Restated And Amended Coal Lease

RESTATED AND AMENDED COAL LEASE


THIS RESTATED AND AMENDED COAL LEASE, made and entered into this 15th day of May, 1987, by and between SIBONEY COAL COMPANY, INC., a Kentucky corporation with a principal address and mailing address of P.O. Box 16184, Clayton, Missouri 63105 (hereinafter called "LESSOR"), and MOUNTAINEER LAND COMPANY, a Delaware corporation, with an office at 2205 Fifth Street Road, Huntington, West Virginia, and a mailing address of P.O. Box 6100, Huntington, West Virginia 25770 (hereinafter called "LESSEE").


WITNESSETH:


WHEREAS, LESSOR and LESSEE entered into that certain Coal Lease dated November 15, 1978, as amended by Amendment No. 1 to Coal Lease dated January 2, 1980 (as so amended, the "1978 Coal Lease") covering tracts of land situate in Johnson and Martin Counties, Kentucky, as more particularly described in Exhibit A attached hereto and made a part hereof; and,


WHEREAS, the parties hereto desire to amend the 1978 Coal Lease in certain respects and restate the 1978 Coal Lease as so amended.


NOW, THEREFORE, for and in consideration of the mutual benefit to be derived therefrom, the mutual agreements herein contained, and in further consideration of the payment of the monies hereinafter set forth, the adequacy of all of which is hereby acknowledged, the parties hereto do hereby restate the 1978 Coal Lease as amended by this Restated and Amended Coal Lease, and LESSOR, subject to all the terms and conditions of this Restated and Amended Coal Lease, does demise and lease to LESSEE, its successors and assigns, all the coal in, on or under (i) all those certain tracts of land situate in Johnson and Martin Counties, Commonwealth of Kentucky, and being more particularly described in Section 1 of Exhibit A attached hereto and made a part hereof, (said tracts of land are hereinafter referred to as the "Fee Tracts"), and (ii) all those certain tracts or parcels of land located in Johnson and Martin Counties, Kentucky, and being more particularly described in Section 2 of Exhibit A attached hereto and made a part hereof (said tracts of land are hereinafter referred to as the "Coal Tracts") (the Fee Tracts and the Coal Tracts are sometimes collectively referred to as the "Property"), and grants exclusively unto LESSEE, subject to all the terms and conditions of this Restated and Amended Coal Lease, its successors and assigns, the rights set forth in ARTICLE ONE hereof.


LESSOR and LESSEE covenant and agree as follows:


ARTICLE ONE. RIGHTS.


1.1 During the Mining Term (as hereinafter defined), LESSEE shall have the right to mine all the coal in, on or under the Property by the deep, strip, auger and any other legal method of mining now or hereafter in existence, together with all necessary and appurtenant privileges with respect thereto, including, but not limited to, the right to use the sand, water and gravel on the Fee Tracts, and use of the surface of the Fee Tracts for the purpose of constructing and operating thereon tramways, roadways, haulways, water drainage courses, side tracks, switches, substations, buildings, processing plants, tipples and any other improvements or structures convenient for the mining, storing, processing, handling and shipping of coal on or from the Property, together with the right to cut and use for LESSEE's coal mining operations on the Property the timber and trees standing or fallen on the Fee Tracts, as well as the exclusive right to haul without additional charge, rent or royalty, coal, men, supplies, equipment and machinery over, under and through the Fee Tracts and under and through the Coal Tracts, and to make such other use of the Property as shall be convenient for the mining of coal from the Property and any other properties owned, leased or controlled by LESSEE and the dumping on the Fee Tracts of refuse from any coal mined by LESSEE from the Property or any other properties owned, leased or controlled by LESSEE, all without any liability for damages to the surface thereof. LESSOR recognizes the Property is, or may be in the future, one of several contiguous or adjacent parcels from which coal may be extracted by LESSEE, and LESSOR specifically waives the prohibition against mining within any specified minimum distance of any boundary line between the Property and any adjoining lands owned, controlled or leased by LESSEE, and waives the maintenance of barrier pillars between the Property and any adjacent or contiguous property owned, leased or controlled by LESSEE, it being specifically understood and agreed by the parties hereto that the Property may be used in conjunction with other properties owned or leased by LESSEE contained in mining plans of LESSEE, its successors or assigns, of which the Property is a part. To the extent LESSOR has the right to grant such rights, LESSOR grants to LESSEE the above rights with respect to the Coal Tracts.


1.2 During the Hauling Term (as hereinafter defined), if LESSEE pays the rental called for in paragraph 9.2 below, LESSEE shall have the right to haul without additional charge, rent or royalty, coal, men, supplies, equipment and machinery over the Fee Tracts and the exclusive right under and through the Coal Tracts and Fee Tracts.


2 ARTICLE TWO. TERM.


2.1 The term of this Restated and Amended Coal Lease shall be as follows:


(a) The period commencing on May 15, 1987 and ending on the earlier of
(i) midnight, April 30, 2012, or (ii) the expiration of thirty (30) days
following the notice referred to in this paragraph 2.1(a) below shall be
known as the "Mining Term", and LESSEE shall have the rights set forth in
paragraph 1.1 above and elsewhere in this Restated and Amended Coal Lease
as rights of LESSEE during the Mining Term. At any time following May 15,
1987, LESSEE shall have the right to surrender this Restated and Amended
Coal Lease by giving written notice to LESSOR, and at LESSEE's option, such
surrender may be with respect to either (A) only the mining rights granted
by paragraph 1.1, or (B) this entire Restated and Amended Coal Lease except
for LESSEE's rights set forth in paragraph 2.2 and ARTICLE TWELVE.


(b) The period commencing with the date upon which LESSEE gives the
notice referred to in the clause (A) of the last sentence of paragraph
2.1(a) above and ending upon the earlier of (i) midnight, April 30, 2017,
or (ii) the expiration of thirty (30) days following the notice referred to
in this paragraph 2.1(b) below shall be known as the "Hauling Term", and
LESSEE shall have the rights set forth in paragraph 1.2 above and elsewhere
in this Restated and Amended Coal Lease as rights of LESSEE during the
Hauling Term. At any time following commencement of the Hauling Term,
LESSEE shall have the right to surrender this Restated and Amended Coal
Lease with respect to the hauling rights granted by paragraph 1.2, except
for LESSEE's rights set forth in paragraph 2.2 and ARTICLE TWELVE. If this
Restated and Amended Coal Lease continues in effect for the Hauling Term
and there is more than one road on the Property, LESSOR shall have the
right to designate the road over which such men, materials, supplies and
coal shall be hauled so long as LESSOR does not designate a road which
unreasonably interferes with LESSEE's operations or increases the cost
thereof. In the event LESSOR desires to relocate any road located on the
Property which is used by LESSEE as herein provided, LESSOR may do so at
its sole cost and expense; provided, however, that such road as relocated
shall not unreasonably interfere with LESSEE's operations or increases the
cost thereof.


(c) Upon surrender of this entire Restated and Amended Coal Lease
pursuant to paragraph 2.1 or the hauling rights pursuant to paragraph 2.1,
LESSEE shall be released from all of its obligations arising from and after
the date of such surrender by LESSEE; provided, however, if such surrender
is at any time other than the end of a lease year, LESSOR shall not be
obligated to refund any of the Minimum Annual Royalty or the Annual Rental
paid for such lease year, as the case may be, or refund any of the monies
referred to in paragraph 6.2.


2.2 LESSEE shall continue to have the right after surrender, termination, cancellation or forfeiture of this Restated and Amended Coal Lease for any reason to reenter the Property to reclaim all or any portion thereof required by any governmental entity to so be reclaimed without any obligations to LESSOR.


3


ARTICLE THREE. TONNAGE ROYALTY.


3.1 LESSEE covenants and agrees to pay to LESSOR during the Mining Term of this Restated and Amended Coal Lease, without demand therefor, a tonnage royalty (the "Tonnage Royalty") on each ton of 2,000 pounds of coal mined, removed and sold from the Property as follows: (i) for all coal mined and removed by any method other than the deep or underground method of mining (a) eight percent (8%) of the gross selling price of the coal or Two Dollars ($2.00), whichever is greater, if LESSOR owns both the coal in, on or under the Property and the surface thereof, or (b) six percent (6%) of the gross selling price of the coal or One Dollar and Sixty Cents ($1.60), whichever is greater, if LESSOR owns only the coal in, on or under the Property, or (c) two percent (2%) of the gross selling price of the coal or Forty Cents ($0.40), whichever is greater, if LESSOR owns only the surface of the Property, and (ii) for all coal mined, removed and sold by the deep or underground method of mining six percent (6%) of the gross selling price of the coal or One Dollar and Sixty Cents ($1.60), whichever is greater, regardless of whether LESSOR owns only the coal in, on or under the Property, or both the surface of the Property and said coal; PROVIDED, that payment pursuant to each of the subdivisions of this ARTICLE 3.1 shall be mutually exclusive and LESSOR shall only be paid pursuant to one of such subdivisions for each ton of coal mined and removed and subsequently sold by LESSEE; and PROVIDED FURTHER, that no payment shall be made to LESSOR pursuant to subdivision (ii) if LESSOR owns only the surface of the Property. On or before the 30th day of each calendar month, LESSEE shall account to LESSOR for all the coal mined, removed and sold from the Property during the preceding calendar month, and LESSEE shall pay to LESSOR the Tonnage Royalty thus found to be due for such preceding calendar month, subject to recoupment as provided for in ARTICLE SIX.


3.2 As used in this Restated and Amended Coal Lease, the term "gross selling price" shall mean the price received by LESSEE, or any affiliate thereof, in a bona fide arms' length transaction less all of the following costs actually incurred by LESSEE or its affiliates, (i) all transportation costs from the mine to the customer, (ii) all tippling, processing or cleaning costs, (iii) severance taxes, (iv) any tax imposed by the Black Lung Benefits Revenue Act of 1977, as now in existence or as it may be hereafter amended, (v) the Reclamation Fee payable under the Surface Mining Control and Reclamation Act of 1977, as now in existence or as it may be hereafter amended and/or (vi) any similar reclamation fee imposed by the Commonwealth of Kentucky, (vii) and any governmental impositions which may hereafter be imposed on the privilege of mining coal.


4 ARTICLE FOUR. MINIMUM ANNUAL ROYALTY; ANNUAL RENTAL.


4.1 LESSEE agrees to pay in advance on or before the first day of each May (except for the first payment which shall be made concurrently with the execution of this instrument by LESSOR) during the Mining Term of this Restated and Amended Coal L ...