EXHIBIT 10.8
OPTION TO PURCHASE
MINERAL LEASE
Prepared by:
▇▇▇▇▇ ▇. ▇▇▇▇▇
Attorney at Law
▇.▇. ▇▇▇▇▇▇ ▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
OPTION TO PURCHASE MINERAL LEASE
This option to purchase Mineral Lease (herein "this Option") is made this
10TH. day of October 10, 2002, by and between the COUNTY OF MONTGOMERY,
ILLINOIS, with and address of ▇▇▇▇▇▇▇▇▇▇ County Courthouse, Hillsboro, Illinois
(herein "Optionor") and BPI INDUSTRIES, INC., of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (herein "BPI").
WHEREAS, Optionor may own all or a portion of the coal bed methane, coal
seam gas, all gas desorbed from coal or captured in the coal seam, and all gas
in abandoned mines, void spaces, and zones in communication therewith, as to the
following described lands (herein "Coal Bed Gas"); and,
WHEREAS, Optionor may own all or a portion of the oil, liquid
hydrocarbons, all gases and their constituent products (except Coal Bed Gas as
defined herein) as to the following described lands (herein "Oil and Gas"); and,
WHEREAS, for purposes of this Option, the Coal Bed Gas and the Oil and Gas
may be referred to jointly as ("the Minerals"); and,
WHEREAS, in addition to owning a possible interest in the Minerals,
Optionor would also own the right to explore, drill for, and produce the
Minerals; and,
WHEREAS, Optionor desires to grant to BPI and BPI desires to receive from
Optionor, an Option to purchase a Mineral Lease as to Optionor's interest in the
Minerals; and,
WHEREAS, in the event the Option is timely exercised by BPI, the Option
shall be consummated by the execution and delivery by Optionor to BPI of a
Mineral Lease in the form as attached hereto as Exhibit A (herein the "Mineral
Lease"); and,
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WHEREAS, Optionor and BPI desire to enter into this writing for purposes
of setting forth the terms and conditions of this Option.
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual benefits to be derived herefrom and One Dollar and other valuable
consideration, Optionor and BPI agree as follows:
1. OPTION.
For and in consideration of FORTY ONE THOUSAND FIVE HUNDRED DOLLARS
($41,500.00), herein "the Option Payment"), the receipt of which is hereby
acknowledged, Optionor gives and grants to BPI the exclusive option to obtain a
Mineral Lease corresponding to Optionor's interest in the Minerals pursuant to
and upon the terms and conditions as set forth herein. In the event the Option
is exercised, the Option Payment shall be applied to any amounts that may be due
and owing pursuant to the Mineral Lease.
2. PERIOD OF OPTION.
This Option may be exercised by BPI by giving notice of the exercise
thereof (herein the "Option Notice") to Optionor at any time during the period
from the date of this Option until the 14th.. day of July, 2004, at 12:00
o'clock, P.M., (herein the "Exercise Period"). Notice shall be given and may be
sent by personal delivery or by depositing the same in the United States Mail
addressed to Optionor, postage prepaid and registered or certified with return
receipt requested with notice being deemed to have been given and received upon
the date of BPI's posting in the United States Mail as shown on the postal
receipt or the date of personal delivery if delivered in this manner. In the
alternative, the notice may be given by prepaid courier service addressed to
Optionor and requiring the signature of Optionor upon delivery with said notice
being deemed to have been given and received upon the date of BPI's delivery to
the courier service as shown on the signed receipt of the courier service.
The Exercise Period may be extended, at BPI's sole discretion, for a
period of 540 days. The Exercise Period may be so extended by BPI paying to the
optionor the sum of FIFTY ONE THOUSAND SEVEN HUNDRED DOLLARS ($51,700.00) on or
before 5:00 P.M., on the last day of the Exercise Period. If said payment is
timely made, then the Exercise Period, as provided herein, shall continue and be
extended until 5:00 P.M. on the 540th day from the last day of the Exercise
Period.
3. MINERAL LEASE.
Contemporaneous with the execution of this Option, Optionor executes
the Mineral Lease in the form as set forth on Exhibit A attached hereto. In the
event this Option is timely exercised as provided herein, BPI shall execute the
Mineral Lease and said lease shall be deemed delivered to BPI and shall cover
and be effective as to all interest of Optionor in the Minerals as of the date
of this Option.
4. REVIEW DURING EXERCISE.
During the Exercise Period of the Option, Optionor will cooperate
with BPI for purposes of determining the title of Optionor as to the Minerals
and for purposes of conducting field tests as to the Minerals. Optionor, upon
request, shall provide to BPI all title materials corresponding to Optionor's
interest in the Minerals. Optionor shall also cooperate with BPI in
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providing access to the Minerals for purposes of conducting any test deemed
necessary by BPI to determine the extent and nature of the Minerals. Such
testing may include the utilization of the surface corresponding to the
Minerals, the drilling for core samples or for the conducting of seismic, and
other operations pertaining thereto. BPI shall indemnify and hold Optionor
harmless from any claim for damages that may be asserted against Optionor with
respect to BPI's operations pursuant to the matters set forth in this paragraph.
5. MEMORANDUM OF OPTION:
Optionor and BPI shall execute a memorandum of this option and
record the same in the County Clerk and Recorder's Office in the county where
the Minerals are located. All parties dealing with Optionor with respect to the
Minerals shall deal and take any interest subject to the rights of BPI and the
obligations of Optionor as set forth herein.
6. SUCCESSION OF ASSIGNMENT
This Option and the Mineral Lease resulting from the exercise
thereof shall be binding upon and inure to the benefit of the parties hereto
together with their successors and assigns. All rights of the parties under this
Option may be assigned without restriction but notice of such assignment should
be given in writing to the other party.
EXECUTED the day and year above written.
OPTIONOR
▇▇▇▇▇▇▇▇▇▇ COUNTY, ILLINOIS
BY /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
ITS
---------------------------
OPTIONEE
BPI INDUSTRIES, INC.
BY /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
ITS President
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MINERAL LEASE
Prepared by
and
Return to:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
BPI Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MINERAL LEASE
This Mineral Lease (herein "this Lease") is made and entered into this
______ day of _____________, 2003, by and between the COUNTY OF
MONTGOMERY, ILLINOIS, with the address of ▇▇▇▇▇▇▇▇▇▇ County Courthouse,
Hillsboro, Illinois (herein the "Lessor"), and BPI INDUSTRIES, INC., of
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (herein the "Lessee").
THIS INDENTURE WITNESSETH:
1. The Lessor, for and in consideration of Ten Dollars and other valuable
consideration, the receipt of which is hereby acknowledged, and for and in
consideration of the covenants and agreements herein provided on the part
of the Lessee, has granted, demised, leased, and let, and by these
presents does grant, demise, lease and let unto Lessee, all of Lessor's
title and interest, but only to the extent in fact actually legally owned
or held by Lessor, in the Coal Bed Gas (as herein defined) and the Oil and
Gas (as herein defined) underlying the following described land:
See Attached Exhibit For Legal Descriptions
"Coal Bed Gas" shall mean herein all coal bed methane, coal seam gas, all
gas desorbed from coal or captured in the coal seam, all gas produced from
abandoned mines, void spaces, and zones in communication therewith and all
associated hydrocarbons contained therein, with the right to investigate,
explore, drill, operate, produce, save, take care of, treat, process, and
transport, and market the Coal Bed Gas.
"Oil and Gas" shall mean all oil, liquid hydrocarbons, gases, and their
constituent produces except for Coal Bed Gas together with the right to
investigate, explore, drill, operate, produce, save, take care of, treat,
process, and transport and market the Oil and Gas
Lessor or its assigns hereby excludes and expressly reserves the right to
explore for, mine, operate, produce, remove or market coal and other hard
minerals.
It is agreed that the right of Lessor or its assigns to explore for, mine,
operate, produce, remove and market coal or other hard minerals shall take
precedence and that BPI's rights hereunder shall be subordinate to those
mining rights. BPI's operations shall not interfere with any operations by
Lessor or it's assigns with respect to the coal and other hard minerals.
Coal Mining Operations. Lessee acknowledges that the coal and other hard
minerals located in and under the land, and the right to mine and remove
the same, are of great value and importance to Lessor and its lessees
("Mineral Tenants"). The right to mine and remove said coal and other hard
minerals, whether by underground methods, surface-mining methods, or other
methods, shall be paramount to all rights granted to Lessee hereunder.
There are excepted from the Land and the Depth and from the mining and
appurtenant rights, waivers and immunities granted to Lessee hereunder,
and hereby reserved to Lessor, the right drill and maintain openings
through the Land and the Depth for purposes of exploring for, developing,
working, mining, removing, shipping and transporting any and all coal,
clay and other hard minerals under and within the Land. Lessee shall use
composite casing in conjunction with its operations. Within sixty (60)
days after receiving notice from a Mineral ▇▇▇▇▇▇▇ under such leases that
any operation being conducted or facility being maintained by Lessee has
or within ninety (90) days will become an interference with the coal
mining operations of a Mineral Tenant under such leases, Lessee shall, at
Lessee's expense, take such steps as may be required to eliminate or
prevent such interference, including the plugging of ▇▇▇▇▇ and/or removal
of such facilities in order to provide for mine-through conditions in
accordance with applicable laws. In the event lessee plugs any ▇▇▇▇▇
pursuant to its operations which have not previously been the subject of a
notice from a Mineral Tenant, said ▇▇▇▇▇ shall be plugged in such a manner
so as to provide for mine-through conditions in accordance with applicable
laws.
Because full extraction mining (e.g. longwall) may be used and subsidence may
result, Lessee agrees that all surface facilities (including pipelines) will
either be designed to withstand the effects of subsidence or will be removed
prior to mining or left in place but with no liability to Mineral Tenant if
damage occurs.
Lessee further agrees that:
Lessor shall be notified of any proposed well location, and if
Lessor is the surface owner, Lessor shall have the right to approve
any roads, equipment and facility locations, pipelines and all other
improvements required by Lessee hereunder;
Lessee shall use its best efforts to drill holes and maintain ▇▇▇▇▇
as close to the vertical as possible and shall furnish Lessor with
information (including without limitation, downhole surveys)
concerning the locations of all holes in the seam and all holes on
the adjacent Land and adjacent properties if Pooling and Unitization
is used;
Lessee shall make every effort to prevent infiltration of oil and
gas, brine, water, and other fluids into any workable coal seam
except by way of an initial hydraulic "frac treatment" and any
breach in the integrity of the well shall be rectified by the Lessee
as soon as possible;
After bonding or providing other security in accordance with all
Laws, Lessee shall plug all abandoned ▇▇▇▇▇ in strict accordance
with all Laws;
Lessee shall protect the Land from drainage as a reasonable and
prudent operator and drill such offsetting ▇▇▇▇▇ as a reasonable and
prudent operator in the same or similar circumstances.
Water Disposal. Lessor grants to Lessee the right to dispose of water in the
association with production of Covered Hydrocarbons from ▇▇▇▇▇ drilled pursuant
to this agreement. Those rights are limited to water thus produced and Lessee
shall not be permitted to dispose of water on the Land from other sources
outside the Land. Lessee shall be responsible for all expenses of disposal,
including, without limitation, drilling and casing. All water disposal
operations (including without limitation, drilling and depth and location of
water disposal ▇▇▇▇▇) permitted hereunder will be conducted in accordance with
all applicable Laws. Lessee shall provide Lessor with copies of (a) all
applications relating to water disposal ▇▇▇▇▇ filed with applicable regulatory
authorities for such ▇▇▇▇▇ within (3) three days of such filing and (b) all
approvals of applicable regulatory authorities within three (3) days of Lessees
receipt.
General Operating Conditions. Lessee shall:
Comply with all federal, state, and local laws, statutes, ordinances, and
orders applicable to Lessee's operations.
Fully indemnify, defend and hold harmless Lessor from and against any and
all loss, liability, damage, cost, and expense imposed as a result of any
such laws.
Abstain from committing any waste or unnecessary damage and from
depositing any materials, supplies or litter on the land;
Obtain permission to enter the Land from both the surface owner and tenant
or comply with 765 ILCS. Lessee shall be solely responsible for surface
damages caused by Lessee and to clean up and restore the Land as nearly as
practical.
For purposes of this lease, Coal Bed Gas and Oil and Gas may jointly be referred
to as "Minerals".
2. For the same consideration as set forth above, Lessor grants, demises,
leases, and lets to Lessee the right (a) to use the seismograph and other
geophysical and geological methods of exploration; (b) to inject gas, water, and
other fluids and air into the subsurface strata; (c) to lay pipelines, establish
and utilize facilities for the disposition of produced substances; (d) to build
roads, bridges, tanks, utility lines, power stations and other structures; (e)
to undertake recovery by primary and secondary or other methods; (f) to have the
right of ingress and egress as to lands described herein or other lands under
lease to Lessee; and (g) to utilize the surface to the extent of Lessor's title
for all purposes as described herein.
3. This Lease shall and does include all lands and interest therein contiguous
to or appurtenant to the lands specifically described herein, and owned or
claimed by Lessor including all interest in which Lessor has a preferential
right of acquisition or acquires
by reversion or otherwise, whether or not specifically described herein. This
Lease shall also include all lands underlying all alleys, streets, roads or
highways and if the land is riparian to, bounds, or embraces within its
boundaries a stream, lake, or other body of water, then all of Lessor's interest
in the lands under said bodies of water and all area now or hereafter added by
accretion. This Lease shall cover all interest in the lands covered hereby now
owned or hereafter vested in or claimed by Lessor.
4. This Lease shall remain in force for a primary term of five (5) years from
the date hereof and as long thereafter as Minerals, or any of them, are being
produced from the lands described herein or land with which said land is pooled
or unitized.
5. If operations for the exploration of Minerals are not commenced on the lands
described herein or on land pooled therewith on or before one year from the date
of this Lease, Lessee shall pay or tender to Lessor an advance royalty computed
based upon 50 cents per net acre of Coal Bed Gas interest (with ownership based
on coal record title) and 50 cents per net acre of Oil and Gas interest (with
ownership based on oil and gas record title) owned by Lessor which shall cover
the privilege of deferring commencement of such operations for a period of 12
months. In like manner and upon like payments or tenders on an annual basis
thereafter, the commencement of said operations may be further deferred for
successive periods of the same number of months, each during the primary term.
Payment or tender of the advance royalty shall be made to the Lessor at the
following address:
▇▇▇▇▇▇▇▇▇▇ County Treasurer
#▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The payment or render of the advance royalty may be made by check, draft, or
other means of payment and mailed or delivered to Lessor or either Lessor, if
more than one, on or before the advance royalty payment date. Notwithstanding
the death of the Lessor or Lessor's successors in interest, the payment or
tender of advance royalty in the manner provided herein shall be binding on the
successors and assigns of the Lessor or Lessor's successors in interest. All
advance royalties paid by Lessee shall be recouped from actual royalties which
may be due and owing to Lessor and which royalties correspond to production.
6. If, prior to the discovery of Minerals, or any of them, on the lands
described herein or on land pooled therewith, Lessee should drill and abandon a
dry hole or holes thereon, or if, after discovery of Minerals, or any of them,
the production thereof should cease from any cause for 120 consecutive days,
this Lease shall not terminate if Lessee commences additional drilling or
reworking operations within 120 days thereafter or (if it be within the primary
term) commences or resumes the payment or tender of advance royalties on or
before the advance royalty paying date next ensuing after the expiration of 12
months from the date of completion and abandonment of said dry hole or holes or
the cessation of production as defined herein. If at the expiration of the
primary term, Minerals, or any of them, are not being produced on the lands
described herein or land pooled therewith but Lessee is then engaged in
operations for drilling or reworking of any well or ▇▇▇▇▇ thereon, this Lease
shall remain in full force so long as such operations or said additional
operations are commenced and prosecuted, (whether on the same or successive
▇▇▇▇▇) with no cessation of more than 120 consecutive days and if they result in
production, so long thereafter as Minerals or any of them are produced from the
lands described herein or lands pooled therewith.
7. The Lessee shall pay to the Lessor the following royalties:
(a) One-Eight (1/8) of the amount realized by Lessee from the sale
of Coal Bed Gas.
(b) One-eighth (1/8) of the oil and liquid hydrocarbons within the
Oil and Gas produced and saved with the same to be delivered at the
well or to the credit of the lessor in the pipeline to which a well
may be connected, based upon Lessor's ownership of the oil within
the Oil and Gas as to the lands described herein.
(c) The market value at the mouth of the well of one-eight (1/8) of
the gas within the Oil and Gas sold or used or one-eight (1/8) of
the amount realized from the sale thereof at the well, based upon
Lessor's ownership of the gas within the Oil and Gas as to the lands
described herein.
8. If at any time there is a well or ▇▇▇▇▇ on the lands which are capable of
producing Coal Bed Gas or gas within Oil and Gas and such well or ▇▇▇▇▇ are shut
in, and if this Lease is not being continued in force by some other provision
hereof, then this Lease shall nevertheless continue in force for a period of 90
days from the date such well or ▇▇▇▇▇ are shut in and before the expiration of
any such 90 day period, Lessee may pay or tender an advance annual royalty
payment of $100.00 for each such well and if such payment or tender is made,
this Lease shall continue in force and it shall be considered that Coal Bed Gas
and gas within Oil and Gas are being produced within the meaning of paragraph 4
hereof for one year from the date such payment is made in a like manner,
subsequent advance annual royalty payments may be made or tendered and this
Lease shall continue in force and it should be considered that Coal Bed Gas and
gas within Oil and Gas are being produced within the meaning of paragraph 4
during any annual period or which such royalty payment is so paid or tendered.
Notwithstanding the foregoing, payment of the aforedescribed royalties for any
shut-in well or ▇▇▇▇▇ shall not exceed a period of 5 years. Perpetuation of this
Lease by payment of royalty as provided in this paragraph shall be in lieu of
payment of advance royalties as provided in paragraph 5 above: In addition,
payment of any royalty pursuant to this paragraph shall be recouped by Lessee
from any royalty payment otherwise payable to Lessor pursuant to actual
production of Minerals or any of them.
9. Lessee is granted the right to pool or unitize this Lease, the land covered
hereby or any part thereof, with other land or leases or parts thereof for the
production of Minerals, or any of them, covered hereby. No production for Coal
Bed Gas or gas with Oil and Gas shall embrace more than 160 acres plus a
tolerance of 10% thereof. No production for oil within Oil and Gas shall embrace
more than 80 acres plus a tolerance of 10% thereof. Notwithstanding, if any
federal or state law, executive order, rule, or regulation shall prescribe a
spacing pattern for the development of the field or allocate a producing
allowable on acreage per well, then any such unit may embrace as much additional
acreage as may be so prescribed or as may be used in such allocation or
allowable. Lessee shall execute in writing an instrument identifying and
describing the pooled or unitized acreage. Such unit shall be designated either
before or after the completion of any ▇▇▇▇▇. Operations and production on any
part of the pooled or unitized acreage shall be treated as if such operations
were upon or such production was from the land described in this Lease whether
the well or ▇▇▇▇▇ be located on the land covered by this Lease or other lands.
The entire acreage so pooled into a unit shall be treated for all purposes,
except for the payment of royalties on production from the pooled or unitized
lands, as if it were included within this Lease. In lieu of the royalties herein
provided, Lessor shall receive on production from a unit so pooled or unitized
only such proportion of the royalty stipulated herein as the amount of Lessor's
acreage placed in the unit or Lessor's royalty interest therein on an acreage
basis bears to the total acreage so pooled or unitized.
10. Lessee shall have the right to use, free of costs, all Minerals covered by
this Lease for all operations hereunder except for water from Lessor's ▇▇▇▇▇ or
tanks. Any royalty payment to the Lessor shall be computed after deducting any
amount so used. When requested by Lessor, Lessee shall bury all pipelines below
plow depth. Lessee shall pay for all damages caused, by Lessee's operations to
growing crops on the land. The amount of any such damage payment shall be based
upon the fair market value of the actual crops destroyed. Lessee shall have the
right at any time to remove any equipment, property, or fixtures placed on the
land by Lessee together with the right to draw and remove all casing and other
downhole equipment.
11. The rights of either party to this Lease may be assigned in whole or in part
and the provisions hereof shall extend to the successors and assigns of the
parties but no change or division in ownership of the Minerals covered hereby
with respect to the lands or royalties, however accomplished, shall operate to
enlarge the obligations or diminish the rights of Lessee or require the
installation of separate measuring tanks or devices. No such change or division
in the ownership of the Minerals in the lands or royalties shall be binding upon
Lessee for any purpose until such person acquiring any interest has furnished
Lessee with the instrument or certified copies thereof constituting said
person's chain of title from the original Lessor. Any assignment of this Lease
by Lessee, in whole or in part, shall, to the extent of such assignment, relieve
and discharge Lessee of any obligations hereunder and if any Assignee of any
part or parts hereof shall fail to comply with any provisions of this Lease,
such default shall not affect this Lease insofar as it covers the part retained
by Lessee or another assignee.
12. In the event Lessor considers that Lessee has not complied with its
obligations hereunder, both express and implied, including the obligation of
production as provided in paragraph 4, Lessor shall give written notice to
Lessee setting forth specifically in what respects Lessee has failed to comply
with Lessee's obligations pursuant to this Lease. Lessee shall then have 60 days
from receipt of such notice to commence and thereafter pursue with reasonable
diligence such action as may be necessary or proper to satisfy the obligation of
Lessee, if any, with respect to Lessor's notice. Neither the service of the
notice nor the doing of any acts by Lessee intended to satisfy any of the
alleged obligations shall be deemed an admission or presumption that Lessee has
failed to perform all of its obligations hereunder. No judicial action may be
commenced by Lessor with respect o any of said obligations until after the 60
day period as provided herein. Lessee shall be given a reasonable opportunity
after judicial ascertainment to prevent the forfeiture or termination of this
Lease by discharging its express or implied obligation as established by the
court.
13. Lessee, at its option, may discharge any tax, mortgage, or other lien upon
the interest and in the event Lessee does so, it should be subrogated to such
lien with the right to enforce same and apply royalties accruing hereunder
towards satisfying the same. Without impairment of Lessee's rights under the
warranty in the event of failure of title, it is agreed that, if Lessor owns an
interest in the Minerals covered hereby as to the lands less than the entire fee
simple estate, then the royalties and other payments to be paid lessor shall be
reduced proportionately. This Lease shall be binding upon all who execute it and
they shall be considered lessors, whether or not they are named in the granting
clause hereof and whether or not all parties named in the granting clause
execute this Lease.
14. To the extent that Lessor owns no interest in the surface as to the lands
described herein, the provisions set forth herein with respect to surface
obligations shall not be applicable except to the extent as may be required by
law.
15. Lessee may at any time surrender this Lease as to all or any part thereof by
delivering or mailing a release to Lessor and if surrendered only as to a part
thereof, any payments based upon acreage shall be reduced proportionately.
16. Lessee shall comply with all applicable federal, state, and local law,
statutes, ordinances, regulations, and orders applicable to Lessee's operations
and the conditions created thereby.
17. When any operation contemplated by this Lease is delayed or interrupted as a
result of any cause whatsoever beyond the control of Lessee or any event of
force majeure, or as a result of any state, federal, or municipal law,
ordinance, executive order, rule, or regulation, then the time for such delay or
interruptions shall not be counted against Lessee as to any timeframe required
by this Lease. Lessee shall not be held liable in damages because of any such
delay or interruption.
18. In the event the coal interest is the subject of a coal mining lease or
other agreement authorizing the mining and removal of coal, the Lessor
acknowledges that the operations for the mining and removal of coal may involve
the venting of Coal Bed Gas into the atmosphere as a waste product for the
protection and efficiency of the mining operation. Lessee shall have no
obligation to recover any gas as may be vented during such coal development and
Lessee shall have no liability or obligation to Lessor for any royalties on such
vented gas. The parties further acknowledge that Coal Bed Gas may be vented and
lost during repairs to or the testing of ▇▇▇▇▇ or prior to the connection of any
▇▇▇▇▇ to gathering and/or transmission lines in conjunction with Lessee's
operations. Under such circumstances, Lessee shall not be liable or obligated to
Lessor for any royalties on such vented and lost gas.
19. Lessor shall pay a proportionate part of any and all taxes levied or
assessed upon the production of Minerals covered hereby and Lessee is authorized
to pay such taxes and assessments on behalf of Lessor and to deduct the same so
paid from any monies otherwise payable to the Lessor. Lessor's proportionate
part shall correspond to the amount of royalty corresponding to Lessor's
interest in the Minerals.
20. Lessor shall have the right at any time, at Lessor's expense to:
a. Inspect by all appropriate means Lessee's facilities on the Land;
b. Test Lessee's meters and other measuring and testing devices;
c. Sample, test measure and gage production of the ▇▇▇▇▇, including the right,
but not the obligation, to install meters on lines;
d. Observe Lessee in the performance of Lessee's obligations under this lease;
and
e. By appointment, examine or audit, during the term of this lease and for three
years thereafter, the books, records, supporting documents, files and
correspondence of Lessee maintained in connection with the lease and the
production and /or sale of the coal gas or coal gas products from the Land at
Lessee's place of business.
21. Special Operating Methods: Lessee shall provide to Lessor, upon request and
at Lessor's expense, all survey information which Lessee may now have or
hereafter obtain to inform Lessor fully as to the exact location of any well
drilled and copies of all logs, drill ▇▇▇▇▇ test records, core analyses,
pressure tests, or any other information obtained by Lessee in the course of
drilling any well on lands covered under this lease.
22. Lessee agrees that no well will be drilled within 300 feet of any personal
residence, or building used in a commercial business.
23. This Lease shall be binding upon and inure to the benefit of the parties
hereto together with their successors and assigns. To the extent that the
interest covered by this Lease constitutes any part of the homestead estate of
Lessor, then the Lessor releases and waives all rights under and by virtue of
the homestead exemption laws of the State of Illinois.
EXECUTED the day and year above written.
LESSOR
COUNTY OF MONTGOMERY, ILLINOIS
BY______________________________________
Its_____________________________________
LESSEE
BPI INDUSTRIES, INC.
BY______________________________________
Its_____________________________________
