must be removed in Lessee's ordinary
mining process and that such substances shall not be removed and sold unless and
until there is mutual agreement regarding division of proceeds received
therefrom.
25. Timber. In conducting operations on the surface of the Leased
Premises, Lessee shall use reasonable care to do as little damage to the timber
and surface as is practicable consistent with its obligation to mine all
mineable and merchantable coal. Lessee agrees to delineate on the ground or on
trees by paint marks or ribbons, the limitations of ground surface to be
disturbed by surface operations and to give notice to Lessor at least 90 days in
advance of any such operations which will require the removal of any timber or
would result in damage thereto so as to permit Lessor, its agents, contractors
or assigns to cut and remove the timber in question. If Lessor does not remove
the timber which is the subject of such notice, Lessee may remove and/or destroy
such timber without any obligation to Lessor for the value of the timber,
provided however, Lessee shall reimburse Lessor for any costs incurred as a
result of such actions with respect to any timber agreement in effect as of the
date of the execution of this Lease. Lessee shall give simultaneous notice
hereunder to both Lessor and any Buyer of timber under any timber sale agreement
existing as of the date of the execution of this Lease where such timber sales
agreement provides that such notice be made to permit or require that buyer
remove timber in advance of mining operations.
26. Roads. Lessee is granted the non-exclusive right to use existing
roads on the Leased Premises. Lessor reserves for itself and its other existing
and future lessees, sublessees, and other designees the non-exclusive right to
use existing roads and roads hereafter constructed by Lessee, and to the extent
Lessee's consent is required therefor, Lessee shall provide such consent. Where,
in the conduct of its activities pursuant to this Lease, it is necessary for
Lessee to alter or destroy existing roads, Lessee shall provide substantially
equivalent alternate access needed by road users. Lessee shall, at its own
expense, keep and maintain all the roads used by it on the Leased Premises in
usable condition and repair, and in at least as good condition as the same now
are. To the extent such existing roads or roads constructed hereafter are used
by Lessee, Lessor, or other grantees of Lessor with respect to such other grants
made after the date of this
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Lease, all such users of the roads shall share, on an equitable basis based upon
the total tonnage hauled over such roads, or some other mutually acceptable
method, by such user, in the cost of maintaining such roads as are commonly
used, and users thereof shall keep such records as are necessary to ascertain
the proper apportionment of the costs therefor. The users of such roads shall
establish between themselves the necessary agreements to accomplish the mutual
sharing of such costs.
Notwithstanding any of the other terms and provisions of paragraph 26,
the parties understand and agree that the Lessee's use of any existing or future
roads constructed by Lessee shall have priority over any other use of such roads
and that any other parties use of such roads shall not unreasonably interfere
with Lessee's use of such roads in its operations hereunder.
27. Assignment Prohibited.
a. Lessee agrees that it will not assign, let, mortgage or otherwise
transfer its rights hereunder, either voluntarily or by operation of law,
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld, provided, however, such consent may be conditioned upon,
inter alia, Lessee's agreement to continue to be responsible to Lessor for the
full and timely performance of obligations under this Lease and to indemnify,
defend and save harmless Lessor and Indemnified Parties for the acts and
omissions of any such transferee and any violation of the terms and provisions
of this paragraph by Lessee shall, at the option of Lessor, automatically
forfeit and terminate this Lease. Nothing herein contained shall prevent or
hinder the right of Lessee to contract any part or portion of its mining
operations under this Lease in the usual and ordinary course of its business,
provided any such contractor agrees to and does provide, obtain and maintain
Workers' compensation and black lung coverage, insurance and indemnification
under terms (except insurance amounts) equal to those contained in this Lease,
all for the benefit of Lessor and the other Indemnified Parties, and provided
such contracting or subcontracting shall not release or relieve Lessee or any
permitted assignee thereof from any of their obligations or liabilities under
this Lease. A transfer, other than by death, in one or more transactions
designed to effect such transfer, of more than 50 percent of the stock in Lessee
or any entity in control of Lessee to a person(s) or entity(s) not an equity
owner as of the date hereof shall constitute an assignment within the meaning of
this provision, provided that the transfer(s) of more than 50 percent of stock
or other interest in an entity in control of any Permitted Mortgagee which is a
Successor Lessor for a legitimate business purpose, rather than for the purpose
of effecting a transfer of this Lease shall not constitute an assignment within
the meaning of this provision.
x. Xxxxxx hereby consents to the granting of the lien of a first
deed of trust on the leasehold interest of Lessee in the Leased Premises (or the
lien of two deeds of trust on such interest, provided that the lien of such
deeds of trust is held collaterally and/or directly by the same person or
entity), which deed(s) of trust may, from time to time, be modified, refinanced,
extended, assigned or restated (such deed(s) of trust as the same may be
modified, refinanced, extended, assigned or restated, the "Leasehold Mortgage";
and the person(s) or entity(ies) holding the same, the "Permitted Mortgagee").
The parties hereto acknowledge that the present Permitted Mortgagee is
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Albelco Finance LLC, as collateral agent for the lenders under that certain
Second Amended and Restated Credit Agreement, dated as of the date hereof, among
Ableco Finance LLC, Pen Holdings, Inc. and others (as the same may be, amended,
modified, restated and/or assigned, the "Credit Agreement"). The Permitted
Mortgagee shall have the right to foreclose or otherwise realize upon its
Leasehold Mortgage and succeed to Lessee's estate hereunder (either directly or
through an entity controlled directly or indirectly by the Permitted Mortgagee)
without Lessor's consent. For purposes of this Section 27, a Permitted Mortgagee
shall have the right to assume ownership and/or control of Lessee without
Lessor's consent under this Lease and, in such event, the Permitted Mortgagee
shall be deemed to have succeeded to Lessee's leasehold estate in compliance
with the provisions of this Section 27 and the other provisions of this Lease.
From and after a default by Lessee hereunder or an Event of Default by Pen
Holdings, Inc. under the Credit Agreement as a result of which the Permitted
Mortgagee succeeds to the rights of Lessee under this Lease through possession,
foreclosure action, delivery of a deed (or assignment of this Lease in lieu of
foreclosure), the Permitted Mortgagee shall be entitled to exercise all of the
rights of Lessee hereunder, including, without limitation, the right to manage,
operate and take control of the Leased Property through a court appointed
receiver or in any other manner permitted by law, it being understood that the
Permitted Mortgagee shall hold harmless, indemnify and defend Lessor from and
against all lawsuits, claims, actions, damages and liabilities incurred by
Lessor that are caused by the actions of Permitted Mortgagee or its agents with
regard to the Leased Premises as though a Lessee as provided in this Lease.
28. Additional Property Rights. Lessor shall have hereunder an option
to acquire from Lessee any additional property rights which Lessee may acquire
for use in connection with its mining operations on the Leased Premises and are
located contiguous to the Leased or Subleased Premises. An option to acquire
such rights, whether they be owned or leased, shall be presented to Lessor by
Lessee within sixty (60) days of the acquisition thereof, which option shall be
offered at a cost of $100.00. If Lessor elects to accept the option, the Lessee
and Lessor shall, within sixty days of such election, execute a recordable
option that becomes exercisable upon demand by Lessor at any time during the
thirty-day (30) period that commences on the date of termination of the Lease
for any reason. For such property rights, Lessor shall pay Lessee only for
Lessee's actual cost of the acquisition of such rights which shall be specified
in the option. Lessee shall be responsible to assure that any leased rights
subject to this provision are assigned to Lessor pursuant to such option.
29. Collection of Rents - Rights Reserved. All rents and royalties
hereinbefore provided to be paid to the Lessor shall be deemed and considered as
rent reserved for the Leased Premises and Lessor shall have for the collection
thereof all the rights and remedies which landlords may now or hereafter have
for the collection of rent reserved upon contract under the laws of the State of
West Virginia.
30. Default; Forfeiture; Remedies Cumulative.
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a. In any of the following events, that is to say:
i) Lessee shall fail to pay any rent or royalty for
fifteen days after the same is due hereunder; or
ii) Lessee shall fail on more than three occasions within
any consecutive 12 month period to timely pay any
installment of rent, royalty, or other payment due
under Article 6 hereof within 10 days after when
first due and payable; or
iii) Lessee shall fail for a period of 30 days after
written demand therefor to pay or repay any sums due
for taxes as provided herein; or
iv) Lessee shall abandon the Leased Premises; or
v) Lessee shall fail to:
a. Comply with the provisions hereof in the
paragraph hereof captioned "Exceptions and
reservations", or otherwise impede Lessor in
the exercise of Lessor's rights thereunder,
or
b. diligently commence and continue its
operations as required in all provisions of
the paragraph hereof captioned "Mining
Operations"; or
c. provide the plan of development or other
maps to Lessor as required in the paragraph
hereof captioned "Surveys, Maps, and
Permits"; or
d. provide such information and access as is
required by Lessor in its conduct of an
Engineering Audit as specified in the
paragraph hereof captioned "Engineering
Audit", or
e. conduct its mining operations in compliance
with the paragraph hereof captioned
"Damages", or
f. provide documentation as required hereunder
for proper determination of the amount of
coal mined and shipped as required in the
paragraph hereof captioned "Weights", or
g. provide documentation as required hereunder
for proper determination of allocation of
coal when coal is commingled as required in
the paragraph hereof captioned "Accounting
for Commingled Coal", or
h. provide such copies of data as is required
in the paragraph hereof captioned
"Exploration Data", or
i. keep and cause to be kept such data as is
required in the paragraph hereof captioned
"Records", or
j. comply with the provisions as required in
the paragraph hereof captioned "Permits and
Reclamation", or
k. comply with the provisions as required in
the paragraph hereof captioned "Indemnity",
or
l. provide workers' compensation and black lung
coverage and insurance as required in the
paragraphs hereof captioned "Workers
Compensation; Black Lung" and "Insurance",
or
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m. prevent any lien or encumbrance prohibited
in the paragraph hereof captioned "Liens and
Encumbrances, or
n. comply with the provisions as required in
the paragraph hereof captioned
"Environmental Damage", or
o. comply with the provisions as required in
the paragraph hereof captioned "Substances
Mixed With Coal", or
p. comply with the provisions as required in
the paragraph hereof captioned "Timber", or
q. comply with the provisions as required in
the paragraph hereof captioned "Roads", or
r. comply with the provisions as required in
the paragraph hereof captioned "Assignment
Prohibited", or
s. comply with the provisions as required in
the paragraph hereof captioned "Additional
Property Rights", or
t. comply with the provisions as required in
the paragraph hereof captioned "Dispute
Settlement and Arbitration"
u. keep and perform any of the other terms,
conditions, covenants and agreements of this
Lease to be kept and performed;
and if any such failure as provided in this subpart
(v) is not cured or reasonable efforts to cure such
failure are not commenced, and diligently prosecuted
thereafter, within 30 days after the Lessor shall
have given written notice of such default to the
Lessee and the Permitted Mortgagee; or
vi) Lessee be adjudicated a bankrupt or discharged by the
Court as an insolvent debtor, or if any receiver or
assignee or other person or persons be appointed by
any court to take charge of the Leased Premises or
the property of Lessee, or the mines and equipment
upon the same (in each case other than on behalf of a
Permitted Mortgagee or its affiliates);
then in any such event all rights of the Lessee hereunder to mine, process and
ship coal as provided herein, shall at the option of the Lessor, (except for an
event specified in (vi) immediately above, which event shall cause a forfeiture
and termination ipso facto), become forfeited and cease and determine, and
Lessor shall have the right to reenter the Leased Premises and to exclude Lessee
therefrom, and to hold the Leased Premises free of any claims of Lessee,
anything herein contained to the contrary notwithstanding; provided that Lessee
shall thereafter fully comply with, perform and complete all of its reclamation,
environmental and other obligations hereunder and Lessee shall have reasonable
access to the Leased Premises for such purpose.
b. Upon any declaration of forfeiture, all estate, rights and
privileges of Lessee to mine, process and ship coal as provided herein shall
cease and determine, and Lessor
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may thereupon or at any time thereafter, without further notice, demand or
action by any of its agents, reenter and take possession of the Leased Premises,
or any part thereof in the name of the whole, and Lessor in making said reentry
and taking possession of the Leased Premises shall have the right to do so
without legal action, or without notice or process, as may be required by the
laws of the State of West Virginia, as amended. In case Lessor exercises the
right herein provided to declare such forfeiture, it shall not be liable to
Lessee for any injury or damage by reason thereof, and Lessee hereby expressly
waives and releases any and every claim for any such injury or damage.
c. All provisions herein contained for the collection of rents,
royalties or other payments, or concerning the remedy of Lessor in case of
breach by Lessee of any condition, covenant or agreement herein contained, shall
be deemed to be cumulative and not exclusive, and shall not deprive Lessor of
any of its other legal or equitable remedies which may now or hereafter be
provided under the laws of the State of West Virginia.
d. No delay or omission of Lessor to exercise any right, remedy or
lien accruing upon any default or forfeiture hereunder, or otherwise available
to it, shall impair, prejudice or waive any such right, remedy or lien, but
every such right, remedy and lien may be exercised by Lessor on account of any
subsequent breach in the same manner and to the same extent as if such delay or
omission had not occurred.
31. Removal of Property Upon Termination. When Lessee shall have paid
to Lessor all the royalties, rentals and other monies required to be paid
hereunder and shall have otherwise complied with all the covenants and
agreements contained herein on the part of Lessee to be kept and performed,
then, unless this Lease is terminated by forfeiture as herein provided, Lessee
shall have 180 days within which to remove all of its property, except that the
time allowed for removal of the coal preparation plant, railroad car loadout
facilities and railroad track shall be 360 days, whether affixed or not, from
the Leased Premises. Any such property not so removed by Lessee within said
applicable period shall, at the election of Lessor, become the absolute property
of Lessor. Notwithstanding anything aforesaid to the contrary, in the event
Lessee has not removed the aforesaid property from the Leased Premises within
said applicable period, Lessor may require Lessee to remove all or any portion
of the said property from the Leased Premises as soon as reasonably possible
after said termination. Lessee may leave in the Leased Premises such of its
property as may be required to complete or comply with valid governmental
reclamation or environmental or other requirements for such period of time as
may be reasonably necessary for such completion or compliance. As consideration
for the extended time periods allowed for removal of property, Lessee grants
unto Lessor a right of first refusal to purchase the coal preparation plant ,
railroad car loadout, and/or railroad tracks. Should the Lessee receive a
bona-fide offer for the purchase of said property with terms acceptable to
Lessee, Lessee shall, within five (5) days of such offer present to Lessor the
terms of said offer and Lessor shall have thereafter thirty (30) days within
which to advise Lessee that Lessor will exercise its option to purchase any or
each of the coal preparation plant, railroad car loadout, or railroad tracks at
the terms contained in such offer and the parties shall close such sale within
60 days after the date Lessor
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provides notice of its intention to purchase such assets. Notwithstanding
anything to the contrary contained herein, the Permitted Mortgagee may, from
time to time, enter on the Leased Premises and remove therefrom any current
improvements, structures, and fixtures thereon and further improvements,
structures, and fixtures constructed thereon by or on behalf of Lessee and the
appurtenances related only to such improvements, structures, and fixtures,
including, without the limitation, the aforesaid coal preparation plant,
railroad car loadout facilities, and railroad tracks, provided that such removal
is performed pursuant to the terms of the Credit Agreement. If the Permitted
Mortgagee elects to remove such items pursuant to the terms of the Credit
Agreement, then (i) Permitted Mortgagee shall be entitled to effect such removal
free and clear of all of Lessor's right, title and interest in such items,
including, without limitation, the right of first refusal, and (ii) upon the
removal of such items, Lessor shall no longer have any right, title or interest
therein; and (iii) Lessor shall, upon the request of Permitted Mortgagee,
execute an instrument confirming clauses (i) and (ii) above.
32. Release Upon Termination. Upon the termination of this Lease,
Lessee shall execute and deliver to Lessor in such form as will permit
recordation of the same, a written release and relinquishment of all the right,
title and interest acquired under this Lease in and to the Leased Premises,
including such property as Lessee is hereby required to leave on the Leased
Premises.
33. Disclaimer of Warranty. Lessee has examined the Leased Premises and
the coal existing on the Leased Premises, accepts the same in their present
condition and assumes all risks incident thereto, to the mining and removal of
coal therefrom and therewith and to any and all activities of its contractors,
agents, employees, invitees or licensees. Lessee shall in no way be considered
an agent, contractor or employee of Lessor. Lessee agrees that Lessor makes no
covenant to Lessee for quiet enjoyment of the Leased Premises and that Lessor
has made no representations or warranties with respect to the Leased Premises,
including, without limitation, the condition thereof, the quantity, quality,
depth or thickness of the coal therein or the condition of Lessor's title
thereto.
34. Waiver. No failure or delay on the part of either the Lessor or
Lessee in exercising any of their respective rights hereunder upon any failure
by the other party to perform or observe any condition, covenant or provision
herein contained shall operate as a waiver thereof, nor shall any single or
partial exercise of any such rights preclude any other or further exercise
thereof or the exercise of any other right hereunder.
35. Successors Bound. All covenants and agreements herein contained
shall inure to the benefit of and shall be binding upon and fully performed by
the respective parties hereto and their respective successors and assigns.
36. Notices. All requests, statements, notices and demands shall be
deemed given and served when presented for delivery by the postal authorities if
sent by registered or certified mail, postage and registration or certification
fee prepaid, return receipt requested or overnight delivery, addressed as
follows
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For Lessor,
Penn Virginia Coal Company
Xxxxx 000, Xxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000
with a copy to:
Penn Virginia Coal Company
0000 Xxxx-Xxxx Xxxx
P. O. Xxx 000
Xxxxxxxx, XX 00000
For Lessee,
Pen Land Company
0000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
or to such other person or address as either party from time to time by written
notice to the other party may prescribe. Notwithstanding the foregoing, any
notice to or demand upon Lessee may be served or given in the manner required by
the laws of the State of West Virginia for service of process.
37. Dispute Settlement and Arbitration. If at any time during the
continuance of this Lease, or any renewal thereof, any dispute shall arise
between Lessor and Lessee under this Lease or under any of the terms and
provisions hereof which cannot be agreed upon by the parties hereto, except for
the disputes to be resolved under paragraph 47 of this Lease, then such dispute
shall be referred to a board of arbitrators (the "Board"). Such Board shall be
composed of a representative of Lessor and a representative of Lessee, to be
selected by them, respectively, and a third arbitrator who shall be chosen by
the two (2) arbitrators herein provided for. In case the two (2) arbitrators are
unable to agree within ten (10) days upon a third arbitrator, then the American
Arbitration Association shall designate a disinterested person to act as such
arbitrator; and, in case either of the parties should, for a period of ten (10)
days after receipt of the notice below referred to, fail to select and make
known in writing to the other party the arbitrator selected by it, the said
American Arbitration Association shall designate two (2) disinterested persons,
who together with the person selected by the party desiring the arbitration,
shall constitute the Board. Either party may at any time serve upon the other a
notice setting forth the point or points upon which the decision of said Board
is desired and the other party may, within ten (10) days thereafter, serve a
counter-notice specifying any additional points or differences arbitrable
hereunder upon which such other party may desire a decision. The Board shall
give ten (10) days written notice of the time and place of hearing to the
respective parties, and shall determine questions submitted to it for
arbitration, and shall make its decision and award in writing within 45 days of
said hearing. The decision and award of a majority of the arbitrators shall be
final, conclusive and obligatory upon the said parties to this
30
Lease, their successors and assigns, and without appeal, and each party hereto
agrees to abide by and comply with every such decision and award. Those costs of
any such arbitration shall in the first instance be paid by the party requesting
the same, but if such party substantially prevails therein it shall be
reimbursed therefor by the other party, and this question of costs shall in each
case be determined by the Board when it renders its decision on the question or
questions submitted to it. The foregoing notwithstanding, the costs of
arbitration in respect of the imposition or adjustment of royalties, Minimum
Rentals or charges for transporting coal on the Leased Premises, and valuation
upon termination, shall be shared equally by the parties hereto. Should the
award of the Board declare that any violation hereof or default hereunder
exists, it shall also provide the time within which the party committing such
default shall pay the award and cure the breach which it decrees.
38. Relationship Between the Parties. Nothing herein contained or
hereby implied including, without limitation, rights reserved by Lessor to use
the Leased Premises for purposes other than those which are granted to Lessee,
to receive and examine development plans and maps, to review Lessee's records
and otherwise audit and inspect Lessor's operations and their impact on the
Leased Coal and Leased Premises shall be construed as creating or constituting
by implication or otherwise, an obligation of or right in Lessor to control or
otherwise correct Lessee's acts and omissions or a lessening of Lessee's duties
to indemnify Lessor and provide insurance herein required or any relationship or
partnership, mining partnership, joint venture, agency or of employer and
employee between Lessor on the one hand and Lessee on the other hand, it being
understood that the relationship between them is solely that of Lessor and
Lessee.
39. Power of Attorney. Lessee acknowledges that pursuant to certain
provisions hereof, it is required to provide upon request of Lessor certain
consents, waivers, transfers, assignments and other documentation. Accordingly,
in the event Lessee fails to deliver any such consent within 30 days after
written demand therefore, which demand shall describe the provisions hereof
requiring such and the circumstances which provide the basis for such demand,
Lessee may elect to submit such matter to arbitration as herein provided. In the
event that Lessee fails to submit such matter for arbitration, or, Lessee, after
submitting such matter to arbitration and receiving a decision in favor of the
Lessor, fails to comply with a decision of the Board directing it to provide
such consents, waivers, transfers, assignments or other documentation within 30
days after such decision, in further consideration of this Lease does hereby
irrevocably designate any officer of Lessor as its attorney-in-fact with the
power and authority to execute and deliver on behalf of Lessee such consents,
waivers, transfers, assignments and other documentation which are the subject of
the written demand given by Lessor to Lessee, and presentation of an executed
copy of this Lease and a copy of the written demand, or if arbitrated, a written
decision of the Board shall constitute sufficient evidence of the nature and
extent of this designation by Lessee.
40. Headings. Paragraph headings used herein are for convenience of
reference only and shall not affect the meaning or construction of any provision
hereof.
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41. Applicable Law. This Lease shall be construed, enforced and
performed in accordance with the laws of the State of West Virginia.
42. Severability. If any provisions of this Lease shall be held to be
invalid, void, or unenforceable, the remaining provisions hereof shall in no way
be affected or impaired and such remaining provisions shall remain in full force
and effect.
43. Representations and Warranties of Lessee. Lessee represents and
warrants as follows:
a. Lessee is a corporation duly organized, validly existing and in
good standing under the laws of the State of West Virginia and has the corporate
power to perform its obligations under this Lease and the other documents
delivered pursuant hereto or referred to herein and to carry on its business as
now conducted and as contemplated by this Lease and the documents referred to
herein.
b. Neither the execution nor delivery by Lessee of this Lease, nor
consummation of the transactions contemplated by this Lease, will (i) conflict
with, violate or result in the breach of or constitute a default under Lessee's
articles of incorporation or bylaws, or any applicable law, regulation, order,
writ, injunction, decree, determination or award of any court, any governmental
department, board, agency or instrumentality, domestic or foreign, or any
arbitrator; (ii) conflict with, result in the material breach of any term or
provision of, termination of, or acceleration or permit the acceleration of the
performance required by the terms of, or give rise to any right of termination
or cancellation under, any loan agreement, indenture, mortgage, deed of trust or
other contract, to which Lessee is a party or by which it may be bound.
c. The execution and delivery of this Lease by Lessee and of the
other documents referred to herein, and the performance by it of the
transactions herein and therein contemplated, have been duly authorized by all
necessary corporate approvals required and no further authorization with respect
to Lessee is required.
d. These representations and warranties shall remain in full force
and effect and shall survive for two years following termination of this Lease.
44. Entire Agreement. This Lease (together with the documents referred
to herein) constitutes all the agreements, conditions, understandings,
representations and warranties made between the parties hereto, and supersedes
all prior or contemporaneous agreements, whether written or oral with respect to
the subject matter hereof. This Lease may not be modified orally or in any
manner other than by an agreement in writing signed by both parties hereto.
45. No Recordation. This Lease shall not be recorded absent mutual
agreement between the parties hereto, but the parties agree each shall execute
and that either may file for record a memorandum of lease in the form attached
hereto and made a part hereof as Exhibit C.
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46. No Disclosure. Without the prior written consent of the other
party, and except to the extent required by applicable law or regulations or
order of a court of competent jurisdiction, neither Lessor nor Lessee will
disclose to any person the terms and conditions of this Lease. Disclosure of the
terms of this Lease may be made as required to secure financing required by the
Lessee to acquire the necessary equipment and credit necessary to perform its
obligations hereunder, but Lessee shall receive the assurance of such lender
that such information shall be held in confidence.
47. Alternative Dispute Resolution. Whenever the parties have a dispute
pursuant to paragraphs 1(a), 7(c), 7(g), 7(h), 12(b), or 13 above, Lessor and
Lessee shall each designate an engineer (preferably an employee or engineer
normally retained by such party) to investigate the dispute and review any data
relating thereto submitted by the parties. The investigation and review shall
occur within five (5) days of either Lessor or Lessee's initial notice under
this paragraph 47. The engineers will in good faith attempt to resolve the
dispute in question. If the engineers cannot agree to a resolution of any such
dispute within five (5) days of their investigation and review, then: (1) the
parties shall submit the question to a panel consisting of the two engineers
appointed by the parties and a mutually acceptable, disinterested registered
Professional Engineer who is knowledgeable about coal mining in southern West
Virginia, and (2) agree in writing prior to the selection of the disinterested
registered Professional Engineer that the decision of a majority of the panel
shall be conclusive and binding upon the parties. If the parties submit any
question to this alternative dispute resolution mechanism but cannot agree on a
disinterested registered Professional Engineer, then either party may request
that the chief judge for the United Stated District Court for the Southern
District of West Virginia appoint the third disinterested registered
Professional Engineer. The Panel shall determine the disputed issue within
twenty (20) days after the appointment of the disinterested registered
Professional Engineer. Each party shall bear one-half the cost of the
disinterested registered Professional Engineer and its own other costs and
expenses associated with the alternative dispute resolution.
48. No Rights in Third Parties. The provisions of this Lease are not
intended and do not confer upon any persons other than the parties hereto and
the Permitted Mortgagee, their permitted successors and assigns any rights or
remedies under or by reason of this Lease.
49. Leasehold Mortgage
a. Right to Mortgage. Lessee shall have the right to mortgage its
estate hereunder in accordance with Article 27(b) hereof, and, upon written
notice to Lessor that Lessee's estate has been mortgaged to a Permitted
Mortgagee, such Permitted Mortgagee shall be entitled to the rights, privileges
and protections afforded under this Lease, subject to the obligations provided
in, Article 27(b) and 49 hereof; provided, however, that Lessor shall in no
event be required to subordinate its fee interest in the Leased Premises to the
lien of any mortgage on Lessee's estate hereunder.
b. Estoppel Certificate. Lessor hereby agrees that it shall, within
ten (10)
33
business days following a written request from Lessee or a Permitted Mortgagee,
execute an estoppel certificate (as ground lessor) indicating whether the Lease
is in full force and effect, that the Lease has not been modified or amended
except as specified, that, to Lessor's knowledge, there has been no default in
the performance of the Lease by Lessee, that no event has occurred or condition
arisen which, to the knowledge of Lessor, would with the passage of time or
giving of notice constitute an event of default by Lessee under the Lease, and
that royalties and all other charges due under the Lease have been paid through
a specified date.
c. Default and Foreclosure. Lessor further agrees as follows:
(i) Notice. Lessor will provide to Permitted Mortgagee at 000
Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attn: Xxxxx X. Genda (or
to such other single Permitted Mortgagee or other address as Permitted
Mortgagee may, from time to time, provide to Lessor in writing) a copy
of each notice of default (a "Default Notice") given to Lessee at the
same time and in the same manner as such Default Notice is given to
Lessee. In addition, Lessor shall notify the Permitted Mortgagee of the
occurrence of any of the default, described in clauses (i) through (iv)
of paragraph 30(a) of this Lease.
(ii) Right to Cure Defaults. A Permitted Mortgagee shall have
the right, at its option, to cure any event of default hereunder within
the applicable cure period afforded to Lessee hereunder (or in the case
of the events of default described in clauses (i) through (iv) of
paragraph 30(a), within twenty days after notice to Permitted Mortgagee
thereof), and Lessor shall accept timely performance by or on behalf of
a Permitted Mortgagee of Lessee's obligations hereunder with the same
effect as though Lessee had performed such obligations. In the case of
events of default that cannot be cured by the Permitted Mortgagees
until such time as the Permitted Mortgagees have obtained possession
and control of the Leased Premises through foreclosure or otherwise (a
"Foreclosure Default"), the following procedure shall apply:
1. A Permitted Mortgagee shall notify Lessor in
writing (a "Foreclosure Notice") if the Permitted Mortgagee
elects to exercise its remedies under the Leasehold Mortgage
within thirty (30) days of Permitted Mortgagee's receipt of a
Default Notice;
2. If a Foreclosure Notice has been timely given, the
cure period afforded the Permitted Mortgagee to cure the
Foreclosure Default described in such Foreclosure Notice shall
be extended for the Extended Cure Period (as defined below);
provided, however, that notwithstanding the foregoing, the
Permitted Mortgagees shall be limited to not more than two
Extended Cure Periods in any eight year period it being agreed
that any event of default occurring after the extension of a
second Extended Cure Period during any eight-year period must
be cured by Lessee (or by the Permitted Mortgagees if they so
desire) with in the cure periods
34
provided in this Lease, provided that if, at any time, from
time to time, (i) an Extended Cure Period occurs, and (ii) the
Permitted Mortgagee or the Lessee in place for such Extended
Cure Period (or any portion thereof) is succeeded, in
compliance with the terms of this Lease, by a new Permitted
Mortgagee or Lessee, then the aforesaid eight year measuring
period shall reset so that the Extended Cure Period described
in clause (i) and all prior Extended Cure Periods which have
then occurred hereunder shall be deemed not to have occurred
for purposes of determining whether the aforesaid limit of no
more than two Extended Cure Periods in any eight year period
has been exceeded. For purposes, of this Lease, the term
"Extended Cure Period" shall mean a period commencing on the
date the applicable Notice of Default is given to Permitted
Mortgagee and ending on the earlier of (i) the ninth month
after such date and (ii) the date the Foreclosure Default
described in such Notice of Default is cured. Notwithstanding
the foregoing, each Extended Cure Period shall extend beyond
the nine month period provided for above, provided that, and
only for so long as, (i) mining operations continue at the
Leased Property in accordance with the terms of Paragraph 7
hereof and at a rate sufficient enough to cover the then
current minimum rentals payable under this Lease, but in no
event less than a rate comparable to the rate which such
mining operations were proceeding prior to the applicable
default, (ii) Lessee or the Permitted Mortgagee pays all rent,
royalties and other charges accruing hereunder to Lessor,
(iii) Lessor is not subject to any criminal liability on
account of the continuance of such default, and (iv) Permitted
Mortgagee provides reasonable security for the civil liability
to which Lessor may be subject on account of the continuation
of such default.
3. During each Extended Cure Period, the Permitted
Mortgagees shall (for so long as the Permitted Mortgagee
desires to keep this Lease in full force and effect) pay or
cause to be paid all amounts due under the Lease as the
obligation to pay such amounts accrues, including, but not
limited to, all tonnage royalties for coal actually mined on
the Leased Premises during such Extended Cure Period, minimum
rentals due during such Extended Cure Period, Wheelage Fees
for coal actually transported through or underlying the Leased
Premises during such Extended Cure Period, Processing Fees for
coal actually processed on the Leased Premises during such
Extended Cure Period, and the amount of any property taxes
accruing on the Leased Premises for each month during such
Extended Cure Period and shall (for so long as the Permitted
Mortgagee desires to keep this Lease in full force and effect)
fulfill all other obligations of Lessee under the Lease (to
the extent Permitted Mortgage may reasonably perform such
obligations given the extent of its access and ability to
control the Leased Premises during such Extended Cure Period),
including but not limited to, maintaining or causing to be
maintained insurance on the Leased Premises, as provided in
the Lease,
35
and making reasonable efforts to protect the Leased Premises
from weather, vandalism or theft. So long as the Permitted
Mortgagees are paying such amounts or causing such amounts to
be paid and fulfilling such obligations (to the extent
required by the preceding sentence), Lessor will not take any
action to terminate the Lease (or otherwise exercise any of
its rights under Paragraph 30 hereof) if the Permitted
Mortgagees are diligently proceeding to exercise their
remedies under the Leasehold Mortgage during the Extended Cure
Period (unless the Permitted Mortgagee is precluded from doing
so pursuant to a stay issued in a bankruptcy or other
proceeding) and if, by the end of such Extended Cure Period,
the Permitted Mortgagees shall have cured or caused to be
cured each default under the Lease.
4. During the first Extended Cure Period occurring
hereunder, the minimum rental payable under Article 6(e)
hereof shall be $300,000 per month commencing on the first day
of the seventh month of such Extended Cure Period. During each
additional Extended Cure Period occurring hereunder, such
minimum rental shall be $300,000 commencing on the first day
of such additional Extended Cure Period, provided that if, at
any time, from time to time, (i) such an additional Extended
Cure Period occurs, and (ii) the Permitted Mortgagee or the
Lessee in place for such Extended Cure Period (or any portion
thereof) is succeeded, in compliance with the terms of this
Lease, by a new Permitted Mortgagee or Lessee, then the
Extended Cure Period described in clause (i) and all prior
Extended Cure Periods which have then occurred hereunder shall
be deemed not to have occurred for purposes of determining
whether, during an Extended Cure Period which occurs after
such Permitted Mortgagee or Lessee is so succeeded by a new
Permitted Mortgagee or Lessee, the minimum rental payable
under Article 6(e) hereof shall be increased pursuant to the
first or the second sentence of this sub-paragraph 4.
5. In the event that the Permitted Mortgagee shall,
during any Extended Cure Period, not diligently proceed to
exercise its remedies under the Leasehold Mortgage, unless the
Permitted Mortgagee has been stayed from exercising its
remedies under the Leasehold Mortgage as the result of any
bankruptcy or other proceeding, the Lessor shall be entitled
to exercise all of its rights under Paragraph 30 hereof.
(iii) Changes to Lease. No agreement between Lessor
and Lessee modifying, amending, canceling, terminating or surrendering
the Lease, or any part thereof, and no exercise by Lessee of any right
to terminate this Lease or release any portion of the Leased Premises
from this Lease shall be effective without the prior written consent
of the Permitted Mortgagee (if any), which consent shall not be
unreasonably withheld, it further being Lessee's obligation to use
best efforts to obtain such reasonable consent from the Permitted
Mortgagee (if any).
36
(iv) No Merger of Estates. So long as there is a
Permitted Mortgage outstanding, there shall be no merger of estates if
Lessee acquires a fee interest in the Leased Premises or if Lessor
acquires Lessee's leasehold interest other than through the expiration
or termination of the Lease.
(v) Lease Superior to Mortgages. Lessor agrees that
the Lease is superior to any and all mortgages, hypothecations or
pledges now encumbering Lessor's fee interest in the Leased Premises
and that the Lease shall remain superior to all such fee mortgages
hereafter encumbering the Lessor's fee interest in the Land.
d. Successor Lessees. If a Permitted Mortgagee (or an entity
directly or indirectly controlled by a Permitted Mortgagee) shall succeed to the
rights of Lessee under this Lease through possession, foreclosure action,
delivery of a deed (or assignment of this Lease in lieu of foreclosure), or
otherwise, or if a third-party purchases this leasehold estate from a Permitted
Mortgagee (or an entity directly or indirectly controlled by a Permitted
Mortgagee) upon or following foreclosure (or assignment of this Lease in lieu of
foreclosure), then, at the request of the Permitted Mortgagee (or an entity
directly or indirectly controlled by a Permitted Mortgagee) (Permitted
Mortgagee, any entity directly or indirectly controlled by a Permitted Mortgagee
and such purchaser, each being a "Successor Lessee"), Lessor shall, subject to
Article 49(e) hereof, recognize Successor Lessee as Lessor's lessee under this
Lease and shall promptly execute and deliver any instrument that Successor
Lessee may reasonably request to evidence such recognition of its status as
lessee under this Lease as if it were a direct lease between Successor Lessee
and Lessor, upon all of the terms, conditions and covenants set forth in this
Lease (and Successor Lessee shall be entitled to the recoupment accrued in favor
of the prior Lessee hereunder to the extent such recoupment is available
hereunder). Successor Lessee shall not be entitled to succeed to Lessee's
interest hereunder unless Lessee cures all events of default reasonably
susceptible of being cured, and shall not be subject to any off-set, defense or
counterclaim which shall have therefore accrued to Lessor against Lessee. For
purposes of this Lease an event of default is "reasonably susceptible of being
cured" if (i) the cure thereof can be made with the payment of money or (ii) the
cure thereof could be a cured by any Lessee in possession of the Premises, as
opposed to merely by the particular Lessee which has defaulted hereunder. No
appointment of any Successor Lessee shall be deemed a release of Lessee of its
obligations under the Lease, and Lessor expressly reserves the right to enforce
against Lessee at any time before or after the appointment of a Successor
Lessee, the obligations of the Lessee under the Lease for any cause of action
arising during any period prior to the time the Lease is assumed by a Successor
Lessee.
e. Third Party Successor Lessees. If at any time any Permitted
Mortgagee (which has succeeded to Lessee's leasehold estate) desires to sell or
otherwise transfer such leasehold estate to a third party (a "Third Party
Successor Lessee"), such Permitted Mortgagee shall so notify Lessor in writing.
Within 5 business days after
37
receipt of such notice, Lessor shall notify such Permitted Mortgagee in writing
of the identity of two coal operators which would be unacceptable to Lessor as a
Third Party Successor Lessee (the "Unacceptable Lessees"). Such Permitted
Mortgagee shall not be entitled to sell or otherwise transfer such leasehold
estate to either Unacceptable Lessee and shall cooperate in good faith with
Lessor to identify an acceptable Third Party Successor Lessee. Such Permitted
Mortgagee shall, however, be entitled to sell or otherwise transfer such
leasehold estate, without Lessor's consent, to any experienced, reputable and
prudent coal mining company (other than an Unacceptable Lessee) doing business
in Central Appalachia which has mined not less than 5 million tons of coal on an
annualized basis over the two years immediately preceding the date on which such
Third Party Successor Lessee becomes a Successor Lessee hereunder and which is
financially capable of performing the obligations of a Lessee under this Lease.
Lessor acknowledges that at no time may there be more than two Unacceptable
Lessees.
f. Anything herein or in the Lease to the contrary notwithstanding,
in the event that a Permitted Mortgagee shall acquire title to the leasehold
estate of the Leased Premises, such Permitted Mortgagee shall have no
obligation, nor incur any liability, beyond its then interest, if any, in the
Leased Premises, and Lessor shall look exclusively to such interest, if any, of
such Permitted Mortgagee in the Leased Premises for the payment and discharge of
any obligations imposed upon such Permitted Mortgagee hereunder. Lessor agrees
that with respect to any money judgment which may be obtained or secured by
Lessor against such Permitted Mortgagee, Lessor shall look solely to the estate
or interest owned by such Permitted Mortgagee in the Leased Premises, and Lessor
will not collect or attempt to collect any such judgment out of any other assets
of such Permitted Mortgagee.
g. Landlord agrees that all insurance proceeds and condemnation
awards (to the extent such awards would be payable hereunder to Lessee) with
respect to the Leased Premises shall be deposited with Permitted Mortgagee and
same shall be applied and disbursed solely in accordance with the terms and
provisions set forth in the Mortgage. Landlord further agrees that Permitted
Mortgagee may participate in any suits or proceedings relating to such insurance
or condemnation proceeds, causes of action, claims, awards or recoveries and
that the Permitted Mortgagee is authorized to adjust any loss covered by an
insurance policy maintained by Lessee or any condemnation claim made by Lessee
pursuant to the terms of this Lease. and to settle or compromise any such claim
in connection therewith.
h. In the case of termination of this Lease by reason of rejection
of this Lease by Lessee in a bankruptcy proceeding, an event of default pursuant
to clause (vi) of paragraph 30(a), or by reason of any event of default by
Lessee which is not reasonably susceptible to cure by the Permitted Mortgagee,
Lessor shall give prompt notice thereof to the Permitted Mortgagee. Lessor, on
written request of the Permitted Mortgagee made any time within thirty (30) days
after the giving of such notice by Lessor, shall promptly execute and deliver a
new lease of the Leased Premises to the Successor Lessee (subject to the
requirements of Article 49(e) hereof) for the remainder of the term of this
Lease upon all of the covenants, conditions, limitations and agreements
contained in this Lease (and the Successor Lessee shall be entitled to the
recoupment accrued in favor of the prior Lessee hereunder to the extent such
recoupment is available hereunder), provided that such Successor Lessee (i)
shall pay to Lessor, simultaneously with the delivery of such new lease, all
accrued but unpaid royalties and other amounts then due under this Lease, and
(ii) shall cure all then existing defaults under this Lease reasonably
susceptible of being cured by such Successor Lessee.
38
WITNESS THE FOLLOWING SIGNATURES:
PENN VIRGINIA COAL COMPANY,
a Virginia corporation
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Its: Vice President
---------------------------------
PEN LAND COMPANY,
A Delaware Corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Its: SVPO
---------------------------------
00
XXXXX XX XXXX XXXXXXXX,
XXXXXX XX XXXXXXX, to-wit:
The foregoing instrument was acknowledged before me this 1st day of
June, 2001, by Xxxxx X. Xxxxxxx, the Vice President of Penn Virginia Coal
Company, a Virginia corporation, on behalf of the corporation.
My commission expires 01-29-2007.
Xxxxxxxx X. Xxxxxxxxxxx
-----------------------------------
Notary Public
STATE OF WEST VIRGINIA,
COUNTY OF KANAWHA, to-wit:
The foregoing instrument was acknowledged before me this 1st day of
June, 2001, by Xxxxxxx X. Xxxxxxx, the Senior Vice President of Operations of
Pen Land Company, on behalf of the corporation.
My commission expires 01-29-2007.
Xxxxxxxx X. Xxxxxxxxxxx
-----------------------------------
Notary Public
This Document prepared by:
Xxxxx X. Xxxxxxx
Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
40
LEASE
between
PENN VIRGINIA COAL COMPANY
and
PEN LAND COMPANY
Dated as of May 18, 2001
41
TABLE OF CONTENTS
Page
----
1. Leased Coal; Leased Premises ............................... 1
2. Term ....................................................... 1
3. Rights; Failure of Title ................................... 3
4. Wheelage and Processing Rights ............................. 3
5. Exceptions and Reservations ................................ 3
6. Payments; Abatement ........................................ 5
7. Mining Operations .......................................... 7
8. Surveys, Maps, and Permits ................................. 10
9. Taxes ...................................................... 11
10. Engineering Audit .......................................... 12
11. Damages .................................................... 13
12. Weights .................................................... 13
13. Accounting for Commingled Coal ............................. 13
14. Exploration Data ........................................... 14
15. Records .................................................... 14
16. Permits and Reclamation .................................... 14
17. Indemnity .................................................. 16
18. Workers' Compensation; Black Lung .......................... 17
19. Insurance .................................................. 18
20. Liens and Encumbrances ..................................... 20
21. Environmental Damage ....................................... 21
22. Boundary Coal .............................................. 21
23. Condemnation ............................................... 21
24. Substances Mixed With Coal ................................. 22
25. Timber ..................................................... 22
26. Roads ...................................................... 22
27. Assignment Prohibited ...................................... 23
28. Additional Property Rights ................................. 24
29. Collection of Rents - Rights Reserved ...................... 24
30. Default; Forfeiture; Remedies Cumulative ................... 24
31. Removal of Property Upon Termination ....................... 27
32. Release Upon Termination ................................... 28
33. Disclaimer of Warranty ..................................... 28
34. Waiver ..................................................... 28
35. Successors Bound ........................................... 28
36. Notices .................................................... 28
37. Dispute Settlement and Arbitration ......................... 29
38. Relationship Between the Parties ........................... 30
39. Power of Attorney .......................................... 30
40. Headings ................................................... 30
41. Applicable Law ............................................. 31
42. Severability ............................................... 31
43. Representations and Warranties of Lessee ................... 31
44. Entire Agreement ........................................... 31
45. No Recordation ............................................. 31
46. No Disclosure .............................................. 32
47. Alternative Dispute Resolution ............................. 32
48. No Rights in Third Parties ................................. 32
49. Leasehold Mortgage ......................................... 32
42
EXHIBIT A
TO
MAY 31, 2001 LEASE
BETWEEN
PENN VIRGINIA COAL COMPANY
&
PEN LAND COMPANY
(MAP)
The Leased Premises includes all coal and rights to mine such coal conveyed to
Lessor from:
(a) Elkhorn Coal Corp. by deed dated May 31, 2001
(b) Pen Coal Corp. dba Fork Creek Mining Company by Deed dated May
31, 2001
43
EXHIBIT A
TO
MAY 31, 2001 LEASE
BETWEEN
PENN VIRGINIA COAL COMPANY
&
PEN LAND COMPANY
(MAP)
The Leased Premises includes all coal rights to mine such coal conveyed to
Lessor from:
(a) Elkhorn Coal Corp. by deed dated May 31, 2001
(b) Pen Coal Corp. dba Fork Creek Mining Company by Deed dated May
31, 2001
44
EXHIBIT B
POTENTIAL ADVERSE CLAIMS
XXXXX PROPERTY
Wellsman Tract:
Xxxx X. Xxxxx 28 acres (possible deed into Union Carbide for most
of acreage)
XxXxxxxxx/Xxxxxxx 364 acres on Long Shoal Branch
Lock 5/Xxxxxx Tract:
Xxxxxx Xxxxxx duplicate tax tickets
Xxxxxxxxx Mineral Claim 779 or 695 acres
Xxxx Tract:
Xxxxx/Xxxxxx 619 3/4 ac. mineral (except oil and gas)
NELLIS PROPERTY
Camper encroaching on property in Nellis, West Xxxxxxxx.
XXXXXX AND XXXXXX PROPERTY
Site Description Potential Owner
---------------- ---------------
AJ* Xxxxxx Xxxxxx
O* Arrett Xxxxx
H* Xxxxxxx Xxxxxxxx
AA* Xxxxx and Xxxxx Xxxxxx
HB86* XxXxxxx Heirs
HB87* Xxxxx Xxxxxxxxx
Xxxx and Xxxxxxxx Xxxxxxx -- boundary dispute in Wildwood Subdivision, Lincoln
County, West Virginia.
Xxxxx Xxxxxx -- boundary dispute in Wildwood Subdivision, Lincoln County, West
Virginia.
Xxxxx Xxxx -- road trespass claim in Lincoln County, WV.
45
Xxxx Xxxxx claims a right-of-way along Big Coal River to access certain surface
properties.
*Exact locations unknown, however it is believed to be located on the Xxxxxx and
Xxxxxx property.
46
EXHIBIT C
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, made and entered into by and between PENN
VIRGINIA COMPANY, a Virginia corporation, hereinafter referred to as the
"Lessor" and Pen Land Company, a Delaware corporation, hereinafter referred to
as the "Lessee."
R E C I T A L
The parties entered into a coal Lease and Agreement (the "Lease") dated
as of the 18th day of May, 2001, involving 27,900 acres of land in Xxxxx,
Kanawha and Lincoln Counties, West Virginia (the "Leased Premises"), as more
particularly described on Exhibit A, attached hereto and by reference made a
part thereof.
The parties hereto desire to make this Memorandum of Lease as permitted
by W. Va. Code ss. 40-1-8.
WITNESSETH THE FOLLOWING:
1. The parties to the Lease are as set forth in the caption hereof as
"Lessor" and "Lessee." Each having the following address:
Lessor
Penn Virginia Coal Company
Xxxxx 000
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Lessee
Pen Land Company
0000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxx, XX 00000
2. The Lease is dated as of May 18 , 2001, and was executed by the
Lessee on May __, 2001 and by the Lessor on May __, 2001.
3. A description of the Leased premises in the form contained in the
Lease is attached hereto as Exhibit A.
4. The Term of the Lease commences on May 18, 2001, and, continues
until all the mineable and merchantable coal is removed or for ten (10) years,
subject to four (4) extensions of five years each, and thereafter for a
Remainder Term until Lessee concludes the work on the Leased Premises.
47
WITNESS THE FOLLOWING SIGNATURES:
PENN VIRGINIA COAL COMPANY,
a Virginia corporation
By:
----------------------------------------
Its:
---------------------------------------
PEN LAND COMPANY,
A Delaware corporation
By:
----------------------------------------
Its:
---------------------------------------
00
XXXXX XX XXXX XXXXXXXX,
XXXXXX XX XXXXXXX, to-wit:
The foregoing instrument was acknowledged before me this ____ day of
May, 2001, by Xxxxx X. Xxxxxxx, the Vice President of Penn Virginia Coal
Company, a Virginia corporation, on behalf of the corporation.
My commission expires _____________________________.
-----------------------------------
Notary Public
STATE OF _________________________,
COUNTY OF ________________________, to-wit:
The foregoing instrument was acknowledged before me this __th of May,
2001, by _________________________, the ________________________ of Pen Land
Company, on behalf of the corporation.
My commission expires _____________________________.
-----------------------------------
Notary Public
This Document prepared by:
Xxxxx X. Xxxxxxx
Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
49
CERTIFICATE OF LIABILITY INSURANCE
XXXXX(TM) DATE (MM/DD/YY)
5/31/01
PRODUCER
Acordia of Kentucky-Lex
Lexington Green Two, Suite 410
000 Xxxxxxxxx Xxxxx Xxxxxx
Xxxxxxxxx XX 00000-0000
(000) 000-0000
INSURED
Pen Land Company
Pen Coal Corporation DBA Fork Creek Mining Company
0000 Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, XX 00000
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER
THE COVERAGE AFFORDED BY THE POLICIES BELOW.
COMPANIES AFFORDING COVERAGE
COMPANY
A Natl Union Fire Ins Co of PA
COMPANY
B American Intl Specialty Lines
COMPANY
C Lloyds of London
COMPANY
D Federal Insurance Company/Lloyds of London
COVERAGES
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN
ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOT WITH
STANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT
WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE
INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE
TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES, LIMITS SHOWN MAY HAVE BEEN
REDUCED BY PAID CLAIMS.
CO POLICY EFFECTIVE POLICY EXPIRATION
LTR TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) LIMITS
------------------------------------------------------------------------------------------------------------------------------------
A GENERAL LIABILITY GL5441878 8/01/00 8/01/01 GENERAL AGGREGATE $ 2,000,000
[X] COMMERCIAL GENERAL LIABILITY PRODUCTS-COMP/OR AGG $ 2,000,000
[ ] CLAIMS MADE [X] OCCUR PERSONAL & ADV INJURY $ 1,000,000
[ ] OWNER'S & CONTRACTOR'S PROT EACH OCCURRENCE $ 1,000,000
[ ] ____________________________ FIRE DAMAGE
(Any one fire) $ 100,000
[ ] MED EXP (Any one person) $ 10,000
------------------------------------------------------------------------------------------------------------------------------------
A AUTOMOBILE LIABILITY CA5487950 8/01/00 8/01/01
[X] ANY AUTO COMBINED SINGLE LIMIT $ 1,000,000
[ ] ALL OWNED AUTOS BODILY INJURY
(Per person) $
[ ] SCHEDULED AUTOS BODILY INJURY
(Per accident) $
[X] HIRED AUTOS
[X] NON-OWNED AUTOS
[ ] ____________________________ PROPERTY DAMAGE $
------------------------------------------------------------------------------------------------------------------------------------
GARAGE LIABILITY AUTO ONLY-EA ACCIDENT $
[ ] ANY AUTO OTHER THAN AUTO ONLY:
[ ] ____________________________ EACH ACCIDENT $
[ ] AGGREGATE $
------------------------------------------------------------------------------------------------------------------------------------
A EXCESS LIABILITY BE7010095 8/01/00 8/01/01 EACH OCCURRENCE $50,000,000
[X] UMBRELLA FORM AGGREGATE $50,000,000
[ ] OTHER THAN UMBRELLA FORM $
------------------------------------------------------------------------------------------------------------------------------------
WORKERS COMPENSATION AND |WC STATUTORY| |OTHER|
EMPLOYERS' LIABILITY |LIMITS |
THE PROPRIETOR/ [ ] INCL EL EACH ACCIDENT $
PARTNERS/EXECUTIVE [ ] EXCL EL DISEASE-POLICY LIMIT $
OFFICERS ARE: EL DISEASE-EA EMPLOYEE $
------------------------------------------------------------------------------------------------------------------------------------
A OTHER WV Employers Liability GL5441878 8/01/00 8/01/01 $1,000,000/$1,000,000/$1,000,000
B Pollution Liability PLS4762271 8/01/00 8/01/01 $1,000,000 Limit/$5,000 Deductible
C Blanket Property AH0000991 8/01/00 8/01/01 $7,500,000 Limit
D Excess Property Coverage 6617482/AH0000992 8/01/00 8/01/01 $22,500,000 Limit
------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS Property Deductible: Real & Personal Property - $25,000, Plants
& Docks - $100,000. Additional insured applies to Certificate Holder.
------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE HOLDER
Penn Virginia Coal Company
Xxx Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
CANCELLATION
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 30 DAYS
WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO
MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON
THE COMPANY, ITS AGENTS OR REPRESENTATIVES.
/s/ Xxxxxx X. Xxxxxx
-------------------------
AUTHORIZED REPRESENTATIVE
Xxxxxx X. Xxxxxx
XXXXX 25-5 (1/95) (C) XXXXX CORPORATION 1988
CERTIFICATE: 090/001/00163
