Exhibit 10.30
ROYALTY AGREEMENT
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THIS ROYALTY AGREEMENT is made and entered into as of the 1st day of
August, 2006, by and between GWENCO, INC., a Kentucky corporation (hereinafter
called "Gwenco") and XXXXX XXXXXXXXXX, an individual residing in Connecticut
(hereinafter called "Xxxxxxxxxx").
W I T N E S S E T H :
1. Gwenco and Xxxxxxxxxx, along with Quest Minerals & Mining
Corp. (parent company of Gwenco) and Quest Minerals & Mining, Ltd. have entered
into a Forbearance Agreement of even date herewith (the "Agreement"). Pursuant
to Section 2.1(a) thereof, and pursuant to this Royalty Agreement, Gwenco agrees
to pay Xxxxxxxxxx fifty percent (50%) of all "Gross Profits" (as defined herein)
derived from the sales of all coal mined from any seam within five (5) miles of
Xxxxxx'x Branch, Pike County, Kentucky (the "Mine Premises"), by Gwenco or its
parent or affiliated companies. The term "Gross Profit" shall be defined as
actual cash proceeds to Gwenco from the sale of coal mined from the Mine
Premises, less production costs incurred in connection with the sale of said
coal mined from the Mine Premises. Productions costs shall include the
following:
(i) Required payments to Gwenco's contract mine operator;
(ii) Black Lung payments;
(iii) Kentucky Severance payments;
(iv) Reclamation payments;
(v) Royalties (including, but not limited to, landowner
royalties);
(vi) Electricity to operate the mine;
(vii) Trucking costs to deliver coal mined from the Mine Premises;
(viii) Belt Move Material;
(ix) Office and Administrative expenses of Gwenco;
(x) Engineering expenses of Gwenco associated with the Mine
Premises;
(xi) Liability Insurance;
(xii) MSHA payments; and
(xiii) Other Miscellaneous items not to exceed $5,000 per month.
2. Payments shall be made directly to Xxxxxxxxxx or his heirs,
assigns or designees, as Xxxxxxxxxx shall direct.
3. The quantity of coal mined and removed by Gwenco or any other
party from the Mine Premises shall be determined by the applicable railroad
weight sheets or certified truck weight sheets furnished to Xxxxxxxxxx or to any
other party by the railroad company over which said coal is transported to
market, by the trucking company employed for the purpose of transporting said
coal to market or by the purchaser of such coal produced. Gwenco shall keep, or
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cause to be kept, accurate records of the amount of coal mined and removed by
them or any other party from the Mine Premises, and not later than the tenth
(10th) day of each calendar month during which mining operations are conducted
on the Mine Premises by Gwenco or any other party, either Quest or Gwenco shall
furnish to Xxxxxxxxxx by hand-delivery to Xxxxxxxxxx or by mail to Xxxxxxxxxx at
00 Xxxxx Xxxxxxx Xxxx, Xxxxxx, XX 00000, a report in writing showing the total
number of net tons of coal so mined and removed from the Mine Premises by Gwenco
or any other party during the preceding month, together with copies of the
applicable truck or railroad weight sheets for said coal.
Xxxxxxxxxx and his duly authorized agents may, at all reasonable times,
examine the pertinent records of Quest or Gwenco including all railroad and
truck weight sheets and maps in order to verify the quantity and weight of said
coal. Should a party other than Quest or Gwenco be mining coal on the Mine
Premises, then Quest or Gwenco shall cause any agreement relating to such mining
to provide appropriate provisions so that the provisions of this Agreement with
respect to the providing and auditing of mining information can be properly
enforced by Xxxxxxxxxx. On or before April 15, July 15, October 15 and January
15 of each year during the term of this Agreement, Quest or Gwenco shall provide
Xxxxxxxxxx with a progress report regarding any mining operations on the Mine
Premises during the prior three (3) month period. Each progress report shall
include such information, statistics, maps and plats as may from time to time be
specified by Xxxxxxxxxx.
4. The Mine Premises described above and to which this Agreement
pertains shall specifically include, but shall not be limited to, any coal mined
from properties currently under lease to Gwenco at Xxxxxx'x Branch, Pike County,
Kentucky, which are identified by reference to the following leases and/or
property descriptions, all appearing of record in the Pike County Clerk's
Office, Pikeville, Kentucky (collectively, the "Leasehold Estate"):
Deed Book 288, Page 193 (Xxxx Xxxxxxx)
Deed Book 640, Page 189 (Xxxx Xxxx Xxxxxx)
Deed Book 124, Page 548 (Xxxxxx & Xxxxxx Xxxxxx)
Deed Book 640, Page 247 (Xxxxx Xxxxxx heirs)
Deed Book 641, Page 308 (Xxx Xxxxxx)
Deed Book 640, Page 261 (Xxxxxx Xxxxx heirs)
Deed Book 641, Page 326 (Xxxxxx & Xxxx Xxxxxx)
Deed Book 641, Page 292 (Xxxx Xxxxxxxxx)
Deed Book 610, Page 228 (Xxxx & Xxxxxxxxx Xxxxx)
Deed Book 740, Page 66 (Xxxxxx Xxxxxxx)
Deed Book 640, Page 235 (X.X. Xxxxx, Xx.)
Lease dated 11/3/87 (Xxxx Xxxxxx - assigned to Xxxx Xxxx Xxxxxx)
No recording information; property
description at Misc. Book 52, Page 269
Deed Book 6, Page 00 - 0 xxxxx (Xxxxxx Xxxxx xxxxx)
Deed Book 000, Xxxx 000 (Xxx & Xxxxx Xxxxx)
Deed Book 640, Page 228, 230 (Xxxx Xxxx - assigned to
Xxxx Xxxx Xxxxxx
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Deed Book 652, Page 588 (Xxxxxxx Xxxxxxxx)
Deed Book 640, Page 183 (Xxxxxxx X. Xxxxxxxx)
Deed Book 623, Page 244 (Tracts 1 & 2) (Xxxxxxx X. Xxxxxxxx)
Deed Book 640, Page 271 (Xxxxx X. Xxxxxxxx)
Deed Book 643, Page 327 (Xxxxxxx & Xxxxxxx Xxxx - 4 parcels)
Deed Book 640, Page 274 (Xxxxxx X. Xxxxxxxx)
5. Payment of the amounts due to Xxxxxxxxxx under this agreement
shall be secured by that certain judgment (the "Judgment") dated May 20, 2005
entered in the action entitled National City Bank of Kentucky vs. Gwenco, Inc.,
et. al. in the Circuit Court of Xxxx County, Kentucky, Case No. 04-CI-00369, in
favor of Xxxxxxxxxx, as assignee, and against Gwenco. Default on any payment of
the amounts due to Xxxxxxxxxx hereunder shall constitute an immediate default
under the Judgment and the Forbearance Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands, on the
day and year first above written.
GWENCO, INC.
By: /s/ XXXXXX XXXXXXXXXXX, XX.
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Xxxxxx Xxxxxxxxxxx, Xx.
President
/s/ XXXXX XXXXXXXXXX
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Xxxxx Xxxxxxxxxx
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